The Panama Papers: Secrets of the Super Rich - Monday 4 April 2016

It's the shadowy world of secret international finance and tax avoidance.

"What we're looking at here is really a parallel universe."

This Four Corners investigation will reveal how the rich and powerful exploit the system.

"What this really says is a lot about the system itself and how broke the system is and how crazy the whole thing is."

Our reporter Marian Wilkinson follows the money trail and it's worth trillions of dollars.

"I was on their immigration stop list. But we've gotten in." Marian Wilkinson, Reporter

The Panama Papers: Secrets of the Super Rich, reported by Marian Wilkinson and presented by Sarah Ferguson, goes to air on Monday 4th April at 8.30pm EST. It is replayed on Tuesday 5th April at 10.00am and Wednesday 6th at 11pm. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners. #PanamaPapers

This story was produced in collaboration with Suddeutsche Zeitung and the International Consortium of Investigative Journalists.

Transcript

The Panama Papers: Secrets of the Super Rich - 4 April 2016

SARAH FERGUSON, PRESENTER: Hello and welcome to Four Corners.

Tonight: the story of how some of Australia's richest companies got into bed with one of the world's shadiest law firms, which operates through offshore tax havens under a veil of secrecy.

In the early hours of this morning companies and individuals across the globe found their most sensitive financial dealings exposed in a massive leak of documents from a firm in Panama City called Mossack Fonseca. Amongst those outed for having assets secretly stashed in tax havens are present and former world leaders, dictators and their cronies, arms dealers and drug traffickers.

The Australian connections include BHP Billiton, Wilson Security, a major electricity company - and 800 individuals, now targets of the Australian Tax Office.

The database of 11.5 million documents was handed over to German newspaper Süddeutsche Zeitung last year. Since then, Four Corners has worked with the International Consortium of Investigative Journalists in Washington, analysing the files.

The story from this massive leak will fuel the already heated debate in Australia about tax avoidance.

Marian Wilkinson's investigation took her to the notorious tax havens of Panama and the British Virgin Islands. It begins in the United States.

MARIAN WILKINSON, REPORTER: In Washington, DC a secret project investigating the wealth of the world's rich and powerful is in full swing.

We are working with a team of international reporters to unravel a vast network of companies that hides the financial affairs of corporations, politicians, oligarchs and criminals.

GERARD RYLE, INTERNATIONAL CENTRE CONSORTIUM OF INVESTIGATIVE JOURNALISTS: What we're looking at here is really a parallel universe, where people can go to play and avoid the rules in their own countries. They can go to offshore tax havens and basically do things they wouldn't be allowed to do at home.

MARIAN WILKINSON: With the International Consortium of Investigative Journalists, we got access to a massive database of documents from tax havens around the world: a stunning leak of financial secrets from a Panamanian law firm called Mossack Fonseca.

GERARD RYLE: We're looking at easily the biggest leak in history in terms of the size. We're looking at more than 11 million documents. And if you were to compare it with sort of famous leaks like the WikiLeaks State Department records: this is thousands of times larger than that leak.

MARIAN WILKINSON: The documents reveal in graphic detail how Mossack Fonseca set up more than 200,000 companies, foundations and trusts - largely in tax havens.

GERARD RYLE: In this parallel universe where people want secrecy, they go to Mossack Fonseca first. Mossack Fonseca set up the, their companies. And then those companies are used to basically open up bank accounts. And therefore the real owner of the bank account becomes anonymised by the fact that it's an offshore company that technically owns, owns the money.

JACK BLUM, FORMER US SENATE INVESTIGATOR: Mossack Fonseca: they're the engineers who put together the wheels and the machinery to make it work. And they make sure that it continues to work. So they're very important.

MARIAN WILKINSON: And who is instructing them?

JACK BLUM: Uh, it's going to be the corporations; it's going to be the representatives of heads of state who've stolen money; it's going to be, ah, all of the criminals who want to hide money.

And as long as the firm is not held to a standard of serious due diligence of who its customers are and what they're up to, ah, they keep this system rolling right along.

MARIAN WILKINSON: Mossack Fonseca services a myriad of clients. In the database are respected global corporations and world leaders who have assets in offshore havens.

GERARD RYLE: The current prime minister of Iceland is in there, with a company with his wife. We've got the current president of the Ukraine. We've got the current king of Saudi Arabia.

And we've also got, ah, interesting sort of asides like, um David Cameron: the British prime minister's father's in there - and in a rather embarrassing way, because he clearly was making a lot of money out of the offshore world, while his son is now campaigning against tax havens.

(Gerard Ryle shows Marian Wilkinson a specific profile on computer)

GERARD RYLE: It would seem, eh, almost impossible that they didn't know who this guy was. They would had to have known who he was.

MARIAN WILKINSON: There are also notorious cronies and criminals who used Mossack Fonseca to secretly organise their business around the world. We discovered their passports and company records buried in the files.

