Australian politicians appear to have been caught napping by the massive leak of 11.5 million documents belonging to Panama-based law firm Mossack Fonseca, which is being analysed by the International Consortium of Investigative Journalists (ICIJ).
The documents, which name Australian companies including BHP Billiton and Wilson Security as well as 800 Australians, many of whom are being investigated by the Australian Taxation Office (ATO), have already caused major reactions offshore.
Political fallout from the leak has already had an effect overseas, with Iceland’s prime minister Sigmundur David Gunnlaugsson resigning after being listed in the documents.
It was also revealed that two more Australian businessmen were linked to companies striking mining deals with North Korea.
Sydney-based businessman David Henty Sutton and South African born, Brisbane-based geologist Louis Schurmann were directors of two companies which announced the mining sub-license agreements on the Australian Stock Exchange (ASX).
The Panama papers also reveal that Tim Roberts, who’s Perth-based family founded building giant Multiplex, to a string of companies in the British Virgin Islands. Mr Roberts, who lives mainly in Los Angeles, ordered $US293 million worth of aircraft in 2012.
A former United Nations official told the ABC the deals announced were with North Korean entities under sanctions, and the revelations warrant an inquiry.
Meanwhile, the United States government is close to issuing a rule that will for the first time require banks and other financial institutions there to find out the identities of people hidden behind shell companies, The New York Times reported.
The rule is meant to close a major loophole in the American banking system that enables the sorts of secretive financial manoeuvres that were revealed by the massive documents leak, the paper reported.
The documents also detail $2 billion in monies washed through banks and other companies by close associates of Russian president Vladimir Putin.
The Panama Papers implicate Mossack Fonseca in creating structures suspected to have financed terrorism, war criminals in the Middle East, drug lords around the world, African arms dealers and nuclear weapons in Iran and North Korea.
France announced on Tuesday it would put the Central American nation back on its blacklist of uncooperative tax jurisdictions, the ABC reported.
Alvaro Aleman, chief of staff to Panama president Juan Carlos Varela, told a news conference the government could respond with similar measures against France, or any other country that followed France’s lead.
The Panamanian lawyer at the centre of the data leak scandal has filed a complaint with state prosecutors about the hacking, according to the ABC.
Founding partner Ramon Fonseca said his law firm, which specialises in setting up offshore companies, had broken no laws and that all its operations were legal and it never destroyed any documents or helped anyone evade taxes or launder money.
Scott Morrison stands on his record
In Australia, the Turnbull government left it to Treasurer Scott Morrison to respond to the scandal and he pointed to his existing record.
“We’ve got some $400 million in revenues over the last few years that we’ve been able to get from acting on sources and information that’s come through to the ATO. We’ve got tax treaties, swap agreements, on information with over 100 countries to crack down on these sorts of things,” he said.
“So, our record, when it comes to tax avoidance, and particularly multinational tax avoidance, is one of legislation and action.”
Labor’s Shadow Assistant Treasurer, Andrew Leigh, told The New Daily that Tony Abbott-era budget cuts “had resulted in 4700 staff reductions at the ATO leaving less capacity to fight international tax avoidance”.
He described the practices emerging from the Panama revelations as “highly organised and very professionalised”, and requiring a sophisticated response.
Aussies are ‘white hot angry’
Opposition Leader Bill Shorten expressed anger, saying: “I think they’re [average Australians] white-hot angry that somehow we see large multinationals shoving their profits into other jurisdictions to pay minimal tax.
“The truth of the matter is we’ve seen global taxation scandals and I think the middle class around the world are getting sick and tired; they pay their taxes, but the top one per cent, well they’re in a separate game all together and they can minimise their taxes and move their capital everywhere,” Mr Shorten said.
John Quiggin, an economics professor from the University of Queensland, told The New Daily the Panama scandal had massive implications.
“On one level it points to the entire global system being debased,” he said. “It’s not just the case of a few bad apples.
“What Australia can do alone is limited. It requires concerted international action as it involves vast numbers of people in companies and global banks using these arrangements,” Mr Quiggin said.
A spokesperson for lobby group Taxpayers Australia said the Panama revelations “would provide leads for the ATO to follow”.