Panama Papers Law Firm Mossack Fonseca to Shut After Tax Scandal

The Panama Papers showed how wealthy people across the world created offshore businesses to safeguard assets.

Panama Papers, which consist of millions of documents stolen from Mossack Fonseca and leaked to the media in April 2016.

(Photo: Reuters)

Mossack Fonseca, the Panamanian law firm at the centre of the Panama Papers scandal, said on Wednesday, 14 March, it was shutting down due to the economic and reputation damage inflicted by its role in the global tax evasion debacle.

The so-called Panama Papers, which consist of millions of documents stolen from Mossack Fonseca and leaked to the media in April 2016, provoked a global scandal after showing how the rich and powerful used offshore corporations to evade taxes.

“The reputational deterioration, the media campaign, the financial circus and the unusual actions by certain Panamanian authorities, have occasioned an irreversible damage that necessitates the obligatory ceasing of public operations at the end of the current month,” the firm said in a statement.

Mossack Fonseca said a skeleton staff would remain in order to comply with requests from authorities and other public and private groups.

Nonetheless, the law firm said it would continue "fighting for justice," adding it would continue to cooperate with authorities.

In February, Panamanian prosecutors raided the offices of Mossack Fonseca, seeking possible links to Brazilian engineering company Odebrecht. The Brazilian construction firm has admitted to bribing officials in Panama and other countries to obtain contracts in the region between 2010 and 2014.

Ramon Fonseca, a partner at Mossack Fonseca, denied last month that his firm had a connection to Odebrecht, while accusing Panamanian President Juan Carlos Varela of directly receiving money from Odebrecht, Latin America's largest engineering company.

Varela has denied that he took any money from Odebrecht.

3 April 2016 marked the beginning of the Panama Papers scandal – a leak of 11.5 million files from Mossack Fonseca's digital archive that revealed how wealthy and influential figures across the world had created offshore businesses to safeguard assets.

The information was obtained by German newspaper Sueddeutsche Zeitung, who shared it with the International Consortium of Investigative Journalists. It was released as a searchable database, with revelations continuing to be unearthed to this day.

Icelandic prime minister Sigmundur David Gunnlaugsson was forced to resign after it was revealed his family had offshore accounts, while former Pakistani prime minister Nawaz Sharif was disqualified for life from office after being implicated in the documents.

Other figures implicated included former British premier David Cameron, football star Lionel Messi, Argentina's President Mauricio Macri, Spanish filmmaker Pedro Almodovar, to name but a few.

At least 150 investigations were opened in 79 countries to examine possible tax evasion and money laundering, according to the US-based Center for Public Integrity.

(With inputs from Reuters and PTI)