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QUEST MEANS BUSINESS

Panama Papers Scandal; Panama Papers Show Extend of Abuse says Gurria of OECD; Panama Should Increase Information-Sharing says Gurria; Governments Improving Tax Avoidance Crackdowns; Former BP CEO says Firms Must Engage with Society; Leaked Documents Said to Expose Tax Havens; Leak Allegedly Reveals Elite Officials' Secret Assets; Eleven Million Documents Leaked From Panama Law Firm. Aired 4-5p ET

Aired April 4, 2016 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:00:00]

RICHARD QUEST, HOST: Major League Baseball ringing the closing bell. The market is off not hugely or heavily but it is down. I think -- oh, we only

got two there. I think we call that a firm gavel to close trading. On an important day, it is Monday; it is the 4th of April.

(BEGIN VIDEO CLIP)

QUEST: Tonight, denouncements and denials. So-called Panama Papers spark outcry over tax avoidance and protests in Iceland. It's one of the biggest

data dumps in history. We're going to speak to the newspaper editor that led and got the scoop.

And Sir Richard Branson bids good-bye to his low cast carrier. Virgin America snapped up by Alaska Air.

(END VIDEO CLIP)

QUEST: I'm Richard Quest. We start a new week together. And I mean business.

Good evening. It has been the most extraordinary day. Tonight, the company that sold secrets, the clients that bought secrecy and the middle men that

helped them do it. We will reveal it all over the course of the next hour.

(BEGIN VIDEO CLIP)

QUEST: Some of the world's most powerful people in politics and business are denying allegations they hid money and illegal activity by using secret

Shell companies. This as governments are promising to investigate the claims. The source says more than 11 million, yes, 11 million documents

stolen from the Panamanian Law Firm Mossack Fonseca, and has been published by the International Consortium of Investigative Journalists and newspapers

around the world.

(END VIDEO CLIP)

QUEST: And what those Panama Papers show is an extremely complex scheme that is literally global in its scope. This is how it worked.

The ultimate buyers of these Shell companies and nominee firms were the clients and they did so through intermediaries, 14,000 banks, law firms and

other middle men. They were the ones who were buying the Shell companies and sending them on to their clients. And the main destinations over in

Hong Kong, the United Kingdom, Switzerland and the United States.

Those intermediaries, those banks and insurance companies, they were dealing with Mossack Fonseca. Everything got funneled and channeled down

towards Panama City. And it was there where Mossack Fonseca may not have known the true owners that the intermediaries were selling on the Shell

companies.

But no doubt about it, Mossack was doing this on an industrial scale. 113,000 Shell companies registered in the British Virgin Islands. 48,000

registered in Panama. Many were also sent into new markets for tax havens out over in the pacific. And some of course were for legitimate purposes

but many went down for tax avoidance as shielding assets from creditors and spouses, dodging sanctions, or quite simply money laundering.

So, Ramon Fonseca is the co-founder of Mossack Fonseca and he insisted his firm is not responsible for what his clients do.

(BEGIN VIDEO CLIP)

RAMON FONSECA, CO-FOUNDER, MOSSACK FONSECA: (As translated) we are a firm in existence of nearly 40 years. We have formed more than 250,000 anonymous

corporations throughout our history and we take care only of the legal part. We do not participate in the activities of the company nor do we have

any responsibility over what the company does.

We sometimes don't know many times who the owner of the company is because we will sell it to a lawyer or a bank, a financial or a trust company. And

this company, that customer has its final customer. We limit ourselves only to the legal part. It is unfair that they want to now link us to the

activities of the societies when it is not like that. We're not responsible for the activities of the 240,000 companies we have established throughout

our history.

(END VIDEO CLIP)

QUEST: Joining me now is the Gian Castillero the adviser to the Panamanian Government. Sir, you've heard both sides of this. You've seen the size and

the scale and you've heard the outrage. What is the Panamanian Government now going to do?

[16:05:00]

GIAN CASTILLERO, ADVISOR TO THE GOVERNMENT OF PANAMA: Well, thank you very much for the opportunity of speaking on behalf of the Panamanian

Government. Certainly the -- the corporate - the incorporation of companies is seen from a Panamanian perspective as a legitimate activity that has

been developed not only in Panama but in many jurisdictions for many years. Certainly over time the requirements to get to know who's the client and

who is the person behind the companies has been increasing substantially both in the international community and Panama.

So it is true that at some point over many years ago, it was impossible to incorporate the companies where the lawyer who insisted in the

incorporation of the companies would not keep substantial records as to who the ultimate beneficial owners of the company are. But that has changed

over time.

QUEST: Right, but do you accept -- does the government accept that more needs to be done and actually, for instance, Panama needs to sign up to all

the treaties on transparency and needs to play a greater role in preventing the misuse of offshore companies.

