Category Archives: finance industry

Vladimir Putin says allegations in Panama Papers are an American plot

The New York Times reports: President Vladimir V. Putin dismissed on Thursday reports based on leaked legal documents that some of his close associates had shoveled around $2 billion through offshore accounts in the Caribbean, calling the allegations an American plot to try to undermine Russian unity.

The Russian president, making his first public remarks on the subject, also defended the cellist Sergei P. Roldugin, an old and close friend who was named in reports about the leaked documents, known as the Panama Papers. The cellist was at the center of a scheme to hide money from Russian state banks offshore, the reports said.

Mr. Putin said that Mr. Roldugin, like many Russians, had tried his hand at business, in his case to support his love of music by getting the money to buy expensive instruments.

“Almost all the money he earned he spent on musical instruments that he bought abroad,” Mr. Putin said at a public forum for regional journalists in St. Petersburg, broadcast live by state-run television. The musician had then donated the instruments to government institutions.

On paper, Mr. Roldugin’s shares in various enterprises linked to friends of Mr. Putin, especially Bank Rossiya, give him a net worth of hundreds of millions of dollars. Mr. Roldugin is the artistic director of the House of Music, which trains classical musicians in St. Petersburg. [Continue reading…]

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Panama Papers tie more of China’s elite to secret accounts

The New York Times reports: At least three of the seven people on the Chinese Communist Party’s most powerful committee, including President Xi Jinping, have relatives who have controlled secretive offshore companies, the organization that has publicized a trove of leaked documents about hidden wealth reported on Wednesday.

The disclosures by the organization, the International Consortium of Investigative Journalists, risked new embarrassment for the Chinese authorities, already unnerved and infuriated by the organization’s leaks of the documents, known as the Panama Papers.

Chinese government censors have moved aggressively since the first release of leaked documents on Sunday to purge any media’s mention of them in China, going so far as to block Internet searches and online discussions that involve the words “Panama Papers.” [Continue reading…]

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Panama Papers firm linked to over 1,000 U.S. companies mostly in Nevada and Wyoming

USA Today reports: The law firm at the hub of a global financial scandal has links to more than 1,000 U.S. companies, formed mostly in Nevada and Wyoming since 2001, but appears to have largely escaped the scrutiny of U.S. financial regulators — at least in public.

The leak this week of more than 11 million records from the Panamanian firm, Mossack Fonseca, has led to a global uproar that prompted Iceland’s prime minister to step aside Tuesday. An international consortium of journalists has reported the documents tie the firm, which specializes in shell companies that can be used to conceal assets, to Russian oligarchs, former heads of state and world soccer’s scandal-plagued governing body.

Yet despite those apparent dealings and its operations in the United States, the firm has appeared in only a scattering of court cases and regulatory filings. Most involve government attempts to track money the authorities believed had been concealed behind overseas shell companies the firm helped establish.

The Justice Department is “reviewing the reports” published by international journalists, the head of its Criminal Division, Leslie Caldwell, said Tuesday, but declined to elaborate.

The firestorm around Mossack Fonseca has been tied mostly to its work for foreign customers. But state incorporation records show the firm helped set up nearly 1,100 business entities in the United States since 2001.

The majority of U.S.-based companies linked to Mossack Fonseca were formed in Nevada by M.F. Corporate Services (Nevada) Limited, a one-employee company based out of a low-slung tile-roofed office building 20 miles from the Las Vegas strip. MF Nevada has served as the registered agent for 1,026 business entities since 2001, according to USA TODAY’s review of Nevada business documents. [Continue reading…]

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Panama Papers law firm, Mossack Fonseca, says data hack was external, files complaint

Reuters reports: The Panamanian lawyer at the centre of a data leak scandal that has embarrassed a clutch of world leaders said on Tuesday his firm was a victim of a hack from outside the company, and has filed a complaint with state prosecutors.

