By: Omer Qureshi
As the Olympic proceedings kick off, many elite Brazilians will not be paying attention to the competition, but rather to their bank accounts.
Brazil was among the countries which had prominent figures implicated in a massive tax haven scandal dubbed the “Panama Papers.” The multimillion file, 2.6 terabyte data leak from a Panamanian law firm, Mossack Fonseca, implicates global leaders and stars ranging from Russian president Vladimir Putin to soccer star Lionel Messi. The documents, leaked on May 9, 2016, expose both the ease of creating and prominence of offshore accounts by global elites.
The history of the Papers begins with the law firm Mossack Fonseca. The company began in 1977, and since then has been among the leading firms in creating and managing offshore accounts.
According to Investopedia, “[Offshore accounts are] financial institutions [that] can also be used for illicit purposes such as money laundering and tax evasion.”
While not inherently illegal, offshore accounts are often used by individuals to avoid taxes and/or hide money from governments across the globe. The thousands of people exposed in the Papers based upon a single law firm alone could hint that the use of offshore accounts is more pronounced than previously thought.
After the Papers were leaked, Mossack Fonseca put out a statement which said, “Recent media reports have portrayed an inaccurate view of the services that we provide and, despite our efforts to correct the record, misrepresented the nature of our work and its role in global financial markets.”
While the firm has attempted to deflect blame, leaders who have been implicated in the leaks have not been so lucky.
Iceland PM Sigmundur Davíð Gunnlaugsson was the first major politician to step down after being implicated in the Papers. Gunnlaugsson’s resignation could be the first of many as more prominent figures become implicated by the leaks.
The biggest question remaining from the papers is the distinct lack of Americans implicated, as many groups believe the leak was a targeted attack. Whatever the motivation, the Panama Papers reveal a culture of corruption of the global elite and signify a growing gap between the haves and the have-nots.