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'Powerful force' behind Panama Papers: China media
By Ben Dooley
Beijing (AFP) April 5, 2016


Credit Suisse CEO defends bank over Panama Papers
Hong Kong (AFP) April 5, 2016 - The CEO of Credit Suisse said Tuesday the bank does not endorse offshore accounts for tax avoidance or shady dealings, the latest bank to defend itself against accusations made in the Panama Papers leak.

The scandal erupted on Sunday when media groups began revealing the results of a year-long investigation into a trove of 11.5 million documents from the Panamanian law firm Mossack Fonseca, which specialises in creating offshore shell companies.

Among those named in the "Panama Papers" are close associates of Russian President Vladimir Putin, relatives of Chinese leader Xi Jinping and Iceland's Prime Minister Sigmundur David Gunnlaugsson, as well as Barcelona striker Lionel Messi.

Major international banks, including Credit Suisse, were also named in the leak among those that requested the most offshore companies for clients.

Offshore companies are not illegal and can be used for legitimate business needs, but commonly feature in corruption cases where they are used to secretly move ill-gotten gains abroad.

Credit Suisse CEO Tidjane Thiam said Tuesday they would only endorse "legitimate" offshore arrangements.

"We only accept offshore structures, vehicles if they serve legitimate purposes," Thiam said, speaking in Hong Kong.

"Clearly, tax avoidance is not one of those," he added.

"We insist on knowing who is the beneficial owner. If it's not revealed, we will not engage in business with that entity," he added.

His comments come after HSBC, another bank on the list of institutions that helped set up the most offshore accounts, also distanced itself from the revelations.

"The allegations are historical, in some cases dating back 20 years, predating our significant, well-publicised reforms implemented over the last few years," spokesman Gareth Hewett told AFP in an emailed statement.

Hong Kong is under the spotlight after the leak showed the city topped the list of territories where intermediaries operate between Mossack Fonseca and its customers, with the United Kingdom and Switzerland second and third on the list.

Hong Kong film star Jackie Chan was revealed to have at least six companies represented by Mossack Fonseca, though he may have used the companies legitimately for business purposes rather than for tax avoidance.

The Guardian newspaper reported that executives from Hong Kong-based Sun Hung Kai, the city's biggest property developer, were also named in the leak over compliance issues with Mossack Fonseca.

Three executives from the company, including former co-chairman Thomas Kwok, were jailed for corruption in Hong Kong in 2014 over handouts to the city's former deputy leader Rafael Hui, who was also convicted.

The trove of Panama Papers documents was anonymously leaked to German daily Sueddeutsche Zeitung and shared with more than 100 media groups by the International Consortium of Investigative Journalists (ICIJ). More revelations are expected over the coming weeks.

Hostile Western forces are behind the "Panama Papers", a state-run Chinese newspaper alleged Tuesday, as media avoided reporting revelations about Communist leaders and it emerged that the law firm involved has eight offices in the country.

The scandal erupted on Sunday when media groups began revealing the results of a year-long investigation into a trove of 11.5 million documents from Panamanian law firm Mossack Fonseca, which specialises in creating offshore shell companies.

At least eight current or former members of China's Politburo Standing Committee, the ruling party's most powerful body, have been implicated, according to the International Consortium of Investigative Journalists (ICIJ), which co-ordinated the reports.

Mossack Fonseca has offices in eight Chinese cities including Hong Kong, its website showed Tuesday, more than any other country.

Under President Xi Jinping, Beijing has launched a much-publicised anti-corruption drive but has not instituted systemic reforms such as public declarations of assets.

Among those named in the Panama Papers are close associates of Russian leader Vladimir Putin and President Xi's brother-in-law, who was previously identified in investigations into the wealth accumulated by Xi's family by Bloomberg News and the New York Times.

Chinese media have largely avoided reporting on the leaks and social media have been scrubbed of references to them, with foreign news broadcasters such as the BBC blacked out when they report on the issue.

As well as Xi Jinping's brother-in-law, the documents also contained the names of family members of two current Politburo Standing Committee members, Zhang Gaoli and Liu Yunshan, reported the BBC, which took part in the investigation.

Chinese journalists were ordered to delete "all content related to the 'Panama Papers' leak case", according to instructions seen by AFP.

Users on microblogging website Weibo tried to circumvent restrictions by circulating pictures of Chinese-language articles describing the allegations.

In an editorial the Global Times, a newspaper with close links to the ruling Communist Party, implied the leaks were part of a "disinformation" campaign by Western forces.

It did not mention any of the Chinese revelations, focusing instead on the allegations involving Putin -- as did the Shanghai Daily, which is linked to the government of the commercial hub.

"The documents revealed do have basic political targets," the Global Times said, adding that "Washington has demonstrated particular influence" in previous leaks of sensitive information to the media.

- 'Strike a blow' -

Such actions were "a new means for the ideology-allied Western nations to strike a blow to non-Western political elites and key organisations", it added.

Asked whether China would investigate those named in the reports, foreign ministry spokesman Hong Lei said: "For such groundless accusations, I have no comment."

Corrupt Chinese officials have moved more than $120 billion overseas, according to a 2011 report by the People's Bank of China.

Offshore companies are not illegal and can be used for legitimate business needs. But they commonly feature in corruption cases, when they are used to secretly move ill-gotten gains abroad.

Britain's Guardian newspaper said an internal Mossack Fonseca survey found the biggest proportion of its offshore company owners came from mainland China, followed by Hong Kong.

Hong Kong also housed the greatest number of intermediaries, banks and law firms, among others, that set up offshore corporations on clients' behalf.

Mossack Fonseca's office locations in China include the major financial centres of Shanghai and Shenzhen, as well as port cities Qingdao and Dalian, and lesser-known provincial capitals such as Shandong's Jinan and Hangzhou in Zhejiang, along with Ningbo, also in the eastern province.

Fallen political star Bo Xilai was once the mayor of Dalian, and at least 48 officials from Shandong have been caught up in Beijing's anti-graft campaign according to information maintained by the Asia Society on its Chinafile website.

Mossack Fonseca set up its first mainland China office in 2000, Zhang Xiaodong, described as a partner in its Asia practice, told a Chinese magazine in 2007.

Offshore companies, he told the China Economic Weekly, were useful for firms seeking to "avoid" restrictions imposed by countries that "opposed China's new economic strength".

The Panama Papers document trove was anonymously leaked to German daily Sueddeutsche Zeitung and shared with more than 100 media groups by ICIJ.

In a statement, Mossack Fonseca denied any wrongdoing and said it has always complied with relevant laws and regulations.

dly/slb/eb

THE NEW YORK TIMES COMPANY

BANK OF CHINA

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