Among them: Rami Makhlouf, billionaire cousin of Syrian president Bashar al-Assad and a key financial backer of the regime.

Marllory Chacon Rossell, a queen of the Latin American cocaine trade before she was jailed in the US.

Sergei Roldugin, godfather to the daughter of Russian president Vladimir Putin. A cello player: but the leaked files show his offshore company receiving millions of dollars in suspicious loans.

Hugo Jinkis and his son, Mariano, two of the biggest sports marketers in Latin America. Both are charged in the FIFA scandal for allegedly conspiring to solicit $150 million in bribes.

JACK BLUM: It is the corporate use of this system that protects the criminals who use the same system.

Ah, the corporations say, "Look, what we're doing is perfectly legitimate. Ah, after all, the OECD- the treaty allows us to manoeuvre around; to have these subsidiaries; to move the profits to wherever we want."

The same system is the system that criminals use to hide the money and to make sure that they're not caught and they have no responsibility for what they've done.

MARIAN WILKINSON: We soon discovered hundreds of Australian passports, names and addresses in Mossack Fonseca's files.

They include corporate giant BHP Billiton and some of our leading foreign investors. But we also uncovered convicted fraudsters and tax evaders.

The Mossack Fonseca leak escalates the heated debate in Australia over tax avoidance.

SAM DASTYARI, LABOR SENATOR: Let's not pussyfoot around it. What is the business model of these tax havens? Be it the Cayman Islands, the British Virgins Islands, be it Panama, the business model is built around: "We will allow you to engage in practices for a small fee that would otherwise be illegal in your host country." That's the business model.

JAMES HENRY, TAX JUSTICE NETWORK: We estimate, ah, that there's at least $21 trillion to $32 trillion of individual private, ah, financial wealth offshore, ah, parked through havens. Ah, that's just individual wealth; that's not, ah, corporate money.

There's additional, ah, you know, trillions of dollars of corporate money that flows offshore and is parked in, ah, low-tax havens, ah, for tax purposes.

MARIAN WILKINSON: We've come to Panama City in Central America to investigate Mossack Fonseca at its headquarters.

Given Panama's colourful history, it's not surprising that a law firm here has become a global leader in the tax haven business.

(Footage of Marian Wilkinson walking down street, Panama City)

This city is one of the oldest tax havens in the world. At the height of the cocaine trade, Panama was a money laundry for the Latin American drug lords. And it offered the full service: wash, rinse and spin dry.

These days, Panama says it's reformed.

Today many Panamanian lawyers and bankers get rich moving money into tax havens.

It's not a crime. But their business often moves billions in tax revenue out of the reach of national governments.

JAMES HENRY: They're increasingly using the best structures on the planet and not just Panama facilities, but they're based in Panama 'cause there is relatively strong financial secrecy in Panama.

And then they would wire the money elsewhere...

MARIAN WILKINSON: As James Henry from the Tax Justice Network explains, many wealthy individuals and corporations want a tax haven company to get around the tax laws at home.

JAMES HENRY: Well, usually we refer to a tax haven as a low-tax jurisdiction compared to other places. It's a place that, where non-residents, either companies or individuals, ah, can take advantage of, ah, ah, the fact that they're not really taxed on their income or their capital gains or their estates, ah, even though they have planted, ah, companies there.

MARIAN WILKINSON: Even in Panama, Mossack Fonseca stands out among other law firms. It's setting tax up haven companies on an industrial scale, through its 30 offices around the world.

Co-founder Jürgen Mossack is an expert in Swiss tax law, with a glamorous Cuban wife and unlimited ambition.

JURGEN MOSSACK, CO-FOUNDER, MOSSACK FONSECA (corporate video): My vision is that, er, our company... and its various, er, divisions become an organisation that is really, really: not only well respected, but which is an organisation similar to, perhaps, Microsoft, where people basically... need us.

MARIAN WILKINSON: His partner, Ramon Fonseca, is one of the best-connected lawyers in Panama City. Until recently he was a special ministerial advisor to the Panamanian president and a top player in the ruling political machine.

RAMÓN RICARDO ARIAS, TRANSPARENCY INTERNATIONAL, PANAMA: Mr Fonseca is the president of the governing party. Mr Fonseca was an advisor to the president and as such he basically advises the president in whatever he's requested to.

MARIAN WILKINSON: Is that an influential position?

RAMÓN RICARDO ARIAS: Ah, definitely he, you know, he has the ear of the president.

Money laundering is a big problem in Panama. Ah, we are making connections. We are trying to restrict it. But it's still dragging on. Eh, there are still cases going on.

MARIAN WILKINSON: The local head of the anti-corruption body, Transparency International, says despite Mossack Fonseca's political connections, its operations are coming under scrutiny.

RAMÓN RICARDO ARIAS: If you're going to continue in this industry, you know, you need to know your client. You need to make sure your client is bona fide and is doing exactly what he tells you he's doing with this and he's not using this company for any criminal activity.