CASTILLERO: Panama is committed to transparency and as well to exchange of information. Over the last five years, it has negotiated over 30

international agreements for the exchange of information and has improved substantially its laws. Making compulsory for every single practitioner in

Panama, both in the financial sector, and the non-financial sector to be able to fully identify who the beneficial owners of the company are. So the

situation is now completely different than what it was 40 years ago.

QUEST: We've seen the number of Shell companies full off quite considerably since 2009. If you look at these numbers, it literally is halved from the

ICIG papers, the Panama Papers. But more needs to be done. Are you worried that Panama is going to want, for want of a better word, a bad reputation;

it is going to be besmirched as a result of what's coming out now?

CASTILLERO: Panama has been a very successful provider of international services among other reasons because of its ability to accommodate the

needs of the international community. We have done so in the past and we will continue to do that in the future as well.

I don't have any doubts that Panama will take whatever necessary measures and changes in the legislation that would be required by the international

community to make sure that the Panamanian system is not abused by people seeking a place to harbor illegal activities.

QUEST: Finally, there's 11 million documents and we can discuss and argue about how they were obtained, but they are going to reveal that this use

of, whether it be by politicians, chief execs, these Shell companies have been misused and for the first time we're going to get behind the veil of

that misuse. That must shock you to some extend the size and the scale of what we're now learning.

CASTILLERO: Well, I believe it's about assumption to think that any and every corporation incorporated in Panama or in the 20 years mentioned in

the report has been incorporated for illegal or inappropriate purposes. (Inaudible) Panamanian companies and companies incorporated in different

jurisdictions dictions are mainly incorporated for legitimate business activities. So we wouldn't believe that that reference to 11 million

documents is a reference to all of the clients and companies listed in those documents are the result of an underlying illegal activity.

QUEST: Sir, we thank you. It has been kind and generous of you to come and talk about this on a day when I know obviously the Panamanian Government is

coming under a lot of pressure about this. We're grateful that you've chosen to come on Quest Means Business tonight, and speak to us. Thank you,

sir.

[16:10:03]

QUEST: Close associates of President Vladimir Putin are implicated in the leak. Matthew Chance joins me from Moscow. Of all the revelations, Matthew,

it is those revolving around the Russian oligarchs and hierarchy that have gained the most attention. Tell me why.

MATTHEW CHANCE, CNN SNEIOR INTERNATIONAL CORRESPONDENT: Well, the Kremlin, Richard, says it's because of "Putinophobia." The inability of the west to

say anything good at all about Russia or its leader. And they say that this, these reports, this leak, this entire leak, in fact, was targeted at

Vladimir Putin with the express intention of undermining him ahead of the parliamentary elections in this country which are scheduled to be held in

September.

The problem with that interpretation of course which is the Kremlin is that these leaks weren't just aimed at Putin there are countless dozens of

politicians and world leaders who are implicated in this and in fact Putin wasn't specifically named, it's just the people around him.

(BEGIN VIDEO CLIP)

CHANCE: And in terms of the damage it might do to Putin politically it may very well be none at all. Because the Russian public are no strangers to

allegations of corruption circulating around the top Kremlin leadership and it's not clear these latest allegations are going to have any more of an

impact on Putin's popularity than the dozens of previous ones.

(END VIDEO CLIP)

QUEST: So Matthew, is there - I mean let's not -- let's not parry, if you like, you know, the details because they're so complex, they're so

fiendishly complicated. But is there anybody or any organization or any institution in Russia that is going to run with this and hold those

responsible to it, if not to account, to at least explain?

CHANCE: You know I can't imagine that. The media in this country which would obviously take the lead in any kind of drive like that is almost

wholly controlled by the Kremlin or by those sympathetic to the Kremlin. Big business is essentially, you know, controlled by the Kremlin or is

sympathetic to the Kremlin.

Of course there are opposition groups that are going to be pushing this but they are, you know small fry in terms of the big picture. Politically there

are T.V. stations and newspapers that are relatively independent and have opposition voices. I don't think any of it is going to cut any mustard with

the Russian public. As I say, they're pretty immune to these allegations. They get their news from the state media. The state media is casting this

as a western conspiracy to weaken Russia. And I bet the majority of Russians are going to buy that.

QUEST: Matthew Chance, staying up late for us tonight, and we're grateful that you always do, Matthew. Thank you very much in Moscow.

Also grateful that Jeffrey Robinson's here. Why? Because he's been writing about financial crime for decades, he's the author of "Standing Next to

History." Jeffrey is with me - you, sir, are not -

JEFFREY ROBINSON, AUTHOR, "STANDING NEXT TO HISTORY": Always good to see you my friend.

QUEST: -- are not surprised by this.

ROBINSON: Not at all. First of all Panama is not a country, it's a business. And at the heart of this business, a really sleazy business; drug

trafficking, money laundering.

