Panama squirms as `Panama Papers` scandal keeps expanding

Panama City: A week after the first revelations from the Panama Papers, the government of Panama was on Monday stepping up a PR blitz to dissociate the country from the expanding scandal.

President Juan Carlos Varela wrote an op-ed for the New York Times newspaper lamenting that "Panama does not deserve to be singled out on an issue that plagues many countries."

Highlighting recent financial transparency reforms by his administration, and the creation of a commission to propose more measures, he said Panama was working to fall in line with international standards on sharing tax information.

But for much of the world, Panama remains entwined with the Panama Papers -- a massive stash of leaked documents from a law firm that revealed how the world`s wealthy, powerful, famous and infamous used offshore companies to stash their assets.

While using such offshore entities is not in itself illegal, the use they are put to may be, if used for tax dodging or money laundering.

The firm, Mossack Fonseca, says it was the victim of a malicious hack.On Monday, Peruvian authorities raided a branch of Mossack Fonseca in Lima, which is located directly across the road from the Panamanian embassy. They said they were looking for evidence Peruvians used the firm for tax avoidance.

The local manager, Monica de Ycaza Clerc, told reporters: "We are going to cooperate with the authorities."

Peruvians linked to the firm include two financiers behind the presidential campaign of Keiko Fujimori, the daughter of imprisoned former president Alberto Fujimori. She won a first-round election victory on Sunday and is headed for a run-off poll in June.

El Salvador last week also raided the local office of Mossack Fonseca, hauling away computers and documents.

More swoops can be expected around the world as countries acting on information from the Panama Papers look to see if their wealthy citizens sought to hide money from the tax office.Politicians in some places have come under pressure from the revelations.

In just one week, the following occurred:

-- Iceland`s prime minister was forced to resign

-- Britain`s prime minister dodged questions about his family`s offshore dealing before finally admitting he had profited from one and went on to publish his tax records

-- Russian President Vladimir Putin has sought to deflect attention on his entourage as a US plot

-- China`s censors have been working flat out to keep any mention of the Panama Papers out of the media and online forums

In the eye of the storm, Panama is trying to head off international action against its financial services sector, which accounts for seven percent of gross domestic product.

France is leading the charge to get the Central American country put back on an international "black list" of nations that facilitate tax evasion and money laundering.

Varela, the president, said last week that he was dispatching his finance minister to Paris on Tuesday to press home Panama`s willingness to cooperate on sharing tax information.

But French and Panamanian officials said on Monday that the Paris trip was not confirmed and would not be happening as announced.

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