A Panama-based law firm helped the founders of Secom Co, Japan’s top security company, obscure their wealth through a web of shell corporations, a massive data leak tying several world leaders to offshore tax havens showed Monday.
Secom director Makoto Iida and the late former director Juichi Toda were among the clients of the law firm Mossack Fonseca & Co, one of the world’s top creators of shell companies—corporate structures that can be used to hide the ownership of assets.
The leaked documents showed the Secom founders managed more than 70 billion yen ($626 million) worth of their stock holdings in the company via shell firms in foreign tax havens.
The law firm’s leaked internal files, 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.
Iida, 83, and Toda, who died in January 2014 aged 81, founded Secom in 1962 as Japan’s first security company.
The leaked documents show that a number of shell firms linked to the two men and their relatives were established in the 1990s on the British Virgin Islands and the island of Guernsey, known as offshore tax havens. The documents stated that the purpose was to distribute Secom stock holdings among the relatives ahead of the deaths of the founders. By using the shell firms, the two founders were able to effectively manage a large number of Secom shares that were not listed as directly under their control.
The Secom founders “had probably decided to use the offshore scheme in a bid to avoid or substantially reduce the inheritance and gift tax burden on the relatives,” said Tasuku Honjo, a professor emeritus at the Nagoya University of Economics.
A former National Tax Agency official pointed out that the use of several firms in foreign tax havens “makes it more difficult for the Japanese tax authorities to probe into someone’s assets.”
Meanwhile, a certified public accountant well-versed in international tax affairs commented, on condition of anonymity, that Iida and Toda had likely taken the step to “prevent their relatives from going bankrupt when they inherited the shareholdings and paid the taxes.”
Secom’s public relations department denied its founders had set up the firms to avoid tax. In a written response to Kyodo News, the company said its disclosure of information to tax authorities concerning the case and its payment of taxes have both been appropriate and in compliance with the law.
“Regarding your statement that there are various opinions and views in connection with this case, the tax authorities, as well as the legal experts we had consulted, have not questioned its legality and we trust their views,” the company said.
The leaked records also expose the offshore holdings of 12 current and former world leaders, including Iceland Prime Minister Sigmundur David Gunnlaugsson, and reveal how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies.
Movie star Jackie Chan and renowned soccer player Lionel Messi were also among Mossack Fonseca’s clients.
The International Consortium of Investigative Journalists is a global network of more than 190 reporters in more than 65 countries who collaborate on in-depth investigative stories.
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