QUEST: Now stop there - stop right there Jeffrey. Stop, the law firm involved --

ROBINSON: -- let me tell you - let me tell you about the law firm --

QUEST: -- has made it clear -

ROBINSON: -- yes I know they have.

QUEST: -- that they have never been charged with anything. And they've acted upon reproach. And none of their subsidiaries have ever been charged

Jeffrey.

ROBINSON: OK, now I'll tell you about Messrs.' Mossack Fonseca. In 1998 we were doing a television version of the laundry, my book on money

laundering. And on camera I got on the phone and I called a company formation agent in London and I said, I want a place where I can really

hide money where no one will ever find it. And he said Niue. I said what? He said Niue N-I-U-E. It's a rock out in the middle of the Pacific, New

Zealand protectorate.

Mossack & Fonseca set up an off shore company, an off shore system in Niue specifically to sell banks, not four walls and a roof, but banks to

Russians and Colombians and everybody. It's been disgraceful. Let me --

QUEST: -- Post-2008, much has changed. The transparency treaties have come in, the information exchange treaties.

ROBINSON: Really? Where? Where? Nonsense. Utter nonsense. What they've done is they've taken the street corner whore put her in a wedding dress but

she's still a street corner whore, I'm sorry. Mossack & Fonseca, I wrote about them in my old newspaper, the Herald Tribune, I talked about it with

John Snow on Channel 4 News and then I went to the FBI because I was researching a book called "The Sink" which was about the offshore world.

And I sat with a very senior manager at the FBI, very senior guy. And I said to him, what do you know about Niue? He said, I've never heard of it.

And I took a piece of paper and wrote down Mossack - Jurgen Mossack, Ramon Fonseca and I handed it to. And he shrugged.

10 days later he phoned me in London, and I'll never forget the conversation. He said, we take these things very seriously. I said what?

He said those two names. I said really? He said, we have multiple areas of interest on them.

[16:15:05]

QUEST: So they've managed to keep going for many years and now this 11 million document -- do you believe that there's enough smoking guns -

ROBINSON: Oh yes.

QUEST: -- In this I mean they've basically got the entire archive of the firm.

ROBINSON: They've been exposed -- they've been exposed.

QUEST: And we haven't heard the beginnings of really what's still to come out, names and the like.

ROBINSON: No, they've been exposed. I mean they've been running a really sleazy operation and I certainly hope they go down.

QUEST: Right. But at the end of the day, you've also got to factor into this the intermediaries. HSBC Private Services.

ROBINSON: Of course.

QUEST: UBS, all of those that are on the list that ICIJ, I mean, the client -- not many clients go to -- some go direct to Mossack but many of them go

through intermediaries.

ROBINSON: Absolutely, you factor in intermediaries. They are all contributing to criminal activity. And all of them should be brought down.

They won't be because the good guys don't have the resources, the time or in many cases the ambition or the will to do it but they should be.

QUEST: Do you think tonight there are people around the world, in major financial cities, thinking, what's coming out next, what do you know, what

can you tell me?

ROBINSON: The last guy you interviewed from Panama's that because he knows the gig is up. I mean he's says Panama's transparent, what a joke. He said

it without laughing. I was shocked. Of course - of course it's a terrible thing.

QUEST: No, but I mean individuals -

ROBINSON: Individuals of course because the dumb ones get caught. The smart ones don't.

QUEST: But you'd agree with me you know, there are legitimate reasons for having offshore bank accounts.

ROBINSON: Absolutely.

QUEST: I mean I've got one myself.

ROBINSON: Yes, absolutely. I can tell you as far as I know, there is only one offshore jurisdiction that turned and became a clean offshore

jurisdiction and that's the Island of Guernsey, where my friend, Jeff Rolands, the Bailiff said we're going to be clean because we'll make more

money doing it. These guys are making a lot of money being filthy and they've been caught.

QUEST: We'll see you sir.

ROBINSON: Any time, my pleasure.

QUEST: Later in the program you're going Angel Gurria, the Secretary- General of the OECD. He tells me that tax avoiders increasingly have nowhere to hide. Our coverage tonight will be full and comprehensive.

We're also going to talk about Alaska Airlines which is buying Virgin America.

(END VIDEO CLIP)

QUEST: Has the Virgin finally lost its wings? In a moment.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUEST: Plenty more coverage on the Panama Papers but let's look at the market. There were three moments, three little scintillas of green in an

otherwise sea of red over the market and the Dow Jones closed off 55. Not a huge number, at 17,737. All the three major indices were down. The

commodity prices also slipped.

(END VIDEO CLIP)

QUEST: Sir Richard Branson says he's sad to see Virgin America merge with Alaska Air. Now, Alaska Air is to pay $2.6 billion for Virgin America. If

you add in the leases on the planes, the debt on the company, it's a deal worth around $4 billion.

