Panama Papers: US Justice Department launches criminal investigation into tax avoidance allegations

The US Department of Justice is set to dig deeper into allegations of tax avoidance by rich and wealthy citizens, which came to the fore following the so-called Panama Papers leak. The department has launched a criminal investigation into the matter and has sought assistance from the International Consortium of Investigative Journalists (ICIJ).

In a letter to ICIJ, Preet Bharara, the US attorney for Manhattan, said he had "opened a criminal investigation regarding matters to which the Panama Papers are relevant," The Guardian reported. He also wrote that he wishes to speak to an ICIJ employee or representative involved in the Panama Papers project to throw more light on the issue.

The documents were leaked by ICIJ in association with several media houses of different countries. The leaked documents belonging to Panama-based law firm Mossack Fonseca reportedly revealed how many wealthy citizens of different countries set up offshore companies in Panama to allegedly dodge taxation rules in their respective countries.

Many high profile people from politics, media and the business world were named in the exposé. UK Prime Minister David Cameron's father Ian Cameron also featured in the documents. Close aides of Russian President Vladimir Putin were also named. Iceland's Prime Minister Sigmundur David Gunnlaugsson and Spain's industry minister had to resign following the turmoil started off by the leak.

More than 200 US citizens were reportedly named in the papers, of which many are already facing investigation by Bharara's office.

The launch of a criminal inquiry into the matter follows US President Barack Obama's acknowledgement that "the problem of global tax avoidance generally is a huge problem." He was reportedly quoted as saying to mediapersons in early April that loopholes in taxation rules allow people to dodge taxes, but they come "at the expense of middle-class families" who ultimately end up paying for the taxes evaded by the wealthy.