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By Shaikhul Islam Imran

Over the decades, the super wealthy persons around the world hide their money in different tax havens or offshore financial centre by setting up shell and offshore companies. They use it as an instrument of tax evasion. The International Consortium of Investigative Journalists (ICIJ) reveals the documents of this underworld money describing as “panama papers”.

Panama Papers – What do we know ?

ICIJ,  along with the German news paper Süddeutsche Zeitung, has revealed a massive amount of documents from the Panamanian law firm Mossack Fonaseca rooting of nearly 40 years from 1977 to December 2015. The papers show that how wealthy individuals hide their money from public by setting up offshore business and shell companies and use it as an effective instrument of tax evasion. The documents identified how a global industry of law firm and big banks sell financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars about 200 countries and territories. About 240,000 offshore companies, belonging to the super wealthy persons around the world, in 21 tax heaven or offshore financial centre were operated by the consultation and direction of Mossack Fonseca law firm along with the assistance of some globally  operated banks.  The divulged documents are one of the biggest- ever larger than US diplomatic cables released by Wiki Leaks in 2010, and the secret intelligence documents given to journalists by Edward Snowden in 2013.  There are 11.5 million documents equal to 2.6 terabytes of information drawn from Mossack Fonseca’s internal database.

Tax Haven or Offshore Financial Center

An offshore financial center, sometimes known as a tax haven, is a small, low tax jurisdiction specializing in providing corporate and commercial services to non- resident offshore companies, and for the investment of offshore funds, which has mainly some features as:

  1. Primarily provides services or business to people who are not its residents.
  2. Requires little or no disclosure of information before doing business.
  3. Offers low taxes.
  4. Offshore centers benefit from a low burden of regulation.

Customers in such a jurisdiction may require offshore accounts for many reasons, as to hide wealth for safety reasons and to get better opportunities in terms lower tax rate. However, “the most obvious use of offshore financial centers is to avoid taxes” remarked The Economist. The documents of panama papers have marked some the delicious tax heavens around the world, as follows:

  1. British Virgin Island: This has the largest number of offshore companies. The documents show that more than 240,000 companies for which the firm acted as registered agent among them the British Virgin Island held more than 100,000 companies.
  1. Panama: panama had a significant international maritime centre, although it lost significance in the early 1990s. Now, Panama is the second only to the British Virgin Islands.
  1. Bahamas: The Bahamas used to be the dominant force in the offshore financial world having considerable number of registered vessels, but fell from the 1970s, after independence.

Several other areas have been exposed by the papers as tax haven, such as Seychelles, Samoa and Niue and so on. Hong Kong contained the most of the affiliated banks, law firms and middlemen.

Mossack Fonseca- The Firm, Inside the Scenario

Jürgen Mossack was born in Germany and raised and educated in Panama because of his father’s migration to panama after the 2nd world war, when mossack was 13 years. In 1975, mossack went to London for practice as a layer, two years later, he returned to panama in 1977 and formed his own law firm. Mossack was joined by Panamanian novelist/lawyer Ramon Fonseca in 1986, in that time the law firm became ‘Mossack Fonseca’ and later, added a third director, Swiss lawyer Christoph Zollinger. It specializes in commercial law, trust services, investor advisory, and international business structures. It also offers intellectual property protection and maritime law services. Law firms generally play a central role in offshore financial operations and can include creating “complex shell company structures” that allow the firm’s clients “to operate behind an often impenetrable wall of secrecy”.

The "Panama Papers" (04.04.2016)

Mossack fonseca operates 600 employees with more than 40 regional offices around the world as china, Switzerland, Latin America, United States and Europe. The enormous leaked documents reveal a new view of mossack fonseca that purport to show Mossack Fonseca’s dealings with world leaders, company officers’ internal discussions about court cases, and communication about sheltering money obtained through crimes. Mossack fonseca affiliated with many global banks who did not reveal the identities of offshore accountants through anonymous account names. The Swiss banking giant USB, The British banking giant HSBC along with others bank included Société Générale, the Royal Bank of Canada, Commerzbank and Credit Suisse had embraced with Mossack Fonseca in a mutually profitable relationship.

