Panama Papers: World leaders in tax evasion pickle

Governments across the world began investigating possible financial wrongdoing by the rich and powerful on Monday following a leak of documents from a Panamanian law firm which allegedly showed how clients avoided tax or laundered money.

The documents detailed schemes involving an array of figures from friends of Russian President Vladimir Putin to relatives of the prime ministers of Britain, Iceland and Pakistan and as well as the president of Ukraine, journalists who received them said.

While the "Panama Papers" detail complex financial arrangements benefiting the world' s elite, they do not necessarily mean the schemes were all illegal.

Iceland

Prime Minister Sigmundur David Gunnlaugsson faces a no confidence vote in parliament amid revelations he and his wife had an investment account in the British Virgin Islands created with the aid of the Panama-based law firm at the centre of a global tax evasion leak. The opposition has called for a vote against the government as parliament begins its session at 3 pm local time, though it' s still unclear whether the vote can be held on Monday. Protests in Reykjavik organised by a Facebook group calling for "Elections Now!" are due to start two hours after the opening of the assembly.

Ukraine
Ukrainian lawmakers said on Monday parliament should investigate allegations that President Petro Poroshenko used an offshore firm to avoid tax, following a global leak of documents from a Panama-based law firm over the weekend. According to the International Consortium of Investigative Journalists, Poroshenko set up an offshore company to move his confectionery business, Roshen, to the British Virgin Islands in August 2014 during a peak in fighting between Ukraine and pro-Russian separatists. Poroshenko has not commented publicly.

Australia, Austria, Brazil, France and Sweden were among countries which said they had begun investigating the allegations, based on more than 11.5 million documents from law firm Mossack Fonseca, located in the tax haven of Panama. Banks as well as individual clients came under the spotlight.

The documents were leaked to the International Consortium of Investigative Journalists (ICIJ) and more than 100 other news organisations. Mossack Fonseca has denied any wrongdoing.

"I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents," ICJC director Gerard Ryle said.

Arms and drugs?
The material covers a period over almost 40 years, from 1977 until last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax evasion.

Britain' s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth $2 billion led to close friends of Putin, including concert cellist Sergei Roldugin. Reuters could not confirm those details.

Russia
The Kremlin said the documents contained "nothing concrete and nothing new". Putin' s spokesman dismissed the reports, saying they aimed to discredit him ahead of upcoming elections.

"This Putinophobia abroad has reached such a point that it is in fact taboo to say something good about Russia, or about any actions by Russia or any Russian achievements. But it' s a must to say bad things, a lot of bad things, and when there' s nothing to say, it must be concocted. This is evident to us."

Britain
A spokesman for British Prime Minister David Cameron said his late father' s reported links to an offshore company were a "private matter". The British government asked for a copy of the leaked data, which could be embarrassing for Cameron, who has spoken out against tax evasion and tax avoidance.

His late father, Ian Cameron, is mentioned in the files, alongside some members of his Conservative Party in the upper house of parliament, former Conservative lawmakers and party donors, British media said.

Jennie Granger, director general of enforcement and compliance at HM Revenue and Customs, said the government had a great deal of information from a wide range of sources.

"We will closely examine this data and will act on it swiftly and appropriately," she said.

Cameron' s spokeswoman declined to comment on whether the leader' s family had money invested in offshore funds set up by his father, saying it was a "private matter".

The oppostion Labour Party' s finance spokesman, John McDonnell, tweeted: "Cameron promised and has failed to end tax secrecy and crack down on ' morally unacceptable' offshore schemes, real action is now needed."

The Australian Tax Office said it was investigating more than 800 wealthy Mossack Fonseca clients and had linked more than 120 of them to an associate offshore service provider located in Hong Kong, which it did not name.

Database ' hack'
The head of Mossack Fonseca, Ramon Fonseca, has denied any wrongdoing but said his firm had suffered a successful but "limited" hack on its database. He described the hack and leak as "an international campaign against privacy".

Fonseca, who was up until March a senior government official in Panama, told Reuters the firm had formed more than 240,000 offshore companies, the "vast majority" used for "legitimate purposes".

Pakistan
The papers also showed the use of offshore companies by Pakistani Prime Minister Nawaz Sharif' s family, including his daughter Mariam and son Hussain. Pakistani Information Minister Pervez Rasheed denied any wrongdoing on their part.

"Every man has the right to do what he wants with his assets, to throw them in the sea, to sell them, or to establish a trust for them. There is no crime in this in Pakistani law or in international law," Rasheed said.

Brazil
The O Estado de Sao Paulo newspaper said politicians from seven parties were named as Mossack Fonseca clients. They included politicians from Brazil' s largest party, the PMDB, which broke away from President Dilma Rousseff' s coalition last week.

No politicians from Rousseff' s Workers' Party were mentioned in the documents, although they included at least 57 people or companies already investigated in Brazil for alleged involvement in corruption at state-run oil firm Petroleo Brasileiro SA .

Fifa
Media reports also said the leaked data pointed to a link between a member of global soccer body Fifa' s ethics committee and a Uruguayan soccer official who was arrested last year as part of a US probe into corruption in the sport.

Fifa' s ethics committee said Juan Pedro Damiani, a member of its judgment chamber, was being investigated over a possible business relationship with fellow Uruguayan Eugenio Figueredo, one of the soccer officials arrested in Zurich last year. Damiani told Reuters in Montevideo he broke off relations with Figueredo when the latter was accused of corruption.

European banks probed
Austria' s financial markets regulator FMA is investigating whether lenders Raiffeisen Bank International and Hypo Landesbank Vorarlberg followed rules against money laundering after they were named in the "Panama Papers". Raiffeisen said it had complied but could not comment on specific cases. Hypo Landesbank Vorarlberg had no immediate comment.

The Norwegian government said Norwegian bank must explain its policy of helping clients set up offshore companies in the Seychelles. "DNB says this should not have happened and that the bank should not have participated," Trade and Industry Minister Monica Maeland said. DNB said it regretted assisting about 40 customers in setting up the firms between 2006 and 2010, and that the practice had ended. Dutch authorities said they would investigate allegations related to the Netherlands.

Panama, is among the world' s most secretive offshore financial centers, and has declined to sign up to global transparency rules which international organisations have been pushing in a bid to fight tax evasion, money-laundering and other criminality.

BIG NAMES UNDER THE SCANNER

Vladimir Putin,
President, Russia
According to The Guardian, the papers show a network of secret offshore deals and loans worth $2 bn leading to his close friends, including concert cellist Sergei Roldugin

Petro Poroshenko
President, Ukraine
ICIJ claims he set up an offshore firm to move his confectionery business to the British Virgin Islands in August 2014 during a peak in fighting between Ukraine and pro-Russian separatists

Nawaz Sharif
PM, Pakistan
Three of his four children - Maryam, Hasan and Hussain - "were owners or had the right to authorise transactions for several companies", the documents say, a PTI report said

Sigmundur Gunnlaugsson
PM, Iceland
His wife was named in the documents, in connection with a secretive company in an offshore haven. He is under pressure to resign