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US Treasury boss Jacob Lew supports crackdown on tax havens as G20 considers blacklist in wake of Panama Papers
The G20 ministers also warned that the global economy faced a number of serious risks, among them the possibility that Britain leaves the EU.
PUBLISHED : Saturday, 16 April, 2016, 3:04pm
UPDATED : Saturday, 16 April, 2016, 3:04pm
Agence France-Presse
The world’s leading economies took a step on Friday toward denying tax evaders and money launderers around the world the ability to hide behind anonymous shell companies.
Acting in the wake of the “Panama Papers” scandal, finance chiefs of the Group of 20 powers meeting in Washington supported proposals requiring authorities to share the identities of shell companies’ real owners.
They also backed creating a blacklist of international tax havens that do not cooperate with information-sharing programmes.
Making the beneficial owners of companies, trusts and foundations transparent “is vital to protect the integrity of the international financial system”, the G20 finance ministers and central bank governors said in a statement.
Doing so is important “to prevent misuse of these entities and arrangements for corruption, tax evasion, terrorist financing and money laundering”.
The declaration came hours after the Panama Papers scandal claimed another victim. Spain’s industry minister Jose Manuel Soria resigned on Friday over allegations he had links to offshore companies.
Files from the leaked document trove of Panama law firm Mossack Fonseca showed Soria was an administrator of an offshore firm in 1992. He was just the latest in a number of powerful officials, including the leaders of Russia, Iceland, Britain and Argentina, linked by the Panama Papers to offshore tax havens.
[Finance ministers and central bankers of the G20. Photo: Xinhua]
The leak provided the impetus for the strong proposals to the G20 on Thursday by Germany, France, Italy, Spain and Britain.
The five said they would take the lead on creating an international database that provides tax and other authorities the identities of the owners of shell companies, trusts, foundations and other vehicles often used to hide assets.
The move laid out a challenge to both Britain and the United States, where the use of shell companies is legal and widespread. But US Treasury Secretary Jacob Lew expressed support.
“We need to act to deal with tax shelters and the problems of the international tax system permitting havens,” which most people see as “unfair,” he said.
Under pressure from the IMF and World Bank to help prevent the world economy from stalling, the G20 also pledged to support growth with more investment and other fiscal actions, rather than relying on central banks to stimulate activity with monetary measures such as negative interest rates.
“Monetary policy alone cannot lead to balanced growth,” they said. “We will use fiscal policy flexibly to strengthen growth, job creation and confidence.”
Lew said the talks focused on the need for more investment in sustainable infrastructure.
“Today’s low interest rate environment makes it an opportune time to make growth-enhancing infrastructure investments,” he said.
But the rest of the world should not depend on the United States to spur demand, Lew warned.
“The United States cannot and must not be the only engine of growth, nor the importer of first and last resort for the global economy,” he said. “All major economies need to deploy a full toolkit of economic policy measures.”
The G20 ministers, however, warned that the global economy faced a number of serious risks, among them the possibility that Britain would pull out of the European Union.
“Geopolitical conflicts, terrorism, refugee flows, and the shock of a potential UK exit from the European Union also complicate the global economic environment,” they said.
The G20 statement came during the IMF and World Bank Spring Meetings, where officials warned of potentially severe damage to regional and global economies from the so-called Brexit.
With two months to go before Britain holds a referendum on splitting with the EU, IMF chief Christine Lagarde called on the two sides to save their “long marriage.”
“Because keeping Europe together after what it has gone through over the last century, and what the risks are on the horizon ... is actually a huge asset which is vastly underrated in my view,” she said.
Pakistan PM says to resign if found guilty in Panama Papers probe
AFP on April 23, 2016, 3:00 am
Islamabad (AFP) - Pakistan's Prime Minister Nawaz Sharif on Friday pledged to resign if a probe related to the Panama Papers tax scandal found his family had committed any wrongdoing.
Three of Sharif's children were named in a vast leak of documents from Panama-based law firm Mossack Fonseca this month that has revealed how the wealthy hide their money.
