Spain, France and several other countries launched tax evasion probes yesterday after a massive leak of confidential documents lifted the lid on the murky offshore financial dealings of a slew of politicians and celebrities.
The scandal erupted on Sunday when media groups began revealing the results of a year-long investigation into a trove of 11.5mn documents from the law firm Mossack Fonseca, which specialises in creating offshore shell companies in the tax haven of Panama.
Among those accused are close associates of Russian President Vladimir Putin, relatives of Chinese leader Xi Jinping, Iceland’s Prime Minister Sigmundur David Gunnlaugsson as well as Barcelona striker Lionel Messi.
“We have opened an investigation for money laundering in relation to the law firm” Mossack Fonseca, a judicial source at the National Court, Spain’s top criminal court, told AFP after the release of the documents which named Messi and Oscar-winning Spanish film director Pedro Almodovar among others with offshore holdings.
The footballer’s family immediately came to his defence, saying “that Lionel Messi has not carried out any of the acts attributed to him, and accusations he created a... tax evasion plot, including a network of money-laundering, are false and insulting”, it said in a statement.
Messi has been charged with tax fraud in a separate case that is due to go to trial in May.
Australia said it had launched a probe into 800 wealthy Mossack Fonseca clients. Prosecutors in France and tax authorities in the Netherlands also announced investigations in those countries.
The trove of documents, known as the Panama Papers, was anonymously leaked to German daily Sueddeutsche Zeitung and shared with more than 100 media groups by the International Consortium of Investigative Journalists (ICIJ), with more information expected to be released over the coming days and weeks.
The first revelations elicited a chorus of denials, including from the Kremlin, which suggested a US plot after the ICIJ said that banks, companies and close associates of Putin had “secretly shuffled as much as $2bn through banks and shadow companies”.
“Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilise the situation,” said Kremlin spokesman Dmitry Peskov, adding the reports were likely the work of journalists who were “former officials from the (US) Department of State, the CIA and other special services”.
Offshore financial dealings are not illegal in themselves but may be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.
The probe named about 140 political figures, including 12 current or former heads of state.
The Panama Papers, from around 214,000 offshore entities covering almost 40 years, also name sporting and movie stars, including Hong Kong’s Jackie Chan and India’s Amitabh Bachchan. Almost all of them denied any wrongdoing.
French newspaper Le Monde cited documents showing that Syria used Mossack Fonseca to create shell companies to help it break international sanctions and fund its war effort.
“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,” said ICIJ director Gerard Ryle.
One of the Panama law firm’s founders, Ramon Fonseca, told AFP the leaks were “a crime, a felony” and “an attack on Panama”.
“Certain countries don’t like it that we are so competitive in attracting companies,” he said.
Panama’s government said it had “zero tolerance” for shady deals, and vowed to “vigorously co-operate” with any legal investigations.
More than 500 banks, their subsidiaries and branches have worked with Mossack Fonseca since the 1970s to help clients manage offshore companies.