Sir Richard was unable to stop the takeover going through and the reason why was of course if you look at the share structure. Although Sir Richard

had quite a large number of shares in Virgin America because of the law, they weren't many of them weren't voting shares so his number of voting

shares is lower.

(BEGIN VIDEO CLIP)

QUEST: But as you can't - I mean if you take the view the market that you can't (inaudible) market and the market's always right, that it was up

41.7% at $55.11.

Alaska Air had reportedly been in a bidding war with JetBlue. I asked the JetBlue Executive Vice President, Marty St. George why JetBlue didn't

follow through.

MARTY ST. GEORGE, JETBLUE EXECUTIVE VICE PRESIDENT: There was an opportunity that we looked at, we were involved in the bidding process, we

ended up not being the winner at the end. You know fundamentally from JetBlue's perspective, for 16 years, we have never looked at M&A. The

opportunity came up at the right price, it might have made sense for us but at the core, we've got a great organic plan you know with our six focus

cities now. We have a really good growth plan in front of us. You know, I'm happy for the winners. But I'm also happy for our plan too.

QUEST: Right, and in that sense of course you just basically decided you're not going to get into a bidding war.

ST. GEORGE: I can't go into details of negotiations, I'm sure it will come out in the end but you know at the end of the day, I think the good thing

for JetBlue is you know we have an alternative we like a lot. So you know the amount of money that the winning partner paid for that is money you

know we can use for other stuff and we've got plenty of things we want to do.

QUEST: One of the issues again to JetBlue's point, one of the issues why Virgin America was attractive, it was the strength on the west, the

strength out west. Yes, we've got lots of Transco, but you haven't got that core strength in the west. So how are you going, do you need to have that

strength? And if so will you build it?

ST. GEORGE: Yes, I think it's way too early to say. I mean I will say I do have focus sitting on Long Beach. You know, right now, we're somewhat

(inaudible) as far as our growth there, but we hope to be growing a little bit there soon. But I don't want to underestimate the benefit of the

transcontinental strength we have.

You know the entry of the mid-product into our product portfolio has done a major, major number on, you know, the competitive dynamics of this market.

I mean it is truly, again, it's not what you wrote when you flew but it is absolutely the best Transco product out there right now and we have

customers flocking to it. We keep adding more airplanes. It's done extremely well for us.

(END VIDEO CLIP)

QUEST: Let's stay with aviation which as you know we always love on this problem. Finnair has just marked its 90th anniversary by ringing the

closing bell on the NASDAQ.

(BEGIN VIDEO CLIP)

QUEST: Now the airline recently became the first European Airline to fly the Airbus A-350 XWB. There it is with the - at the NASDAQ. The Finnair

Chief Executive Pekka Vauramo, joins me live from the NASDAQ trading floor. Good to see you. Nice to see you.

(END VIDEO CLIP)

PEKKA VAURAMO, FINNAIR CHIEF EXECUTIVE: Yes, nice to see you, good afternoon.

QUEST: Good afternoon. So look, we're talking about air growth consolidation. I mean it's not -- maybe it's not the most tactful way to

start off an interview, but Finnair is constantly mentioned as one of those airlines that at some point will need to either merge or consolidate with a

larger carrier. Do you buy that?

VAURAMO: We hear that speculation yes being said but we of course as Finnair, we need to stay focused on what we do. We do have our own plan,

our own growth plan and that's what we are busy executing at this moment. This A-350 being a big part of it

QUEST: What is that growth strategy? Because the concept of the over the Helsinki hub out to Asia, is that the backbone of your long haul strategy?

VAURAMO: That is the backbone. And really based on the fact that Helsinki is located at optimum distance from Asian metropolis and this makes it

possible for us to turnaround an aircraft, white poly aircraft in 24 hours and we'll get very high utilization rate for our white poly aircraft with

that model.

QUEST: So is that Asia over Helsinki route, is that attracting, say, from the U.S. or from Europe where the alternative -- because your biggest

competitor there, besides all the legacies in Europe, would be the Gulf three.

VAURAMO: Yes, we see of course the competition. There's competition major European airlines who fly direct or the Gulf carriers who fly passengers

via the Gulf region. But what we offer is much faster connection time in Helsinki than any other hops can provide and much, much shorter flying time

overall flying time from Europe over Helsinki to northeast Asia and that's a major, major benefit both time wise. But when we look into the future,

those skies are not busy skies, there's plenty of airspace available plus when the flying times is shorter, then the emissions are lowest at the same

time.

QUEST: The one thing you're going to need and this is the big issue in European or short-haul aviation at the moment is of course feed. Do you see

yourself doing a deal with a low-cost carrier in some shape or form to give yourself greater feed?

