1. What are the Panama Papers?
The Panama Papers are a set of 11.5 million documents that were leaked from an organisation called Mossack Fonseca. The papers contained names of thousands of people that allegedly hid their taxable money from their governments by investing it abroad.
2. What is Mossack Fonseca?
Mossack Fonseca is a Panamanian corporation that provides the service of ‘wealth management’. Essentially, they help really wealthy people set up shell companies in countries that have few or no tax laws and don’t share financial information with foreign tax authorities. Their clients can, therefore, buy shares in these companies to avoid paying taxes on their investment.
3. How did the Panama Papers come to light?
In August 2015, an anonymous source under the pseudonym, John Doe, transferred 11.5 million documents to the German newspaper called Suddeutsche Zeitung, who later shared this with the International Consortium of Investigative Journalists (ICIJ). These papers were then secretly distributed to about 107 media organisations around the world. With 300 journalists analysing the documents for over a year, they broke the story to the world in April 2016.
4. Who are the people on the list?
The documents contain the names of prominent people everywhere. Current government leaders of Argentina, Iceland, Saudi Arabia, Ukraine and the United Arab Emirates are on the list. Family members of Russian President Vladimir Putin, Chinese President Xi Jinping, Pakistani PM Nawaz Sharif and U.K. PM David Cameron are also mentioned. Adding to this, there are movies stars like Amitabh Bachchan, Aishwarya Rai and Jackie Chan and footballer Lionel Messi. As you can imagine, the list of businessmen and industrialists is nearly endless.
5. What’s the biggest take away from all this?
Being the biggest data leak in history, the Panama Papers show the extent of how far and wide tax evasion goes. Countries that have grappled with bankruptcy in the past have leaders parking their money abroad. The leaders who have strongly spoken against tax avoidance have family members on the papers. The leaks effectively ended the political careers of Iceland’s former PM Sigmundur Davíð Gunnlaugsson, Pakistan’s former PM, Nawaz Sharif and Brazil’s former president Dilma Rousseff.
6. What now? Where does India stand in the case?
After the Panama Papers were revealed, governments, prosecutors and investigation agencies around the world are scrambling to bring justice to everyone on the list. A global race to hunt down the perpetrators will soon unfold.
Since the Panama papers contain names of 500 Indians, India has been trying to retrieve all the money stashed away in foreign banks and has reached out to Panama for information exchange on Indian tax offenders. India even has a backup if the tax information exchange deal isn’t signed. It plans to label Panama as ‘Non-cooperative’ jurisdiction and levy a higher withholding tax of 30%.