Founding partner Ramon Fonseca said the firm, Mossack Fonseca, which specializes in setting up offshore companies, had broken no laws and that all its operations were legal. Nor had it ever destroyed any documents or helped anyone evade taxes or launder money, he added in an interview with Reuters.

Company emails, extracts of which were published in an investigation by the U.S.-based International Consortium of Investigative Journalists and other media organizations, were “taken out of context” and misinterpreted, he added.

“We rule out an inside job. This is not a leak. This is a hack,” Fonseca, 63, said at the company’s headquarters in Panama City’s business district. “We have a theory and we are following it,” he added, without elaborating. [Continue reading…]

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Unlike the secrets exposed by the Panama Papers, big U.S. tax dodging is done in full public view

Quartz reports: Unlike in emerging markets and in Europe, the main US tax avoidance problem isn’t about individuals. Data on financial assets such as stocks and bonds, instruments in which affluent people tend to park their wealth, show a relatively small share of US money is kept offshore.

No, in the US, tax avoidance has more to do with corporations. And much of that dodging has increasingly been done in the clear, bright light of public view.

In his terrific recent book on what he calls the “scourge of tax havens,” Gabriel Zucman, an economist at the University of California, Berkeley, estimates that the artificial shifting of profits to low-tax locales such as Ireland, Switzerland, and the Bahamas reduces US corporate tax liabilities by $130 billion per year.

But the US Treasury Department is taking steps to address this. On April 4, it imposed new limits on so-called tax inversions, a type of deal in which a US company merges with a smaller firm in a foreign country where taxes are lower, adopts the foreign address, and takes advantage of the discrepancy in tax rates.

Such deals have been one of the most popular type of M&A transaction in recent years. The $160 billion deal between US drug giant Pfizer and Ireland-based Allergan is perhaps the most eye-popping example of this. [Continue reading…]

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Panama Papers reveal a global web of corruption and tax avoidance

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Matthew Yglesias writes: Even as the world’s wealthiest and most powerful nations have engaged in increasingly complex and intensive efforts at international cooperation to smooth the wheels of global commerce, they have willfully chosen to allow the wealthiest members of Western society to shield their financial assets from taxation (and in many cases divorce or bankruptcy settlement) by taking advantage of shell companies and tax havens.

If Panama or the Cayman Islands were acting to undermine the integrity of the global pharmaceutical patent system, the United States would stop them. But the political elite of powerful Western nations have not acted to stop relatively puny Caribbean nations from undermining the integrity of the global tax system — largely because Western economic elites don’t want them to. [Continue reading…]

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The Panama Papers: Where are the Americans?

Politico reports: The Panama Papers sent ripples across the globe Monday after revealing that 140 politicians from more than 50 countries, including Russian President Vladimir Putin and Iceland President Sigmundur David Gunnlaugsson, were linked to offshore accounts set up by the Panamanian law firm Mossack Fonseca.

Despite its breadth, the scandal so far has barely touched American individuals and companies. There were no mass protests, as occurred in Iceland where protesters demanded the resignation of Gunnlaugsson; no U.S. leaders were forced to deny accusations of tax evasion as Putin did.

How have Americans so far escaped the biggest leak of financial data of all time? It’s not because wealthy Americans don’t use offshore bank accounts to avoid U.S. taxes: they do — to the tune of $1.2 trillion in 2014, according to one estimate. Some professors have suggested that Americans may have disguised their accounts at Mossack Fonseca behind another party. But there’s also a more structural answer, tax experts say — one that has to do with shifts in global financial policy — and, to an extent, taste.

Tax evasion overall is a far larger problem in developing countries, where norms around paying taxes are weak and rules designed to stop such evasion are ineffective. And when wealthy Americans do want to evade taxes, they turn to Bermuda, or the Cayman Islands, or Singapore. They don’t park their money in Panama. [Continue reading…]

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Why Vladimir Putin will hardly flinch at Panama paper cut

By Anastasia Nesvetailova, City University London

The world remains gripped by the revelations made in the papers leaked from Panamanian law firm Mossack Fonseca. But Moscow has greeted the coverage with what might be characterised as calm indifference.

