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A guide to the 6 biggest revelations from the Panama Papers (so far)

When the International Consortium of Investigative Journalists released the trove of data on secret financial dealings now known as the Panama Papers, it claimed it linked 140 politicians from more than 50 countries to secret offshore accounts. In the eight days since, the revelations have ended one political career — that of the prime minister of Iceland — and have revealed new scandals in dozens of other countries.

After a year of sleuthing, the ICIJ released findings from 2.6 terabytes of data from Panamanian law firm Mossack Fonseca revealing international corruption and tax evasion by the world's political elite. From billion-dollar webs of offshore agreements to shady investments, the Panama Papers have proved the pervasiveness of financial loopholes.

According to ICIJ, the historic data leak tied "140 politicians from more than 50 countries, connected to offshore companies in 21 different tax havens."

Some of these findings come at tumultuous times in countries around the world. In Brazil, President Dilma Rousseff was already facing impeachment charges for past corruption allegations. Argentina just came out of a 15-year battle over defaulted debts. In other nations, the documents have revealed the vast gulf between politicians' stump speeches and their personal financial practices.

All the countries implicated in the Panama Papers.
By JCRules (Own work), via Wikimedia Commons

The Panama Papers caught Iceland's prime minister in an incredible conflict of interest

Icelandic Prime Minister Sigmundur Gunnlaugsson resigned Tuesday, two days after the Panama Papers exposed his connections to an offshore shell company in the first major fallout so far from the massive document leak.

The Panama Papers were a touchy subject for Gunnlaugsson, who walked out of an interview on April 4 after a Swedish reporter asked him about his exposed investments – a line of questioning he called "totally inappropriate." But as it turns out, his investments were totally suitable areas of questioning.

Iceland's capital, Reykjavik, spiraled into demonstrations calling for the prime minister's resignation after the documents revealed Gunnlaugsson and his wife, Anna Sigurlaug Pálsdóttir, purchased an offshore company, Wintris, in 2007, that later invested millions in Icelandic bank bonds. That means that after the country's financial crisis in 2008, Gunnlaugsson was a creditor for three major Icelandic banks – at the same time as he was negotiating deals between the banks and foreign creditors, a serious conflict of interest.

Who was implicated:

  • Iceland's (now former) Prime Minister Sigmundur Gunnlaugsson
  • His wife, Anna Sigurlaug Pálsdóttir

What the papers revealed:

The Panama Papers showed Iceland's prime minister was personally connected to an offshore company, Wintris, registered in the British Virgin Islands, that stood to benefit from negotiations he was involved in with big banks, although it's not clear whether he personally benefited financially.

What's next:

Iceland's Agricultural and Fisheries Minister Sigurdur Ingi Johannsson will be taking over as interim prime minister, he announced Thursday.

David Cameron made the Panama Papers look a lot worse for himself

The Panama Papers have resulted in an unfortunate slew of headlines for England's Prime Minister David Cameron, after the leaked documents named his father Ian Cameron in connection to an offshore holdings company, Blairmore Holdings.

The Economist explains:

The Panama Papers leak revealed that the prime minister's late father, Ian, had something called a "unit trust" fund, whereby a group of people pool their money … and use it to invest in a variety of securities, spreading the risk. Its incorporation offshore, initially in Panama, was seemingly motivated by administrative convenience rather than tax-dodging.

David Cameron and his wife owned shares in the offshore company before he became prime minister. To date, the ICIJ has not found any illegal activity in Ian Cameron's dealings with the holding company; both the prime minister and his father paid taxes on the profits from their investments.

Much of the controversy now surrounding Cameron has to do with the way the prime minister responded to the findings — or, rather, didn't respond to them.

When the papers were first leaked naming Cameron's father, the prime minister's spokesperson called the findings a "private matter." When Sky News reporter Faisal Islam asked the prime minister whether he or his family had ever profited from his father's offshore company, Cameron responded truthfully, but in the present tense only:

In terms of my own financial affairs, I own no shares. I have a salary as prime minister and I have some savings, which I get some interest from and I have a house, which we used to live in, which we now let out while we are living in Downing Street and that's all I have. I have no shares, no offshore trusts, no offshore funds, nothing like that. And, so that, I think, is a very clear description.

As the Economist put it, the story continued to "run away from his control" Saturday, as thousands protesting outside 10 Downing Street, London, the prime minister's residence, called for Cameron's resignation after it became clear that Cameron had at one point owned and profited £19,000 from shares from the offshore company. Cameron himself admitted he had fumbled on responding to the whole thing:

"Don't blame No. 10 Downing Street or nameless advisors, blame me, and I will learn the lessons," Cameron said to his party, according to reporting from NPR. "I was obviously very angry about what people were saying about my dad … but I musn't let that cloud the picture."