The premier has announced a probe into the revelations contained in the Panama Papers, which claim his children owned London property through an offshore company.
His daughter, Maryam, who has been tipped to be his political successor, was named along with his sons Hasan and Hussain.
Sharif defended his family on television Friday, saying the claims had been investigated twice, decades ago, under the tenure former military ruler Pervez Musharraf.
He also pledged to create a new judicial commission headed by a retired judge to investigate the allegations, after his first proposal was rejected by lawmakers.
"If the allegations levelled against me any my family members are proved, I will resign without any delay," he said.
"I hereby announce (I will) write to the chief justice, asking him to lead the judicial commission, which will investigate revelations made in the Panama Papers."
Allegations of corruption are particularly sensitive for Pakistan's government, which is receiving a $6.6 billion bailout package from the IMF.
Sharif has come under pressure over the claims, and last week a member of the public called him "useless" and put him up for sale on eBay -- with bids soaring to more than $90,000.
The post, which went viral in Pakistan, promised to throw in Sharif's brother Shahbaz, the current governor of Punjab province, for free.
Family of Iceland president's wife tied to 'Panama Papers'
AFP on April 26, 2016, 6:33 am
Reykjavik (AFP) - Iceland's president on Monday denied knowing that his wife's family had offshore investments which were revealed in the "Panama Papers" leak following revelations in the Icelandic media.
Olafur Ragnar Grimsson, 72, who has been president since 1996, confirmed last week that he would seek another term as president in June's election.
The case could prove embarrassing for Grimsson who has made a virtue of his integrity and assured US broadcaster CNN on Friday that neither he or his family would be linked to the Panama Papers leak of millions of financial records.
But the English language website Reykjavik Grapevine reported that the family of Grimsson's British-Israeli wife, Dorrit Moussaieff, had an interest in a British Virgin Islands company, Lasca Finance Limited.
Between 2000 and 2005, the company received part of the profits from the Moussaieff Jewellers chain.
Grimsson said that even if such transactions had happened, he and his wife were unaware of them.
"Neither the president nor Dorrit have any knowledge of this company, nor have they heard about it before," said the president's office, according to Iceland's Kjarninn news site.
Grimsson's spokesman could not be reached for comment Monday.
The country fell into crisis this month after former prime minister Sigurdur David Gunnlaugsson was pressured to resign amid mass protests over a hidden offshore account worth millions of dollars.
Grimsson played a calming role during the turmoil, opposing the head of government who wanted to dissolve parliament immediately. On April 7, he swore in a new prime minister, Sigurdur Ingi Johannsson.
The presidency in Iceland is largely a ceremonial position, and Grimsson has limited powers. He can call a referendum on a law passed by parliament if it is felt the whole nation should have a say.
Grimsson's earlier terms were marked by the financial crisis of 2008 which devastated the small island's economy.
He subsequently convened two referendums, in 2010 and 2011, over the astronomical sums demanded by Britain and the Netherlands after savings bank Icesave went bust.
Hong Kong government sidesteps calls for action after revelations in Panama Papers
There is no law against setting up firms outside the city’s jurisdiction, minister says, after leaks reveal Hong Kong’s key role as a tax haven intermediary
PUBLISHED : Wednesday, 27 April, 2016, 7:27pm
UPDATED : Wednesday, 27 April, 2016, 7:35pm
As European nations fast-track proposals to crack down on tax avoidance after the Panama Papers revealed how the world’s wealthy hide their riches, the Hong Kong government sidestepped questions on whether it would take any action.
New official data also revealed that a government agency set up to combat money laundering had passed on more cases than ever for criminal investigation.
The government, however, remained tight-lipped over calls by lawmakers to investigate names linked to secretive Panamanian law firm Mossack Fonseca or investigate potential illegality among the city’s middlemen who dispense offshore advice.
Hong Kong was revealed in the leaked Panama Papers as having the most intermediaries offering services for the purpose of setting up offshore companies to help wealthy clients shelter money. The city was labelled a “top centre for secretive offshore financial services”.