[16:25:04]

VAURAMO: We are currently flying most of our short-haul by ourselves. We've just announced that we are leasing further capacity or further

aircraft that we will fly by ourselves. Going forward, I don't exclude anything in this arena. But this really depends on what rate at the end of

the day we will be able to grow our wide body traffic.

QUEST: Right. And just to conclude, though, I guess you know, you do see a long-term independent future for Finnair when many of the experts say that

that is -- whilst it's possible, it may not be probable?

VAURAMO: It is possible, I agree. And the best we can do is really to focus on our plan. Then I mean if someone gets interested on us then it's time

for them to speak to our owners.

QUEST: I'm not sure whether you've just put yourself up for sale but there we are, sir, thank you for joining us from the NASDAQ.

So if you're interested in Finnair, the CEO says get in touch with the owners, and the shareholders and I'm sure there's a right price somewhere

along the line.

European stocks, how did they close? They closed mostly higher.

(BEGIN VIDEO CLIP)

QUEST: The French telecom sector did not. It plunged after Orange-Bouygues deal that fell through.

(END VIDEO CLIP)

QUEST: As we continue on our nightly conversation, more than 400 journalists from 100 different news organizations, they worked for a year

to dissect 11 million documents they called the Panama Papers.

(BEGIN VIDEO CLIP)

QUEST: We're going to speaking to the Editor in Chief of the German newspaper that was first contacted by the whistleblower.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard quest. Of course there's more QUEST MEANS BUSINESS in just a moment.

When the Editor of the German Newspaper that first received the Panama Papers tells me why he thinks it was right to public them.

And Lord Brown, the former Chief Exec of BP want to redefine businesses role in society. He'll be live with me hear in the C-suite. Before that

this is CNN and on this network the news will always come first.

Panama will ensure its laws are not abused. That's the message from the Panamanian government after the leak of the so called Panama Papers. The

papers allege top political and business leaders worldwide have used a Panamanian law firm to set up shell companies for the purpose of tax

avoidance. Speaking to me on QUEST MEANS BUSINESS an advisor to the Panamanian government said transparency has improved.

(BEGIN VIDEO CLIP)

GIAN CASTILLERO, ADVISER TO THE GOVERNMENT OF PANAMA: I don't have any doubts that panama will take whatever necessary measures and changes in the

legislation that would be required by the international community to make sure that the Panamanian system is not abused by people seeking a place to

harbor illegal activities.

(END VIDEO CLIP)

QUEST: The United Kingdom, Mexico, Australia and France have all vowed to investigate the claims arising from the leaked documents. While Mossack

Fonseca, the law firm involved, has called the people who took the information to be brought to justice. The French President Hollande says

the whistleblower should be protected.

(BEGIN VIDEO CLIP)

FRANCOIS HOLLANDE, FRENCH PRESIDENT: (through translator): It's thanked to those who come forward that we now have this information. These

whistleblowers are doing work that is useful for the international community. They take risks and they need to be protected.

(END VIDEO CLIP)

QUEST: Greece has deported its first set of migrants back to Turkey under the deal between Turkey and the E.U. Two hundred and two migrants arrived

in the Turkish port town of Dikili, early morning on three different votes. Greek officials say the migrants had not applied for asylum.

Heavy rains and flash flooding have killed at least 47 people in Pakistan, while flood waters washed out roads, destroyed houses and caused

landslides. Rescuers are trying to help thousands of survivors. The forecasters are warning that more storms are on the way.

President Obama says NATO will remain the linchpin of the United States security policy. Mr. Obama met with the NATO Secretary-General, Jens

Stoltenberg, at the White House. They were discussing the fight against ISIS and last month's terror attacks in Brussels. The U.S. president

praised NATO's role in the fight against terror after Donald Trump had called the organization obsolete.

Iceland's Prime Minister insists he will not resign after being dragged into the Panama Papers revelations. A crowd of people gathered outside the

parliament building in Reykjavik, calling for the Prime Minister Sigmundur Gunnlaugsson, to step down. The report accused him of having ties to an

offshore company through a bank and through his wife.

(BEGIN VIDEO CLIP)

SIGMUNDUR GUNNLAUGSSON, PRIME MINISTER OF ICELAND: I certainly won't because what we've seen is the fact that my wife has always paid her taxes.

We've also seen she has avoided any conflict of interest by investing in Icelandic companies at the same time I've in politics. And finally, we

seen that I have been willing to put the interest of the people of Iceland first, even when it's a disadvantage to my own family.

(END VIDEO CLIP)

The Panama leaks began more than a year ago when a whistleblower contacted the Munich based newspaper, Suddeutsche Zeitung. Wolfgang Krach is the

paper's editor and chief, and he joined me earlier on the line and explained what it was like when they first began receiving more than 11

million documents.

