An almighty flurry of activity, both in investigations and embarrassment on the part of 'politically exposed persons,' attended the massive data leak of Mossack Fonseca’s files in April. A slow tidal wave of revelations, new investigations and new laws has continued ever since.

The International Consortium of Investigative Journalists, which originally publicised the story in collaboration with the German daily Süddeutsche Zeitung and scores of other media partners, now says that at least 150 inquiries, audits or investigations into the revelations are underway in 79 countries – a sizeable proportion of the 200-odd states on Earth, making the phenomenon a truly global one.

The ICIJ estimates that the revelations cancelled $135 billion from the share value of nearly 400 publicly traded companies. A review that it conducted of share price movements of randomly-selected corporations with ties to the Panama Papers revealed that the Swiss company Glencore and the UK’s HSBC Holdings Plc both suffered in that way. Another review, by Hannes Wagner of Bocconi University in Milan and two co-authors, found that the revelations wiped out $230 billion in market capitalisation around the world, spread among the shareholders of 1,100 companies – a larger figure than all fines and losses in the major data leaks and scandals involving Home Depot, Target, Vokswagen and Enron combined.

Governments are investigating more than 6,500 taxpayers and companies, and have recouped at least $110 million so far in unpaid taxes or asset seizures. Seizures, meanwhile, have gone into the tens of millions of dollars in unpaid taxes or other assets, including more than $80 million in Colombia, $1 million in Slovenia and 375 pounds of silver bullion in Australia. Billions more are being traced for potential tax evasion. Nine Mossack Fonseca offices have closed in various jurisdictions (the one in San Salvador forcibly, with police seizing the computers lest the firm destroy evidence) and, as readers of Compliance Matters know, the regulator of the British Virgin Islands has levied its biggest ever fine of $400,000 on it for anti-money-laundering failures.

Many of the revelations, as we have seen, have implicated politically exposed persons or PEPs. Government officials in three countries have resigned as a result, including the Icelandic prime minister and an energy and industry minister. Ireland, Mongolia, Panama and even the United States are planning on new laws and rules of varying efficacy to fight money laundering and/or tax evasion because of the leaks.

Mossack Fonseca, meanwhile, is claiming that none of the documents can be used in a court of law because they were leaked as a result of an illegal cyber-breach. One of its partners tweeted in celebration six months after the scandal came to light, glorying in the fact that no charges had been laid at his firm's door.

PEP investigations

The issue of hidden company ownership among politicians has not gone away since April. One continuing PEP investigation of which all financial crime directors ought to be aware concerns President Mauricio Macri of Argentina, who was the secret director of Fleg Trading, a company registered in the Bahamas, during his eight-year tenure as mayor of Buenos Aires. He has fallen foul of judicial authorities because he failed to declare his interest, in much the same way as the former Icelandic premier. The crime of maliciously failing to complete one's tax declaration carries a maximum sentence of two years' imprisonment, although for an influential politician the minimum term of 15 days might apply.

Meanwhile, Nawaz Sharif, the premier of Pakistan, has had to plead his innocence before the Supreme Court. His lawyer claimed recently that he is not the beneficial owner of any shell companies or offshore-held property, although the PEP declined to mention any offshore holdings that his offspring might have. The court recently gave those individuals a ‘last chance’ to testify about the subject.

Sharif seems to have used his political power to stall any Parliamentary investigation into the Panama Papers, but the Supreme Court (cheered on by Imran Khan, the cricketer-turned-politician) has set up a one-judge investigative commission for the purpose. It is not known when the judge, who also sits on the Supreme Court, is likely to report, but the court has lent him its full powers to investigate. Violence on the streets has accompanied every step of the process.