How the Documents got divulged

The documents were primarily got the German newspaper Süddeutsche Zeitung by an anonymous whistleblower using the pseudonym “john doe”, tracing the documents transaction as far back as 1970s. The detail of whistleblower has not been published because of safety reasons, as “john doe” said that his life may fall under threat because of the powerful leaders’ connection in this corruption. The German news paper, then, enlisted the help of the International Consortium of Investigative Journalists (ICIJ) because of the massive scale of papers, which (ICIJ) distributed the documents for investigation and analysis to some 400 journalists at 107 media organizations in 76 countries. The first news reports based on the papers, and 149 of the documents themselves, were published on April 3, 2016. The ICIJ has announced that they would reveal more detailed information about the enlisted companies next.

Legal Basis of Offshore Financing

Here, the interesting fact is that offshore accounts are not illegal, because every offshore financial centre or tax haven regulates taxation law by its own legal provisions and taxation law, generally, varies region to region.  People operate offshore financial accounts for getting extra facilities as to lower tax rate, hide wealth from suspected persons and so on. But the problem arises when those accounts are used as an instrument of hiding money for evading tax, as a save home of highly corrupted, stolen and black money also. The panama papers show that Mossack Fonseca law firm helps lots of wealthy persons hiding money through anonymous accounts; mostly used the names from Harry Potter series.  Sources of income cannot be found for the offshore account holders, in most of the cases. Though having legality, such businesses are often used for illegal purposes and this is the dark side of offshore financial system.

Profiling the Customers of Mossack Fonseca

Panama papers expose the connection of politicians; Head of the state, their associates, relatives, and ministers, elected officials, lots businessmen, sports stars and entertainment personalities to offshore finance from about 200 countries and regions who operated their activities in 21 tax heavens around the world. The international consortium of investigative journalists (ICIJ) has not yet revealed the total lists of the Mossfon customers. ICIJ would publish its full details next month. Profiles that were exposed by ICIJ are given below briefly.

Heads of State

Several present and former heads of the different states have taken Mossack fonseca’s assistance for hiding their massive empire of wealth. Among the present heads, the Argentine president Mauricio Macri Macri ran for president of Argentina in the 2015 presidential elections. The Ukrainian president Petro Poroshenko held some high officials of government and was elected president on 25 May 2014. Petro is one of the Forbes enlisted billionaires amounting of $1 billion wealth.

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The next US president candidate Hillary Clinton and her husband, Bill Clinton, former US president, have been exposed to be connected with panama papers, according to New York Times. The report shows that they multiple connections with people named in the papers — including staffers and major donors, McClatchy, Gabrielle Fialkoff, who served as Clinton’s finance director during her first campaign for the Senate in New York, according to a report published online at mcclatchydc.com. Another name from the papers is billionaire Frank Giustra, a Canadian mining magnate and longtime crony of Bill Clinton who has donated $100 million to the Clinton Foundation.

Salman Bin abdulaziz al Saud, the king of Saudi Arabia, was crowned as the new King of Saudi Arabia on 23 January 2015. Khalifa Bin Zayed Bin Sultan Al Nahyan, born in 1948, is the president of United Arab Emirates. The Al Nahyan family is believed to have a fortune of $150 billion collectively as a family. Hamad Bin Al Thani, former amir of Qatar, Ahamed Al Mirghani, former president of Sudan, also connected to this offshore finance, according to the documents.

Heads of Government

Sigmundur Davíð Gunnlaugsson, Prime Minister of Iceland who resigned on April 7, 2016 because of his connection with panama papers. David Cameron, present prime minister of Britain, holds offshore business from his father founded business. Among the former heads, Bidzina Ivanishvili, former Prime Minister of Georgia, Ayad Allawi, former Acting Prime Minister of Iraq, Silvio Berlusconi, former Prime Minister of Italy, Benazir Bhutto, former Prime Minister of Pakistan and so on.

Connection of Power Players

The Süddeutsche Zeitung, which made the papers public, has described the connections of various individuals listed in the papers to Russian president Vladimir Putin, though Vladimir Putin does not appear directly in any of the records but the names of many of his associates do. Relatives of highly placed Chinese including seven senior leaders and former senior leaders of Politburo of the Communist Party of China have been named, including former Premier Li Peng’s daughter Li Xiaolin. Deng Jiagui, the brother-in-law of current General Secretary Xi Jinping also connected. Chinese social media have been forced to remove all the documents of panama papers.

