The Sunday Leader

Panama Papers Expose Sri Lanka’s Loopholes

  • CBSL requests for original documents from the Panamanian Central Bank

by Amavasya Sirisena

The exposures of Panama Papers, which have stirred up many a hornet’s nest in Sri Lanka and elsewhere, will result in investigations by both the country’s banking watchdog as well as Sri Lanka Police criminal investigation arm, The Sunday Leader learns.

Speaking to The Sunday Leader, Governor of the Central Bank of Sri Lanka Arjuna Mahendran stated that the banking watchdog had requested original documents from Panamanian counterpart for further investigations. As such, the CBSL was awaiting for original documents from the National Bank of Panama or ‘Banco Nacional de Panamá’. However, Panama does not have an ‘official’ Central Bank.

When questioned on the kind of investigations that have been commenced over Sri Lankan individuals and companies exposed by Panama papers, the governor stressed that the CBSL would be contacting relevant authorities such as the Department of Inland Revenue etc., to ascertain whether any Sri Lankan individuals or entities have actually take part in the scandals, under principal laws such as Inland Revenue Act and the Exchange Control Act when conducting investigations. He further pinpointed that they are taking action to mitigate such activities in the future by making the public aware of the minuses of tax evasion etc.

Earlier, Finance Minister Ravi Karunanayake speaking to the media said he was awaiting green light from President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe prior to directing the Central Bank to launch investigations into Sri Lankan individuals and companies revealed in the Panama Papers leak.


Massive leak

According to The International Consortium of Investigative Journalists, the Panama Papers is a global investigation into the sprawling, secretive industry of offshore that the world’s rich and powerful use to hide assets and skirt rules by setting up front companies in far-flung jurisdictions. In terms of size, the Panama Papers is likely the biggest leak of inside information in history – more than 11.5 million documents – and it is equally likely to be one of the most explosive in the nature of its revelations.

Based on a trove of more than 11 million leaked files, the investigation exposes a cast of characters who use offshore companies to facilitate bribery, arms deals, tax evasion and financial fraud and drug trafficking. Offshore corporations have one main purpose  – to create anonymity. Recently leaked documents reveal that some of these shell companies, cloaked in secrecy, provide cover for dictators, politicians, and tax evaders. Behind the email chains, invoices and documents that make up the Panama Papers are often unseen victims of wrongdoing enabled by this shadowy industry.


Key figures of the leak

When exploring the key figures, the Panama Papers expose the internal operations of one of the world’s leading firms in incorporation of offshore entities, Panama-headquartered Mossack Fonseca, that has branches in London, Beijing, Miami, Zurich and more than 35 other places around the globe. The 2.6 terabyte trove of data at the core of this investigation contains nearly 40 years of records, and includes information about more than 210,000 companies in 21 offshore jurisdictions. The firm is one of the world’s top creators of shell companies, corporate structures that can be used to hide ownership of assets. The law firm’s leaked internal files contain information on 214,000 offshore companies connected to people in 200 countries and territories.

It is the largest cross-border media collaboration ever undertaken. Journalists working in more than 25 languages dug into Mossack Fonseca’s inner affairs and traced the secret dealings of the law firm’s customers around the world. They shared information and hunted down leads generated by the leaked files using corporate filings, property records, financial disclosures, court documents and interviews with money laundering experts and law-enforcement officials.

The data include emails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions, from Nevada to Hong Kong to the British Virgin Islands.


Mossack Fonseca

The leak contains more than 11.5 million internal files of the company. It includes nearly 40 years of data, from 1977 through the end of 2015. The data contains a few incorporations before 1977, but they are sporadic and represent less than 1% of the companies.

Although the data within the leak stretches back to 1977, Mossack Fonseca only came into being under its current name and structure in 1986, when Ramón Fonseca merged his small, one-secretary law firm in Panama with another local firm headed by Jürgen Mossack, a Panamanian of German origin.

