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Panama Papers Piggy Bank Analogy Has The Simplest Explanation For The Offshore Scandal

It's really that simple.
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By 

HuffPost UK

If you still don't understand the significance of the 11.5 million offshore financial records leaked in the 'Panama papers' on Sunday, we've got help.

US Reddit user DanGliesack has shared an insightful explanation of how secret tax havens can be used to 'hide' someone's money - using a child and their piggy bank.

In the simple story, you are the child, and you decide what to do when you are given a quarter.

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Blend Images - JGI/Jamie Grill via Getty Images

 We'll leave the rest to DanGliesack:

"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."

Brilliant.

This is who is implicated in the Panama paper scandal:

This Is Who Is Implicated In The Panama Papers
The Prime Minister's Late Father(01 of10)
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David Cameron's late father, Ian, is reportedly named as a client of the firm. It is understood he used the firm at the centre of the scandal, Mossack Fonseca, to protect his investment fund, Blairmore Holdings, from UK taxes as he built up a significant legacy, part of which was inherited by the Prime Minister.

The Guardian has reported the offshore fund avoided ever paying tax in the UK by hiring residents of the Bahamas to sign its paperwork.

"Cameron promised and has failed to end tax secrecy and crack down on 'morally unacceptable' offshore schemes; real action is now needed," shadow chancellor John McDonnell said.

Ian Cameron passed away in 2010.

David Cameron did not respond to a request for comment. (credit:Johnny Green/PA Archive)
The 90-Year-Old British Millionaire Who Covered For An American Millionaire(02 of10)
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US author and business guru, Marianna Olszewski, enlisted the help of Mossack Fonseca in order to access some of her personal fortune invested in an offshore account.

The bank that held the funds would not release the money unless they knew the identity of the person behind the company and Olszewski wished to remain anonymous.

Mossack Fonseca arranged for the company to be listed under the name of someone else - a 90-year-old British millionaire - in return for thousands of pounds a year in fees.

Andrew Mitchell QC told the BBC: "Anybody looking at all these documents will believe that it is entirely legitimately owned by this person.

"Mossack Fonseca are prepared to go to that length in order to assist their client. Basically creating a real, live human being to look to the world as if they own the assets, when in fact and in truth, they know, as their client knows, that that person is a sham." (credit:Rex)
The Tory Baroness(03 of10)
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Baroness Pamela Sharples is named as having links to Mossack Fonseca through Nunswell Investments Limited of which she became sole shareholder in 1995. In 2013 she is alleged to have discussed if it "made sense to defer a distribution from her Nunswell account, if she didn't need the funds, to postpone paying taxes on it".

The law firm currently handling her affairs said she had "no remuneration...nor any income or capital from that company". (credit:Johnny Green/PA Archive)
The Former Tory MP(04 of10)
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Michael Mates has been linked to Mossack Fonseca though his position as chairman of Haylandale Limited which invested in property development in the Caribbean archipelago.

Mates denied any wrongdoing claiming he had not and would not receive any remuneration "unless and until the development took place, nor were the shares of any value". He also claims the company "never really had any value".

HM Revenue and Customs has approached the International Consortium of Investigative Journalists (ICIJ) for access to the data and said it would "act on it swiftly and appropriately". (credit:Chris Young/PA Archive)
The World's Best Footballer(05 of10)
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Lionel Messi and his father, Jorge Horacio, were the ultimate beneficial owners of the Mossack Fonseca-registered Mega Star Enterprises. Although there is nothing illegal in owning an offshore company, both men are currently on trial for tax evasion. (credit:Luis Hidalgo/AP)
The Film Star(06 of10)
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Martial arts movie star Jackie Chan is reported as having having at least six offshore companies managed through Mossack Fonseca.

As yet there is no suggestion his accounts were used for the purpose of tax avoidance.


(credit:ChinaFotoPress via Getty Images)
The Fifa Ethics Lawyer(07 of10)
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Juan Pedro Damiani, a Uruguayan lawyer, is a member of Fifa's ethics committee - the same group currently charged with reforming the organisation after recent corruption scandals.

Damiani is not accused of doing anything illegal, but a spokesman for Fifa told the BBC: "We confirm that on 19 March the investigatory chamber of the independent ethics committee was informed by the chairman of the adjudicatory chamber, Hans-Joachim Eckert, about becoming recently aware of a business relationship between the member of the adjudicatory chamber Juan Pedro Damiani, and Eugenio Figueredo Aguerre."After receiving the information Dr Cornel Borbely, chairman of the investigatory chamber of the ethics committee, has immediately opened a preliminary investigation to review the allegations in question. Dr Borbely is currently looking into said allegations in order to determine if there is a breach against the Fifa code of ethics and decide any further measures.‎" (credit:Andres Stapff / Reuters)
The Prime Minister of Iceland(08 of10)
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Icelandic Prime Minister Sigmundur Davio Gunnlaugsson is accused to having undeclared interests in one of the banks bailed out during the country's devastating financial crash that began in 2008. He and his wife are alleged to have bought an offshore company, Wintris, in 2007 which was used to invest millions of dollars of inherited money. Since becoming PM in 2013, he has been involved in talks which could have affected the value of Wintris shares.

In March, Gunnlaugsson was asked if he had ever owned an offshore company. He said: “Myself? No. Well, the Icelandic companies I have worked with had connections with offshore companies, even the — what's it called? The worker's unions. So it would have been through such arrangements, but I have always given all of my assets and that of my family up for taxes."

Among the countries with past or present political figures named in the reports are Ukraine, Pakistan, Saudi Arabia, Russia and Argentina.

Gunnlaugsson did not respond to questions in light of the revelations.
 (credit:Seth Wenig/AP)
The World Famous Cellist(09 of10)
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Sergey Roldugin, a close friend of Vladimir Putin, is a world-renowned musician and the Artistic Director of the St. Petersburg House of Music.

He was also an owner of three offshore companies.

Roldugin did not respond to questions.

Putin's spokesman claimed that the Russian president was the "main target" of the investigation, which he suggested was the result of "Putinophobia" and aimed at smearing the country in a parliamentary election year. The ICIJ has links to the US government, Dmitry Peskov suggested."I don't consider it possible to go into the details" of allegations that Putin's friends ran an offshore scheme, Peskov told reporters, "mainly because there is nothing concrete and nothing new about Putin, and a lack of details." He added that Rodulgin was a friend of Putin's but that the president "has very many friends."

Peskov, who had last week foreshadowed the disclosure of the documents by warning of an upcoming "information attack" on Putin, said Monday he expected more reports to follow. (credit:Mikhail Svetlov via Getty Images)
The Deceased Dictator(10 of10)
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Family members and associates of the deceased ex-leader of Libya, Muammar Gaddafi, appear in the documents.

Links to the families and associates of Syria’s president Bashar al-Assad and Egypt’s former president Hosni Mubarak also feature in the documents.

 (credit:Michel Euler/AP)

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