How did they hide their billions – Things you need to know about the biggest leak in the world of billionaires

By Tarush Bhalla|5th Apr 2016
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A leak of documents from a Panama-based law firm proved last Sunday to be a trying day indeed for some government heads and billionaire celebrities, FIFA officials, fraudsters and drug smugglers. The leak by an international coalition of media organisations, revealed the hidden offshore accounts of several world leaders and celebrities, including 500 Indians.

Panama-Paper-Leaks
Panama-Paper-Leaks

Named ‘The Panama Papers,’ it implies how:

  • Global industry, led by a network of major banks, asset management companies and legal firms, secretly manages the estates of the world’s billionaires
  • Government heads setting up ‘shell’ companies (non-trading company kept dormant for a future capacity and use), adversely affecting the governance of offshore countries

Below is everything you need to know about the investigation:

1. How did it start?

German national daily Süddeutsche Zeitung (SZ) was contacted a year ago by an anonymous source, with encrypted internal documents from Mossack Fonseca, a Panamanian law firm that sells anonymous offshore companies to the world’s richest.

While having dozens of offices, the companies sells its shell (anonymous and fake) companies to whoever wants to buy them in cities like Zurich, London, and Hong Kong, among others. The law firm is also tainted for providing fake directors for an extra fee, while also withholding the true identity of the offshore company’s owner.   

The German publication decided to analyse the data in cooperation with the International Consortium of Investigative Journalists (ICIJ), with which they had coordinated other researches, including Offshore Leaks, Lux Leaks, and Swiss Leaks.

The source still remains anonymous, with The Panama Papers considered the biggest ever international cooperation of its kind.

Following is a quick fact file about what went into the revelations:

2. Across the world, 29 of Forbes-listed billionaires were named in the scam with 15,579 companies created by the banks in the process.

3. The Panama Papers is a massive leak of 11.5 million tax documents, higher than the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks, Swiss Leaks.

4. The data included e-mails, PDF and photo files, and excerpts of an internal Mossack Fonseca database, comprising 2.6 terabytes of data of four decades, from 1977 to 2016.

To give a perspective, Cablegate and Wikileaks had 1.7 GB of data; Offshore Leaks was 260 GB of data, Luxemburg Leaks had 4 GB of data and Swiss Leaks was 3.3 GB of data alone.

5. Laundering money and evading taxes reveals the links to 72 current or former heads of state in different governments (country leaders from Argentina, Georgia, Iceland, Iraq, Jordon, Qatar, Saudi Arabia, Sudan, Abu Dhabi, Ukraine have been named).

6. The team behind The Panama Papers included the International Consortium of Investigative Journalists (ICIJ) with close to 400 journalists from more than 100 media organisations across 80 countries.

The Süddeutsche Zeitung says the group included teams from The Guardian, as well as the BBC in England, Le Monde in France, and La Nación in Argentina. In Germany, SZ journalists cooperated with their colleagues from two public broadcasters, NDR and WDR. Journalists from the Swiss Sonntagszeitung and the Austrian weekly Falter have also worked on the project, as have their colleagues at ORF, Austria’s national public broadcaster.

7. The India connection

According to Indian Express (which was involved in the investigation, naming it ‘Project Prometheus’), there are 500 Indians on the list, including:

  • Amitabh Bachchan – Bollywood veteran Amitabh Bachchan was appointed director in at least four offshore shipping companies set up in 1993. Although the authorised capital of these companies were said to be between $5,000 -50,000 but according to the Indian Express, they traded in ships worth millions of dollars.
  • Aishwarya Rai Bachchan- Actress Aishwarya Rai and her family members were made directors of Amic Partners Limited, with her status changed to shareholder before the company dissolved in 2008.
  • DLF’s KP Singh – DLF promoter KP Singh in 2010 acquired a company registered in the British Virgin Islands. Additionally, the 10 members of Singh’s family own three offshore entities, valued almost at $10 million.
  • Indiabulls' Sameer Gehlaut: Going by the investigation by Indian Express, Sameer Gehlaut owns UK realty via Bahamas, Jersey. Acquired through family entities in Karnal, Delhi, Bahamas, Jersey and UK the family acquired three top London properties owned by the SG Family trust in 2012.
  • Onkar Kanwar: The chairman of Apollo Group with his family members had an offshore entity, J&S Systems Corporation, in British Virgin Islands in 2010, along with two trusts in 2014.
  • Adnani Enterprise Chairman’s elder brother Vinod Adnani has also been named.

Other prominent Indians include politician Anurag Kejriwal; celebrity lawyer Harish Salve; son of former Attorney General Soli Sorabjee, Jehangir S Sorabjee; well-known industrialist Mohan Lal Lohia; son-in-law of veteran Congressman and Karnataka Horticulture Minister Shamanur Shivashankarappa, Rajendra Patil; Cottage Industries Exposition (CIE) Founder and CEO, Abdul Rashid Mir.

RBI guidelines before 2003 stated that an Indian citizen was not allowed to start an overseas entity. Later, in 2004, RBI launched the Liberalised Remittance Scheme (LRS), under which individuals were allowed to remit funds up to $25,000 a year, but it still never allowed citizens to set up companies abroad.

8. Other countries involved

The Panama Papers also raises a $2-billion trail leading to Russian President Vladmir Putin and his circle of close friends. Money channeled through offshore companies raised question on Putin’s childhood friend Sergei Roldugin, who is the godfather to Putin’s daughter.

According to the Independent, Putin's name doesn’t appear, but his close friends have earned millions from deals that couldn’t really have gone through without his backing. Putin’s childhood friends Arkady and Boris Rotenberg are also on the list.

Other connections to world leaders are former Premiere of the People’s Republic of China (1988-98) Li Peng’s daughter Li Xiaolin; former President of Egypt Hosni Mubarak’s (1981-2011) eldest son Alaa Mubarak; father of UK’s Prime Minister Ian Cameron (who died in 2010); Pakistan’s Prime Minister Nawaz Sharif’s three children Mariam, Hasan and Hussain.

 

Where will this lead to? Share your thoughts in the comments below.

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