Wednesday 6 April 2016

Panama Papers: Leaked documents spark uproar worldwide

Kremlin calls papers a plot to destabilise Russia while others deny any wrongdoing
The Straits Times, 5 Apr 2016


The "Panama Papers", with their exposes of world leaders or their associates having shady offshore financial dealings, have caused a furore worldwide, with a furious Kremlin calling it a plot to destabilise Russia, France saying it is good news that could boost tax revenue, and others such as Iceland's premier facing calls to resign.

The documents from Panamanian law firm Mossack Fonseca, leaked by the International Consortium of Investigative Journalists (ICIJ) on Sunday, allegedly showed how the firm's clients avoided tax or laundered money.

They detailed schemes involving an array of figures from friends of Russian President Vladimir Putin to relatives of the prime ministers of Britain, Iceland and Pakistan, journalists who received them said.

While the Panama Papers detail complex financial arrangements benefiting the world's elite, they do not necessarily mean the schemes were all illegal.

Panama Papers: What you need to know
The Panama Papers' leak of 11.5m documents shines rare light on murky world of offshore finance. Here's what you need to know.
Posted by Financial Times on Tuesday, April 5, 2016

According to ICIJ, most of the services the offshore industry provides can be used for legal purpose and are by law-abiding customers. But the documents show that banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption.

Prime Minister Najib Razak's son Mohd Nazifuddin, who was said to be holding directorships in two offshore firms, reportedly told ICIJ that one of the firms was set up for international business, according to website Malaysiakini.

The Kremlin yesterday said the documents contained "nothing concrete and nothing new" while a spokesman for British Prime Minister David Cameron said the reported links of the politician's late father to an offshore company were a "private matter". The documents showed Mr Putin linked to a network of secret offshore deals and vast loans worth US$2 billion (S$2.7 billion).

Iceland's Prime Minister Sigmundur Gunnlaugsson, whose wife was named in connection with a secretive firm in an offshore haven, said he would not bow to the opposition calls for him to resign.

Pakistan denied any wrongdoing by Prime Minister Nawaz Sharif's family after his daughter and two sons were linked to offshore firms.

Australia, New Zealand, India, France and Austria were among countries which said they had begun investigating the allegations, based on more than 11.5 million documents from Mossack Fonseca. Banks, as well as individual clients, came under the spotlight.

China, where it was a public holiday yesterday, has kept silent, although President Xi Jinping's brother-in- law Deng Jiagui has been named, along with retired premier Li Peng and former top political adviser Jia Qinglin, whose daughter and granddaughter, respectively, had set up offshore firms.

Media reports in 2014 said Mr Xi had instructed his extended family to leave business so as to boost his authority in taking on other top leaders in his anti-corruption campaign. Mr Deng's two firms, according to the leaked papers, had been dormant in late 2012.

A report by Bloomberg in June 2012 revealed that Mr Deng, his wife and their daughter had held investments worth hundreds of millions of dollars in real estate, share holdings and other assets.

Beijing-based political analyst Yang Dali said the ICIJ findings may have a limited impact on Mr Xi as he has managed to get his relatives to divest their investments, sometimes even at a loss.

"But the party still has to limit news of these findings to avoid damage to its image and credibility as the anti-corruption campaign is deemed by some to have been selective in its targets and avoiding some families," he told The Straits Times.

Apart from political leaders, sports and other celebrities have also been named in the papers.

They include Bollywood legend Amitabh Bachchan and Hong Kong movie star Jackie Chan.

In sports, Barcelona striker Lionel Messi has been named, along with world football body Fifa's ethics committee member Juan Pedro Damiani.

REUTERS • Additional reporting by Kor Kian Beng

The #PanamaPapers - an investigation by Süddeutsche Zeitung - in English:
Posted by Süddeutsche Zeitung on Sunday, April 3, 2016

Busy times continue at ICIJ! Our #PanamaPapers investigation has exposed the offshore holdings of some of the world's...
Posted by The International Consortium of Investigative Journalists on Monday, April 4, 2016

A child's guide to the good, bad and ugly of offshore banking (also works for adults).
Posted by The Guardian on Tuesday, April 5, 2016

Offshore accounts not always illegal
The Straits Times, 5 Apr 2016

LONDON • It is not illegal in many cases to use offshore structures because there are legitimate reasons to do so.

According to the Financial Action Task Force, a global money laundering watchdog, companies or trusts can be set up offshore for legitimate uses such as business finance, mergers and acquisitions and estate or tax planning, the Associated Press news agency reported.

