(Photo used for illustrative purposes only)
Here's a simplified explanation of the Panama Papers scandal and the dubious 'offshore accounts'.
Published: Tue 5 Apr 2016, 11:39 AM
Updated: Wed 6 Apr 2016, 1:44 AM
In what is being called the biggest leak in whistleblower history - the 'Panama Papers' scandal has ruffled feather of big wigs all over the world.
The leak of 11.5 million confidential documents from the Panama-based law firm Mossack Fonseca has revealed details of how some of the globe's richest people funnel their assets into secretive shell companies in Panama and in other lightly regulated jurisdictions.
Ramon Fonseca, a co-founder of the firm, said on Monday that his country's success in establishing itself as an offshore banking giant has bred jealousy from first-world rivals at a time of increasing competition and scrutiny of the industry in the aftermath of the global financial crisis.
But what are offshore accounts and how do they work?
Here's a 'simplified' explanation, posted by DanGliesack on reddit:
'When you get a quarter you put it in a 'money box'. The 'money box' 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 'money box' 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 'money box'.
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 'money box'.
Now Johnny's closet is full of 'money box' from everyone in the neighborhood. One day, Johnny's mom comes home and sees all the 'money box'. 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 'money box', 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 'money box' 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.'
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