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LEIGH SALES, PRESENTER: The clandestine world of tax havens and offshore companies
has always been a mystery to anybody not wealthy enough to buy into it.
But the millions of documents that make up the Panama Papers leak have at last exposed
the inner workings of this enigmatic industry and reveal just how easy it is to set up a
company offshore.
Hundreds of Australians are now being investigated over their links to the Panama-based
law firm Mossack Fonseca. And we know more than ever before about the small countries
where rich people hide big money.
Pat McGrath has been digging a little deeper.
(Footage of Icelandic citizens protesting against the prime minister)
PAT MCGRATH, REPORTER (voiceover): The shocking truth about how the world's rich and
powerful hide their money has provoked anger around the world.
REPORTER (to Icelandic protester): What are you protesting?
PROTESTER: I would like the prime minister to resign.
PAT MCGRATH: In Iceland, the prime minister is resisting calls to quit over claims he
concealed family investments through a secret company in the British Virgin Islands.
And other world leaders have found themselves caught up in what's being described as the
biggest leak in history.
JASON SHARMAN, PROF., GRIFFITH UNIVERSITY: This is data dump is bigger than we've
had before and it's... more criminal conduct has been exposed than any other comparative
leak from offshore.
PAT MCGRATH: As more scandalous details emerge from the millions of documents leaked
from the Panama law firm, Mossack Fonseca, one of the company's founders has defended
its practices.
(Ramon Fonseca speaks in Panamanian Spanish)
RAMON FONSECA, CO-FOUNDER, MOSSACK FONSECA (voiceover): We have formed more
than 250,000 anonymous corporations through our history and we take care only of the
legal part.
We do not participate in the activities of the company, nor do we have any responsibility
over what the company does.
PAT MCGRATH: But Professor Jason Sharman was told a very different story when he
visited the firm's Panama City headquarters eight years ago.
JASON SHARMAN: The people at Mossack Fonseca were pretty open in saying that their
clients wanted to avoid paying tax. They said that they didn't really like to use the word
"tax", or the phrase "tax avoidance" or "tax evasion" too much. They preferred to use
euphemisms like "asset optimisation" or "financial planning".
PAT MCGRATH: In some of the world's most beautiful places, there are some very ugly
things going on.
MICHAEL INGLIS, BARRISTER: Yeah, well, Singapore's running hot. But the old favourites
are still there. They're alive and well: British Virgin Islands, Isle of Man, Guernsey.
It's a long, long list. And if you want a few risks and you really want to be edgy: have a go
at Mauritius. You know, have a go at Somalia if you like.
PAT MCGRATH: Mossack Fonseca is just one of thousands of law firms and accounting
agencies helping rich people set up secret offshore companies.
As a barrister who works exclusively in tax, Michael Inglis sees a range of reasons why
people park money overseas.
MICHAEL INGLIS: At the top, they're used for hiding assets and income offshore. And that
can be to keep it from somebody in a divorce; it could be to defraud creditors; it could be
because somebody, ah, likes privacy.
But it could also be tax evasion. It could be money laundering. It could be proceeds of
crime.
I think people over-bake it when they say that so many of these accounts are used for
legitimate purposes. I think it's the other way around.
REPORTER (ABC news): The data leak also raises serious questions for Australian company
Wilson Security. Documents...
PAT MCGRATH: Since last night's Four Corners uncovered Mossack Fonseca's links to
Australia, the identities of some of its other Australian clients have come to light. They
include John Patrick Gillespie, the mastermind behind the infamous Fine Cotton horseracing scandal.
MICHAEL INGLIS: People used to get on a boat often with their solicitor and their
accountant and go away to the Bahamas or whatever for weeks at a time to do this sort of
thing.
Now the average Joe - particularly the rich average Joe - can do it from their computer in
a few hours, sitting in the comfort of their home. That's a key contrast: the barriers have
come down enormously.
PAT MCGRATH: We decided to find out what's involved in setting up an offshore company.
JASON SHARMAN: It's quick. It's easy. You can use Google. You can use a credit card. It's
pretty cheap: between maybe $1,000 and $3,000.
PAT MCGRATH: Perth-based businessman Warren Black has been named in the leak as a
director and shareholder of a company managed by Mossack Fonseca: Wealth Grow
International.
WARREN BLACK, BUSINESSMAN: I think there seems to be some kind of witch-hunt
flavour to somehow make people feel named or shamed or guilty about doing it.
PAT MCGRATH: He says there are perfectly legitimate reasons for setting up an offshore
company.
WARREN BLACK: We live in a global economy, so using a global structure is certainly no
different, really, to that: provided you're using it legally.
GREG TRAVERS, TAX DIRECTOR, WILLIAM BUCK: The legitimate reasons that we would
see as to why people would set up companies or other entities in these types of
jurisdictions usually come down to: that we're dealing with business operations in multiple
countries, shareholders or investors in multiple countries.
And we've got to work out a way to be able to bring all of their interests together.
PAT MCGRATH: Corporate adviser Greg Travers has helped Australians set up companies
offshore. But he says his firm would never take on a client who specifically asked for such
a service.
GREG TRAVERS: Setting up a company in one of these jurisdictions is rarely your objective
at the starting point. If it is, you're probably in the group of people who are exploiting
these arrangements. And they're the ones that should really be clamped down on.
For the ones that are doing it legitimately, we're starting with: what are we trying to
achieve commercially? And then this may well become the outcome.
PAT MCGRATH: As more details emerge from Mossack Fonseca, attention is now turning to
what Australia needs to do to clamp down.
JASON SHARMAN: It's important to realise that most of the money often goes through
Panama or the British Virgin Islands, but it doesn't stay there. It tends to go to places like
London, New York, Switzerland, Australia and so on.
So it's at least as much big countries that are to blame for this kind of criminal activity as
it is small tropical islands or Central American places like Panama.
LEIGH SALES: Pat McGrath reporting.