![]() Sophia Shaikh Staff Writer Last week, leaked files about Mossack Fonseca, a Panamanian law firm, were anonymously sent to a German newspaper that shared them with the rest of the world. These have been named the Panama Papers and are the biggest leak in history, with eleven million files revealing confidential information from Mossack Fonseca about the economic practices of many world leaders and the wealthy. The law firm offers offshore firms and wealth management, but their services have been misused by many for things such as money laundering and tax evasion. The leak has led to uproar across the world about the morality of those in power, with huge names like Vladmir Putin and David Cameron appearing in their records. How exactly have these been misused? Mossack Fonseca specializes in offshore financial centers. These are also known as tax havens because they are usually located on remote islands, such as the British Virgin Islands, where taxes are low or nonexistent. Additionally, authorities here are usually too weak or turn a blind eye to any shady business. This makes it very easy to keep any questionable stashes of cash kept here a secret from the rest of the world. That is, until a hacker gets hold of your classified files. People may use a tax haven through Mossack Fonseca to avoid taxes on large amounts of money and keep their wealth to themselves or to launder dirty money and erase its source.
Many of the politicians on the list were revealed to be holding shell companies, which are fake businesses only used to manage the money within. To use their store of money on big expenses without raising eyebrows, people can take “loans” from their shell companies. The original source of the money is nearly untraceable. Vladmir Putin’s childhood best friend had a shell company under his name, which was probably utilized by Putin himself. Others on the list included Great Britain’s prime minister David Cameron’s father, Ukraine’s Petro Poroshenko, Iceland’s Sigmundur Davíð Gunnlaugsson, and Syria’s Bashar al-Assad. Many American multimillionaires were on the list as well. Even some well-known celebrities appeared in the leak such as Jackie Chan and Stanley Kubrick. This practice is not necessarily illegal, but it does raise moral concerns. This only furthers the wage gap when the already rich and powerful have ways to avoid taxes, hide their wealth, and pile up their riches even higher. On Sunday, David Cameron was forced to reveal his tax returns amid demanding protests, revealing a gift of £200,000 from his mother with no inheritance tax. Ironically, he has spoken about the necessity of cracking down on these types of set-ups and making things fair. People have attacked other politicians for their secret holdings as well, and Iceland’s Gunnlaugsson ended up giving up his position as Prime Minister amid public outrage when his shell companies were revealed. Putin denied all accusations, claiming the situation was all lies set up by the CIA and a result of “Putinphobia.” Mossack Fonseca itself denied all responsibility for the misuse of its resources. The law firm insists that it complied with all international regulations and was not aware of illegal ongoings. It assured that it dropped any clients revealed to be taking part in illicit activities. As a result of the leak, the U.S. Treasury Department is moving gears to set a new rule in place that would force banks to find the owners behind shell companies, but some critics say the rule will not make much of a difference. Many American agencies, such as the FBI and IRS, now have a surplus of information to go after criminals who were exposed in the leak. Mossack Fonseca has not faced any criminal charges for the situation. Journalists are still looking through the millions of files released, and there is surely only more political turmoil to come. Updates on findings in the Panama Papers are available at https://panamapapers.icij.org/. Hopefully, awareness of the practices of the elite can help bring people together to close loopholes and root out corruption in the world. Comments are closed.
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