A Panamanian bombshell

Izabella Kaminska

| Apr 03 22:02

http://ftalphaville.ft.com/2016/04/03/2158156/a-panamanian-bombshell/

 

A seemingly massive leak originating from one of the world’s most secretive law firms, Panamian-based Mossack Fonseca, has just been revealed by journalists working under the auspices of The International Consortium of Investigative Journalists. The 2.6 terabytes of data reveals how the firm has helped clients launder money, dodge sanctions and evade tax, according to media sources privy to the data.
The named parties include heads of state, connections to Vladimir Putin and even sports superstars.

One thing that strikes us immediately is the apparent use of bearer shares in most of these shady structures. From the ICIJ’s data pages:

As the ICIJ explains:

…companies held by bearer shares often don’t need to register an owner’s name – ownership is determined by whoever holds the share certificates, providing a deep level of secrecy. When the British Virgin Islands cracked down on bearer shares in 2005, Mossack Fonseca moved bearer share clients to Panama

Also worth noting, how the number of active companies managed by Mossack Fonseca peaked in 2009:

And these were the sorts of banks requesting the offshore structures:

The most cited locations of companies structured by Mossack Fonseca: British Virgin Islands, Panama, Bahamas, Seychelles, whilst Hong Kong, United Kingdom and Switzerland head the list for the Top 10 countries where intermediaries working with the law firm were based in.
More revelations are no doubt going to come in the days, weeks and months ahead — if only because 2.6 terabytes is a helluva lot of data to analyse.
But we shouldn’t forget that this is as much the story of the unbacked, unregulated and non-guaranteed eurodollar “store of value” system — which has been struggling to stay afloat ever since the 2008 crisis struck — as much as it is about tax havens per se.

Related links:
All about the eurodollars – FT Alphaville