More than 11 million files from a law firm in the country Panama were leaked to a newspaper company and shared with journalists from over 70 nations. This leak is being called “The Panama Papers”. The documents were examined for about a year, before the findings were released to the world. The files that were leaked date from the years 1977 to 2015. The law firm is called Mossack Fonseca (image). The documents reveal that the firm helped many people hide their wealth to avoid paying taxes. Some of these people were very powerful, including some present and past world leaders.
When individuals and companies make money, they usually have to pay a portion of that to their government as “taxes”. The tax money is used by governments to support many public services such as schools, hospitals, fire departments, parks, police departments, and roads. Amongst other things, Mossack Fonseca helped some of its customers create fake companies with no employees. This was a way to hide money and avoid paying taxes.
Sigmundur David Gunnlaugsson stepped down from the post of Prime Minister of Iceland on April 7 because of protests in the country. His name was associated with one of the accounts managed by Mossack Fonseca. Many people in Malta demanded the resignation of their Prime Minister Joseph Muscat. This is because some folks in his government had accounts with the Panamanian firm. British Prime Minister David Cameron (image) is being questioned because his father had an account with the firm as well.
Panama is an isthmus – a skinny piece of land that connects two larger land masses, North America and South America. The nation is a land of mountains, rain forests, swamps, rivers, jungles, and the hot sun. Its capital is Panama City. The country is famous for its Panama Canal, a 50 miles (80 kms) long man-made waterway through the country connecting the Pacific Ocean and Atlantic Ocean (the Caribbean Sea). The Canal was finished in 1914, and has had a huge impact on the shipping industry by decreasing the distance a ship travels to get from one ocean to the other.
Image Credits: Valenciano for Mossack Fonseca headquarters image, , http://www.number10.gov.uk for the image of Cameron,http://www.ushistory.org for the image of the Canal
Sources: BBC, https://panamapapers.icij.org, https://www.pancanal.com