Aware that president Vladimir Putin would be linked to offshore schemes, the people around him began their PR manoeuvres ahead of time. The week before the papers were released, the Kremlin was forewarning the public about an imminent “information attack aimed at destabilising Russia in light of its success in Syria”.

The reaction of the Russian individuals mentioned in the Panama Papers – at least those who have gone on record so far – has also been calm. Some have denied knowledge of ownership of any offshore accounts. Considering the way offshore structures operate and set up, is not an implausible proposition.

Others queried the authenticity of the documents (which is easy, as not all of the original documents have been presented). Some have admitted an earlier relationship with an offshore business but have said the company in question had been sold or shut down. Again, that’s not an odd claim considering that many offshore shells survive as empty, or fossil corporations after their corporate parents have no further use for them and don’t want to go to the expense of shutting them down.

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Mossack Fonseca serviced Rami Makhlouf, Assad’s cousin and ‘poster boy for corruption’

The Guardian reports: The firm at the centre of the Panama Papers leak serviced a string of companies for a top financier in Bashar al-Assad’s government in the face of international concern about corruption within the Syrian regime.

Documents show Mossack Fonseca’s links to Rami Makhlouf, a cousin of the Syrian president, who was described in US diplomatic cables as the country’s “poster boy for corruption”.

Washington imposed sanctions on Makhlouf in February 2008, saying he was a regime insider who “improperly benefits from and aids the public corruption of Syrian regime officials”. It blacklisted his brother Hafez Makhlouf in 2007.

The documents show, however, that the Panamanian firm continued to work with the Makhloufs, and in January 2011 it rejected the advice of its own compliance team to cut ties with the family as the crisis in Syria began to unfold.

Documents show a Mossack Fonseca compliance officer wrote: “I believe if an individual is found on a sanction list then this is a serious red flag and we should make every effort to disassociate ourselves from them.” [Continue reading…]

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Iceland PM calls to dissolve parliament after tax scandal

Reuters reports: Iceland’s prime minister asked the president on Tuesday to dissolve parliament in the face of a looming no-confidence vote and protests, after leaked files showed his wife owned an offshore firm with big claims on the country’s collapsed banks.

After a meeting with Prime Minister Sigmundur Gunnlaugsson, President Olafur Ragnar Grimsson said he had asked for talks with the main parties before making a decision. Dissolving parliament would almost certainly lead to a new election.

“I was not ready to agree to that request (for dissolving parliament) until I had a discussions with the leaders of other parties on their stand,” Grimsson told reporters.

“I do not think it is normal that the prime minister alone … should be given the authority to dissolve the parliament without the majority of the parliament being satisfied with that decision.”

Earlier on Tuesday, Gunnlaugsson said on his Facebook page: “I would dissolve parliament and call for new elections as soon as possible” if he lost support among his ruling coalition members.

On Monday, the opposition filed a motion of no-confidence and thousands of Icelanders gathered in front of parliament, hurling eggs and bananas and demanding the departure of the leader of the centre-right coalition government, in power since 2013.

Gunnlaugsson would be the first casualty of the “Panama Papers” a leaked collection of documents revealing the financial arrangements of politicians and public figures from around the world. [Continue reading…]

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Hundreds of Israelis exposed in Panama Papers financial scandal

Haaretz reports: Some 600 Israeli companies and 850 Israeli shareholders are listed in the leaked documents of Panamanian law firm Mossack Fonseca, a leader in creating shell companies that often serve to conceal ownership of assets.

The leaked files, which were obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with Haaretz and other media organizations, provide a glimpse of the economy that until now had been hidden from the Israeli public.

There is a number of prominent names among the shareholders. It is important to note that as long as holdings in the companies and their revenues — if any — are reported as required to Israeli tax authorities, owning the company is not against the law.

