Fucking Learn Stuff : The Panama Papers
Fucking Learn Stuff is a weekly column that covers various topics. It is our attempt to keep everyone informed. We attempt to simplify and break down some of these “things” that everyone talks about in an easy to consume way, or in other words... to do our part in helping you Fucking Learn Stuff.
Let's get right into it, The Panama Papers have exposed how some of the world's richest and most powerful people may have used offshore bank accounts and shell companies to conceal their wealth or simple avoid taxes.
The Mossack Fonseca law firm in Panama have leaked millions of confidential documents (The papers) - these papers identify international politicians, business leaders and celebrities that are all involved in what might be one of the most suspicious and suspect financial transations of all time.
Who are we talkin about?
There is a pretty big list of names involved with this. Some of the most talked about is close associates of ol' Russia himself, Vladimir V. Putin, the father of Prime Minister David Cameron of the Brits and relatives of President Xi Jinping of China as well as members of the Chinese Communist Party. It's actually pretty crazy, amongst these already heavy names is : King Salman of Saudi Arabia, Sigmunder David Gunnlaugsson who resigned as Prime Minister of Iceland AFTER the papers were leaked; President Mauricio Macri of Argentina and one of the world's wealthiest athletes, Lionel Messi. (Along with a huge list of other officials of FIFA, their governing partys and players via many connections. )
What the fuck do these documents mean they have done?
The names listed as well as hundreds more are tied to - by the papers - directly to THOUSANDS of offshore shell companies. These type of companies can be used to shield vast wealth from tax collectors, regulators, and creditors. Now not all of this can be considered shady always, most of the time when storing masses amounts of wealth (Putin's friends allegedly shuffled $2 Billion through several shell companies) tax free should cause some global concern.
Is any part of this illegal?
Not 100% for sure if the papers document any specific lawbreaking. The holding of money in an offshore company is generally not illegal by itself, but it may be done to hide criminality from people searching for it, for example, by facilitating tax evasion or money laundering.
Legit uses for shell companies?
There are many valid reasons for multi-national corporations, joint ventures or wealthy indivisuals to set up and use such companies.
One use - some countries only allow land to be owned only by citizens or locally registered companies. So a foreigner looking to cash out and retire or put up a vacation home would set up a local shell company to purchase the property.
A corporation establishing a joint venture in a country with a weak legal system may want an offshore company based in a place like B.Virgin Islands or the Cayman Islands, so the venture can gain access to stronger courts and operate under better laws.
RECAP
As of this time, this data is still being analyzed and will take a long time to do so, but this should be a concern for everyone. Mossak Fonseca bought and sold thousands of shell companies and was quoted as being "a global industry led by major banks, legal firms, and asset management companies secretly managing the estates of the world's rich and famous: from politicians, FIFA officials, fraudsters and drug smugglers, to celebreties and professional athletes." to hide, transfer, and some times to clean dirty money. Heads of state and industries were implicated as well as kings... even Jackie Chan. Some of the clients were out right criminals and for some there are no proven links of wrong doing but it is known that most of the companies and shares that were bought and sold on behalf of Mossak Fonseca were set up so you can not track who owned the shell corps.
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