The Panama Papers Explained in 3 mins

If you’re struggling to find an article that’s easy to read about this subject then look no further; we have put together a handy blog to explain what the Panama Papers are and why they matter.

What are the Panama Papers?

The Panama Papers refer to a story made public by the German newspaper The Sueddeutsche Zeitung and at the center of this story is a legal firm called Mossack Fonseca. Mossack Fonesca complied a heck of a lot of confidential documents, and these documents went public.

OK, so what’s a Mossack?

Mossack Fonseca is legal firm is based in Panama. They have denied any wrong doings regarding the documents going public. If a person(s) were involved in taking their data, they have not yet been identified.

Why Panama?

Panama is a country with more favourable tax levels for companies than the UK, EU or US.

Mossack Fonseca is based there but they also have offices in other so called ‘tax havens’. These are countries where individuals and companies pay low rates of tax.

Sounds controversial. What happened next?

The German newspaper (The Sueddeutsche Zeitung) and the International Consortium of Investigative Journalists (ICIJ) organised the data leaked to them by the anonymous source for over a year before going public.

The size of the leak is ridiculous. It is huge, 11.5 million files totalling 2.6 terrabytes, that’s bigger than when Zayne left 1D.

The leaks have revealed a lot of tax dodging, a lot of corrupt deals and a lot of funds going to criminal gangs and terror organisations.

Wait. What?

For over 40 years Mossack Fonseca has represented lots of rich and powerful people by setting up clever schemes to allegedly “hide” their money from the taxman, the lawman and in some cases the ex-wife.

They also represent lots of rich and powerful people from countries which have international sanctions against them.

For example, countries like North Korea and Syria aren’t allowed to trade on the global market or use international finance. Yet contained in the leak are details of North Korean officials using Mossack Fonesca to allegedly “side step” these sanctions.

Yeah, but why?!

It might be that some people don’t like paying more tax than they have to. There are very clever ways of getting out of paying tax, some are legal, some are illegal and some probably should be illegal.

Mossack Fonseca is accused of being involved in all of these methods, many newspapers have reported that they set up schemes for their rich and powerful clients so their clients didn’t have to pay tax and could avoid any pesky international sanctions.

But what does this mean for us?

Tax is paid by all of us to pay for nice things like roads and hospitals and our education. When people who use all these nice things decide that they don’t want to pay for these things, that should make us mad.

The leaks reveal a complex and complicated system, incredibly dense company and tax structures that are very hard to understand.

The leaks show clearly that if you are rich enough and powerful enough you could find ways to avoid your tax obligations to society. But the leaks also mean hopefully this will start to change. Handled correctly there should be enough evidence to make convictions stick.

Where can I find out more?

Find in depth information at the dedicated Panama Papers website, set up by the German newspaper The Sueddeutsche Zeitung.

Listen to the BBC World Service Documentary. A half hour report highlighting some of the important details.

Get up to date information on the Guardian Panama Papers webpage.

Or find your own news source and draw your own conclusions.

Whatever source you find, let us know your thoughts in the comments below.