Mossack Fonseca’s branch in Israel is headed by attorney Amir Maor. Callers to the branch are informed by a voicemail message that they have reached the offices of “The Company for Establishing Companies.”

Reached by telephone, Maor stated that Mossack Fonseca informed its Israeli branch last week that files had been stolen after its computer systems were breached. “Any information you use [from these files] is like using stolen data,” he said, refusing to give further comment.

The leaked files mention Sapir Holdings, a company registered in 2002 in the Virgin Islands. The owner and its only director was top-ranking lawyer Jacob Weinroth. He was indicted for money laundering in late 2009 and acquitted two years later of all charges against him. During the trial, it emerged that the company had received 30 million shekels ($7.95 million) for services rendered from Uzbek-Israeli entrepreneur Michael Cherney and Russian-Israeli businessman Arcady Gaydamak.

The fraudulent real estate deal of 2002 with the Greek Orthodox Patriarchate was also brought up in the trail. The failed deal, in which expensive lands in Jerusalem were offered to the State of Israel for a 999-year lease, was intended to be carried out by Christian Lands of Israel, a company created by Mossack Fonseca, which Weinroth represented. Company documents, like those requesting power of attorney for Weinroth, are among those found in the leaked files. [Continue reading…]

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The Panama Papers

The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe’s most prominent figures.

The International Consortium of Investigative Journalists, together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, spent a year sifting through 11.5 million leaked files to expose the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more. [Continue reading…]

The Guardian reports: The Panama Papers reveal:

  • Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
  • A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend – a cellist called Sergei Roldugin – is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort where in 2013 Putin’s daughter Katerina got married.
  • Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
  • Six members of the House of Lords, three former Conservative MPs and dozens of donors to UK political parties have had offshore assets.
  • The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
  • Twenty-three individuals who have had sanctions imposed on them for supporting the regimes in North Korea, Zimbabwe, Russia, Iran and Syria have been clients of Mossack Fonseca. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.
  • A key member of Fifa’s powerful ethics committee, which is supposed to be spearheading reform at world football’s scandal-hit governing body, acted as a lawyer for individuals and companies recently charged with bribery and corruption.
  • One leaked memorandum from a partner of Mossack Fonseca said: “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”

[Continue reading…]

Learn more at the International Consortium of Investigative Journalists, Suddeutsche Zeitung, the BBC, and the Guardian.

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HSBC and Citibank aided firm at center of international bribery scandal

Huffington Post reports: No business can operate without bankers — not even the bribery business.

British financial giant HSBC and American bailout kingpin Citibank processed transactions, managed money and vouched for Unaoil, a once-obscure firm that is now at the center of a massive international corruption scandal. Police raided Unaoil’s Monaco offices and interviewed its executives on Thursday, a day after The Huffington Post and Fairfax Media first exposed the company’s practices. Law enforcement agencies in at least four nations are involved in a wide-ranging probe of the company and its partners.

Halliburton, KBR and other corporate conglomerates relied on Unaoil to deliver them lucrative contracts with corrupt regimes in oil-rich nations. But without the help of banks like HSBC and Citibank, none of Unaoil’s operations would have been possible. [Continue reading…]

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World economy stands on the cusp of another crash, warns former Bank of England governor

The Telegraph reports: Former Bank of England Governor Lord Mervyn King has warned that the world is on the cusp of another crash because regulators’ have failed in their attempts to reform the financial system in the wake of the last crisis.

“Another crisis is certain, and the failure…to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later,” Lord King says in his new book, the exclusive serialisation of which starts in The Telegraph this weekend.

Since the last crisis, “governments and regulators have been hyperactive at the national and international level” but “bankers and regulators have colluded in a self-defeating spiral of complexity”, he claims. [Continue reading…]

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Wall Street declares war on Bernie Sanders

Bill Black writes: Wall Street billionaires are freaking out about the chance that Bernie Sanders could be elected President. Stephen Schwarzman, one of the wealthiest and most odious people in the world, told the Wall Street Journal that one of the three principal causes of the recent global financial trauma was “the market’s” fear that Sanders may be elected President. Schwarzman is infamous for ranting that President Obama’s proposals to end the “carried interest” tax scam that allows private equity billionaires like Schwarzman to pay lower income tax rates than their secretaries was “like when Hitler invaded Poland.”

