Explain Like I'm 5: The Panama Papers

In a nutshell, Powerful names in business, politics, and sports used fake companies to evade trillions of dollars worth in tax money.

When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.

Now one day, you might decide "I don't want mom to look at my money." So you go over to Johnny's house with an extra piggy bank that you're going to keep in his room. You write your name on it and put it in his closet. Johnny's mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.

Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny's house with extra piggy banks. Now Johnny's closet is full of piggy banks from everyone in the neighborhood.

One day, Johnny's mom comes home and sees all the piggy banks. She gets very mad and calls everyone's parents to let them know.

Now not everyone did this for a bad reason. Eric's older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people's lunch money and didn't want his parents to figure it out. Michael was stealing money from his mom's purse. Fat Bobby's parents put him on a diet, and didn't want them to figure out when he was buying candy.

Now in real life, many very important people were just caught hiding their piggy banks at Johnny's house in Panama. Today their moms all found out. Pretty soon, we'll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble regardless, because it's against the rules to keep secrets no matter what. - DanGliesack from Reddit

What the Panama Papers reveal:

• Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
• National leaders with offshore wealth include Pakistan’s prime minister, Nawaz Sharif; former vice-president of Iraq, Ayad Allawi; president of the Ukraine, Petro Poroshenko and the son of Egypt’s former president, Alaa Mubarak.
• Leaked documents also show the prime minister of Iceland, Sigmundur Gunnlaugsson, and his wife bought an offshore company in 2007. He did not declare an interest in the company when entering parliament in 2009 and sold his 50% to his wife for 70p, eight months later. The offshore company was used to invest millions of dollars of inherited money, according to a document signed by Mr Gunnlaugsson's wife Anna Sigurlaug Palsdottir in 2015.
• The files also reveal a suspected billion-dollar money laundering ring involving close associates of Russia’s President Putin. The operation was run by Bank Rossiya, which is subject to US and EU sanctions following Russia's annexation of Crimea.
• Three former Conservative MPs, six members of the House of Lords and dozens of donors to UK political parties have had offshore assets.
• Clients of Mossack Fonseca include 23 people who have had sanctions imposed on them for supporting regimes in North Korea, Zimbabwe, Russia, Iran, and Syria.
• A member of Fifa’s ethics committee, meant to be leading reform at world football’s scandal-hit governing body, acted as a lawyer for individuals and companies recently charged with bribery and corruption.
• The families of at least eight current and former members of China’s supreme ruling body have been found to have hidden wealth offshore.
• Mossack Fonseca provided structures designed to hide the identity of real owners including beneficiary services. One American millionaire was apparently offered fake ownership records to hide money from the authorities – this included using a 90-year-old British man as a ‘beneficial owner’.
• The data also contains secret offshore companies linked to the families and associates of Egypt's former president Hosni Mubarak, Libya's former leader Muammar Gaddafi and Syria's president Bashar al-Assad.

The scary part is that there's not really anyone to hold these people directly accountable, since some of the wealthiest, most powerful people in the world will likely be implicated in this.

Source: Telegraph