In a written response to questions from accountancy sector lawmaker Kenneth Leung, the government said such services were not illegal in Hong Kong.
“There is no law in Hong Kong prohibiting companies or commercial entities from setting up companies in jurisdictions outside Hong Kong,” said Secretary for Financial Services and the Treasury Professor Chan Ka-keung.
But he said the authorities would investigate any reports of suspicious financial transactions.
Leung maintained Hong Kong had “a role and responsibility to tell the international business community and foreign governments that Hong Kong is not a tax haven nor a centre for money laundering”.
He added that the city had “the required legislation, which have met international standards”.
The lawmaker was also concerned about middlemen posing as qualified white-collar workers offering tax haven-type services, which could harm the image of lawyers and accountants.
Last week former civil service minister Joseph Wong Wing-ping said Hong Kong had no choice but to follow the global trend to tighten interest declaration systems and improve transparency in the wake of the Panama Papers.
New figures disclosed in the Legislative Council showed the number of cases referred by the government’s Joint Financial Intelligence Unit (JFIU) for criminal investigation climbed to 10,454 last year, a fresh high, from 7,662 in 2014, accounting for 25 per cent of all reported cases.
On Sunday, the South China Morning Post reported that the overall number of reports of suspected dodgy financial dealings – known formally as suspicious transaction reports – made to the JFIU reached an all-time high of 42,555 in 2015.
Despite the rising caseload, there was just one investigator last year for every 895 potential money laundering cases.
Chan gave no indication that extra resources would be made available, telling lawmakers: “The JFIU will review and adjust its workload in handling [suspicious transaction reports] from time to time to cope with the increased caseload.”
Two more Hong Kong universities admit they also have offshore companies after Panama Papers exposed PolyU
Renewed calls for a review of transparency standards after fresh disclosures by the University of Hong Kong and Chinese University
PUBLISHED : Wednesday, 27 April, 2016, 10:19pm
UPDATED : Wednesday, 27 April, 2016, 10:36pm
Jeffie Lam Stuart Lau
Two more Hong Kong universities have admitted they have offshore companies, days after the leaked Panama Papers exposed the secretive commercial operations of Polytechnic University.
The disclosures by the University of Hong Kong (HKU) and Chinese University of Hong Kong (CUHK) prompted more calls for a review of the transparency standards for business dealings of publicly funded academic bodies.
A number of pan-democratic lawmakers, including Kenneth Leung of the accountancy sector and Dr Fernando Cheung Chiu-hung, a PolyU academic, said they planned to investigate the matter and raise it in the Legislative Council after the Post’s exposé.
The first university discovered to own secretive BVI firms, PolyU, faces more questions as it did not name the two BVI firms in its financial reports.
CUHK has consistently done so in its financial reports.
In reply to a Post inquiry, HKU confirmed it owned five BVI firms, two of them set up in 2000 to hold 11.7 per cent shares in an unnamed biotechnology company. They had been dormant for some years, it said.
The other three firms were set up by Versitech, a not-for-profit technology transfer arm wholly owned by HKU. One had been dormant and the two still in operation hold 20 per cent shares in two medical services companies.
While defending the use of offshore companies as a “measure of risk management” without using public money, HKU pledged to consider closing dormant companies when necessary.
Chinese University confirmed it had held a dormant, unprofitable BVI firm, HKIX Hong Kong Limited, since 2000, adding: “The original purpose is take advantage of the flexibility in shares transfer in BVI for spin-offs in the process of technology transfer that might ... attract international investors.”
The remaining five publicly funded local universities said they had no offshore companies.
CUHK has given more details than HKU or PolyU, saying the decision to set up the firm was approved by the governing council.
PolyU, meanwhile, set up companies in 2012 and 2013 upon the approval of its president, Timothy Tong Wai-cheung, calling it a last alternative to exit from loss-making joint ventures. Some council members told the Post they had no recollection of being told about such firms.
A closer look at the financial reports indicate inconsistent levels of disclosure among institutions.