The data shows that Mossack Fonseca worked with more than 14,000 banks, law firms, company incorporators and other middlemen to set up companies, foundations and trusts for customers.A database leak at the Mossack Fonseca law firm in Panama exposes how it hides money for its clients.

Mossack Fonseca co-founder Jurgen Mossack has claimed he was surprised to learn that clients of his firm had ties to Russian President Vladimir Putin and the current and former members of China’s Communist Party Politburo Standing Committee.

Mossack told CNBC television in an interview that his firm does not regularly monitor the actions of companies it has helped set up for clients. Had Mossack Fonseca & Co. been aware of such connections, “normally in a case like that we would resign, we would stop dealing with that client and with that company,” he said.

It was one of a handful of interviews that Mossack and his partner Ramon Fonseca have given since the publication of the Panama Papers, an investigation into the leaked files of the firm. Mossack said in an interview with the Wall Street Journal that the firm would continue forward. “We’re not going to stop the services and go plant bananas or something,” he said. “People do make mistakes. So do we, and so does our compliance department. But that is not the norm.”

One question that has been raised since the publication of the Panama Papers has been about the relative absence of rich and powerful Americans. Fonseca told the Associated Press in an interview that their law firm has only a handful of American clients; most of them were members of Panama’s growing expatriate retirement community. It’s not out of any anti-Americanism or fear of the Internal Revenue, according to the AP.

In other developments, U.S. Senators Elizabeth Warren and Sherrod Brown wrote Treasury Secretary Jacob Lew seeking assurances that Treasury is investigating “any potential involvement of U.S. or U.S.-linked banks, financial services institutions, or other companies or individuals with Mossack Fonseca & Co.” They mentioned as a particular concern “whether companies or individuals involved with or utilizing the services of this firm may have facilitated money laundering or terrorist financing.

The leak exposes the offshore holdings of 12 current and former world leaders and reveals how associates of Russian President Vladimir Putin secretly shuffled as much as US$2 billion through banks and shadow companies.

The files contain new details about major scandals ranging from England’s most infamous gold heist, an unfolding political money laundering affair in Brazil and bribery allegations convulsing FIFA, the body that rules international soccer.

They also provide details of the hidden financial dealings of 128 other politicians and public officials around the world and show how a global industry of law firms and big banks sells financial secrecy to fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.

The Panama Papers expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the pPresident of Azerbaijan. They also include the names of at least 33 people and companies blacklisted by the U.S. government because of evidence that they’ve done business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations, including North Korea and Iran.

Most of the services the offshore industry provides can be used for legal purpose and are by law-abiding customers. But the documents show that banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption. The files show that these fixers and middlemen protect themselves and their clients by concealing suspect transactions. In some instances, they work to head off official investigations by backdating and destroying documents.

The Panama Papers make it clear that major banks are big drivers behind the creation of hard-to-trace companies in the British Virgin Islands, Panama and other offshore havens. The files list more than 15,600 paper companies that banks set up for clients who wanted to keep their finances under wraps, including hundreds created by international giants UBS and HSBC.

Heads of States, their associates, ministers, elected officials etc. from 140 countries all over the world have been accused of their connections to offshore companies in 21 tax havens. The main service provided by tax havens is simply that — since they’re not bound by other countries’ laws — they don’t report the income of foreigners to the relevant tax authorities.

According to The Intercept, tax havens serve two functions: tax evasion, which involves hiding assets and is illegal, and tax avoidance, which is done by multinational corporations in the open and is legal (since the same corporations have conveniently made sure the laws work that way). Eliminating them requires different strategies.


Panama Papers hit political agendas around the world

The office of U.K. Prime Minister David Cameron issuing a statement recently said that “there are no offshore funds/trusts which the Prime Minister, Mrs. Cameron or their children will benefit from in future.” It was the most recent in a string of responses about Blairmore, an investment fund run by his father Ian and incorporated in the Bahamas, which avoided paying tax in Britain, as disclosed in the Panama Papers.