(BEGIN VIDEOTAPE)

WOLFGANG KRACH, EDITOR AND CHIEF SUDDEUTSCHE ZEITUNG (via telephone): When the information the glut of information started -- we were just -- I

wouldn't say shocked but it was an enormous amount of information. So we saw this enormous amount of data. And we saw in the very beginning that we

would never be able to do all this research just by ourselves. So this was of two reasons. Because the first one was this huge data -- amount of

data. The second reason was we saw in the very beginning that it's concerning dozens of countries all over the world. So we knew we would

need any international form of cooperation because we would never be able to do all the research in all these places all over the world by ourselves.

[16:35:10] QUEST: The treasure trove of information, I mean, I do need to put it to you from the point of view of the law company and the law firm

involved, they say quite clearly this is stolen material. This is material that belonged to them that has been stolen by somebody. Even allowing for

journalistic investigations, how do you answer that?

KRACH: First of all, we do not know whether this material is stolen. We don't have any knowledge about that. So I can't confirm because we don't

know. This is the first thing. The second one, of course in the history of investigation of investigative journalism, there is a lot of material in

general that was stolen and aware -- take the Snowden case, for example. Of course Snowden took this material illegally from the NSA, but I would

say this, nevertheless, it was the right thing the Guardian and others published this material, because this was in the real public interest. I

think this is for us as journalists, this is the decisive, the crucial point is the material we have of public interest and this public interest

has to justify the publication.

QUEST: This is a fascinating part, Wolfgang, because when I look at the information as much as one can, 11 million documents. I'm sure you looked

at most of them at some point. But when I look at this, it tells the -- sort of the raising of the eyebrows of people in power, governments and

transparency organizations. They say, yes, this is what we always told you was going on. We've all known the shell companies, these offshore

companies have been used by rich powerful people to hide assets and avoid taxation. So I ask you, Wolfgang, what do you hope is now done with this

information?

KRACH: This is the first time that we can really prove these things. We can prove that people or companies avoid taxes. We can prove many more

things. I would say my personal hope or our hope is that governments all over the world, they really start to cooperate. In fact, not only start a

corporation by talking, but they change things, they make laws to change this way of tax avoiding and of other criminal actions.

(END VIDEOTAPE)

QUEST: The editor of Suddeutsche Zeitung says they'll have more revelations in tomorrow's newspaper looking at the relationship between

German banks and Mossack Fonseca in Panama. The Panama Papers have provided journalists have a massive amount of data going back nearly forty

years. If you look at the data, according to the leaks, the number of offshore companies peaked in 2005. It pretty much stays quite steady.

That's about 13,000 incorporated. The practice becomes less popular both as the financial crisis hits in 2008 and 2009. But also of course the g 20

in its treaty agreement of both London and elsewhere. They have basically, the G-20 and its treaty agreement of both London and us. The have

basically the G-20 agreement to restrict tax avoidance, means it shrunk all the way through to as you can see the numbers falling off. Last year, just

over 4,000 offshore companies were opened. The OECD has been on the frontline against the fight against tax avoidance and measures used as

offshore companies. The OECD Secretary-General, Angel Gurria, joined me earlier. I put it to him that the Panama Papers appeared to show

widespread abuse.

(BEGIN VIDEOTAPE)

ANGEL GURRIA, OECD SECRETARY-GENERAL: It's not about potential abuse. Most of these cases are about deliberate ways in which to avoid the

obligation of doing their fair share in terms of paying taxes. In some cases that have been identified so far it has to do with efforts about

moneys that were taken away from countries in order to, again, avoid scrutiny. So what has now been shown is the extent and the importance and

the size of these flows. Unfortunately, it also shows that it's a shrinking group of institutions and a shrinking group of places that are

still practicing this because of both the automatic exchange of information and because of the base erosion and profit shifting policies we put in

place.

[16:40:21] QUEST: Panama may have been also the headquarters of this law firm, but there are many other -- all the usual suspects in terms of tax

havens are in the list. Yes, it has fallen off quite considerably since 2009, 2010. But they're all still there and they're all still up to it,

aren't they?

GURRIA: No, Richard, 130 jurisdictions, and that is practically every single financial center, have already accepted and are practicing exchange

of information on request and most of them have committed to do exchange of information automatically. Panama has not joined them. So Panama is one

of a few, a handful of countries that have observed this behavior and hopefully now that this has become so evident, they will join the

international community in becoming more transparent and avoiding the, you know, being a place where people can -- well, effectively move away from

the tax man.

The idea that in 2017, 2018, if you create an account, it's going to be automatically reported to your own authorities in the country of origin of

the citizen that created the account has already cost upwards of 50 billion euros to be delivered on a voluntary disclosure basis to the authorities of

the countries. Because they know there's going to be nowhere to hide.