MARIAN WILKINSON: Mossack Fonseca's files reveal its clients are under investigation on four continents.

Its simple aim might be to help people and companies minimise their tax, but the leaked data exposes a pattern of covert financial manoeuvrings.

JACK BLUM: Mossack Fonseca can help people avoid the laws and the regulations of countries that have the capability of collecting tax and imposing liability. And they are very good at, ah, helping people in that offshore environment.

MARIAN WILKINSON: One way Mossack Fonseca helps its wealthy clients is by hiding their identity in so-called shell companies.

These companies hire front men or nominees as directors and shareholders, so the real owner of the assets never appears on a company register.

JAMES HENRY: It depends on the game that you're playing, but ultimately you're trying to avoid identification of the ultimate beneficial owner involved in these things, so you can avoid liability.

Let's say someone, ah, borrows money and defaults on it. They want to escape their creditors. They don't want to know- you know, want you to be able to track them down. If they're dodging taxes they're not interested in (laughs) the IRS finding them. Ah, so it's really a game of, ah, you know, hide the, ah, the peanut under the shells. And, ah, that's a, a major part of it.

MARIAN WILKINSON: As we dug deeper into Mossack Fonseca's files, we found one network of front men and women, repeatedly used to hide the identity of clients.

This network was not based in Panama, but on Queensland's Gold Coast.

The man behind it is Ian Taylor.

Ian Taylor is a shady New Zealander who moved to Australia a decade ago. His shell companies have been embroiled in a series of scandals, including allegations of money laundering.

GERARD RYLE: Ian Taylor is one of these people - and there are many hundreds of them in the data - where they literally rent their name to pretend to be directors of companies. So if you want to have an anonymous offshore company, you'll need someone to be your, basically your proxy.

So Ian Taylor will be the director of thousands of companies around the world and he won't have a clue what any of those companies are doing, which again raises questions about, you know, probity.

MARIAN WILKINSON: We've come to Queensland's Gold Coast in search of Ian Taylor.

We want to ask him why he and his proxies appear on hundreds of tax haven companies registered by Mossack Fonseca.

Taylor and his former wife, Rachel, were both listed as directors at this address.

(Marian Wilkinson drives up to gated property. She tries gate intercom)

MARIAN WILKINSON: Doesn't look like there's anyone home. We'll have to try again.

(Footage of Marian Wilkinson walking to multi-story apartment building at dusk. She tries an intercom button at entrance)

MARIAN WILKINSON: We tried other addresses used by Taylor, including this one he currently lists with the Australian corporate regulator.

WOMAN (intercom): Hello?

MARIAN WILKINSON: Oh, hi. I'm looking for Ian Taylor. Have I got the right building?

WOMAN (intercom): Oh, he doesn't live here. He's not here.

MARIAN WILKINSON: Right. Ah, is Rachel there at all?

WOMAN (intercom) (pause): No. She doesn't live here at all.

MARIAN WILKINSON: OK. Thanks very much for your help.

(Marian walks off)

MARIAN WILKINSON: Taylor proved an elusive character. He keeps a low profile here since his New Zealand business hit the news six years ago.

REPORTER (TVNZ news, December 2009): Ian Taylor's Queensland office is half a world away from a cargo plane in Thailand, seized last month with 35 tons of illegal arms believed to be destined for Iran. But the complex paper trail leads back to a New Zealand-registered company, set up by this Kiwi businessman.

MARIAN WILKINSON: Taylor and his father's business had registered a local company with nominee directors that was exposed organising an arms shipment from North Korea to Iran - both countries under UN arms sanctions.

IAN TAYLOR (TVNZ news, December 2009): After the initial shock we went into, ah, I guess, a, ah, a mode of, of trying to figure out exactly where we stand with everything.

GERARD RYLE: That really blew the lid on the Taylor family enterprise. It attracted a lot of, ah, unwanted attention to them and I believe that the authorities in New Zealand began to look at, at their activities. Major scandals involving, um, arms dealing, um, er, bank scandals involving the laundering of money for, ah, Mexican drug cartels and other things.

MARIAN WILKINSON: Our investigation uncovered disturbing emails, showing Mossack Fonseca ignored warnings about working with the Taylors.

The firm's executives repeatedly backed the Taylors, describing Ian's father Geoffrey as a man of:

MOSSACK FONSECA EMAIL (voiceover): High credibility, professional history and moral standard. We have been cooperating with his company for many years.

(Footage of Marian Wilkinson meeting Ian Taylor)

MARIAN WILKINSON: Taylor finally agreed to meet me at a pub in Surfers Paradise.

He admitted acting as a nominee director and shareholder on hundreds of tax haven companies.

But he also claimed his passport and identity had been stolen and used to forge directorships in eastern Europe. He said he would explain all in an interview, but then stopped taking our calls.

GERARD RYLE: Ian Taylor and the family always say: well, you can't blame them for any of this, 'cause they don't know what the companies are doing. But they are actually directors of these companies and they do have some sort of responsibility to know what these companies have been up to.

