Recently leaked documents dubbed the Panama Papers have revealed a number of Japanese nationals own companies in offshore tax havens, raising suspicions that they are being used to transfer gains from criminal activities to disrupt police investigations.

A 41-year-old businessman from Ashiya in Hyogo Prefecture, who was named in the papers, said, “It is so easy to send money out of the country. Pyramid sales, bank transfer scams, pornographic video production — people engaging in suspicious businesses are all using tax havens.”

The man, who spoke to Kyodo News on condition of anonymity, has allegedly collected about ¥340 million from investment fraud and owns a company in the Seychelles that he acquired in 2013 via a Chinese firm.

“We can fool authorities by moving money using tax havens even in shady businesses in Japan,” he said.

The man was ordered by Japanese district courts between 2010 and 2014 to pay a total of around ¥36 million in five civil suits in connection with fraudulent investment schemes. But the man has not paid any of the money, with a representative of the plaintiffs saying, “There were no assets in Japan that could be confiscated.”

Lawyer Masaki Kito, who is well-versed in investment fraud, said companies tend to be established in tax havens as a means for individuals to buy time by sending gains from criminal activities overseas.

“An investigation can drag on for a year to check the money flow because police have to make inquiries with local authorities,” Kito said.

A 44-year-old trader in Kanda, Fukuoka Prefecture, who was also found in the Panama Papers to have set up a company in the Seychelles, had an overseas account to manage investment funds he collected from customers.

The man, also speaking on condition of anonymity, said he entrusted a Hong Kong firm to set up the offshore company and it told him that he could choose not to disclose his name in registration documents stating the offshore company’s shareholders and executives.

The leaked internal files from a Panama-based law firm, containing information on 214,488 offshore entities connected to people in more than 200 countries and territories, were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, with which Kyodo News and other media outlets are in partnership.

The files contain information on 24 companies and 360 shareholders in Japan.

The Chinese and Hong Kong firms involved in setting up the offshore companies for the two Japanese men Kyodo News spoke to had links with the Panama-based law firm Mossack Fonseca & Co., the leaked documents indicated.