In a last-ditch attempt to calm the fires, Cameron released the past six years of his tax records, which showed Cameron inherited £300,000 tax-free and two separate transfers of £100,000 from his mother, which, as gifts, were exempt from nearly £80,000 in inheritance taxes, the Guardian reported.

While not illegal, the Camerons' use of inheritance tax loopholes was not great for the prime minister's optics.

Who was named:

  • David Cameron, England's prime minister
  • Ian Cameron, David Cameron's father

What the papers revealed:

The papers showed David Cameron's father owned an offshore holdings company in Panama that the prime minister also once had shares in and sold before becoming prime minister in 2010.

What does this mean:

Cameron was the first British politician to release his tax records — a pledge he made early in his career as prime minister. Because Cameron, like a lot other politicians, ran his campaign on a "new era of public transparency," wanting to fight against corruption, financial loopholes, and the like.

Cameron is already facing a tough time in office: His party is split on the major referendum, Brexit, which decides Britain's future in the European Union, and a crisis in the steel industry could cost the nation thousands of jobs. A recent poll found that opposition Labour Party leader Jeremy Corbyn's approval rating had surpassed Cameron's for the first time since Corbyn's election. If there is such a thing as a "better" time for a prime minister to be found using legal financial loopholes, it is not now.

The $2 billion trail in the Panama Papers that leads to Vladimir Putin

Putin

While Putin has been the subject of many news reports about the Panama Papers controversy, it's important to note that the Russian leader was never directly named in the documents. Rather, the data dump exposed a $2 billion string of offshore loans and deals within Putin's inner circle. According to the Guardian, "His friends have earned millions from deals that seemingly could not have been secured without his patronage."

In fact, the links to Putin are so clear that the Russian government said it was "obvious" the Russian leader was the main target of the Panama Papers.

The documents named cellist Sergei Roldugin, Putin’s best friend, who has a net worth of more than $100 million, though many have speculated that's a front for Putin’s personal holdings.

Roldugin, who has denied an aptitude for business, has a 12.5 percent stake in Russia’s largest TV advertising agency, and also owns 3.2 percent of Bank Rossiya, a private bank in St. Petersburg that President Barack Obama has called Putin’s "personal bank," according to the New York Times. The bank was placed under US sanctions in 2014 for contributing to Putin's actions in the Ukraine crisis.

Bank Rossiya’s head, Yuri Kovalchuk, was also implicated in the papers, for transferring at least $1 billion in unsecured loans from a state-controlled bank to an offshore company named Sandalwood Continental. According to reporting from the BBC, "There is no explanation in the files of why the banks agreed to extend such unorthodox credit lines."

Kovalchuk’s offshore company subsequently bought the rights to a multimillion-dollar loan for a single dollar, invested in a multimillion-dollar yacht, and loaned millions to others in Putin’s inner circle with interest rates as low as 1 percent.

The papers named others in Putin’s close circle, including billionaire brothers Arkady and Boris Rotenberg, childhood friends of Putin's who have long benefited from their personal connection with the president. They were also placed under US sanctions in 2014 as the owners of at least seven offshore companies.

Who was implicated:

  • Sergei Roldugin, a Russian musician and Putin’s best friend who seems to own shares of very powerful companies and banks in the country
  • Yury Kovalchuk, who is the head of Bank Rossiya (which Roldugin own 3.2 percent of) and has his own shady offshore company
  • Brothers Arkady and Boris Rotenberg, Putin's childhood friends
  • Arsenal FC shareholder Alisher Usmanov

What the papers showed:

The Panama Papers showed a multimillion-dollar network of offshore companies surrounding Putin and his closest friends, but not directly linked to his name, that connect the Russian president to secret and questionable loans and investments in Russian monopolies.

What these revelations mean:

According to New York University professor Mark Galeotti, these leaked documents show the dynamics of money and power in Russia:

Together, these stories tell us something important about how corruption works in Russia. Whereas in many countries corruption is the means by which elites turn their power into money, in Russia it is the other way around — corruption is a way to get and keep the political power that is so much more important than mere wealth.

They confirm the cronyism and deep web of corruption that has allowed Russia’s elite to retain wealth and power – potentially costing the country more than six times what the sanctions have, Galeotti wrote for Vox.