Previously the Prime Minister’s statements about whether he or his family benefitted from his father’s offshore firm Blairmore had been in the present tense, prompting speculation about future benefits. For instance, a spokesperson said Tuesday that “the prime minister, his wife and their children do not benefit from any offshore funds.” That was after trying to dismiss it as a “private matter” on Monday.

Labour Party leader Jeremy Corbyn had pushed back. “It’s a private matter insofar as it’s a privately held interest. But it’s not a private matter if tax is not being paid. So an investigation must take place, an independent investigation, unprejudiced, to decide whether or not tax has been paid.

“I think the Prime Minister, in his own interest, should tell us exactly what’s been going on.”

He also called for the Cameron government to take a stronger stance with British crown territories such as the Cayman Islands and British Virgin Islands. They should be told, “You must obey U.K. tax law; you must not become a harbour for tax avoidance and tax evasion.”

President Barack Obama spoke out about tax havens. In announcing new U.S. Treasury rules designed to make it harder for corporations to reduce their taxes by merging with foreign firms, he also noted, “We’ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem. It’s not unique to other countries.

Sen. Bernie Sanders, battling his Senate colleague Hillary Clinton for the Democratic nomination for presidency, meanwhile used the Panama papers to attack her. “I was opposed to the Panama Free Trade Agreement from day one,” he said in a statement released by his campaign.

“I predicted that the passage of this disastrous trade deal would make it easier, not harder, for the wealthy and large corporations to evade taxes by sheltering billions of dollars offshore.

I wish I had been proven wrong about this issue, but it has now come to light that the extent of Panama’s tax avoidance scams is even worse than I had feared.

“My opponent, on the other hand, opposed this trade agreement when she was running against Barack Obama for president in 2008. But when it really mattered she quickly reversed course and helped push the Panama Free Trade Agreement through Congress as Secretary of State. The results have been a disaster.”

In Pakistan, opponents of Prime Minister Nawaz Sharif, including retired cricket star and politician Imran Khan, hammered him with demands that the country’s corruption watchdog open an investigation. Sharif announced that he would do so.

Three of his children owned London real estate through offshore companies according to files examined by the International Consortium of International Journalists and its partners.


Football Pro Messi Gets Nervous

The Panama Papers now reveal that Lionel Messi, the 28-year-old Argentinean, widely considered being the world’s greatest footballer apparently holds a fifty percent share of a shell company, the existence of which was unknown until now, and which Mossack Fonseca temporarily looked after. This is in addition to the offshore companies that Spanish investigators have already uncovered. The company is called Mega Star Enterprises, a fitting name for the most popular footballer on the planet, who could have gone anywhere but always stayed in Barcelona. After the tax evasion charges were made public, there was widespread concern in the city that Messi might leave the club on bad terms. His fate would then have been similar to that of football stars past, among them Johan Cruyff, Bernd Schuster, Diego Maradona, Ronaldo, Luis Figo, and Ronaldinho.

The Football France sports journal estimated that Messi’s gross income amounted to EUR 65 million in 2015. According to the report, he earns an annual salary of EUR 36 million in Barcelona; the rest of his income is from advertising revenues. In comparison, Cristiano Ronaldo, the Real Madrid striker, apparently earns “only” EUR 54 million. And Neymar, Messi’s Brazilian teammate at FC Barcelona, has an annual salary of EUR 36.5 million.

People who earn a lot can also save a lot, especially when they invest their money wisely. As the Panama Papers data proves, five sham directors head Mega Star Enterprises, which was still active as recently as a few weeks ago. However, Lionel Andrés Messi and his father and manager Jorge Horacio Messi appear to be the company’s true owners, as a Panama Papers document from June 2013 shows. In it, an employee of a Uruguayan law firm explains to the offshore provider Mossack Fonseca (Mossfon) that the Messis are the ultimate beneficiaries of decisions relating to Mega Star Enterprises.