Those doing business in countries such as Russia and Ukraine, for example, often deploy their assets offshore to defend them from being raided by criminals or to circumvent hard currency restrictions, The Guardian reported.

But such offshore structures are used in some instances by wealthy individuals and criminals to hide money and business transactions, and to avoid paying taxes.

Typically, companies or individuals use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.

Sometimes referred to as a "letterbox" firm because it is little more than an address, a shell company appears to be a legitimate business but only manages the money in it. Its management, usually lawyers and accountants, simply sign documents and allow their names to appear on a letterhead.

Whether a tycoon or a drug dealer, it is all about hiding the owners of the money and its origin, and tax avoidance. In a speech in Singapore last year at the Lee Kuan Yew School of Public Policy, British Prime Minister David Cameron highlighted the use of shell companies to snap up London properties and said he wanted to ensure "that all this money is clean money".

A shell company would not be based in London or Paris where the authorities could find out who owns it, but it would be set up in an offshore financial centre - a tax haven. Apart from Panama, the Cayman Islands, the British Virgin Islands and Bermuda are among more than a dozen locations that handle business services and investments of non-resident companies.

Mossack Fonseca says it has always complied with international protocols to ensure the companies it incorporates are not used for tax evasion, money laundering, to finance terrorists or for other illicit purposes.

Law firm in spotlight 'secretive, with big clients'
The Straits Times, 5 Apr 2016

PANAMA CITY • Law firm Mossack Fonseca, founded more than 30 years ago, is a discreet outfit with a roster of big-name clients and a quiet reputation for hiding money from the taxman.

That cloak of secrecy was ripped apart when media organisations around the world published information from a massive leak from the firm's supposedly secure data centre. The data also exposed techniques allegedly used by the firm to make money trails murky, including the use of offshore havens such as the British Virgin Islands.

"This is a crime, a felony," said the firm's co-founder Ramon Fonseca, 63, of the leak. "This is an attack on Panama because certain countries don't like it that we are so competitive in attracting companies."

Making of Panama Papers
2.6 terabytes, 11.5 million documents, and 214,000 shell companies: The #PanamaPapers are the largest data leak journalists have ever worked with. Learn more:
Posted by Süddeutsche Zeitung on Tuesday, April 5, 2016

The company is run by the other co-founder, Mr Juergen Mossack, 68, who was born in Germany. His father was a Nazi in World War II, according to the International Consortium of Investigating Journalists (ICIJ), citing US Army records.

The ICIJ said the leak shows that half of the companies the law firm incorporated - more than 113,000 - were in the British Virgin Islands.

When the British Virgin Islands was forced to clamp down on some methods that had previously permitted anonymous ownership of companies, the law firm moved its business to Panama and to the Caribbean island of Anguilla.

In Brazil, its role in a huge bribery case involving state oil company Petrobras is under scrutiny.

Last month, Mr Fonseca, who had been an adviser to Panamanian President Juan Carlos Varela since 2014, declared he was taking a leave of absence.


Breaking news: Iceland’s prime minister resigned under pressure after the leaked “Panama papers” tied him to a hidden offshore company.
Posted by The New York Times on Tuesday, April 5, 2016

Panama Papers leak: Singapore carries out checks
Republic among countries across the globe investigating offshore company documents
The Straits Times, 6 Apr 2016

Singapore last night joined several countries which have launched probes into the leaked documents from a Panamanian law firm to uncover any wrongdoing using offshore company structures.

The relevant agencies are reviewing the leaked information and conducting checks. "If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate to take firm action," the Ministry of Finance and the Monetary Authority of Singapore said in a joint statement.

The "Panama Papers" have cast light on the financial arrangements of high-profile politicians and public figures and the companies and financial institutions they use for such activities.

Among those named in the documents are friends of Russian President Vladimir Putin and relatives of the leaders of China, Britain, Iceland and Pakistan, and the President of Ukraine.

Leading figures and financial institutions responded to the massive leak of more than 11.5 million documents with denials of any wrongdoing as prosecutors and regulators began a review of the reports from the investigation by the US-based International Consortium of Investigative Journalists (ICIJ) and other media organisations.

Iceland's Prime Minister Sigmundur David Gunnlaugsson became the first casualty of the leak when he resigned yesterday after facing mass protests, according to national broadcaster RUV.

China has moved to limit local access to coverage of the matter, with state media denouncing Western reporting on the leak as biased against non-Western leaders.

France, Australia, New Zealand, Austria, Sweden and the Netherlands are among the nations that have started probes, and some countries, including the United States, said they are looking into the matter.

