Panama raids law firm at centre of tax leaks scandal

Panam City: Police have raided the headquarters of the Panama law firm whose leaked documents have unleashed a global scandal over how the world's elite use offshore companies to hide their wealth.

Organised crime police surrounded Mossack Fonseca's headquarters in Panama City yesterday as the offices were being searched, along with several other branches.

Prosecutors said the raids had taken place "with no incident or interference," but gave no details on the results of the searches.

The fallout from the so-called Panama Papers, which law firm Mossack Fonseca claims were stolen when hackers from abroad breached its system, has spread around the world.

A year-long probe by a consortium of investigative journalists examined the papers, which come from around 214,000 offshore entities and cover almost 40 years.

The world's business, political and even sports elite have been thrown onto the defensive.

Iceland's prime minister was forced to resign after it emerged he owned shares in the country's banks through an offshore company during the financial crisis.

Leaders in Britain and Ukraine have faced questions over their taxes, while Russian President Vladimir Putin has sought to divert attention from his entourage by claiming it is all a US plot against him.

China has been censoring online forums and media to stifle discussion of the papers, which showed relatives of eight of its political top brass also owned offshore companies.

And wealthy citizens in Australia, France, India, Mexico, Peru, Spain and elsewhere face probes over suspected tax avoidance after their names figured in some of the 11.5 leaked million documents.

Panama has hit back at the apparent blemish on its image as an important financial crossroads.

It warned France earlier yesterday, before the raid on the law firm, of unspecified diplomatic measures if France does not remove it from a blacklist of tax havens.

Paris put Panama back on its national list of uncooperative jurisdictions, after removing it in 2012, in the wake of the leaks.

France is also urging the European Union and all member states of the Organization for Economic Cooperation and Development to follow suit.

Such an international designation would deal a heavy blow to Panama's vital financial services sector, which the government has been trying to make more transparent.