This is in addition to the already well-known allegations about Messi’s approach to managing his finances, which was already enough to get him into trouble. In October 2015, a Spanish examining magistrate decided that Lionel Messi and his father Jorge Horacio would be put to trial for suspected tax evasion. Previously, the public prosecution’s office had argued in favour of dropping all charges against Messi and prosecuting his father only. However, the Spanish ministry of finance insisted on pressing charges against the Argentinean national player. Messi must now also appear in court. (Source –


Global Topdogs In Panama Papers Leaders of countries


•         President of Argentina, Mauricio Macri

•         Former Prime Minister of Georgia, BidzinaIvanishvili

•         Iceland’s Prime Minister, Sigmundur Davíð Gunnlaugsson (Resigned)

•         Ex-prime minister of Iraq, Ayad Allawi

•         Prime Minister of Jordan and Minister of Defense, Ali Abu al-Ragheb

•         Prime Minister of Qatar, Hamad bin Jassim bin Jaber Al Thani

•         King of Saudi Arabia, King Salman bin Abdulaziz bin Abdulrahman Al Saud

•         President of Sudan, Ahmad Ali al-Mirghani

•         President of the United Arab Emirates and emir of Abu Dhabi,  Khalifa bin Zayed bin Sultan Al Nahyan

•         Prime Minister of Ukraine(1996-1997), Pavlo Lazarenko

•         President of Ukraine (2014 present), Petro Poroshenko


Relatives/associates of leaders


•         Azerbaijan’s Prime Minister Ilham Aliyev’s wife, children and sister

•         Deng Jiagui, brother in-law of China President

•         Li Xiaolin, daughter of Former Chinese Premier

•         Arkady and Boris Rotenberg, childhood friends of Russian President Putin

•         Sergey Roldugin, close friend of Russian President Vladimir Putin

•         Rami Makhlouf, cousin of Syrian President Bashar Assad

•         Ian Cameron, father of British Prime Minister, David Cameron

•         Alaa Mubarak, son of Former Egyptian President, Hosni Mubarak

•         Mounir Majidi, Personal Secretary to the King of Morocco, Mohammed VI

•         Mariam Safdar, Hasan and Hussain Nawaz Sharif,  children of Pakistan’s Prime Minister, Nawaz Sharif

•         John Addo Kufuor, son of Ghana’s former president, John Agyekum Kufuor

•         Mohd Nazifuddin bin Mohd Najib, son of Malaysia’s Prime Minister, Najib Razak

•         Daniel Muñoz, Aide to former Argentine Presidents Kirchner

•         Juan Armando Hinojosa, “Favourite contractor” of Mexico’s President

•         Pilar de Borbón, Former king of Spain’s sister

•         Jean-Claude N’Da Ametchi, Associate of Cote d’Ivoire’s former president, Laurent Gbagbo

•         Clive Khulubuse Zuma, Nephew of South African president, Jacob Zuma

•         Mamadie Touré, Widow of Ghana’s former dictator, Lansana Conté

(Source: ICIJ)




5 Comments for “Panama Papers Expose Sri Lanka’s Loopholes”

  1. michael

    When will the Americans be named. Putin was one the first named not even on the list the whole thing has the smell of political construct by the Americans

  2. Not surprised, even during the Sirimavo Bandaranaike government and its strict exchange control act, various methods were adopted to circumvent the law and some with the help of corrupt officials. If one were to need any exchange overseas there were agents, operating in a clandestine way, here, who on payment here ensured you get the equivalent overseas. Even during the LTTE conflict there were agents , even of the LTTE, operating under the very nose of the Security forces and police, on Mudalige Mawatha, Pettah.

  3. Renu

    Srilankan Politicians….?

  4. carlos

    What about the post box offices in Delaware, has the SLCB asked for details from there as well

  5. Freddy

    Yes those in Government and politicians cannot run because they have to declare assets. Why all terrorist, mafia, murderers, crooks and criminals not named. The ltte, alquieda etc. these assets should be seized and used for infrastructure and other works. Cameron was very supportive of the Tamils now his transparency has been uncovered. Lost his credibility like the ltte.

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