While the Panama Papers detail complex financial arrangements benefiting the world's elite, they do not necessarily mean that the schemes were all illegal.

Mossack Fonseca, the Panamanian law firm at the centre of the leaks, has set up more than 240,000 offshore companies for clients around the globe and denies any wrongdoing. It calls itself the victim of a campaign against privacy and claims media reports misrepresent the nature of its business.

In a statement yesterday, the firm said it has never been charged with or formally investigated for criminal wrongdoing in its nearly 40 years of operation. "We do not advise clients on how to operate their businesses. We don't link ourselves in any way to companies we help incorporate," the firm said.

A North Korean front company used to help fund the country's nuclear weapons programme, DCB Finance, was among the firm's clients, said Agence France-Presse.

The Hong Kong government said in a statement that its Inland Revenue Department has taken note of the documents and will take "necessary actions" based on any information it gets.

Credit Suisse and HSBC, two of the world's largest wealth managers, yesterday dismissed suggestions that they were actively using offshore structures to help clients cheat on their taxes.

Both were named among the banks that helped set up complex structures that make it hard for tax collectors and investigators to track the flow of money from one place to another, according to the ICIJ.

Both banks have in recent years paid large fines to the US authorities over their wealth management or banking operations.


"It turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes," Bernie Sanders said on the Senate floor in 2011.
Posted by CNN on Tuesday, April 5, 2016

Singapore Government agencies reviewing information on leaked papers
By Chong Koh Ping, The Straits Times, 6 Apr 2016

Government agencies are reviewing information being reported in connection with the leaked tax documents from a law firm in Panama, said the Ministry of Finance (MOF) and the Monetary Authority of Singapore (MAS) last night.

The agencies are also doing the "necessary checks" in connection with the "so-called Panama Papers", said spokesmen for the MOF and MAS in an e-mail reply to The Straits Times. "If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate to take firm action," they said.

#PanamaPapers leak: "If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate...
Posted by The Straits Times on Tuesday, April 5, 2016

About 72 current and former world leaders were named in a report on Sunday by a global journalists body after a year-long study of documents leaked from law firm Mossack Fonseca, which handled their offshore deals.

German daily Suddeutsche Zeitung had obtained the data from an anonymous source and shared it with the International Consortium of Investigative Journalists, which reviewed it with some 370 reporters from over 70 nations.

Dubbed the "Panama Papers", the documents have showed possible wrongdoings by high-profile figures using offshore firms or bank accounts for purposes such as money laundering and tax evasion.

"Singapore takes a serious view on tax evasion and will not tolerate its business and financial centre being used to facilitate tax-related crimes," said the MOF and MAS spokesmen.

"We have put in place a strong legal, tax and regulatory framework, coupled with a rigorous supervisory regime, to tackle cross-border tax evasion and avoidance."

The Global Forum on Transparency and Exchange of Information for Tax Purposes, an international body that assesses jurisdictions' implementation of the international standards on tax transparency, has said that Singapore's exchange of information regime is "largely compliant" with the international standard.

This is similar to its assessment of jurisdictions such as the US and Britain, said the spokesmen.

Law firm 'hacked by overseas servers'
The Straits Times, 7 Apr 2016

PANAMA CITY • One of the founders of the law firm at the centre of the explosive "Panama Papers" revelations on offshore holdings has told Agence France-Presse his company was hacked by servers abroad.

Mr Ramon Fonseca said the firm, Mossack Fonseca, had lodged a criminal complaint with Panamanian prosecutors on Monday over the breach.

He added that in all the reporting so far, "nobody is talking of the hack, and that is the only crime that has been committed".

In a telephone message, Mr Fonseca said: "We have lodged a complaint. We have a technical report that we were hacked by servers abroad."

He did not specify from which country the hack was carried out.

Mr Fonseca also rued the fact that reporting on the 11.5 million documents taken from Mossack Fonseca's computer system focused on the high-profile clients who had used the law firm to set up offshore companies to hold their wealth. "The world is already accepting that privacy is not a human right," he said.

The hack has badly shaken Panama's financial services sector, which relied on discretion to do its business.

With high-profile politicians, sports stars, celebrities and a few criminals revealed to have used Mossack Fonseca to set up offshore entities, scrutiny on the small Central American nation has suddenly ramped up.

But the law firm and the government have stressed that offshore companies are not, in themselves, illegal, and that Mossack Fonseca was not responsible for what its clients used them for.

