By- Durgesh Desai

Before 3rd April 2016, Panama was known around the world for the Panama Canal. That Sunday the world came across 11.5 million leaked documents created by the Panamanian law firm Mossack Fonseca. Dubbed as the Panama Papers, it revealed the complex web of shell companies formed by the rich and the powerful around the world in tax havens like Panama, British Virgin Islands, Lichtenstein and Switzerland among others, for the purpose of money laundering and tax avoidance. Several leaders including Vladimir Putin, Nawaz Sharif and King Salman were named in these papers.


These are the countries which offer low or no taxes for residents and non-residents. The banking infrastructure in these countries require businesses to disclose minimal information to start a new venture which makes them ideal places for the rich to store their wealth from the prying eyes of the general public.


As their name suggests, these companies are like empty shells but appear to be legitimate businesses from outside. Such firms are used to manage the wealth and protect the identity of the owners. The management comprises of professionals who let their name appear on the company’s letterhead. The rich park their funds in these companies from where it is invested in buying assets across the globe. The ownership of such shell companies can be easily transferred making them a useful vehicle for money across countries.


Gerard Ryle, Director of Investigative Consortium of Investigative Journalists (ICIJ), who carried out the leak, called it “probably the biggest blow the offshore world has ever taken because of the extent of the documents”. The first casualty was Iceland’s PM Sigmundur David Gunnlaugsson who had to resign since his name along with his wife’s appeared on the list.


Almost 500 Indians had set up offshore companies around the world with the help of Mossack Fonseca.  Famous personalities like Amitabh Bachchan, Aishwarya Rai, Omkar Kanwar of Apollo Tyres etc. were named in the leaks. The central government swiftly formed a multi-party agency which is expected to probe the cases of all the Indians who have been named in the Panama Papers.

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