For decades, the world's wealthiest and most powerful people -- including world leaders, politicians, celebrities and investors -- have been part of a private club, using the services of a Panama-based law firm to hide their enormous wealth through thousands of shell companies.
Now, with the publication of "the Wikileaks of the mega-rich," as Fusion called it, the doors to that club have been thrown wide open, and the dirt on the globe's most prolific alleged tax-evaders is out in public for all to see.
Dubbed the Panama Papers, the leak includes more than 11 million documents -- equal to about 2.6 terrabytes of data -- detailing how the Panama-based law firm, Mossack Fornesca, allegedly helped the world's wealthiest people hide their money through more than 14,000 shell companies.
By using shell companies, Mossack Fornesca's clients are able to avoid the government and the public learning "even the most basic things about what you’re doing and what your company is and who owns it," Matthew Gardner, executive director of the Institute on Taxation and Economic Policy, told USA Today.
The papers were obtained and parsed by a coalition of journalists from more than 100 media organizations, according to CNN. They revealed a client list of world leaders like Russian President Vladimir Putin, former Iceland Prime Minister Sigmunder Savid Gunnlauggson, and King Salman bin Al Saud of Saudi Arabia, some of whom are accused of pillaging their own countries' assets to pad their hidden bank accounts.
But the papers also implicate hundreds of Americans, who have allegedly taken advantage of loose corporate laws in states like Nevada and Wyoming to hide assets from the government and avoid paying taxes. The company set up around 1,100 businesses in the U.S., according to USA Today.
“These companies are using mechanisms that are precisely designed to avoid prosecution, to avoid discovery,” Gardner told USA Today. “Shell corporations are very effective for conduits for avoiding the law, for whatever purpose.”
Reaction to the leak has been swift. Gunnlauggson, who didn't disclose his hidden assets and the existence of a shell corporation when he assumed public office in Iceland, has already stepped down. In Russia, Putin spokesman Dmitry Peskov suggested the reports were false, and said they were being used to smear the Russian leader.
“Journalists and members of other organizations have been actively trying to discredit Putin and this country’s leadership,” Peskov said.
But Gerard Ryle, director of the Washington-based International Consortium of Investigative Journalism, told USA Today the massive data leak will have drastic consequences for the super-rich who use havens and shell companies to hide their wealth.
"I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents," Ryle said.