What Is a Company Formation Agent?
Hidden assets, money laundering, tax dodging, and the firms that help make it all possible. Here’s how formation agents can facilitate abuse of the global financial system.
The Panama Papers are provoking a tsunami of reaction on social media and on headlines across the globe. The impact ranges from debates among readers, to officials at the center of stories, to governments, prosecutors and law enforcement authorities.
In just two days, the Panama Papers have incited anger and street protests, conspiracy theories and denunciations, and launched government investigations and potential prosecutions.
The project was kicked off by a data leak from a Panama-based offshore services provider called Mossack Fonseca. The documents were received by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with the Organized Crime and Corruption Reporting Project (OCCRP).
Here’s some of the reactions and impact the project has had so far around the world.
Prosecutors, Tax Authorities and Police Are Reading the Panama Papers - In light of the Panama Papers revelations, international authorities have been incited to act.
In Azerbaijan, President Ilham Aliyev Denies Wrongdoing - The Panama Papers revealed Azerbaijan’s first family controlled more assets than previously known. A spokesman for Azerbaijan’s president, whose children are named as owners of offshore companies, says such practice “is not banned by any law,” adding that they “are grown up Azerbaijani citizens,” reported the BBC.
The ‘Not So’ Beautiful Game: FIFA Fielding New Scandals - The Panama Papers revealed that a key member of FIFA’s ethics committee, Uruguayan lawyer Juan Pedro Damiani, was linked to Eugenio Figueredo, an allegedly corrupt football official, and two corrupt businessmen. FIFA’s ethics prosecution chamber said Monday that it has opened an investigation to review the allegations about Damiani, reported CNN.
From Russia With… Denials - President Vladimir Putin’s spokesman, Dmitry Peskov, has denied his wife owns offshore companies, although documents from the Panama Papers show she set them up in 2014, reported the Guardian. The Kremlin has dismissed the leaks as ‘Putinphobia’ which ‘has reached a level at which it is impossible a priori to speak well of Russia, and it’s required to speak ill of Russia,’ said Peskov.
The Kremlin claims the project hasn’t uncovered ‘anything new.’ Peskov also alleged the Panama Papers were a plot to ‘destabilize the situation in Russia ahead of elections.’
Peskov also claimed he believed the journalistic consortium behind the Panama Papers included ‘many former State Department and CIA employees, as well as those of other intelligence services,’ said the Guardian.
But Lithuania Confirms Sergey Roldugin’s Financial Network - The Washington Post reported the Kremlin denied Putin had any involvement in US$ 2 billion in offshore transactions through his friend, cellist Sergey Roldugin. But today, Lithuanian law enforcement officials verified information from the Panama Papers confirming there were significant money flows from four offshore accounts in Lithuania to the Roldugin network, reported OCCRP partner 15min.lt.
Meanwhile, In Ukraine … - Ukrainian President Petro Poroshenko said he has done nothing wrong and denied allegations of tax evasion, reported the BBC. One politician, however, has called for Poroshenko’s impeachment although prosecution officials said there was no evidence of a crime. Poroshenko also posted on his Facebook account that, on becoming president, he had delegated management of his assets to consulting and law firms.
UK Prime Minister David Cameron Faces a Probe - The Panama Papers revealed leaked files mentioning Prime Minister David Cameron’s late father, Ian, who set up an offshore investment fund. On Tuesday, the BBC reported the Labour Party is calling for a probe not only into Cameron’s family members but also into any British citizens linked to offshore tax haven allegations.
Iceland’s Prime Minister In Hot Water - By Monday afternoon, 24,000 Icelandic citizens signed a petition demanding the resignation of Prime Minister Sigmundur David Gunnlaugsson in reaction to the Panama Papers revelations. Thousands of Icelanders took the streets after he refused to resign, reported Iceland Monitor. They threw yoghurt and eggs at the Parliament building, added Mashable. Today, Gunnlaugsson resigned in response to the mounting political pressure caused by the Panama Papers’ revelations, reported the Guardian.
Don’t Cry for Me, Argentina - In Argentina, political opposition parties demanded an explanation from center-right President Mauricio Macri because he served as a director of an offshore company in the Bahamas related to his wealthy father’s business in the past, said the Huffington Post. Macri denied wrongdoing in a short TV interview, saying the company his father founded was legal.
All The Way to China - Following the launch of the project, China limited internet access to coverage of the Panama Papers, with state media denouncing Western reporting on the leak as biased against non-Western leaders, reported Reuters. The censorship is probably the result of the involvement of a relative of the Chinese premier in the Panama Papers.
The Hong Kong government said its Inland Revenue Department will take “necessary actions” based on any information it receives in regards to the leaked documents, but that it will not comment on individual cases or disclose any course of action due to secrecy provisions in Hong Kong tax law, said Reuters.
The Blame Game: Mossack Fonseca & The Banks - The Panama-based law firm at the center of the storm, Mossack Fonseca, published a response to the investigation in the Guardian asserting it did not do anything illegal despite its apparently vast failure in due diligence in regards to its clientele. The firm claims 90 percent of its clientele is intermediary financial institutions, law firms and banks who are regulated in their own jurisdictions of business. Mossack Fonseca also pledged legal action against the journalists and media outlets who published the leaks, saying they had ‘unauthorized access’ to the documents.
“We trust that you are fully aware that using information/documentation unlawfully obtained is a crime, and we will not hesitate to pursue all available criminal and civil remedies,” said Mossack Fonseca.
Meanwhile, HSBC and Credit Suisse, banks named in the Panama Papers for involvement in setting up complex structures, on Tuesday dismissed allegations they actively helped their clients commit tax evasion, said Reuters. A spokeswoman for the French bank Société Générale said the bank helped some of its clients set up companies in Panama, but said it broke no laws, reported the Wall Street Journal.
The editor in chief of the Süddeutsche Zeitung newspaper, Wolfgang Krach, says over 1,000 Germans have been implicated in the Panama Papers and they all used major German banks, including Deutsche Bank, Commerzbank, HypoVereinsbank and Bayerische Landesbank.
The Final Say Goes To Panama - “We have zero tolerance for illicit financial activities,” said the President of Panama, Juan Carlos Varela, reported the BBC. He promised to cooperate vigorously with any investigations in any country.
More to come on Panama Paper revelations.
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