Panama Papers: How the release of the documents could lead to deadly political purges

Embarrassment, prosecution, political instability andmurder all possible ramifications, say some observers, ofthe leak of millions of confidential documentsrevealing the hidden offshore assets of billionaires,top government officials,celebrities and athletes.

"I'd be stunned if insiders in the authoritariangovernments that this has been leaked onare not caught up in purges and killed as a consequenceof this information," said U.S. political scientist Ian Bremmer, headof the global political risk research firmEurasia Group.

"Because when you're talking about stealing billions ofdollars from thepeopleand you're a dictator, that's the information that's most importantto keep close at hand and that's what peopleare most willing to fight for."

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The dump of 11.5 million documents that revealoffshore financial activity through thePanamanian law firmMossackFonsecaincludes the dealings of12 current or former heads of state. Among the countries with past or present political figures named in the reports are Iceland, Ukraine, Argentina, Pakistan, Saudi Arabia, China andRussia.

Icelandic PM resigns

Icelandic Prime Minister Sigmundur David Gunnlaugsson, who, along withhis wife controlled a secret offshore company in the British Virgin Islands, according to the leakeddocuments, stepped down on Tuesday after mounting public pressure.

The documents also revealalleged links tofamily members and friends of former and current authoritarianleadersSyrian President Bashar al-Assad,Zimbabwean PresidentRobert Mugabe, Pakistani Prime MinisterNawaz Sharif,former Libyan leader MoammarGadhafiand oustedEgyptian president Hosni Mubarak.

"This is a threat to all of them,"Bremmersaid, referring to the authoritarian governments linked to the scandal. "It's the biggest threat to the ones who are the least popular, who have people waiting in the wings, who would love to see them fall.

"Everybody knows these guys have been enriching themselves, but you've never been able to shine a light on it."

Russian President VladimirPutin's childhood friendSergei Roldugin, a cellist,was listed as the owner of companies that obtained payments from other companies worth tens of millions of dollars.

"The insiders in Russia finding out this cellist was making a bunch of money but [now thinking], 'How come I wasn't?' that has the potential to lead tosignificantinfighting among the people who truly are powerful in these countries," Bremmersaid.

A number of countries, includingCanada,whose citizens were named in the documents, have already vowed to launch investigations.

"The minister of national revenue has instructed CRA officials to obtain the list of data leaked through Panama Papers in order to cross-reference this information with data already being obtained through the agency's existing mechanisms," theCanada Revenue Agency said in a statement.

But the success of those investigations will in part dependonhow many resources each country has to devote to a probe.

"It depends on national tax regulators," said CrawfordSpence, a professor of accounting at theWarwick Business School in London.

"You have a lot of individuals who are involved in these schemes who may have a lot of questions to answer to those particular agencies. Now that would bethe main legalrepercussions."

'Real problem pursuing all those people'

In Britain, for example, HM Revenue & Customs is chronically under-resourced, Spence said.

"They're going to have a real problem pursuing all those people."

One former official at the U.S. Department of Justice said this information leak is a "gold mine" in terms of leads. But the problem is that for asuccessfulprosecutionfor some of these cases,much of the information resides in Panama.

"It's impossible to get information out of the law firm," the former official said. "We've tried for years."

MartinKenney, a Canadian fraud and asset recovery lawyer based in the British Virgin Islands who leads a team of 30 investigators, said there will be repercussions from this document drop.

"On a scale of [seriousconsequences] from0 to 10, and 1and 2is embarrassment, deep embarrassment to having to answer questions, a lot are going to be in there," saidKenney.

'Some people will go to jail'

"The next level, the 3s and the 4s, on the scale of serious consequences, will be the criminal or revenue or regulatory investigations directed at numbers of people and companies as a result of the data dump," he said.

"Somepeoplewill go to jail. It's always a couple."

But it's notjusttax revenue departments around the world thatwant apeek at the documents. According to theWashington-based International Consortium of Investigative Journalists, which revealed the leak, they alsoinclude the transactions ofcompanies blacklisted by the U.S. government because of evidence that they'd been involved in dealings with drug lords and terrorist organizations.

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"Allegedly, hundreds of millions ofdollarsofunlawfultradingtook placewith NorthKoreathrough MossackFonsecastructures that funded the nukeprogramover there,"said Kenney."The CIAis going to want to crawl all over that stuff."

That means theICIJ can expect some attentionby authorities.

"The journalists are going to bevisitedwith many courtorders," Kenneysaid. "Under penalty of going to jail, they're going to have to turn over the data to a variety oflaw enforcement andintelligenceagencies. And the data is going to be combed through."