MARIAN WILKINSON: Australian Federal Police have recently questioned Taylor on behalf of Romanian authorities.

But Taylor and his proxies can escape legal responsibilities for the companies they front, because they operate in the offshore world.

GERARD RYLE: What this really says is a lot about the system itself and how broke the system is and how crazy the whole thing is that you can do this.

I mean, you can have this parallel universe and it exists. And you've got all these fake directors and all these fake companies and all this secrecy. I think the Taylors are just, you know, part of... you know, of this kind of crazy world.

MARIAN WILKINSON: Mossack Fonseca uses the offshore system expertly for its top corporate clients. While what it does is legal, in some cases it raises serious ethical questions.

Our investigation reveals Mossack Fonseca helped conceal the identities behind a major Australian government contractor.

Wilson Security, which guards the Australian Tax Office, the Defence Department and Australia's offshore detention centres, uses the services of Mossack Fonseca.

(A security guard emerges from the entrance of Wilson Security's Australian headquarters.

SECURITY GUARD: You filming me?

CAMERA OPERATOR: Yep.

SECURITY GUARD: Do you have my permission?

SARAH HANSON-YOUNG, GREENS SENATOR: I think if a government is going to outsource such a delicate operation, such as the detention of men, women and children, um, in an isolated place, away from public scrutiny, where the media is locked out, where there is a massive, er, ah, lockdown on information and transparency: then at the very least, some proper due diligence on the backgrounds on those people being contracted, um, should occur.

MARIAN WILKINSON: Wilson Security portrays itself as an Australian operation. But buried in Mossack Fonseca's files we found this courier envelope that tells a different story.

It led us from Wilson's accountants in Perth to Wilson's ultimate holding company, in the British Virgin Islands.

JAMES HENRY: These places are not kind to whistleblowers. They're not kind to journalists. They thrive on secrecy and that's their bread and butter. So, um, I wouldn't expect a warm, ah, red-carpet treatment when I go to BVI.

(Marian Wilkinson takes a flight to the British Virgin Islands. She boards a boat)

MARIAN WILKINSON: Following the Wilson trail to the BVI - the British Virgin Islands - is fraught. This Caribbean tax haven doesn't welcome reporters. Indeed, we could be jailed here for publishing the Mossack Fonseca documents.

We were forced to enter the territory as tourists when the authorities refused us work permits. Then we were stopped at the border.

(Marian Wilkinson leaves customs building)

MARIAN WILKINSON: Well, that took almost an hour because I was on their immigration stop list. But we've gotten in.

We met up first with Martin Kenney, a top asset recovery lawyer who knows this place better than most.

MARTIN KENNEY, FRAUD AND ASSET RECOVERY LAWYER: The British Virgin Islands is a beautiful archipelago of islands in the eastern Caribbean Sea. We have only 32,000 people here; perhaps 2,000 beautiful sailing boats, the world's largest sailboat charter fleet.

But we have far more companies than people or boats: 500,000 by latest count, representing about a quarter, 25 per cent of the world's population of offshore companies.

MARIAN WILKINSON: That's about 15 offshore companies for every man, woman and child who lives here.

These companies don't come here to invest: they come because it's a tax haven. And in some cases, they come to hide their affairs from public scrutiny.

MARTIN KENNEY: We have the same level of confidentiality as you would have in Australia, or where I'm from in Canada, ah, with the exception that we don't have a public registry of, ah, identifying the names of directors or registered shareholders - or what's critically important to a fraud lawyer: the identity of the UBO, the ultimate beneficial owner, the real owner behind a corporate structure.

(Footage of Road Town, BVI)

MARIAN WILKINSON: This is the capital of the British Virgin Islands. Behind the main street is the address on the envelope for Wilson Security's holding company. It's the same address as Mossack Fonseca's headquarters here.

M. SHUMI AKHTAR, DR., UNIVERSITY OF SYDNEY BUSINESS SCHOOL: Wilson's corporate setup - Wilson Group corporate setup - is extremely complicated. It has got many dimensions. It has got many layers.

And especially when you have got that many dimensions and that many layers and it's not within one country but globally: it's just complex beyond what one can actually say in words.

MARIAN WILKINSON: In Mossack Fonseca's files we found the original directors of Wilson's holding company. They include two billionaire directors from Hong Kong, Raymond and Thomas Kwok.

In 2012 the Kwok brothers, along with one of their top executives, were charged in one of the biggest bribery cases in Hong Kong's history.

RAYMOND KWOK, FORMER MANAGING DIRECTOR, SUN HUNG KAI PROPERTIES (translation): I want to confirm to everyone that I myself haven't done anything wrong and I believe Thomas Kwok hasn't done anything wrong either.

MARIAN WILKINSON: The charges hit as Wilson Security in Australia geared up to bid for government contracts worth hundreds of millions of dollars.

