As Israel begins Panama Papers investigation, controversy grows worldwide

A map of the countries implicated in the Panama Papers. Credit: The International Consortium of Investigative Journalists (ICIJ) via Wikimedia Commons.

The Israeli Tax Authority (ITA) on Monday announced plans to investigate approximately 600 Israeli companies and 850 Israeli shareholders that were mentioned in the "Panama Papers" leak. The figures were revealed by Israel's Haaretz newspaper, which was able to view the leaked documents via the International Consortium of Investigative Journalists. Meanwhile, the scandal surrounding the Panama Papers list of 140 implicated politicians from more than 50 countries, is growing worldwide.

The documents revealing the involvement of Israelis were part of roughly 11.5 million materials belonging to the Panamanian law firm Mossack Fonseca, showing how world leaders and other wealthy individuals are hiding money by funneling it into offshore shell companies.

ITA Director General Moshe Asher said that owning a company abroad was not inherently problematic, unless it was not reported to the authorities.

"These [reports] arouse suspicions, but I am saying right now that there are Israelis who report [their taxes] to us and that some of the names [in the leaked documents] have reported," he said, Israel Hayom reported.

"We have already initiated our own detection process, which has exposed over one billion shekels abroad. I am calling on all those who have not reported to us: This is the time to do so," Asher added.

Some of the Israelis mentioned in the documents are Dov Weissglass, former manager/bureau chief for the late Israeli prime minister Ariel Sharon; Weissglass's business partner, attorney Assaf Halkin; businessman Idan Ofer; and attorney Jacob Weinroth.

The documents also link Mossack Fonseca with Israel's Bank Leumi, which was once already implicated in a tax evasion investigation involving American clients, leading it to pay $400 million in a settlement compensation to the U.S. Department of Justice and the State of New York in December 2014.

Attorney Amir Maor, who represents Mossack Fonseca in Israel, said that the firm informed its Israeli branch last week that its files were stolen and warned that "any information you use [from these files] is like using stolen data."

The documents also mention Mohammad Mustafa, a close confidant of Palestinian Authority (PA) President Mahmoud Abbas, who reportedly used Mossack Fonseca to funnel money from Arab countries to the PA.

Among those also implicated in the papers are a number of other current and former Middle Eastern leaders, including the king of Saudi Arabia, the son of former Egyptian president Hosni Mubarak, the former Prime Minister of Qatar, and others. In Europe, Icelandic Prime Minister Sigmundur David Gunnlaugsson—also implicated in the papers—announced his resignation in response to the Panama Papers scandal. Although Russian President Vladimir Putin is not mentioned directly in the papers, there are allegations of his involvement in the scandal through associations referenced in the documents.

In the U.S., democratic presidential candidate Hillary Clinton has garnered some criticism for her connection to Tony Podesta of the Podesta Group lobby, whose brother John is a Clinton campaign aide. The Washington Free Beacon reported that the Podesta Group was recently enlisted by the U.S. branch of the Panama Papers-implicated Russian Sberbank.

Clinton's Democratic rival Bernie Sanders vowed to end the Panama Free Trade Agreement in response to the controversy, taking a swipe at his opponent in the process.

"It has now come to light that the extent of Panama’s tax avoidance scams is even worse than I had feared. My opponent, on the other hand, opposed this trade agreement when she was running against Barack Obama for president in 2008. But when it really mattered she quickly reversed course and helped push the Panama Free Trade Agreement through Congress as Secretary of State. The results have been a disaster," Sanders said in a statement.

Posted on April 5, 2016 .