Understand Panama Papers Leak in the Simplest way Possible

Understand Panama Papers Leak in the Simplest way Possible

The Panama Papers are a leaked set of 11.5 million confidential documents that provide detailed information about more than 214,000 offshore companies, including the identities of shareholders and directors of the companies.

This huge leak has recently exposed how the rich and powerful people across the world, including politicians, businessmen and actors, use tax havens to hide their wealth.

Over 500 Indians, including film stars Amitabh Bachchan and Aishwarya Rai Bachchan, DLF owner K P Singh, and Adani Group chairman Gautam Adani’s elder brother Vinod Adani have been allegedly linked to the leaked files that clearly show how clients were able to launder money, dodge sanctions and avoid tax.

These files were leaked from one of the world’s most secretive companies, a Panamanian law firm called Mossack Fonseca.

Now tell me what did you understand about the Panama Papers leak? Can you explain how people manage to avoid taxes and dodge sanctions? Some of you might have the answers but majority of you must be wondering what it is all about.

No doubt the leak is very complicated On spending a couple of hours on reddit, I found that a Redditor has made it very simple to understand. He weaved out a story to make us understand easily how and why powerful and rich people managed to do so.  

Read his explanation below:

He says, “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 awhile, 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,” the Redditor concluded.


We are thankful to Redditor DanGliesack as he made it really simple to know how it happened.

//Link to the reddit post–https://www.reddit.com/r/explainlikeimfive/comments/4d8rta/eli5_the_panama_papers/d1owxn5


I hope this post might be informative. Do leave your views on the topic.

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shubham mehra

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