Among the Indians, Jehangir Soli Sorabjee, son of former Attorney General Soli Sorabjee, Rajendra Patil, son-in-law of Karnataka minister Shamanuru Shivashankarappa are listed  by ICIJ. There are 37000 papers of Indians have been found in panama papers . Maryam Nawaz, Hasan Nawaz Sharif and Hussain Nawaz Sharif, children of Prime Minister Nawaz Sharif, Hassan Bhutto, nephew of Benazir Bhutto are alleged among Pakistanis. Some 600 Israeli companies and 850 Israeli shareholders are listed. Among the Israelis, found in the leaked documents are: top attorney Dov Weissglass, who was the bureau chief of deceased prime minister Ariel Sharon. Idan Ofer, a member of one of Israel’s wealthiest families, according to Haaretz and so on.

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Many senior EU figures have been implicated in the Panama Papers scandal. Among the French, Patrick Balkany, Member of the National Assembly and Mayor of Levallois-Perret, Dominique Strauss-Kahn, former Managing Director of the International Monetary Fund and former Minister of Finance and so on. Among the UK alleged, Pamela Sharples, Member of the House of Lords, Michael Ashcroft, retired Member of the House of Lords and others. Wealthy persons from Sweden, Venezuela, Ruanda, Nigeria, Poland, Peru and panama, Brazil, Chile, Argentina, Hungary, Iceland, Greece, Italy, North Korea, Spain, Canada, Egypt and Syria have been alleged in panama papers.

The documents also reveal lots of entertainment personalities among them Amitabh Bachchan, Indian actor, Aishwarya Rai Bachchan, Indian actress, former Miss World and the daughter in law of Amitabh Bachchan. Stanley Kubrick, American award-winning filmmaker and so on. Among the sports personalities, Gianni Infantino, Swiss-Italian President of FIFA, Juan Pedro Damiani, Uruguayan member of the FIFA Ethics Committee, Lionel Messi with his father and several other also.

Bangladeshi Involvement in Panama Papers

Some wealthy Bangladeshi politicians and industrialists have been found connected with offshore financial activities. Two conglomerates and thirty-two Bangladeshi shareholders are listed in the exposed panama papers scandal. Among them, Kazi Zafarullah, born in 1949, is an industrialist and politician. He is one the members of presidium of the ruling Bangladesh Awami League, its central working committee and a former MP of Faridpur. In 2008, he was arrested and bailed on three charges, including extortion. In 2013, it was reported that Zafarullah and his wife and other family members had created a network of offshore companies in the British Virgin Islands from 2006 to 2008. Nilifar zafar ullah, wife of Kazi Zafrullah, is a Bangladeshi politician and a member of parliament from Bangladesh Awami League. She is also alleged with panama papers scandal.

Samson H. Choudhury was one of the richest entrepreneurs in our country and He was a Chairman of Astras Ltd. Square (Bangladesh) and Mutual Trust Bank board of Directors. Mr. Chowdhury was recognized as a Global Business Leader in the country. He had been awarded with various national and international recognitions from various business associations. He was considered as a Commercially Important Person (CIP) in Bangladesh. Panama papers have revealed his connection with offshore finance.

Muhammed Aziz Khan (born 1955) is a Bangladeshi businessman, founder and chairman of the Summit Group, one of the largest conglomerates in Bangladesh. Mr. Khan, his wife Anjuman Aziz Khan, and various family members have been named in connection with the Panama Papers. Mohiuddin Monem has also been exposed to be connected with panama papers.

Serious political crisis has been brought after the exposition of panama papers scandal. Several countries have announced to bring under trial that has connected with illegal transactions. Bangladesh anti corruption commission has also declared to trial the tax evaders, also. We have to ensure the money transactions must be made fairly, otherwise this would be a catastrophe for ours, especially when we are an underdeveloped nation.

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Shaikhul Islam Imran is a law student at University of Dhaka; he writes about Law, Human Rights and Geopolitics.

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