M. SHUMI AKHTAR: Definitely it shocked people, because the Kwok brothers were very reputable and, ah, many Hong Kong citizens used to look up to them. They were charged because of bribery. But no-one really knew which one of the Kwok brothers was actually, um, behind this all.

MARIAN WILKINSON: Within a week of the charges, the Kwok brothers resigned as directors of Wilson's holding company in the British Virgin Islands, apparently cutting their ties with Wilson Security.

But two mysterious companies then appeared as the new directors: Harmony Core and Winsome Sky. And we found behind these companies sat Raymond and Thomas Kwok.

They'd hidden their directorships of the company controlling Wilson Security, with the help of Mossack Fonseca.

JACK BLUM: Financial secrecy is the essential piece of business. And the skills of the Panamanian law firms are to figure out how to set up a trust here that owns a corporation there, that owns another corporation somewhere else; and create a series of layers that make it very difficult, if not impossible, for an investigator to figure out who really owns what - and where the money is.

MARIAN WILKINSON: Wilson Security's Australian executives would not be interviewed. But in a statement they sought to distance the Kwoks from the company.

STATEMENT FROM WILSON SECURITY AUSTRALIA (voiceover): Raymond Kwok... is not - nor has he ever been - a director of Wilson Security.

Thomas Kwok is not, nor at any stage has he ever been, a director of, nor has he ever had any involvement in any Wilson company's operations in Australia.

MARIAN WILKINSON: In December 2014 Thomas Kwok was jailed for five years over the Hong Kong bribery scandal. His brother Raymond was acquitted.

By then, Wilson Security had won Australian government contracts worth more than $400 million, including sensitive contracts that are supposed to require tough probity rules.

SARAH HANSON-YOUNG: It seems ridiculous to me that a company that can, um, take hundreds of millions of Australian taxpayer dollars, in exchange for locking up children, doesn't require an assessment of the character of the individuals involved. I mean, where else would, would that be acceptable?

JACK BLUM: Well, this: this is a, a fundamental question, which is: why should the large countries of the world accept as real entities that are set up on a group of islands that has fewer people by far than it has offshore corporations; and has no real legal system to monitor and police what these entities are up to?

Ah, that is really the heart of the problem. And what governments should be doing is saying, "We will not accept as real these entities. You have to come here. You have to incorporate here. You have to do it under our rules and that requires full disclosure."

MARIAN WILKINSON: While governments insist they want to clean up the offshore world, the number of companies in tax havens is exploding.

That has a real impact on our economy and our tax system. We only had to come down to the famous Panama Canal to see that.

The company that operates this crucial port at the entrance to the Panama Canal is controlled by Hong Kong's richest man. And he, too, is a client of Mossack Fonseca, here in Panama. He also happens to be one of the biggest foreign investors in Australia today.

He is 87-year-old Li Ka-shing. His net fortune is estimated at over $40 billion - and we discovered his identity card in Mossack Fonseca's files.

M. SHUMI AKHTAR: Li Ka-shing: he's the number-one richest man in Hong Kong. And he's very wealthy. He's a very powerful businessman in Asia and he's best known for his mobile business in Hutchison Whampoa Limited, which happens to be one of the biggest listing, um, companies in Hong Kong. Um, but he also has got a lot of assets that he holds in infrastructure.

MARIAN WILKINSON: In Australia, few people know the name Li Ka-shing. But if you live in Victoria or South Australia and you turn on your lights at night, you help Li Ka-shing stay at the top of the rich list.

His company, Cheung Kong Infrastructure, has a big slice of Australia's electricity market, especially in South Australia.

NICK XENOPHON, INDEPENDENT SENATOR: This company is ubiquitous. Everyone who turns on the lights, turns on an appliance in their home: ah, it's through this company.

They have a monopoly on the distribution of electricity into people's homes and into factories, into businesses throughout the state. It has a massive presence in my home state. That's all the more reason that there needs to be transparency i- in this.

MARIAN WILKINSON: Li Ka-shing's company, Cheung Kong Infrastructure or CKI Holdings, is listed on the Hong Kong stock exchange - but it's incorporated in the tax haven of Bermuda.

The leaked data shows Cheung Kong Infrastructure used Mossack Fonseca's Hong Kong office to organise a string of related subsidiaries in Panama and the British Virgin Islands.

Internal emails show the company insisted on the utmost secrecy for its affairs.

MOSSACK FONSECA EMAIL (voiceover): Special instruction: please do NOT display and send any documents from the client by email. The client request us to treat their documents as the high confidence.

NICK XENOPHON: The great irony here is that: here is a company that effectively provides, ah, light for every South Australian household, ah, but is not prepared to have the light shone on its tax affairs.

MARIAN WILKINSON: Unravelling CKI's tax affairs, even with the leaked data, is virtually impossible.

But we do know the Australian Tax Office took two CKI-related companies to court in 2013. The Tax Office argued each company owed almost $400 million in back taxes and penalties on their Australian electricity business.

