Panama is a place that connects Central and South America and is known for its waterways and harbours. A panama hat is a cool hat made of straw. The Panama Papers are not so cool, especially for billionaires around the world, who are scampering to hide their secret stashes from the taxman.
Why?
Mossack Fonseca, a trust firm in Panama (the place), was hacked, and the hackers leaked millions of documents dated all the way back to the 1970s in a German newspaper called Sueddeutsche Zeitung. The documents showed the world how the company’s super-rich clients move their millions around offshore accounts to exploit tax systems around the world. To achieve this Mossack Fonseca set up over 200,000 offshore companies in countries like Niue, Samoa, the Bahamas, and of course Panama. A leaked client list revealed political leaders, celebrities, a top footballer, some criminals, a bunch of Bollywood stars, and Vladimir Putin’s best buddy Sergei Roldugin – even Jackie Chan and Simon Cowell were on the list.
Then, What Happened?
The first axe dropped on Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson who resigned quickly. Slightly south from there UK’s David Cameron was backed into a corner when residents clamoured for him to quit over his alleged involvement with Mossack Fonseca. Cameron initially stonewalled the media, but then claimed that he had sold his shares shortly before he took his seat in parliament in 2010. Offices from South America to Switzerland were raided, documents were seized, and Mossack Fonseca representatives in Brazil were arrested. Eventually the company made a statement in which they assured the world that their operations have ‘always complied with international protocols…’ The company spokesperson claimed that all due diligence was taken, and that they regularly turn clients away, if they come across as suspicious. Of course, not many people believe them.
How Putin Got Involved
Soon after the leaks started emerging, the Kremlin went into a spin, which is not surprising considering the network of super-secret offshore deals of around US$2 billion leading straight to Vladimir Putin. The leaked papers divulged that these deals have made some of Putin’s closest friends fabulously wealthy. Although the controversial president’s name does not appear in any of the documents, it tacitly shows his involvement.
What the Russian President Had to Say About it All
(Not) surprisingly, Putin made a blunder. In a press interview he said that Sueddeutsche Zeitung was owned by the US bank Goldman Sachs, and that the United States will continue to use provocations like this ahead of upcoming Russian elections. Kremlin spokesperson Dmitry Peskov said that the allegations from the leak are actually a plot to attack Putin and destabilise Russia. Peskov claimed that the ‘disinformation’ contained in the documents are the weapons used by the United States against Putin and his cronies. Since the Russian government signed a three year contract with Goldman Sachs to help fix up the country’s international reputation, why would Putin say bad things about the bank to the media? Some would say the president is feeling guilty. After all, attack is best form of defence. Either way… the Kremlin very quickly apologised for Putin’s faux pas, and blamed it on bad information from aides. Is it not always easier to blame the help?