Brazil is on the brink of political collapse, and the Panama Papers added fuel to the fire

Protests Erupt In Brazil After Audio Tape Of Lula And Dilma Rousseff Is Released
Millions of Brazilians have poured out into the streets calling for President Dilma Rousseff's impeachment.
Photo by Victor Moriyama/Getty Images

To understand the implications of the leaked documents, it is important to note that even before the release of the Panama Papers, Brazil was already in a state of deep political turmoil:

  1. In 2014, Brazil began to witness the largest bribery scheme in recent democratic history unfold. The corruption scandal, nicknamed "Operation Car Wash," involved Brazil's largest company, the state-run energy firm Petrobras, laundering upward of $5.3 billion. (Zack Beauchamp explains all this in more detail here.) It allegedly implicated former Brazilian President Luiz Inácio Lula da Silva (who denies all links), a once beloved leader from the Workers' Party (PT).
  2. Separately, Brazil's current president, Dilma Rousseff, also part of PT, is currently facing impeachment trials, headed by the opposing Brazilian Democratic Movement Pary (PMDB), after being accused of campaign finance fraud. She allegedly took out unauthorized loans from state banks to cover the costs of her reelection.
  3. While also being investigated for corruption, Rousseff appointed Lula to be her cabinet chief, essentially shielding him from corruption charges in Brazil's lower court; charges brought against Cabinet ministers and elected officials go to Brazil's Supreme Court, a more difficult venue to bring up these allegations. The chief prosecutor in Rousseff's impeachment case has recommended that the Supreme Court block this appointment.

So when the Panama Papers revealed that at least 57 people already linked to Operation Car Wash had opened more 107 offshore companies through Mossack Fonseca, it raised the stakes.

Among those implicated are members of Brazil's PMDB party, the leading opposition against Rousseff. Notably, the papers name an offshore company allegedly linked to Eduardo Cunha, the speaker of the lower house of Brazil's legislature, who is leading the push for Rousseff's impeachment.

While Cunha's name is not directly referenced and he denies all ties to this offshore company, three major Brazilian news organizations say it is his company. Cunha has also previously been charged with hiding money in Swiss banks while taking millions in bribes, according to reporting from AFP.

This is not the first time Mossack Fonseca has come up in reference to Operation Car Wash. In January, Brazilian prosecutors brought charges against the Panamanian law firm's lawyers for money laundering and hiding documents related to the Brazilians Petrobras scandal – including those that implicate Lula.

Who was implicated:

  • 57 people already linked to Brazils Petrobras scandal
  • An offshore company said to be owned by Eduardo Cunha

What the papers revealed:

The papers showed that Mossack Fonseca was deeply tied to Brazil's current corruption scandal and Rousseff's pending impeachment trial. The Panamanian law firm helped 57 people linked to the Petrobras scandal set up 107 offshore companies, including one allegedly tied to Cunha, the lead opposition politician pushing for the president's impeachment.

What's next:

Rousseff's top attorney made his final plea against the effort to begin impeachment trials against the Brazilian president Monday, calling the challenge to the president's office Cunha's "act of revenge."

On Thursday, Rousseff inched closer to trial after a member of the review committee said the senate has grounds for impeachment proceedings. The committee will vote Monday.

China wishes the Panama Papers never happened

The Chinese elite named in the Panama Papers have been named in investigations of offshore holdings before. And while China’s top leader, Xi Jinping, says he is ready to take on the "armies of corruption," like many heads of state exposed in this data dump, family members of Xi and other top Chinese officials are tied to multiple offshore companies.

The papers named Xi's brother-in-law Deng Jiagui and Li Xiaolin, the daughter of former China Premier Li Peng — who were previously exposed in a 2014 ICIJ report that the Chinese government denied. Others named include propaganda chief Liu Yunshan's daughter-in-law Jia Liqing and Lee Shing Put, the son-in-law of Vice Premier Zhang Gaoli, who is among China's 10 most powerful people, according to the Guardian.

Deng, who with his wife has "hundreds of millions of dollars in real estate, share holdings and other assets," was the director of two offshore companies, one of which gained the rights to a seal used by Chinese businesses to validate documents, according to ICIJ. Li's daughter and her husband were connected to an offshore company that profited from importing heavy European machinery into China.

According to the Guardian, Jia was the director and shareholder of an offshore company in the British Virgin Islands and Lee was connected to three companies in the British Virgin Islands.

The Chinese government ramped up censorship of the Panama Papers, blocking most online and broadcast references to the document dump.

