Monday, April 4, 2016 6:07 am
A massive leak of 11.5 million tax documents has exposed the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona forward Lionel Messi.
Also revealed were accounts linked to former Nigerian governor, James Ibori and the son of former Ghanaian leader John Kuffour.
An investigation into the documents by more than 100 media groups, described as one of the largest such probes in history, revealed the hidden offshore dealings in the assets of around 140 political figures.
The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ).
The documents, from around 214,000 offshore entities covering almost 40 years, came from Mossack Fonseca, a Panama-based law firm with offices in more than 35 countries.
The investigations allege close associates of Putin, who is not himself named in the documents, “secretly shuffled as much as $2 billion through banks and shadow companies”.
Twelve current or former heads of state are named in the investigations, including the prime ministers of Iceland and Pakistan, the president of Ukraine and the king of Saudi Arabia, as well as sporting and movie stars including Jackie Chan.
They allege Chinese President Xi Jinping’s family has links to offshore accounts, as did the father of British Premier David Cameron, and claim Iceland’s prime minister secretly owned millions of dollars of bank bonds during the financial crisis.
Xi has led a high-profile anti-graft drive in China, targeting the excessive wealth accumulated by Communist Party cadres.
The papers also cast fresh light on the corruption scandal engulfing football’s world governing body, revealing that FIFA ethics committee member Juan Pedro Damiani had business ties with three men who have been indicted over the probe.
Disgraced UEFA chief Michel Platini allegedly used Mossack Fonseca to administer an offshore company, while Messi and his father apparently own a shell company not discovered in a Spanish investigation into the football star’s tax affairs.
Platini’s communications service said in a statement sent to AFP that “all of his accounts and assets are known to the tax authorities in Switzerland, where he has been a tax resident since 2007”.
– ‘Attack on Panama’ –
“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” said ICIJ director Gerard Ryle.
One of the law firm’s founders, Ramon Fonseca, told AFP the leaks were “a crime, a felony” and “an attack on Panama”.
“Certain countries don’t like it that we are so competitive in attracting companies,” he said.
Panama’s government said it had “zero tolerance” for any shady deals, and vowed to “vigorously cooperate” with any legal investigations.
Though most of the alleged dealings are said by the ICIJ to be legal, they are likely to have a serious political impact on many of those named.
Iceland’s Prime Minister Sigmundur David Gunnlaugsson is expected to face a no-confidence vote this week over allegations he used a secret offshore firm called Wintris Inc. to hide millions of dollars in the British Virgin Islands.
“I have never hidden assets,” Gunnlaugsson told a journalist from the Swedish SVT channel. “It’s a bit like you’re accusing me of something,” he added, visibly irritated, before calling off the interview.
His spokesman insisted he and his wife have scrupulously followed the law.
At least 33 people and companies listed in the documents were blacklisted by the US government for wrongdoing, including dealings with North Korea and Iran, as well as Lebanon’s Islamist group Hezbollah, the ICIJ said.
The leaked data, covering 1977 to the end of last year, provides what the ICIJ described as a “never-before-seen view inside the offshore world”.
The massive leak of documents recalls Wikileaks’ exploits of 2010 — which included the release of 500,000 secret military files on the wars in Afghanistan and Iraq and 250,000 diplomatic cables, and infuriated the US.
– ‘Biggest leak in history’ –
However, in terms of size, “the ‘Panama Papers’ is likely the biggest leak of inside information in history,” according to ICIJ.
“It is equally likely to be one of the most explosive in the nature of its revelations,” the group added.
Names also figuring in the leak included the president of Ukraine, the king of Saudi Arabia and the prime minister of Pakistan, the ICIJ statement said.
More than 500 banks, their subsidiaries and branches have worked with Mossack Fonseca since the 1970s to help clients manage offshore companies.
UBS set up more than 1,100 and HSBC and its affiliates created more than 2,300.
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,” the ICIJ said on its website.
“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley, cited by the consortium.
The leaked documents were reviewed by a team of more than 370 reporters from over 70 countries, according to the ICIJ.
Here are summaries of some of the findings in the leaked documents:
John Addo Kuffour:
John Addo Kufuor is the eldest son of Ghana’s former president, John Agyekum Kufuor, who led the country from 2001 to 2009. A trained accountant, the younger Kufuor has worked in the hotel industry. Throughout 2005, local media in Ghana reported allegations that he gained lucrative government contracts and private sector business deals through paternal connections. An official commission later found no evidence of wrongdoing. In early 2001, shortly after the start of his father’s first presidential term, Kufuor appointed Mossack Fonseca to manage The Excel 2000 Trust. Later that year, it controlled a bank account in Panama worth $75,000. His mother – Theresa Kufuor, then-Ghana’s first lady – was also a beneficiary. In November 2010, an employee in Mossack Fonseca’s compliance office in the British Virgin Islands suggested to colleagues that “due to the apparent prevalence of corruption surrounding Mr. Kufour we would not recommend us taking him on as a client or continuing business with him.” Mossack Fonseca, however, continued to do business with Kufuor. In 2012, Kufuor asked Mossack Fonseca to close the trust. Files also connected Kufuor with BVI companies Fordiant Ltd and Stamford International Investments Group Limited. Both were registered when Kufuor’s father was president of Ghana and became inactive in 2004 and 2007.
