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China, Hong Kong top market for firm at centre of Panama Papers

Thursday, April 7, 2016 - 13:51

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Hong Kong and mainland China accounted for almost a third of the offshore companies created by the law firm at the center of the "Panama Papers" leak, including some set up by family members of the country's most powerful officials.

[PANAMA CITY] Hong Kong and mainland China accounted for almost a third of the offshore companies created by the law firm at the center of the "Panama Papers" leak, including some set up by family members of the country's most powerful officials.

Mossack Fonseca was collecting fees for more than 16,300 offshore companies incorporated through offices in Hong Kong and China - the firm's largest market accounting for 29 per cent of the companies set up worldwide, according to the information published Wednesday by the International Consortium of Investigative Journalists, which is coordinating analysis of the leaked documents.

Shareholders include celebrities such as kung fu star Jackie Chan, the brother-in-law of President Xi Jinping and relatives of two other members of the Communist Party's supreme Politburo Standing Committee, the group said.

Revelations from the firm's 11.5 million documents come at an awkward time for Mr Xi, who's making party members handover more information about their family wealth amid his three-year-old campaign against corruption.

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Reports about the documents have been largely scrubbed from China's Internet, with a foreign ministry spokesman dismissing the findings as "hearsay" and a state run newspaper casting them as part of a Western-media-led effort to smear foreign leaders.

Mossack Fonseca's Hong Kong operation, which the firm set up in 1989, represented is busiest office in the world, according to ICIJ.

The firm also has offices in eight mainland cities: Dalian, Hangzhou, Jinan, Nanjing, Ningbo, Qingdao, Shanghai and Shenzhen.

Bloomberg News wasn't part of the ICIJ consortium and hasn't be able to review the China-related documents. 

The papers detail offshore holdings of family members of Liu Yunshan, the country's top propaganda official, and Zhang Gaoli, a vice premier. Since November 2012 both men have been among the seven members of the Standing Committee, China's innermost sanctum of political power.

A daughter-in-law of Mr Liu was the director and a shareholder of one company incorporated in the British Virgin Islands, according to the report.

A son-in-law of Mr Zhang's was a shareholder of three BVI companies, the report said.

It's unclear what purposes the companies served. While not all offshore interests are illegal, companies incorporated in jurisdictions with restricted records access can hide financial relationships that otherwise might draw disapproval from government authorities and the public.

Iceland's ruling coalition named a new leader Wednesday to replace Prime Minister Sigmundur David Gunnlaugsson who stepped down after leaked Mossack Fonseca documents revealed that he and his wife had investments in offshore accounts.

Foreign media are required to direct requests to contact senior Chinese officials through the Ministry of Foreign Affairs. The ministry on Tuesday declined to comment on the reports stemming from the Panama Papers, other than to call them groundless.

Some documents regarding Chinese officials expanded on previous reports of their relatives' offshore holdings. ICIJ reports, for instance, showed that Deng Jiagui - husband to Mr Xi's sister, Qi Qiaoqiao - was a shareholder in two BVI companies.

There have been signs that Mr Deng and Ms Qi moved to divest at least some of their wealth before Xi took power in November 2012. Mr Deng told Bloomberg in 2012 he was retired. ICIJ says the two BVI companies associated with him were made inactive before May 2011.

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