PARIS -- The law firm at the center of the Panama offshore accounts scandal routinely usurped the name of the Red Cross and other charities to help obscure the origin of millions of dollars in questionable funds, two newspapers involved in the investigation reported Sunday.
There's no suggestion that the charitable groups had any idea their names were being used in this way. International Committee of the Red Cross spokesman Claire Kaplun told The Associated Press on Sunday that the revelation was "a total surprise and something we find extremely shocking."
France's Le Monde and Switzerland's Le Matin Dimanche said Mossack Fonseca created dummy foundations with names such as the "Faith Foundation" to hold shares in about 500 offshore companies. The foundation's beneficiary was routinely listed as "the Red Cross," a designation that served the dual purposes of hiding the firms' real beneficiaries and of draping them in an "NGO aura," the papers wrote, referring to nongovernmental organizations.
Mossack Fonseca didn't immediately return an email seeking comment, but a leaked email cited by the publications appeared to lay out the firm's reasoning.
"Given that banks and financial institutions are today asked to obtain information about economic beneficiaries, it has become difficult for us not to divulge the identity of those of the Faith Foundation's," the email said, according to the papers. "That's why we've implemented this structure designating the 'International Red Cross.' It's easier that way."
Another email cited by the papers suggests Mossack Fonseca deliberately kept the Red Cross in the dark about the maneuver.
"According to Panama law, the beneficiaries of a foundation can be used without knowing it," the email said, according to the papers. "That means the International Red Cross doesn't know about this arrangement."
Kaplun said that using the group's name or logo without its permission is barred by international law -- and could put the group's staff in jeopardy.
"We work in conflict zones. We work without weapons. Our protection is our name, our emblem, the faith that people have in our reputation," she said in a telephone interview.
"Let's say this money was linked to a warring party in a conflict. Imagine what consequences that could have."
The newspapers' examination of the Faith Foundation turned up a host of questionable connections.
Both said that the Faith Foundation was a relay in the money trail leading back to former Argentine President Nestor Kirchner and his wife, Cristina Fernandez de Kirchner, who succeeded him in 2007. The foundation also played a role in a complex London real estate transaction involving United Arab Emirates leader Sheikh Khalifa bin Zayed Al Nahyan, the papers said, adding that another Panama-based foundation played a similar role in obscuring the finances of Elena Baturina, the wife of Moscow's ex-mayor and repeatedly listed as Russia's wealthiest woman.
Denmark wants answer
Denmark's financial regulator asked the European Banking Authority to guide national supervisors in how best to respond to leaks revealing that banks on a grand scale allegedly helped clients hide wealth and evade taxes.
While the Panama leaks provided millions of documents spanning several continents, the extent to which banks engaged in illegal activity remains unclear, said Jesper Berg, head of the Financial Supervisory Authority in Denmark.
It's also not clear how to treat the information, since breaches could be considered threats to financial stability, violations of anti-money laundering requirements or operational missteps. The path a regulator chooses will to an extent determine the outcome, he said.
"We need to get a grip on whether it is one of the above or all of the above in order to ask qualified questions to the banks," Berg said by phone. Given the cross-border nature of the challenge, the European Banking Authority needs to provide some guidelines, he said.
The Panama files have already toppled the prime minister of Iceland and two European bank executives.
In the U.K., pressure is mounting on Prime Minister David Cameron to defend his use of offshore accounts. Cameron early Sunday released details on taxes he's paid since 2009, as he sought to draw a line under the furor over his personal finances, which culminated in him acknowledging on Thursday that he profited from an offshore fund linked to his father.
And today, Cameron said in a statement that his government intends to create criminal penalties for employers, such as the directors of banks and accounting firms, if they are found guilty of failing to prevent their own employees' promotion of tax-evasion schemes.
Cameron said he will outline the bill and other measures to combat tax evasion to lawmakers later today, when Parliament reconvenes after a two-week Easter break.
Hong Kong, too, was implicated, as Mossack Fonseca's go-to spot for financial intermediaries, home to 2,212 accountants, banks and other middlemen Mossack Fonseca used to set up 37,675 offshore companies for its global clients from 1977 to 2015 -- more than any other place in the world, according to the analysis.
China's Foreign Ministry dismissed the analysis as "groundless," and the government has aggressively censored discussion of them.
In Germany, the finance minister said countries that don't participate in an international initiative he's proposing to help fight tax evasion and money laundering could be subjected to sanctions.
Speaking on ARD television Sunday, Wolfgang Schaeuble said that if Panama, for example, refused to share information on who owns and controls companies, "they could be put on a so-called blacklist and certain financial business with Panama would no longer be possible."
In Scandinavia, residents have been shocked to learn that a region known for low levels of corruption and high levels of transparency has a number of banks named in the leaks as having helped clients dodge taxes.
The Swedish Financial Supervisory Authority is investigating Nordea Bank AB, the region's biggest. The chief executive officer of Norway's biggest bank, DNB ASA, has apologized for misdeeds revealed in the files.
Berg said the Danish Financial Supervisory Authority is fielding calls from the banks it oversees as they try to explain their use of offshore accounts. The regulator is "currently trying to figure out what are the supervisory issues," Berg said. "They contacted us to explain to us how they see the situation in relation to their specific business."
Should it emerge that the Financial Supervisory Authority doesn't have the legal authority to stop banks continuing potentially illegal practices, the agency will seek it, Berg said. The Financial Supervisory Authority already can investigate tax evasion as part of its anti-money-laundering efforts and "maybe that's sufficient," Berg said.
Berg said the Panama files have also finally brought to a head the need to take on tax havens directly. More than 20 nations have announced probes, and the Organization for Economic Cooperation and Development will host a meeting Wednesday to discuss cross-border tax compliance issues stemming from the leaks.
"I very much understand the public outcry," Berg said. "But whether to eliminate offshore accounts? I'll leave that for the tax authorities to make a call on. And the politicians."
Duel in Pakistan
In Pakistan, opposition leader Imran Khan on Sunday called on Prime Minister Nawaz Sharif to resign over Panama documents that he said indicate that the premier's sons own several offshore companies.
Addressing a news conference at his residence in Islamabad, Khan warned he would stage a rally outside Sharif's residence in the eastern city of Lahore if the prime minister does not quit. He attached no date to the ultimatum.
Information Minister Pervaiz Rashid rejected Khan's demand, saying Sharif will not quit over "baseless allegations."
Last week, Sharif announced the establishment of an independent judicial commission to probe whether his family illegally owns offshore companies and property, as indicated in the documents. Khan said the documents show Sharif himself is linked to at least two companies.
Khan also alleged that Sharif and his family were involved in corruption and tax evasion.
Khan, a former cricket star, is the leader of Pakistan Tahrik-e-Insaf, which made a strong showing in the 2013 elections. The next year, he staged a sit-in outside parliament for weeks, demanding Sharif step down over allegations of fraud in the election. The demonstrators gradually dispersed, and the protest was formally ended after a Taliban attack on a school in the city of Peshawar in which 150 people, mostly children, were killed.
Information for this article was contributed by Raphael Satter, Aomar Ouali, Erika Kinetz, Kelvin Chan, Fu Ting and staff members of The Associated Press and by Frances Schwartzkopff, Thomas Penny and Alex Morales of Bloomberg New.
A Section on 04/11/2016