James Ibori, governor of Nigeria’s oil-rich Delta State from 1999 to 2007, pleaded guilty in a London court in 2012 to conspiracy to defraud and money laundering offenses. Ibori admitted using his position as governor to corruptly obtain and divert up to $75 million out of Nigeria through a network of offshore companies, although authorities alleged that the total amount he embezzled may have exceeded $250 million. Ibori, who received a 13-year prison sentence, used millions of dollars to support a lavish lifestyle that included six houses in London and a fleet of Range Rovers, Bentleys and Mercedes. Mossack Fonseca was the registered agent of four offshore companies connected to James Ibori, including Julex Foundation, of which Ibori and family members were beneficiaries. Julex was the shareholder of Stanhope Investments, a company incorporated in Niue in 2003. Ibori was also connected to Financial Advisory Group Ltd. and Hunglevest Corporation, although Mossack Fonseca’s files do not specify the exact nature of his connection. In 2008, Mossack Fonseca received a request from the Seychelles government to produce documents as part of a probe by the Crown Prosecution Service, England’s principal prosecuting authority, of Ibori and alleged criminal activities. In 2012, Ibori pleaded guilty in a London court to laundering and fraud charges. During court hearings in the United Kingdom, prosecutors claimed that Ibori opened a Swiss bank account in the name of Stanhope Investments through which millions of dollars were later channeled to ultimately buy a $20 million private jet.
President Vladimir Putin
Billionaire brothers Arkady and Boris Rotenberg had the incredible good fortune of being childhood friends of Russian President Vladimir Putin. As teenagers, they bonded with Putin over Sambo, a Russian martial art, and judo. Arkady Rotenberg has insisted that they don’t get preferential treatment from Putin, but during his tenure as Russian leader the brothers have amassed a multibillion dollar fortune in part through lucrative contracts with state and state-owned companies . In March 2014, they were placed under U.S. sanctions for providing support to, and benefiting from, “Putin’s pet projects” including “approximately $7 billion in contracts for the Sochi Olympic Games.”
Arkady and Boris Rotenberg were owners of at least seven companies registered in the British Virgin Islands, six with the help of Markom Management, a company that stayed in touch with Mossack Fonseca on behalf of the Rotenbergs. Arkady Rotenberg was connected to four of the companies and Boris Rotenberg to three of them . The companies often acted as interlocking shareholders alongside Markom, which was formerly SP Management. The firms were involved in everything from investing in a major pipeline construction company (through Causeway Consulting from Arkady Rotenberg) to buying equipment for the construction of an Italian villa in Tuscany for Arkady’s son Igor Rotenberg (through Highland Ventures Group from Boris Rotenberg). Arkady Rotenberg was also the owner of Honeycomb Holdings Ltd., according to the financial database Orbis . By summer 2015, Markom began to redomicile most of the Rotenbergs’ companies in Cyprus.
Sergei Boldugin (Putin’s friend)
As young men in the late 1970s, Sergey Roldugin and Vladimir Putin became very close, “almost like brothers,” according to Roldugin. Putin went on to join the KGB and is now president of Russia. Roldugin gained fame as a world-class cellist, eventually becoming director of the St. Petersburg State Rimsky-Korsakov Conservatoire and Artistic Director of the St. Petersburg House of Music. Throughout their lives, the two have remained close. Roldugin had a role in introducing Putin to his future wife Lyudmila. He is also the godfather of Putin’s oldest daughter, Mariya.
Sergey Roldugin was an owner of three offshore companies: Sonnette Overseas, International Media Overseas and Raytar Limited. St. Petersburg-based Bank Rossiya, which the U.S government described as Russia’s “personal bank for senior officials,” created the first two. The Rossiya executive in charge of setting up Sonnette described Roldugin as being “assigned” to the company.. In March 2008, Sonnette Overseas and four other offshore-companies gained major influence over Kamaz , Russia’s largest truckmaker, for almost a year. International Media Overseas owned Med Media Network, which in turn controlled 12.5% of Vi, Russia’s largest television advertising buyer, formerly known as Video International. Another Bank Rossiya-created company assigned International Media Overseas the rights to a $200 million loan for $1.
The soccer players whose names appear in the Mossack Fonseca files hail from Brazil, Uruguay, the United Kingdom, Turkey, Serbia, The Netherlands and Sweden, among other countries. Most seemed to have used the law firm’s services to create offshore companies to hold the money they earned selling their image rights to athletic shoe companies and other advertisers.
Lionel Messi and his father, who served as his son’s agent, are slated to stand trial on tax fraud charges starting May 31. Accused of shortchanging the government out of nearly $6.5 million in taxes by shielding his image rights in an offshore network, Messi has paid the back taxes the government said he owed for the years 2007-2009. Messi denies that he deliberately tried to deceive anyone.
Mega Star Enterprises , the offshore company owned by Messi and his father at least as far back as 2013 , is not mentioned in the Spanish government’s 2014 and 2015 indictments against the pair. The leaked records show Messi signed at least one document reflecting his ownership of Mega Star, but that his father, Jorge Messi, took over sole ownership of the company in December 2015. The company remains active in Panama’s company register.