Massive document leak draws quick reaction in Costa Rica

The scandals have just started from the leak called the Panamá Papers.

The bombshell disclosure already reveals the offshore holdings of 140 politicians and public officials around the world, including 12 current and former world leaders.

So far no Costa Rica political figures or business leaders have been named, but more information based on leaked documents from a leading Panamá law officer are promised.

In Costa Rica the disclosures generated response from the Minsterio de Hacienda that said investigations would be made of  companies, individuals and law offices mentioned in the report.

So far the most substantial mention of Costa Rica in news articles published by The International Consortium of Investigative Journalists involves Caro Quintero, the drug figure arrested here in 1985.

One of the news articles notes that Quintero was represented by the Panamá law firm of  Mossack Fonseca, and the Costa Rican government ended up with property owned by the detained man.

Still the Ministerio de Hacienda, in an unusual Sunday news release, said the disclosures confirm the urgency of legislation creating a value-added tax, higher income tax and a modern tax system that closes the many doors to the evasion.

The ministry also promoted a bill that has stronger tools to fight tax fraud and said that the country needs a registry of the beneficial owners of corporations.

The Panamá law firm is known for setting up thousands of off-shore corporations for the financial elite. Such off-shore entities are not in themselves illegal, but the disclosures show how many could be used to hide or misrepresent vast sums of money.

The Ministerio de Hacienda said it would seek additional information from foreign countries. The journalism report says without more details that the Panamá law firm set up some companies via Costa Rican banks, but the country is not in the top 10 of countries being used for this purpose.

Among the disclosures, the team of international journalists, working with the leaked documents from the Panamanian law firm, has concluded that associates of Russian President Vladimir Putin moved as much as $2 billion through offshore bank accounts over a nearly 40-year period.

The International Consortium of Investigative Journalists, allied with the German newspaper Sueddeutsche Zeitung and more than 100 other news organizations, said in its report Sunday that the 11.5 million documents from Panama’s Mossack Fonseca law firm show dozens of transactions involving people or companies linked to Putin from 1977 through the end of 2015.

Parking money in offshore accounts can be used to establish legal tax shelters or ease international business deals. But the report said “the documents show that banks, law firms and other offshore players have often failed to follow legal requirements that they make sure their clients are not involved in criminal enterprises, tax dodging or political corruption.”

The Kremlin last week did not answer questions posed by the journalists about the transactions, and it publicly accused the group of preparing a misleading information attack on the Russian leader and people close to him.

The International Consortium of Investigative Journalists is a nonprofit organization based in Washington, D.C.

Sueddeutsche Zeitung, based in Munich, said Sunday it received the data from an anonymous source more than a year ago. It says the amount of data it obtained is several times larger than the U.S. diplomatic cables released by WikiLeaks in 2010, and the secret intelligence documents given to journalists by Edward Snowden in 2013.

Where Mossack Fonseca formed companies over the years.

Where Mossack Fonseca formed companies over the years.

Along from the links to Putin, the International Consortium says these documents:

• Reveal the offshore holdings of 140 politicians and public officials around the world, including 12 current and former world leaders. Among them are the prime ministers of Iceland and Pakistan, the presidents of Ukraine and Argentina, and the king of Saudi Arabia.

• Include the names of at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.

• Show how major banks have driven the creation of hard-to-trace companies in offshore havens. More than 500 banks, their subsidiaries and their branches have created more than 15,000 offshore companies for their customers through Mossack Fonseca.

• At least four of the international soccer federation figures involved in the current scandal had offshore companies set up by the Panamá company, as did Lionel Messi, the soccer star, as well as a number of other players.

The Panamanian firm told The Washington Post it follows both the letter and spirit of financial laws, which vary throughout the world. It said that in nearly 40 years of operation it has never been charged with criminal wrongdoing.

In an interview Michael Hudson, a senior editor at the International Consortium, said, “This is really the shadow side of our global economy, the money that flows around mostly unchecked, undetected. “You can’t say in every single case that someone is doing something wrong, or that they’re hiding improper practices. But it certainly raises lots of questions about transparency when you have politicians, and especially top leaders of countries, moving their holdings offshore and using offshore entities to obscure what they’re doing.”

The report lists the British Virgin Islands as the most popular offshore tax haven, with one out of every two companies in Mossack Fonseca’s files being incorporated there. Panamá, the Bahamas and the Seychelles are next on the list.

The International Consortium’s report also sheds new light on a 1983 British gold heist that has been called the Crime of the Century.

Robbers stole nearly 7,000 gold bars from the Brink’s-Mat warehouse at London’s Heathrow Airport, along with cash and diamonds. The gold was smelted and sold, and much of the money was never recovered.

The report said a Mossack Fonseca document shows that an official at a company the law firm created 16 months after the robbery was “apparently involved in the management of the money from the famous theft from Brink’s-Mat in London.  The company itself has not been used illegally, but it could be that the company invested money through the bank accounts and properties that was illegitimately sourced.” The law firm denied it helped conceal the proceeds of the London theft.

An Internet search reveals that the law firm has a Costa Rican subsidiary, Mossack Fonseca & Co. Ltda. on Avenida 5 between calles 42 and 44 in Sabana Norte.

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