Panama Papers: US launches probe into tax avoidance claims

The US Department of Justice is set to dig deeper into allegations of tax avoidance by rich and wealthy citizens, which came to the fore following the Panama Papers leak.

The department has launched a criminal investigation into the matter and has sought assistance from the International Consortium of Investigative Journalists (ICIJ).

Preet Bharara, the US attorney for Manhattan, said he had “opened a criminal investigation regarding matters to which the Panama Papers are relevant”.

Bharara has written to the International Consortium of Investigative Journalists (ICIJ), which coordinated the unprecedented leak of 11.5m files from offshore law firm Mossack Fonseca, to ask for further information to assist with his criminal investigation.

The inquiry comes after Barack Obama described the revelations from the leaks – which have caused political tumult across the world – “important stuff” and global tax avoidance as a “huge problem”.

“There is no doubt that the problem of global tax avoidance generally is a huge problem,” Obama told reporters in an unscheduled appearance in the White House briefing room earlier this month. “The problem is that a lot of this stuff is legal, not illegal.

“A lot of these loopholes come at the expense of middle-class families, because that lost revenue has to be made up somewhere.”

The US president said the leak from Panama illustrated the scale of tax avoidance involving Fortune 500 companies and running into trillions of dollars worldwide.

“We shouldn’t make it legal to engage in transactions just to avoid taxes,” he added, praising instead “the basic principle of making sure everyone pays their fair share”.

The US attorney general’s office was unable to provide any further details about the criminal investigation because it is ongoing.

Bharara, who as US attorney general for the southern district of New York has led several crusades against criminal wrongdoing in the financial sector, is already investigating several of the more than 200 US citizens named in the papers.

Being named in the papers is not itself evidence of wrongdoing, and tax avoidance — as distinct from tax evasion — is a legal activity.

The leak, which revealed the offshore banking affairs of several heads of state, politicians, celebrities and public figures has already resulted in some resignations (most notably that of the Prime Minister of Iceland), and saw U.K. Prime Minister David Cameron come under sustained pressure over whether he benefited from an offshore fund set up by his late father.