QUEST: Are you concerned, though, a lot of the structured that have been revealed, they're exceptionally complicated? The whole structure of

setting up companies, hiding behind them, shifting assets. Again, not only for tax evasion purposes, but for the purposes potentially of looting

national treasuries, or avoiding regulation. It's all still there and we're now getting a better idea of just how widespread it is.

GURRIA: Indeed, Richard, this is a question of beneficial ownership. Where this, you know, in many jurisdictions you basically cannot know who

is the actual owner of the shares of the companies. Again, there's a lot of progress here. There's a whole new awareness of the fact that in a

modern country of the 21st century you cannot have governments that do not know who owned the companies for the purposes you mention, and also simply

for the first element of discussion that we had, which is about paying your fair share of taxes.

(END VIDEOTAPE)

QUEST: Gurria of the OCDE. There are people who hid their money and companies that help them do it. My next guest, Lord John Browne, says it's

time for businesses to engage with society. This is his new book. Lord Browne is going to be joining me in the C-suite to discuss this and other

issues. Come with me, your lordship.

(COMMERCIAL BREAK)

QUEST: A leak of the so-called Panama Papers is raising questions about corporate transparency and responsibility. Lord John Brown led BP. In his

new book "Connect," Lord Browne argues that companies engaged with society are more successful. We'll deal with that and the success. You weren't

surprised when you heard the news of the Panama Papers, the size and scale of what's going on, were you?

JOHN BROWNE, FORMER CEO OF BP, AUTHOR "CONNECT": Well, here's another event, which has happened in the past and will doubtless happen again in

the future. Not a surprise that way. The details I'm not on top of. It's certainly something which is here again I think pushed corporations into a

bad place. The rich doing good things for the rich and not for the poor. And doing it at the expense of everybody.

QUEST: Because that's what will come out here, and again not the details we don't know. But never mind the law firm per se, but it's the

intermediaries, all the banks around the world. Big names, household names within the financial community that we're using. What does it tell us

about companies?

BROWNE: Well, it again is a repeat of history. Hegel said if there's one thing we learn from history, is we don't learn from history. But if you go

back in the book, I go back to China before the Common Era. It's repeated again and again where people take advantage of society, if they do not

engage with them in the right way, engage radically. They have to remember their purpose and they have to be able to engage on the basis in which

society wants them to engage. Their agenda, not a corporate agenda.

QUEST: Right, but this goes to the heart of the debate about this engagement with society and whether or not it's a carrot or a stick.

BROWNE: Well, it clearly has to be both.

QUEST: Does the carrot really work?

BROWNE: It does. If you look at the history of companies who have done this well, they've made more money. They've actually made more money. Our

studies show 20 percent more profits over ten years. Our study also shows 30 percent less value at risk. Volkswagen, when they were caught out with

their pollution control issue, their stock price dropped by 30 percent. Exactly what we predicted in the book. So it happens again and again. So

the carrot is getting it right. The stick is if you get it wrong, look what happens to you.

QUEST: You talk in the book, you mention Hank Paulson and the way in which he arrived at the treasury, and when he saw just what a mess that was. And

you also talk about Paul Pullman of Unilever. If there's ever an example of a chief exec who is using his company to engage with society it's

Unilever.

BROWNE: Exactly, he's changed the strategy so the strategy isn't just about products and manufacturing, it's the strategy -- contains the

strategies for society as a whole and that first and center --

QUEST: but that nebulous.

BROWNE: No, it's not. It's actually making sure you have direct measured engagement with communities, with NGOs, with regulators, with everybody

who's affected.

QUEST: How do you ensure that happens? And A it's not lip service, but B that companies do actually do it? Saying to somebody your share price will

fall if you don't. Means there's going to be -- you'll suffer if you don't. But there's got to be an incident before you suffer, with the

Volkswagen, or with the BP. There's got to be an incident before you suffer.

BROWNE: So our studies show that CEOs get this.

QUEST: Do they?

BROWNE: They do. We surveyed thousands of them. And they all get it, but they have to do something. But only 30 percent think they do it

effectively. And they don't know and the rest don't know how to do it. I think some of this is about pushing from the investor side a clear

exposition of strategies that include engagement with society. Not corporate social responsibility, that's something which has actually

allowed people to sort of just get away from the main topic.

QUEST: Do you still -- but finally, on the Panama Papers -- do you still have the capacity, John, to be shocked when you hear something like this?

BROWNE: It's a bad thing to say that I've been in business 50 years, so not too much shocks me.

[16:50:00] QUEST: Thank you very much indeed.

BROWNE: Thank you.

QUEST: We'll talk about the other side to this Panama Papers. Because although the details have been leaked, somebody had to steal them before

they could be leaked. The theft of the documents in a moment.

