Delhi: Spain, France and several other countries launched tax evasion probes on Tuesday after a massive leak of confidential documents lifted the lid on the murky offshore financial dealings of a slew of politicians and celebrities.
The scandal erupted yesterday when media groups began revealing the results of a year-long investigation into a trove of 11.5 million documents from the law firm Mossack Fonseca, which specialises in creating offshore shell companies in the tax haven of Panama.
Among those accused are close associates of Russian President Vladimir Putin, relatives of Chinese leader Xi Jinping, Iceland's Prime Minister Sigmundur David Gunnlaugsson as well as Barcelona striker Lionel Messi.
Meanwhile, the state prosecutor's office in Panama has said it will launch an investigation into revelations contained in a massive data leak of a law firm that created offshore companies for the world's rich and powerful.
"The facts described in national and international communication media publications under the term 'Panama Papers' will be the subject of criminal investigation," the office said in a statement yesterday.
On the other hand, asserting that there could be genuine reasons for having offshore accounts, RBI Governor Raghuram Rajan today said the multi-agency probe will look into the legitimacy of such holdings of Indians named in the leaked Panama list.
The Reserve Bank is part of the multi-agency group announced by the government yesterday to probe the list which has nearly 500 Indians including celebrities and industrialists.
Following is how the lid was blown off one of the biggest scandals in recent times, as per a report in WIRED:
- When more than a hundred media outlets around the world, coordinated by the Washington, DC-based International Consortium of Investigative Journalists, released stories on the Panama Papers, it sent ripples around the world.
- The leak which exposed a widespread system of global tax evasion includes more than 4.8 million emails, 3 million database files, and 2.1 million PDFs from the Panamanian law firm Mossack Fonseca that, appears to specialize in creating shell companies that its clients have used to hide their assets.
- “This is pretty much every document from this firm over a 40-year period,” ICIJ director Gerard Ryle was quoted by WIRED as saying.
- The report says that the source warned that his or her 'life is in danger,' was only willing to communicate via encrypted channels.
- The source refused to meet in person.
- Neither the ICIJ nor any of the reporters it’s worked with have made the leaked data public but the scandal from their reporting has already sent shock waves around the world.
- Just think about it - An anonymous whistleblower sends journalists a gargantuan collection of files. The files are then analyzed by more than 400 reporters in secret over more than a year before going public.
- The Panama Papers leak began, according to ICIJ director Ryle, in late 2014.
- As per WIRED, this was when an unknown source reached out to the German newspaper Suddeutsche Zeitung.
- A Suddeutsche Zeitung reporter named Bastian Obermayer is quoted as saying that the source contacted him via encrypted chat, offering some sort of data.
- This the source said was intended “to make these crimes public.”
- “How much data are we talking about?” Obermayer asked, as per the report.
- “More than you have ever seen,” the source replied.
- Obermayer is then quoted by WIRED as saying that he communicated with his source over a series of encrypted channels.
- Also, each time all history from their prior exchange was deleted.
- Obermayer refers to crypto apps like Signal and Threema, as well as PGP-encrypted email but does not reveal which methods they used.
- Plus, everytime the reporter and source connected again, they would use a known question and answer to reauthenticate each other.
- “I’d say ‘is it sunny?’ You’d say ‘the moon is raining’ or whatever nonsense, and then both of us can verify it’s still the other person on the device,” Obermayer is quoted as saying.
- Suddeutsche Zeitung went through a section of the documents and then contacted the ICIJ who then flew to Munich to coordinate with Suddeutsche Zeitung reporters.
- “Over time we got more and more until we had all 11.5 million documents,” Ryle is quoted as saying.
- Howver, Obermayer refuses to say the 'leaker' sent Suddeutsche Zeitung hundreds of gigabytes or even terabytes of information at a time.
- Moving on from there, the ICIJ’s developers then built a two-factor-authentication-protected search engine for the leaked documents, as per the report.
- They then shared the URL via encrypted email with scores of news outlets, like the BBC, The Guardian, Fusion, and dozens of foreign-language media outlets.
- “If you wanted to look into the Brazilian documents, you could find a Brazilian reporter. You could see who was awake and working and communicate openly. We encouraged everyone to tell everyone what they were doing,” WIRED quotes Ryle as saying.
- To be noted is the fact that full leaked database has yet to leak to the public.
- Ryle says that the media organizations will not release the full dataset as it would expose the sensitive information of innocent private individuals and also of the public figures on which group’s reporting has focused.
- What is interesting is that weeks before contacting the subjects of the investigation, Obermayer destroyed the phone and the hard drive of the laptop which he had used for his conversations with the source.
- Regarding his source, he says, “I don’t know the name of the person or the identity of the person. But I would say I know the person."