Updated March 15, 2018 18:58:28

Mossack Fonseca, the law firm at the centre of the Panama Papers scandal, says it is shutting down due to the economic and reputational damage inflicted by its role in the global tax evasion debacle.

The so-called Panama Papers, which consist of millions of documents stolen from Mossack Fonseca and leaked to the media in April 2016, provoked a global scandal after showing how the rich and powerful used offshore corporations to evade taxes.

Why does this matter? Is it illegal? How do they operate? These questions and more are answered in our explainer.

"The reputational deterioration, the media campaign, the financial circus and the unusual actions by certain Panamanian authorities have occasioned an irreversible damage that necessitates the obligatory ceasing of public operations at the end of the current month," the firm said in a statement.

Mossack Fonseca said a skeleton staff would remain in order to comply with requests from authorities and other public and private groups.

Nonetheless, the law firm said it would continue "fighting for justice", adding it would continue to cooperate with authorities.

Fresh raid on law firm

Last month Panamanian prosecutors raided the offices of Mossack Fonseca, seeking possible links to Brazilian engineering company Odebrecht.

The Brazilian construction firm has admitted to bribing officials in Panama and other countries to obtain contracts in the region between 2010 and 2014.

Ramon Fonseca, a partner at Mossack Fonseca, denied last month that his firm had a connection to Odebrecht, while accusing Panamanian President Juan Carlos Varela of directly receiving money from Odebrecht, Latin America's largest engineering company.

Mr Varela has denied that he took any money from Odebrecht.

Reuters

Topics: law-crime-and-justice, international-financial-institutions, banking, world-politics, company-news, business-economics-and-finance, panama

First posted March 15, 2018 12:05:49