(COMMERCIAL BREAK)

QUEST: The firm, the legal heart of the Panama Papers, says it's a leak and it wants justice on the theft of so many documents. In the statement,

Mossack Fonseca says, "Obviously no one likes to have their property stolen, and we intend to do whatever we can to ensure the guilty parties

are brought to justice." Jose Pagliery, he joins me now. Good to see you sir. Eleven million documents are taken from them. And with you now I

want to explore this question of cybersecurity. This was theft.

JOSE PAGLIERY, CNN MONEY CORRESPONDENT: Yes, absolutely was, as WikiLeaks was, as Snowden's leaks were. And what we need to realize is that this is

going to happen a lot more often. Because it's easy. Right. In this case, it was 11.5 million documents. You would need a truck, right, 20

years ago, you'd need a truck to come in, be backing up and take all these documents. Now, I plug in this hard drive to that computer and I walk out.

No one's going to ask me if I'm walking out with this, right. That's what companies are dealing with today.

QUEST: How much can I get on those hard drives?

PAGLIERY: On these two, everything we're talking about 11.5 million documents, two terabytes worth, yes. The thing is we live in a new world

where it's easier to do that. And that's physically in person. If we're talking about something like Sony where all those e-mails were taken, they

were taken from abroad. Someone poked into their computer network and pulled these documents out.

QUEST: All right let's just for argument sakes, say I take my computer and I take your thing and I plug the two together.

PAGLIERY: Plug the hard drive in.

QUEST: Surely the system, the computer system of the company involved should be marginally sophisticated to say, hang on, somebody's try to

download the entire archives of the entire company.

PAGLIERY: It doesn't take a lot of sophistication to do that. But it's Sony of all companies, Sony wasn't looking to see if its movies were being

pulled from its systems outside the company. Much less inside the company. And so companies haven't matured yet. Expect more of this transparency

activism because it's easy right now. Cybersecurity's hard. It takes money to install programs that watch for this sort of thing. It takes

money to hire experts who guard your network. But even then, everyone in this industry says the same thing it it's only a matter of time before a

hacker is going to get in. Or before an employee on the inside retrieves the data.

QUEST: We're talking about 11 million document going back 40 years, which suggests -- I mean, half of this stuff was archived. Look I can't even get

some of my emails from three months ago from the Turner Broadcasting System.

PAGLIERY: Yes, whoever -- saying, so whoever did this is surely saying thank you for digitizing it so I can just walk out with this little thing.

This little thing. You stick it in your pocket, no one will know.

QUEST: We can argue over this for a while, but you know, the company says it's theft, and now we come on to the question of which do the ends justify

the means?

PAGLIERY: This is transparency activism. We saw it with WikiLeaks. You'll a lot of people say that WikiLeaks was justified, because now we

knew what the government was engaged in. Snowden as well. President Obama says we need to have an open debate about security, about privacy.

[16:55:00] That debate would have never happened were it not for Snowden coming out with these documents. So the same thing's going to happen here.

Was this illegal? Probably. But it's going to spark a conversation that we weren't having.

QUEST: But it also raises the question of the person who did it having access and a certain level of sophistication, because you do have to have -

- I wouldn't even know how to, frankly -- I can't even download emails --

PAGLIERY: It's not that hard but --

QUEST: But the point I'm saying is and this question everybody becomes their own judge and jury. I think that the company's up to no good.

Therefore, I'm going to steal their entire archives and I'm going to leak it.

PAGLIERY: Yes. It's inevitable. Because it's not just that you need -- it's not just that you need the skills. If you have is 1000 bucks, you can

pay someone. You can pay a hacker to do it for you. I mean, someone else has the skills. You can just outsource it.

QUEST: Thank you very much. You won't be needing these.

PAGLIERY: All my secrets are on there.

QUEST: It will be a short day indeed for you. Thank you, good to see you.

Some breaking news just in to CNN. Thomas Staggs the chief operating officer and number two executive at Disney is to step down from his post.

He was the likely successor to the Chief Exec, Box Iger. We'll talk about that. We'll have a Profitable Moment after the break.

(COMMERCIAL BREAK)

Tonight's Profitable Moment. The release of the Panama Papers has told most of us pretty much nothing we didn't already know, that the abuse of

offshore companies is widespread, that it's used for money laundering, shielding assets from spouses and creditors and of course for tax evasion.

[17:00:06] But there is of course another side of this. This is a legitimate use for offshore companies, shareholders, bearer of bonds and

the like. The problem is deciphering the good from the bad. And until now, that's been pretty difficult. What we have seen with the panama

papers is the extent and scale to which it's being used. And it will not be good enough for people like the Icelandic Prime Minister to simply say I

broke no laws or I did nothing wrong. Because there's stench of hypocrisy, a whiff of what you were doing it for that leads one to say something

smells bad. And that's perhaps the advantage of what we've heard and will hear from the Panama Papers.

That's QUEST MEANS BUSINESS for tonight. I've Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. We'll do

it again tomorrow.

END