MARTIN LOCK, FORMER OFFICIAL, AUSTRALIAN TAX OFFICE: That particular company had blatantly, it appeared, ignored its obligations under t- the Tax Act to lodge either returns or documents; or it had filed a return that the Tax Office was dissatisfied with, which appears to have been the first year's return.

MARIAN WILKINSON: We asked a former senior official with the Australian Tax Office, Martin Lock, to explain the extraordinary court ruling.

MARTIN LOCK: Obviously, in frustration the Tax Office finally issued assessments which the company obviously didn't even act upon, because the, ah, ATO had to take this matter to court to get a judgement debt against the company.

MARIAN WILKINSON: In your experience, is that pretty unusual for a large corporation to do that?

MARTIN LOCK: Ah, that's very unusual for a large corporation to do that. Um, that simp- appears to show just blatant disregard for the law: a blatant non-compliance.

MARIAN WILKINSON: Li Ka-shing's companies quietly settled the case with the Australian Tax Office last year, for less than one tenth of the original claim.

CKI executives refused to be interviewed by Four Corners about their tax haven arrangements, but issued a statement saying:

STATEMENT FROM CHEUNG KONG INFRASTRUCTURE HOLDINGS LTD (voiceover): All our companies fully comply with regulatory, tax and legal requirements of the countries they operate in, and Australia is no exception.

MARIAN WILKINSON: The Deputy Tax Commissioner defends the settlement, but laws on confidentiality of corporate taxpayers mean he can't discuss it.

MARK KONZA, DEPUTY COMMISSIONER OF TAXATION: I'm really unable to comment on anything that wasn't on the public, ah, record. Settlements are very important, ah, in the Australian tax system because they allow us to, ah, secure the right amount of tax without having to go through a whole court process.

NICK XENOPHON: To paraphrase Lewis Carroll: this is a case of curiouser and curiouser. Ah, here is a company which has been subject to a ruling of almost $800 million in back taxes; in underpayment of taxes. Then it was quietly settled a year or two later for a fraction of that: something like 10 per cent of the total amount being sought.

Ah, what I think this highlights is: the need for greater transparency in these settlements.

MARIAN WILKINSON: In the British Virgin Islands it's obvious financial secrecy is a big problem.

You only have to see the rows of post office boxes that line the back streets to realise no company actually keeps any significant records in this tax haven. It's just a letter drop. And that makes it tough for tax investigators.

MARK KONZA: The fact is that they don't hold any information because the companies running through those, ah, havens: er, they might run through them but they don't leave any information there. So then you have, ah, you have to see through, ah, these, er, havens to, to try and find out what's really going on.

MARIAN WILKINSON: You can see why the authorities didn't want us filming here. Behind me is the British Virgin Islands headquarters of Mossack Fonseca. In this modest building they manage to act as the registered agent of literally thousands of companies; among them, some of the biggest operators in Australia.

BHP Billiton has used Mossack Fonseca as its BVI agent for companies linked to its diamonds, steel and aluminium businesses - and, most importantly, its finance arms.

The files show five BHP Billiton finance companies were registered in BVI, moving billions of dollars in loans through the tax haven, organised from London.

(To Mark Konza) The company is a UK tax resident, as well as...

(Voiceover) The Deputy Tax Commissioner won't comment on BHP Billiton specifically. But he explains why some multinationals put their inter-company loans through tax havens.

MARK KONZA: You loan money to your Australian company through a low-tax jurisdiction. You charge, ah, interest: that's a deduction in Australia.

That amount of money would have been subject to tax at, say, 30 per cent in Australia, but it leaves the country - it may have a, er, withholding tax, say, of 10 per cent, but when it gets to the tax haven it may have a tax- it may be taxed there at, say, one per cent.

So your overall, ah, tax burden becomes 11 per cent, as opposed to 30 per cent. That's essentially, ah, why you go through a, a- what's called a tax haven; what we call low-tax jurisdictions.

MARIAN WILKINSON: BHP Billiton executives declined to be interviewed, but in a statement they strenuously denied their BVI finance companies were used to avoid tax.

STATEMENT FROM BHP BILLITON (voiceover): BHP Billiton does not engage in aggressive tax planning. Each of these companies was, and continues to be, resident in the UK for tax purposes and therefore subject to UK tax on its worldwide income.

Consequently, any profits made by these companies were taxable in the UK at the normal company tax rate.

(Footage of Tony Cudmore and Jane Michie appearing at Senate tax inquiry, April 2015)

TONY CUDMORE, PRESIDENT, CORPORATE AFFAIRS, BHP BILLITON (Apr. 2015): Tony Cudmore, president in corporate affairs, BHP Billiton.

JANE MICHIE, HEAD OF TAX, BHP BILLITON (Apr. 2015): Jane Michie, head of tax, BHP Billiton.

MARIAN WILKINSON: BHP Billiton is extremely sensitive about its tax affairs following last year's Senate tax inquiry.