The government, which has recently seen through reforms to get the country taken off an international list of states seen as money-laundering hubs, is also mounting a fierce defence of the financial sector.


Hong Kong plays key role in Chinese money flow

The Straits Times, 8 Apr 2016

HONG KONG • The Panama Papers have put the spotlight on Hong Kong as a hub for setting up offshore firms, with much of the money flowing through the city coming from mainland China.

Revelations yesterday that more than 16,300 of Panamanian law firm Mossack Fonseca's active shell companies were incorporated through its Hong Kong and China offices - 29 per cent of the worldwide total - show the lengths to which wealthy Chinese will go to safeguard their money and flout domestic currency controls.

Hong Kong is a key cog in the process due to its proximity and financial freedoms.

"Chinese are moving the money offshore because the economy is slowing," said Mr Andrew Collier, managing director of Hong Kong- based Orient Capital Research.

"The property market in many parts of the country is collapsing... and there's concern about the anti-corruption campaign and the impact that may have on the safety of capital in China."

Analysts say that one way the Chinese can generate income outside the mainland is to falsify trade and service invoicing.

As well, by underpricing goods exported through Hong Kong or overpricing those they import through the city, companies can generate extra cash to be siphoned off into offshore accounts set up in the city.

Chinese companies can also apply for foreign exchange at domestic banks for purchases but overstate the amount they need, said Mr Collier. The extra cash can then be moved into an offshore account.

"It is very hard for a bank to work out which invoices are correct and which are not," said Mr Collier.

The amount of capital moved out of China is limited to US$50,000 (S$68,000) per person a year, but funnelling more into secretive offshore accounts is made easy through Hong Kong, said shareholder activist David Webb.

Earning a commission for taking money across the border from the mainland to Hong Kong, "money mules" strap bundles of notes to their bodies to try to duck customs, or hide money in luggage. Currency exchange shops in Hong Kong also facilitate transferring money from wealthy Chinese overseas.

Cash and cheques moved out of China are often sunk into Hong Kong property, forcing up prices in recent years.

In another money-moving method, expensive credit card purchases such as jewellery and cameras are sometimes refunded in cash immediately at shops, which earn a commission in the process.


Mossack Fonseca has office in Singapore

By Chong Koh Ping, The Straits Times, 8 Apr 2016

Mossack Fonseca, the Panamanian law firm at the centre of the document leak, has an office in Singapore. It shares office space in the Jit Poh Building at 19 Keppel Road with TPS Corporate Services, a firm that helps clients set up and manage companies in different jusrisdictions, both onshore and offshore.

The chairman of Mossack Fonseca's Singapore office is Mr Peter Tay, who is also the founder and executive chairman of TPS Corporate Services. Mr Tay's online profile also indicates that he has been representing Mossack Fonseca in Singapore, Malaysia and Indonesia since the 1990s.

He did not respond to a Straits Times request for an interview by press time.

The International Consortium of Investigative Journalists (ICIJ), which has access to the leaked files says that globally, Mossack Fonseca has worked with more than 14,000 banks, law firms, company incorporators and other middlemen and intermediaries to set up companies, foundations and trusts for customers.

ICIJ added that Mossack Fonseca worked with intermediaries in more than 100 countries.

The countries that had the most active intermediaries in terms of the number of offshore company incorporations were Hong Kong (37,675), Switzerland (34,301) and the United Kingdom (32,682). Singapore, where the intermediaries are said to have set up 4,050 offshore companies, was ranked No. 9.

Singapore is also one of the 21 jurisdictions named by ICIJ as a tax haven used by Mossack Fonseca.

The Monetary Authority of Singapore and Ministry of Finance said in a joint statement on Tuesday that "the relevant agencies in Singapore are reviewing the information being reported in connection with the so-called Panama Papers and are doing the necessary checks".

"If there is evidence of wrong-doing by any individual or entity in Singapore, we will not hesitate to take firm action," said the spokesmen.

"I know that I should have handled this better." David Cameron speaks out about how he handled the fallout from his links to the #PanamaPapers scandal.
Posted by Sky News on Saturday, April 9, 2016

Why few Americans appear in Panama Papers

The Straits Times, 9 Apr 2016

WASHINGTON • From Russia to China, and Britain to Iceland, the revelations in the "Panama Papers" have tarnished the powerful and the wealthy with the implication that they hide riches offshore.

But one group is not there: prominent Americans. US tycoons and politicians are notably absent in the leaked files of the Panama law offices of Mossack Fonseca, which created thousands of shell companies worldwide to hide the identities of their ultimate owners, some of whom may have been evading taxes or hiding their wealth for a variety of reasons.

