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Huge leak reveals elite's tax havens

BBC News BBC News 4/04/2016 By Richard Bilton
Panama Papers © BBC Panama Papers

A huge leak of confidential documents has revealed how the rich and powerful use tax havens to hide their wealth.

Eleven million documents were leaked from one of the world's most secretive companies, Panamanian law firm Mossack Fonseca.

They show how Mossack Fonseca has helped clients launder money, dodge sanctions and avoid tax.

The company says it has operated beyond reproach for 40 years and has never been charged with criminal wrong-doing.

Q&A: All you need to know about the leaked documents

Panama Papers reaction - latest

French President Francois Hollande hailed the "good revelations" which would "increase tax revenues from those who commit fraud".

The documents show 12 current or former heads of state and at least 60 people linked to current or former world leaders in the data.

They include the Icelandic Prime Minister, Sigmundur David Gunnlaugson, who had an undeclared interest linked to his wife's wealth. He has said he will not resign.

The files also reveal a suspected billion-dollar money laundering ring involving close associates of Russian President Vladimir Putin.

Gerard Ryle, director of the International Consortium of Investigative Journalists (ICIJ), said the documents covered day-to-day business at Mossack Fonseca over the past 40 years.

"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," he added.

Panama Papers - tax havens of the rich and powerful exposed

Eleven million documents held by the Panama-based law firm Mossack Fonseca have been passed to German newspaper Süddeutsche Zeitung, which then shared them with the International Consortium of Investigative Journalists. BBC Panorama and UK newspaper the Guardian are among 109 media organisations in 76 countries which have been analysing the documents. The BBC does not know the identity of the source

They show how the company has helped clients launder money, dodge sanctions and evade tax

Mossack Fonseca says it has operated beyond reproach for 40 years and never been accused or charged with criminal wrong-doing

Tricks of the trade: How assets are hidden and taxes evaded

Panama Papers: Full coverage; follow reaction on Twitter using #PanamaPapers; in the BBC News app, follow the tag "Panama Papers"

Watch Panorama at 19:30 on BBC One on Monday, 4 April, or catch up later on the BBC iPlayer (UK viewers only)

The documents also shed light on how Mossack Fonseca offered financial services designed to help business clients hide their wealth.

One wealthy client, US millionaire and life coach Marianna Olszewski, was offered fake ownership records to hide money from the authorities. This is in direct breach of international regulations designed to stop money-laundering and tax evasion.

An email from a Mossack executive to Ms Olszewski in January 2009 explains how she could deceive the bank: "We may use a natural person who will act as the beneficial owner… and therefore his name will be disclosed to the bank. Since this is a very sensitive matter, fees are quite high."

Ms Olszewski did not respond to the BBC's questions.

In a statement, Mossack Fonseca said: "Your allegations that we provide structures supposedly designed to hide the identity of the real owners, are completely unsupported and false.

"We do not provide beneficiary services to deceive banks. It is difficult, not to say impossible, not to provide banks with the identity of final beneficiaries and the origin of funds."

The data also contain secret offshore companies linked to the families and associates of Egypt's former President, Hosni Mubarak, former Libyan leader Muammar Gaddafi and Syria's President Bashar al-Assad.

Russian connection

Also revealed is a suspected billion-dollar money-laundering ring that was run by a Russian bank and involved close associates of President Putin.

The operation was run by Bank Rossiya, which is subject to US and EU sanctions following Russia's annexation of Crimea.

The documents reveal for the first time how the bank operates.

Money has been channelled through offshore companies, two of which were officially owned by one of the Russian president's closest friends.

Concert cellist Sergei Roldugin has known Vladimir Putin since they were teenagers and is godfather to the president's daughter Maria.

On paper, Mr Roldugin has personally made hundreds of millions of dollars in profits from suspicious deals.

But documents from Mr Roldugin's companies state that: "The company is a corporate screen established principally to protect the identity and confidentiality of the ultimate beneficial owner of the company."

The Kremlin spokesman said it was clear the main target of the reports was Mr Putin, as well as Russia's political stability ahead of parliamentary elections.

Dmitry Peskov dismissed the investigation as insinuation and speculation, and suggested many of the team of journalists behind it were actually former US state department and CIA officials.

Read more: Putin associates linked to 'money laundering'

Iceland connection

Mossack Fonseca data also show how Icelandic Prime Minister Sigmundur David Gunnlaugsson had an undeclared interest in his country's failed banks.

Leaked documents show that Mr Gunnlaugsson and his wife bought offshore company Wintris in 2007.

He did not declare an interest in the company when entering parliament in 2009. He sold his 50% of Wintris to his wife for $1 (70p), eight months later.

The offshore company was used to invest millions of dollars of inherited money, according to a document signed by Mr Gunnlaugsson's wife, Anna Sigurlaug Palsdottir, in 2015.

Mr Gunnlaugsson is facing calls for his resignation, but said on Monday that this was not something he was considering.

He apologised for his poor performance in an earlier interview, when he walked out after a question about Wintris.

The prime minister stressed that his wife had always paid taxes in Iceland.

He says he has not broken any rules and his wife did not benefit financially from his decisions.

Read more: Iceland PM's investments questioned

Mossack Fonseca says offshore companies are available worldwide and are used for a variety of legitimate purposes.

"If we detect suspicious activity or misconduct, we are quick to report it to the authorities," it said. "Similarly, when authorities approach us with evidence of possible misconduct, we always co-operate fully with them."

Jennie Granger, a spokeswoman for the UK's tax authority, HM Revenue and Customs (HMRC), said the organisation had received "a great deal of information on offshore companies, including in Panama, from a wide range of sources, which is currently the subject of intensive investigation".

She said the ICIJ had been asked to share all its data with HMRC.

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