Category: Forex and Financials
Over 11 million leaked documents from the Panama-based law firm Mossack Fonseca reveal how some of the world’s richest and most powerful people hide their wealth in tax havens. It is being described as the biggest such leak in history.
It is claimed that secret offshore deals and loans worth $2 billion are linked to the inner circle of Vladimir Putin, although the Russian President is not himself named in the files which allegedly show some firms domiciled in tax havens were being used for suspected money laundering and tax evasion.
A Kremlin spokesman says the investigation was aimed at discrediting the president and had been conducted by former US intelligence staff.
Ukrainian President Petro Poroshenko is listed as having offshore wealth – one of 12 current or former leaders mentioned in the files. Around 60 people with close ties to leaders also feature including Li Xiaolin, the daughter of former Chinese Prime Minister Li Peng.
Argentina’s President Mauricio Macri, making headlines recently for the right reasons by hosting President Obama, is named in the data leak as is Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson, now under pressure to resign amid claims he failed to declare a stake in an offshore firm .
There is also embarrassment for Britain’s Prime Minister David Cameron, whose late father Ian is listed as a client of the law firm although there is no suggestion he did anything wrong.
The UK’s PM Is due to host a major summit on tackling ‘tax secrecy’ next month. And it is not only politicians who are implicated in the leaks with world football players of the year Lionel Messi and Michel Platini, the former head of European football’s governing body UEFA, also on the list.
Owning an offshore firm is not, in itself, illegal but with this leak raising claims of illicit activities, the ball is now in Mossack Fonseca’s court to respond. Reacting to the allegations, the firm has staunchly defended its reputation and vehemently denied any wrongdoing.
About The Panama Papers
The Panama Papers are a leaked set of 11.5 million confidential documents created by the Panamanian corporate service provider Mossack Fonseca that provide detailed information on more than 214,000 offshore companies, including the identities of shareholders and directors. The documents identify (as directors and shareholders of such companies) current government leaders from five countries — Argentina, Iceland, Saudi Arabia, Ukraine and the United Arab Emirates — as well as government officials, close relatives and close associates of various heads of government of more than 40 other countries, including Brazil, China, Peru, France, India, Malaysia, Mexico, Pakistan, Indonesia, Russia, South Africa, Spain, Syria and the United Kingdom.
Comprising documents created since the 1970s that amount to 2.6 terabytes of data, the papers were supplied to the Süddeutsche Zeitung in August 2015 by an anonymous source, and subsequently to the U.S.-based International Consortium of Investigative Journalists (ICIJ). The papers were distributed to and analyzed by about 400 journalists at 107 media organizations in more than 80 countries. The first news reports based on the set, along with 149 of the documents themselves, were published on April 3, 2016, and a full list of companies is to be released in early May 2016.
Forex refers to the biggest, freest marketplace in the world: the global trading of different nation’s currencies or money. Dollars, euros, pounds and yen are all examples of currencies. If you live in a country that counts money in dollars, then euros are foreign currency to you. If you want to pay dollars to someone who uses euros, the two you will have to engage in foreign exchange, or forex.
It’s elementary supply and demand. If I have lots of dollars and few euros, your dollar is worth only a small number of euros to me; perhaps only a fraction of a euro. On the other hand, if I have a shortage of dollars (and need them to pay someone else), then I will give you more euros for your dollar. If we can negotiate a mutually agreeable exchange rate – X dollars for Y euros – then we can do business.
Our dollars and euros are said to be “liquid” if each currency can be exchanged for another readily. Liquidity is vital to international trade, obviously. Fortunately, the forex market is extremely liquid. There is always someone willing to buy your dollars with whatever foreign currency you need, and enough players in the market that you can almost always find an acceptable exchange rate.
The more information you have about exchange rates, the better the deal you can negotiate and the better your profit on foreign exchange. The rub for small traders is that they don’t get much market information. The forex market is a clique-ish one. The more currency you trade, the more information other large traders will share with you. If you trade a small amount of currency, you do so in nearly total ignorance of what a “fair” exchange rate should be. Small players in forex make money accidentally; most of the time, they lose.