While the Panama Papers detail complex financial arrangements benefiting the world's elite, they do not necessarily mean the schemes were all illegal.

There is Hollywood mogul David Geffen, the Asylum Records and Dreamworks SKG co-founder. But there are no Americans comparable to Iceland's prime minister or people closely linked to the Russian president - all in the Panama records - at least in what has been disclosed so far.

"There are a lot of Americans, but they are more like private citizens," said Ms Marina Walker Guevara, deputy director of the International Consortium of Investigative Journalists, which coordinated the investigation and release of the Panama Papers.

However, that hardly means Americans have fully embraced financial transparency, she told Agence France-Presse.

"It doesn't show that the US is outside of the offshore system; the US is actually a big player," she said.

One possible reason for their small presence in the Panama documents is that US citizens hoping to hide funds and activities offshore were not drawn to Spanish-speaking Panama as a haven when there were options like the British Virgin Islands and the Cayman Islands.

"Americans have so many tax havens to choose from," said Mr Nicholas Shaxson, author of Treasure Islands: Tax Havens And The Men Who Stole The World, a 2011 book on secretive centres for hiding money. Indeed, Americans do not have to go abroad to hide funds and activities behind anonymous corporations: they can create them at home.

States such as Delaware and Wyoming allow the creation of such companies, for just a few hundred dollars, that conceal their ultimate financial beneficiary.

And while US banks are normally required to "know their customers", they can bypass that rule and open accounts for shell companies, ensuring total discretion for someone who wants to move money around quietly. The US is third in the Tax Justice Network's ranking of the world's least transparent countries, well above Panama.

The Treasury is moving to plug the loophole. "We're in the last stages of drafting the final rule," a Treasury official said.

There is another possible reason that Americans are not so visible in the Panama Papers.

Spurred by the need to halt blatant tax evasion by Americans using foreign banks, Washington in recent years has cracked down with lawsuits, arrests and tighter laws that have targeted both the banks offering safe haven and those hiding money in them. Swiss banks were hit in particular.

The result, Mr Shaxson said, is that now "there are a few tax havens around the world that are very frightened of American clients, because they know that the US can hit them".


Panama Papers: Regulators studying Singapore-linked data

By Yasmine Yahya, Assistant Business Editor and Lee Xin En, The Straits Times, 11 May 2016

Regulators here said yesterday that they are looking into the latest leaks to come out of the Panama Papers, and will take action if any Singaporean named in the cache is found guilty of wrongdoing.

The joint statement from the Ministry of Finance (MOF) and Monetary Authority of Singapore (MAS) came after the International Consortium of Investigative Journalists (ICIJ) unveiled data on some 200,000 offshore entities set up by wealthy individuals around the world.

The ICIJ put up the data onto a searchable online database early yesterday morning. The data, which comes from nearly 40 years of archives of Mossack Fonseca, a Panamanian law firm that specialises in creating and running offshore entities, includes records on thousands of Singapore-linked entities.

"We are reviewing the batch of information that was released this morning on the persons and entities identified in the Panama Papers," the MOF and MAS said. "If there is evidence of wrongdoing by any individual or entity in Singapore, we will not hesitate to take firm supervisory and enforcement action."

The Panama Papers have been making headlines globally as the hidden riches of top politicians in countries such as Iceland and the Ukraine came to light.

However, the ICIJ itself made it clear that there are legitimate uses for offshore companies and trusts.

"We do not intend to suggest or imply that any persons, companies or other entities included in the... database have broken the law or otherwise acted improperly."

The Singapore-linked names in the Panama Papers include OCBC Trustee Limited, a subsidiary of Bank of Singapore.

OCBC Bank's head of corporate communications, Ms Koh Ching Ching, stressed that Bank of Singapore "exercises stringent screening controls to ensure compliance with both internal and regulatory requirements, including anti-money laundering and tax evasion laws" before taking on clients.

The leaks also name DBS Bank, whose spokesman said: "With regard to offshore or trust structures, the law obliges us to take steps to identify ultimate beneficial owners and we do not support the use of concealment techniques."

Another name thrown up by the fresh leaks is that of Boustead chief executive Wong Fong Fui.

Boustead's vice-president of corporate marketing and investor relations, Mr Keith Chu, said Mr Wong was the director of two offshore companies that the firm set up years ago. "Both companies are dormant and were formed to hold foreign investments for legitimate business and tax planning purposes, as advised by reputable professional firms."

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