Panama Papers Shed Light On Global Business Of Tax Avoidance A huge trove of documents leaked from a large Panamanian law firm is shedding light on the global business of tax avoidance.

Panama Papers Shed Light On Global Business Of Tax Avoidance

Panama Papers Shed Light On Global Business Of Tax Avoidance

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A huge trove of documents leaked from a large Panamanian law firm is shedding light on the global business of tax avoidance. The papers reveal that large numbers of world leaders, athletes and movie stars hired the firm to set up shell corporations and offshore accounts with the aim of hiding their money. Regulators around the world say they will use the document dump to pursue illegal activity.


A global investigation is shining new light on the shadowy business of offshore tax shelters. Over the weekend, the International Consortium of Investigative Journalists released some 11 million documents.

They were leaked from a law firm in Panama that specializes in moving money around for the wealthy. Its clients include movie stars, famous athletes, even heads of state. NPR's Jim Zarroli has more.

JIM ZARROLI, BYLINE: For decades, the law firm of Mossack Fonseca has been a major player in the shadowy world of offshore finance. It helped set up complex networks of dummy corporations and income shelters in tax havens such as the Cayman Islands for people who want to cover their tracks financially. Jack Blum is an adviser to the Tax Justice Network.

JACK BLUM: Their job is concealing, hiding and helping people who want to hide their money and hide their transactions and hide the nature of the transactions.

ZARROLI: The two terabytes of leaked data released this weekend punch a big hole in the secrecy surrounding the firm's operations. They also suggest the firm was no lone actor. It allegedly set up the accounts with the help of major global banks such as HSBC, Deutsche Bank and UBS.

Its clients included Bollywood actors, famous soccer stars and lots of top government officials. The documents contain links to Russian President Vladimir Putin as well as leaders of Argentina, Azerbaijan, Ukraine and Sudan. Porter McConnell directs the Financial Transparency Coalition.

PORTER MCCONNELL: This is just one firm, and already 12 heads of state are implicated. These leaks are showing just how toxic financial secrecy has become.

ZARROLI: Among those implicated is the prime minister of Iceland, Sigmundur David Gunnlaugsson, who allegedly set up an offshore company to hide his family's money. Gunnlaugsson was elected to office after promising to take on the banks.


SIGMUNDUR DAVID GUNNLAUGSSON: So when somebody is cheating the rest of society, it is taken very seriously in Iceland.

ZARROLI: That was him speaking in an excruciating interview with Swedish Television this weekend. Gunnlaugsson was apparently unaware of the document leak, and wasn't ready for the question that followed.


UNIDENTIFIED MAN: What about yourself, Mr. Prime Minister? Have you or did you have any connections yourself to an offshore company?

GUNNLAUGSSON: Myself? Well, the Icelandic companies -

ZARROLI: He stumbled around a bit more before things got really uncomfortable.


GUNNLAUGSSON: It's an unusual question (laughter) for an Icelandic politician to get. It's almost like being accused of something.

ZARROLI: Gunnlaugsson soon walked out on the interview. And today, he was facing calls to resign. The documents have been released at a time when much attention is being focused on tax avoidance schemes.

Under U.S. pressure, Switzerland, for one, has been persuaded to change its bank secrecy policies. Jack Blum says this has made it a lot harder for many people to hide their money. But this weekend's document dump shows that the very wealthy can still find ways to avoid taxes.

BLUM: The more sophisticated people have networks of trusts and offshore corporations in multiple jurisdictions. And what this information will show is how the really sophisticated stuff operates.

ZARROLI: Today, regulators in a number of countries - including India, France, Sweden and the United States - said they would look into the documents released.

As for Mossack Fonseca, it confirmed that the documents were authentic and said they had been obtained illegally by hackers. It also said most of the famous people named in the documents weren't really its clients and said they had been brought to the firm by intermediaries, and it denied any wrongdoing.

Most of the banks named didn't comment, but HSBC said many of the alleged activities took place decades ago and the bank has changed the way it operates.

Jim Zarroli, NPR News, New York.

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