Who was named:

  • Deng Jiagui, the brother-in-law of Xi JinPing
  • Li Xiaolin, the daughter of former Premier Li Peng
  • Jia Liqing, propaganda chief Liu Yunshan's daughter-in-law
  • Lee Shing Put, the son-in-law of Vice Premier Zhang Gaoli

What the papers revealed:

These findings, which revealed several offshore companies linked directly to the families of China's top leadership, while not connected to illegal activity have created an image problem for the Chinese government, which is trying to create a cleaner and more humble image for the leading class.

The key takeaway:

The Panama Papers have created an uncomfortable tension in China, which immediately covered up and censored internet references to the leak. Xi, who is facing opposition from within the Communist Party, has pushed an anti-corruption agenda, albeit a selective one, to improve the party's image.

Despite more assertive efforts, it has also become increasingly clear that Xi's anti-corruption attempts have been more directly targeted at his party's rivals, according to reporting from the Washington Post.

A 2014 report from ICIJ previously showed Hong Kong and mainland China had nearly 22,000 tax haven clients – "including at least 15 of China’s richest, members of the National People’s Congress and executives from state-owned companies entangled in corruption scandals," the report said.

Argentina's president ran on a campaign of transparency. Now he has been named in the Panama Papers.

Argentina Faces First Presidential Runoff In Its History
Argentina's president, Mauricio Macri, was narrowly elected in 2015 after campaigning for transparency in government.
Photo by Mario Tama/Getty Images,

Argentinian President Mauricio Macri, who was elected in 2015 on a campaign championing disclosure, was named in the Panama Papers for being the director of the Bahamas-based company Fleg Trading from 1998 to 2009, which he failed to disclose.

The company was not declared in his 2007 financial records as mayor of the Argentinian capital Buenos Aires. Instead, his declared international assets that year included a $2.9 million account in the United States, ICIJ found in its investigation.

Macri's spokesperson, Ivan Pavlovsky, told ICIJ the offshore company wasn't listed in his financial declaration because the president made no capital gains from the company and was not a shareholder.

But this is just the tip of the iceberg for Argentina, a country that has been mired in scandal, corruption, and near economic collapse, a history important to understand in light of the Panama Papers:

  1. In 2001, Argentina defaulted on nearly $100 billion in debt. Foreign hedge funds, led by New York-based Elliott Management Corporation, bought Argentina's debt for pennies on the dollar, using their political power to try to isolate Argentina's economy.
  2. During her presidency, former leftist President Cristina Fernández de Kirchner refused to negotiate and said her country would not pay these "vulture funds." During this time, EMC investigated assets surrounding Kirchner, in an effort to regain payments on its defaulted debt.
  3. Macri, who is part of Argentina's center-right Republican Proposal party and campaigned on a promise to end the 15-year battle with holdout creditors, reached a settlement in February in an effort to stabilize Argentina's economy. Macri accused Kirchner of "lying and deceiving with false information," falsely representing the state of Argentina's economy, according to the Guardian.

The Panama Papers further exposed corruption in Argentina's government during Kirchner's governance, showing evidence that the law firm Mossack Fonseca tried to hide evidence that its subsidiary had set up 123 offshore companies based in Las Vegas, which, according to ICIJ, were used "to steal millions of dollars from government contracts."

Elliott Management Corporation had tried to investigate these assets – and eventually was able to claim upward of $50 million from Fernández de Kirchner's friend Lazaro Baez on corruption charges – in its attempt to claim payment on Argentina's defaulted debt.

The Panama Papers also named former Kirchner's aide Daniel Muñoz, who was also a top aide to Kirchner's husband and former Argentinian President Nestor Kirchner, connecting him to an offshore company in the British Virgin Islands. Munoz was previously investigated for transferring large sums of money for the Kirchners.

Who was implicated:

  • Argentinian President Mauricio Macri
  • Mossack Fonseca's Las Vegas subsidiary, MF Corporate Services, which created shell companies for Lazaro Baez, a close friend of former Argentinian President Cristina Fernández de Kirchner
  • Daniel Muñoz

What the papers revealed:

The Panama Papers confirmed Mossack Fonseca's involvement in corruption charges surrounding the repayment of Argentina's massive debt, along with naming a former confidante to Argentinian presidents, and couple, Nestor and Christina Kirchner.

Despite the current president's denial, the Panama Papers also named Mauricio Macri for failing to disclose an offshore company in his financial assets.

What's next:

Macri appeared before a judge Friday to formally refute the allegations leaked in the Panama Papers.

The allegations have created a difficult situation for Macri, whose calls for transparency and promise to clean up Kirchner's corruption have come under scrutiny with the Panama Papers. Argentinians who have long become familiar with corruption under Kirchner are leery that Macri will be any different.