Some politicians have had to leave office, while waiting for the outcomes of investigations. Among the fallen are Mihran Poghosyan, 40, an Armenian businessman and civil servant who served as Major-General of Justice and Chief Compulsory Enforcement Officer (in charge of ensuring that all court rulings were enforced) between June 2008 and April this year. The authorities are still investigating him. The Armenian press says that he and his family (including his uncles, Grigor and Mikhail Haroutyunyan) own several 'offshores,' configured in such a way as to make their ownership hard to uncover. He was connected to Bangio Invest SA and wholly owned Sigtem Real Estates Inc and Hopkinten Trading Inc, all three registered by Mossack Fonseca in Panama.

The latter two corporations own an Armenian real estate company, completing the familiar cycle of capital flight and return under a different name. They have (or had) accounts at LGB Bank (Suisse) SA, with Poghosyan being authorised to manage them. The PEP has owned shares in them since 2011, three years into his governmental job, despite his claim to the press that "I, as a government official, do not have any business." Bangio was the sole owner of a now-defunct supermarket chain in Armenia.

Investigations into Mossack Fonseca

The Wall Street Journal reported in July that US prosecutors, led by the Manhattan US attorney’s office and the Justice Department’s main office in Washington, have commenced criminal inquires relating to the Panama Papers. They are reportedly looking at a handful of lower-level Mossack Fonseca employees, but are planning to widen their probe with a view to finding out whether the firm knowingly helped its clients launder money or evade taxes. They also suspect the firm of helping people cover up bribes to foreign officials in contravention of the Foreign Corrupt Practices Act 1977.

Other investigations

The ICIJ and various allied journalistic organisations have been gathering responses to the Panama Papers from government agencies and public statements. According to their research, governments around the globe are investigating more than 6,500 taxpayers and companies. In November alone, governments in Iceland, the United Kingdom, Canada, France, India and Pakistan declared that they were 'probing' nearly 1,300 taxpayers for potential tax evasion.

In Iceland, more than 100 tax cases are under review and 46 cases of potential tax evasion have been referred to prosecutors, according to media reports. Authorities have conducted more than a dozen raids. British authorities revealed that 22 people are under civil and criminal investigations for tax evasion and that the offshore dealings of 43 other wealthy Britons are under review. Companies and properties in the United Kingdom are also being scrutinised as part of an unspecified financial sanctions inquiry, the Government announced. Canada’s Revenue Authority announced that 85 Canadians linked to Panama Papers were under investigation for tax evasion.

France’s Ministry of Finance has announced that it is auditing 560 taxpayers. India’s special Panama Papers taskforce says that it is looking into the offshore activity of 415 Indians, making it the country’s largest-ever tax inquiry. Meanwhile, Pakistan’s Federal Board of Revenue has spotted 20 HNW Pakistanis who did not send in their tax returns during the same periods in which they had relationships with companies set up by Mossack Fonseca.

New revelations about new laws

In October, Handelsblatt Global exposed a leaked 37-page report that stated that Wolfgang Schäuble, Germany’s finance minister, was planning a new law to force HNW Germans to divulge their dealings with offshore shell companies. It claims that this is known as the ‘Panama Law’ in German governmental circles and will operate next year. Penalties for offences under the new law are planned to reach the €50,000 mark, with the statute of limitations for those offences dating back 20 years at least.

Taiwan’s legislative assembly has alighted upon the Panama Papers as a pretext to enact new tax avoidance rules. In July the assembly introduced restrictions on benefits enjoyed by Taiwanese companies that keep profits offshore. New Zealand’s government, meanwhile, launched an inquiry into the country’s foreign trust rules after revelations that its clean reputation was being used as a cover for the sale of tax avoidance vehicles. In July, the government accepted the inquiry’s recommendations and said that it wanted to change the law.

The ICIJ reported in October that, in the light of revelations from the Panama Papers that some former and current government officials had held offshore companies, Mongolia’s Parliament was debating a bill to penalise politicians and public servants who did not declare offshore financial interests. It quoted a tweet from Enkhbayar Battumur, Mongolia’s deputy justice minister, to MongolTV that proclaimed that the bill was to become law. Other countries are following suit.