Schwarzman and Pete Peterson co-founded the private equity firm Blackstone. Peterson leads the effort to destroy the safety net in America. His greatest dream is to privatize Social Security so that Wall Street could increase its revenues by tens of billions of dollars. Blackstone is a major owner of Sea World, and it was in this sphere that Schwarzman went beyond his delusional rants about Hitler and became vile. When an Orca killed its trainer, Schwarzman lied and blamed the death on the trainer, claiming that Sea World “had one safety lapse — interestingly, with a situation where the person involved violated all the safety rules that we had.”

Schwarzman’s claim that the global financial markets are tanking because of Bernie’s increasing support is delusional, but it is revealing that he used the most recent market nightmare as an excuse to attack Bernie. The Wall Street plutocrats, with good reason, fear Bernie – not Hillary. Indeed, it is remarkable how vigorous and open Wall Street has been in signaling through the financial media that it has no problem with Hillary’s Wall Street plan. CNN, CNBC, and the Fiscal Times, under titles such as: “Here’s Why Wall Street Has Little to Fear from Hillary Clinton,” pushed this meme. [Continue reading…]

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Iran sanctions: Middle East stock crash wipes £27bn off markets as Tehran enters oil war

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The Telegraph reports: Stock markets across the Middle East saw more than £27bn wiped off their value as the lifting of economic sanctions against Iran threatened to unleash a fresh wave of oil onto global markets that are already drowning in excess supply.

All seven stock markets in the Gulf states tumbled as panic gripped traders. London shares are now braced for a second wave of crisis to hit when they open on Monday morning after contagion from China sent the FTSE 100 to its worst start in history last week.

Dubai’s DFM General Index closed down 4.65pc to 2,684.9, while Saudi Arabia’s Tadawul All Share Index, the largest Arab market, collapsed by 7pc intraday, before recovering to end down 5.44pc at 5,520.41, its lowest level in almost five years. [Continue reading…]

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$2.6 trillion worth of investors have pledged to get out of fossil fuels

Climate Progress reports: The divestment movement is really gaining steam — non-coal, non-fossil-fuel powered steam.

Investors representing $2.6 trillion in assets have pledged to cut fossil fuels from their portfolios, a fifty-fold increase from last year. At least 436 institutions have pledged to stop investing in fossil fuels — for moral or financial reasons. Large pension funds and private companies make up 95 percent of the assets, according to analysis released Tuesday by Arabella Advisors.

“If these numbers tell us anything, it’s that the divestment movement is catching fire,” said May Boeve, executive director of campaigners 350.org.

Actor Leonardo DiCaprio, who established a fund for conservation projects in 1998, also announced that he would join the movement by divesting his assets and those of the Leonardo DiCaprio Foundation. [Continue reading…]

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California pension funds lose $5 billion on fossil fuels

San Francisco Chronicle reports: California’s huge public pension funds, CalPERS and the California State Teachers’ Retirement System, have lost more than $5 billion on their fossil fuel investments at a time when some legislators are urging the funds to dump their coal company stocks.

An analysis from the environmental group 350.org found that the two pension funds lost $5.2 billion from June 2014 through June of this year on companies that produce coal, oil and natural gas. And many of those stocks have plunged even further since then, driven down by sinking oil and coal prices.

“It’s important to see that fossil fuels in general, and coal in particular, are risky bets for the pension system,” said Brett Fleishman, senior analyst with 350.org, which promotes fossil fuel divestment as a way to fight climate change. “When folks are saying divestment is risky, we can say, ‘Well, not divesting is risky.’” [Continue reading…]

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