SAM DASTYARI (Apr. 2015): You don't have a marketing hub in Singapore, do you? Or you do?

MARIAN WILKINSON (Apr. 2015): Executives initially stonewalled senators' questions about a Tax Office audit that claimed the company had avoided millions in tax by using a so-called marketing hub in Singapore.

CHRISTINE MILNE, GREENS SENATOR 2004-2015 (Apr. 2015): But it's a direct question: have you been issued with a paper from the Tax Office in relation to this matter?

JANE MICHIE (Apr. 2015): We, we would prefer not to answer that question, thank you.

CHRISTINE MILNE (Apr. 2015): W-well, I think that actually the community deserves to know. I mean...

(Footage ends)

SAM DASTYARI: It was unbelievable. To have Australia's largest taxpayer come before a Senate inquiry about tax minimisation and not be able to present basic information about their own structure: it's, it's, it's... it's, it just shows the contempt with which when- with which that committee was being held at that point in time.

(Footage of Senate inquiry)

MARIAN WILKINSON (voiceover): BHP Billiton emerged as one of the better corporate taxpayers in the Senate inquiry, compared with foreign multinationals.

TONY KING, MANAGING DIRECTOR, APPLE AUSTRALIA (Apr. 2015): Thirty per cent is our effective tax rate.

MARIAN WILKINSON (voiceover): The senators' controversial report is due as early as this week.

NICK XENOPHON (Apr. 2015): Are you serious? You've come to this inquiry...

MARIAN WILKINSON (voiceover): Coinciding with the Mossack Fonseca leak, it's expected to reignite public anger over tax avoidance by corporations and wealthy individuals.

SAM DASTYARI (Apr. 2015): Do you not know? Or you're not telling us?

(Footage ends)

NICK XENOPHON: I think that we've reached a tipping point; that people are really mad as hell and they don't want to take it anymore; that this is an opportunity to open this up.

And this issue won't go away until there is a fair rate of tax being paid by these companies.

(Footage of Senate inquiry)

TONY KING (Apr. 2015): I have no idea what you're talking about...

CHRISTINE MILNE (Apr. 2015): Oh, come on.

TONY KING (Apr. 2015): ...and...

CHRISTINE MILNE (Apr. 2015): Oh, come on.

(Footage ends)

SAM DASTYARI: Frankly, to the justification that's provided by a lot of these companies that: "Well, we're technically operating, we believe, within the law, so that makes it OK": you know, I think we have to call that for what that is: and that's bullshit. I mean, that is a bullshit argument.

The reality is that they are operating in a very, very grey area of the law.

You know, this isn't a victimless act. Every dollar that's minimised is a dollar that's not going to a school; that's not going to a hospital; that's not going to a service that w- that we require and need.

And yet these companies are getting away with it - and we're letting them get away with it.

MARIAN WILKINSON: Public anger is putting pressure on the Australian Tax Office to step up the fight against tax avoidance.

And tonight Four Corners can reveal tax officials have got their hands on some of the leaked Mossack Fonseca files for its high-profile tax evasion taskforce, Project Wickenby.

MARK KONZA: Our analysis so far has shown a number of, er, people who are either, ah, in our Wickenby or our, ah, wealthy Australians investigation programs have come up. So there is some, er...

MARIAN WILKINSON: Have come up in the Mossack Fonseca data?

MARK KONZA: Yes, they have. Yes. People who are involved in these sorts of secret arrangements to evade tax: they need to consider their position very carefully, bearing in mind that in recent years 46 people have been sent to jail as part of the Wickenby Program.

It's clear that there's a great groundswell of resentment of these tax evasion activities, because we continually receive information from informants. We've received information since, ah, the company you're referring to, ah, on other companies. Ah, and so these- I don't think you can rely on these secret arrangements being kept secret.

MARIAN WILKINSON: Mossack Fonseca, once renowned for its secrecy in handling the affairs of the rich and powerful, now finds itself on a very public stage.

We're here outside the Panamanian headquarters of Mossack Fonseca - and here with media from all over the world, who are demanding answers to their questions. So far, we haven't got any.

(Footage of journalists and camera operators outside building. Journalist Christoph Lütgert calls office on mobile phone)

CHRISTOPH LÜTGERT, NORDDEUTSCHER RUNDFUNK: Tell him that a group of around 20 or 25 international journalists is in front of your building.

MARIAN WILKINSON: The firm's response to this unprecedented exposé was to send out its PR man.

CARLOS SOUSA, PUBLIC RELATIONS, MOSSACK FONSECA (translation): It is very clear. We don't do money laundering. We don't accept money and we don't take money. That is the only thing I can tell you.

MARIAN WILKINSON: Our detailed questions were never answered. But Mossack Fonseca denies it has ever acted illegally.

STATEMENT FROM MOSSACK FONSECA (voiceover): We follow both the letter and spirit of the law. Because we do, we have not once in nearly 40 years of operation been charged with criminal wrongdoing.

