Panama Papers: Who's In Trouble?

Panama Papers: Who's In Trouble?

Panama Papers: Who's In Trouble?

Justin Lavelle
April 9, 2016

All this week we have been looking at the murky world of offshore finance and tax havens as a result of the major Panama Papers leak. Last time we looked at where some of the most notable tax havens are located. Today we are going to look at some of the individuals who have been implicated in the Panama Papers.

As we mentioned in our first post on this topic, simply holding money offshore is not a crime and there are many legitimate reasons to do so. It’s only when individuals or companies use tax havens to avoid taxes they are liable for, or to launder money from criminal activities that there is a problem.

However, as many public figures are now finding out, from world leaders to celebrities, the idea of keeping large sums of money often provokes distrust among the population at large. This is particularly true for world leaders, who typically nurture an image of being a “public servant” and in some cases actually make fighting corruption part of their brand.

Now let’s look at some of the public figures who have been implicated in the Panama Papers, either directly or by association and the possible consequences:

Icelandic Prime Minister Gunnlaugsson – The man with the long name also has a surprisingly long line of 0s in his bank accounts. He has become the first political casualty of the Panama Papers, forced to resign after he failed to disclose his family’s $4 million in bonds held in a shell company in the British Virgin Islands.

UK Prime Minister David Cameron – The fall of the Icelandic Prime Minister may be particularly worrying for David Cameron. After putting out numerous statements that distanced himself from the matter, Cameron admitted that he benefitted from a family offshore fund to the tune of $56,000. This puts his image as a champion fighter of tax evasion in doubt, in a country that is considered the biggest global tax haven.

Chinese President Xi Jinping – It was likewise inconvenient for the Chinese President’s brother-in-law to be named as the owner of multiple shell companies in the British Virgin Islands totaling hundreds of millions of dollars. The Chinese President has been leading an anti-corruption crackdown in his country, but unlike in Iceland or the UK, China’s authoritarian government keeps a tight lid on dissent and information, meaning he likely won’t face too many political consequences.

Russian President Vladimir Putin – While Putin is not directly named in the Panama Papers many childhood friends, business associates and former ministers have been shown to benefit from a number of secretive financial deals, the profits of which have been kept in various offshore accounts. Like Xi, being an authoritarian probably will keep Putin above the fray.

Barcelona soccer star Lionel Messi – While it shouldn’t be a surprise that one of the wealthiest sports stars in the world has substantial offshore wealth, being linked to the Panama Papers will be uncomfortable for the Barcelona star as he seeks to put tax evasion cases to rest in his native Argentina.

Additional source: USA Today

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.