While CUHK listed the firm in its financial reports, HKU included only one of five BVI firms in annual reports. But Versitech named all its BVI firms in publicised reports.
PolyU’s BVI subsidiaries were not published anywhere, even though it insisted it complied with professional standards. The firms only came to light after the leak of Panamanian law firm Mossack Fonseca’s documents, uncovered based on a signature of Nicholas Yang Wei-hsiung, then PolyU vice-president and now Hong Kong’s secretary for innovation and technology.
Lawmaker Leung said Chinese University demonstrated a good example of proper disclosure: “The schools should comply with the highest standards of accounting disclosure and obtain the approval from the [council].”
But former education sector lawmaker Cheung Man-kwong, a CUHK council member in 2001, said he had no memory: “Usually the council only exchanged ideas on hotly debated issues. Other matters like forming companies were quickly dealt with by a show of hands.”
HKU council member Eric Cheung Tat-ming said the council would look into matters that would potentially pose a “reputational risk”.
Panama Papers source releases manifesto, says motivation was 'scale of injustices'
Reuters
First posted: Friday, May 06, 2016 02:39 PM EDT | Updated: Friday, May 06, 2016 02:58 PM EDT
Security guards are reflected by a door where placards featuring the portraits of Chinese Communist Party leader Xi Jinping and British Prime Minister David Cameron are displayed by protesters, at the entrance of the regional head office of Panama-based law firm Mossack Fonseca in Hong Kong, Tuesday, April 12, 2016. (AP Photo/Kin Cheung)
BERLIN - Sueddeutsche Zeitung said on Friday that the source of millions of documents leaked to the German newspaper from Panamanian law firm Mossack Fonseca had sent them a manifesto, saying his motivation was the "scale of injustices" the papers revealed.
The source had never before publicly stated why he leaked the documents, now known as the Panama Papers, said Sueddeutsche Zeitung (SZ), one of Germany's most reputable newspapers.
In an 1,800 word manifesto published on the SZ website on Friday, the source, calling himself "John Doe", praised others who have leaked secret and sensitive documents, such as Edward Snowden, who revealed details of the U.S. government's mass surveillance program.
"For his revelations about the National Security Agency (NSA), he deserves a hero's welcome and a substantial prize, not banishment," the source wrote.
He also said he would be willing to co-operate with law enforcement agencies.
READ THE MANIFESTO HERE.
He called on the European Commission, Britain, the United States and other nations to take steps to protect people who reveal private information about such sensitive issues rather than punishing them.
"Legitimate whistleblowers who expose unquestionable wrongdoing, whether insiders or outsiders, deserve immunity from government retribution, full stop," he said.
The source, who contacted the paper a year ago with an offer of encrypted internal documents from Mossack Fonseca, denied being a spy but said he had recognized the "scale of injustices" described in their contents.
The documents cover a period over almost 40 years, from 1977 until last December, and purport to show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals and tax evasion.
Reuters could not independently verify whether the source was the same person who leaked the original documents. The source's identity and gender is not known.
Sueddeutsche Zeitung spent more than a year, along with other media outlets and the International Consortium of Investigative Journalists, analysing the huge cache of documents.
On Friday, Sueddeutsche Zeitung introduced the manifesto by saying: "Now 'John Doe', the anonymous source, has sent the SZ a manifesto, which can be read as an explanation of his actions - and as a call to action."
The source welcomed the fact that the leak had triggered a debate on "wrongdoing by the elite" but said not enough action had been taken.
"For the record, I do not work for any government or intelligence agency, directly or as a contractor, and I never have," he said.
The source was critical of banks, financial regulators, tax authorities, the courts, and the legal profession, as well as the media, saying he had offered the documents to several major media outlets that had chosen not to cover them.
"The collective impact of these failures has been a complete erosion of ethical standards, ultimately leading to a novel system we still call Capitalism, but which is tantamount to economic slavery."
The source ended the manifesto by saying "inexpensive, limitless digital storage and fast internet connections" should help digitise the revolution against income inequality.