MARIAN WILKINSON: That Mossack Fonseca has never been charged speaks volumes about what is legal and acceptable in the global world of tax havens.

Turning a bright public spotlight on that world, many believe, is the only way to achieve a fairer and cleaner financial system.

MARTIN LOCK: There's really only one solution: and that's to change the laws. The Parliament has to change the laws if it wants a particular result. It can't rely on concepts of fairness to come into the thinking of the courts.

(Footage of Marian Wilkinson with press grouping outside Mossack Fonseca office)

MARIAN WILKINSON (to Carlos Sousa): Will you bring Mr Mossack and Mr Fonseca down for a press conference?

(Security staff close doors behind Carlos Sousa. Footage ends)

MARTIN LOCK: Appeals to, you know, the corporate, social conscience of paying their fair share: well, they can legitimately say, "We're paying what we are required to pay under the law. And if that's not fair by your standards, change your laws."

SAM DASTYARI: People have realised that they are the people getting ripped off here: that if you're not wealthy enough or you're not rich enough, you're not big enough or you're not powerful enough to structure your tax affairs in such a way, then you have to pay tax.

People are angry. People have had enough. People are fed up and the political system needs to catch up with that and actually make some tougher laws that will address it.

SARAH FERGUSON: Reverberations from this extraordinary leak continue around the world tonight.

It'll now take concerted international action to translate the anger it has caused into real reform.

Next week: the rise and fall of Clive Palmer's business empire and political career. See you then.

END

Background Information

RESPONSES

Mossack Fonseca Statement - Mossack Fonseca would not respond to individual questions citing client confidentiality but released this general statement to international journalists, but instead presented us with this statement. [pdf]

Wilson Security - Wilson Security's response to questions on the structure of its offshore holding company, dated 29 March 2016. [pdf]

BHP Billiton Statement - BHP Billiton statement following questions on the use of their British Virgin Islands entities, dated 30 March 2016. [pdf]

Cheung Kong Infrastructure Holdings Limited - Response to questions about its use of offshore companies, dated 18 March 2016. [pdf]

Department of Defence - Response to questions on their hiring of Wilson Security and probity checks undertaken for major tenders, March 2016. [pdf]

Department of Immigration and Border Protection - Response to questions on Wilson Security and probity checks undertaken for major tenders, dated 24 March 2016. [pdf]

Department of Finance - Response to questions on whether corruption charges would influence the awarding of a government tender, 23 March 2016. [pdf]

THE PANAMA PAPERS NEWS COVERAGE

Australian security company Wilson linked to Hong Kong corruption scandal, by Four Corners, Lisa Main & ICIJ | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/australian-company-wilson-linked-to-hong-kong-corruption-scandal/7291178

Panama Papers: Vladimir Putin associates, Jackie Chan identified in unprecedented leak of offshore financial records, by Four Corners & ICIJ | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/unprecedented-leak-of-offshore-financial-records-exposes-secrets/7293524

Explainer: The Panama Papers and Mossack Fonseca Explained | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/explained-what-are-the-leaked-mossack-fonseca-panama-papers/7270690

Inside Story: Mossack Fonseca leak takes Four Corners on a taxing journey into a parallel universe, by Marian Wilkinson | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/four-corners-reveals-parallel-world-of-tax-havens/7295490

Tax office investigating 800 Australians identified in financial record leak, by Four Corners | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/tax-office-investigating-800-australians-in-panama-papers-leak/7296512

Panama Papers: Mossack Fonseca labels leak a 'crime and attack' | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/mossack-foncesa-says-panama-papers-a-crime-and-attack/7296858

Iceland PM Gunnlaugsson urged to resign amid Mossack Fonseca data leak, by ICIJ & ABC | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/iceland-pm-urged-to-resign-amid-panama-papers-scandal/7295742

FIFA officials, Lionel Messi, Michel Platini named in secret offshore files | ABC News | 4 Apr 2016 - https://www.abc.net.au/news/2016-04-04/fifa-officials-and-lionel-messi-named-in-offshore-files/7296140

INTERACTIVE: The Power Players | ICIJ | 4 Apr 2016 - This interactive produced by the International Consortium of Investigative Journalists (ICIJ) explores the stories behind the use of offshore companies of politicians and their relatives and associates. - https://projects.icij.org/panama-papers/power-players/

Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption | ICIJ | 3 Apr 2016 - Millions of documents show heads of state, criminals and celebrities using secret hideaways in tax havens. - https://panamapapers.icij.org/20160403-panama-papers-global-overview.html

The Panama Papers | ICIJ reports on the rogue industry hiding politicians' cash. - https://panamapapers.icij.org/

About the Panama Papers | Suddeutsche Zeitung - Background on the project and cross-border collaboration. By Frederik Obermaier, Bastian Obermayer, Vanessa Wormer and Wolfgang Jaschensky. (English) - http://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3c3495adf4/