Süddeutsche Zeitung's (SZ) release of leaked data – the so-called "Panama Papers" – from the Panamanian law firm Mossack Fonseca on April 3 has roiled the world, sparking outrage from Iceland to the Ivory Coast and leading Edward Snowden to call it the biggest leak since a certain Citizenfour revealed the extent of NSA spying in January 2013:

Biggest leak in the history of data journalism just went live, and it's about corruption. https://t.co/dYNjD6eIeZ pic.twitter.com/638aIu8oSU

— Edward Snowden (@Snowden) April 3, 2016

But the Panama Papers contain 11.5 million documents, taking up 2.6 terabytes of storage. They required the input of almost 400 journalists over the course of a year to sort through – to the extent that that's been accomplished. In other words, it's a lot to take in. So here's a primer.

Who's Mossack Fonseca?

Mossack Fonseca is a law firm that set up some 214,000 shell companies (otherwise known as "offshore companies" or "letterbox companies") on behalf of wealthy clients from every corner of the world. According to journalists investigating the leak, these companies facilitated the movement of funds related to drug dealing, human trafficking, financing terrorism, tax dodging, embezzlement, sanctions evasion and other crimes. 

The firm began life as the Jürgen Mossack Law Firm in Panama City in 1977. Its eponymous founder, known in Panama City's financial district simply as "the German," was born in Fürth in 1948, and his family moved to Panama in the 1960s. Mossack thrived during the 1980s, a time when instability born of the drug trade and Cold War geopolitics racked Latin America. He provided legal services to Caro Quintero, a Mexican drug boss whom he described as making Pablo Escobar look like "a baby." 

Quintero was arrested in 1985, and the next year the German partnered with a Panamanian lawyer, Ramón Fonseca Mora, to form Mossack Fonseca. What occurred over the subsequent years – or a portion of them – is the subject of the Panama Papers.

On April 13, Panamanian law enforcement raided the offices of Mossack Fonseca. The firm has denied any wrongdoing, saying that the crime prosecutors should investigate is what it calls the "hack" of its servers.

Who Leaked the Data?

We don't know. In contrast to Citizenfour, who revealed himself to be Edward Snowden, the whistleblower in this case has not been identified. According to SZ, he wants it that way. The paper's big reveal, a video posted to social media, showed a likely-fictionalized exchange in which a "John Doe" tells the paper he will send them data under "a couple of conditions. My life is in danger. We will only chat over encrypted files. No meeting, ever. The choice of stories is obviously up to you."

What's an Offshore Company?

The crux of the leak is the service Mossack Fonseca provided, and to whom. The law firm set up companies in tax havens around the world, which had no function – say, providing goods or services – except as repositories and channels of funds. By moving money through these entities, the firm's clients could conceal their assets from whoever might be looking, be they tax authorities, law enforcement, nosey journalists or estranged spouses.

Clients often did not want their names to appear on company documents, so "Mossfon" (for short) would provide sham directors and officers for an extra fee. They would even use aliases to communicate with clients, who received anonymized email addresses for the purpose. Here's one example of Mossfon correspondence, addressed to Winnie the Pooh: "Dear Sir, we refer to the meeting that we had with Harry Potter and our calling two days ago." Even the shadowy client was in many cases not the ultimate beneficiary of the services, but a served as an extra buffer to a friend or relative.

To echo SZ's query, "Does this really pass for a normal client relationship?" (See also, Offshore Accounts Hold a Tenth of the Stock Market.)

Is All That Legal?

There is nothing inherently illegal about hiring a foreign law firm to set up a company in a third country, even if it is a letterbox company in a tax haven like the Cayman Islands. Citizens of dangerous or unstable countries may want to protect their assets, or partnerships comprising multiple nationalities may want to find neutral turf. These are just examples of possible legitimate uses for offshore companies.

In many cases, however, the motivation for setting them up is illegal. Money earned through the theft of public funds, forced prostitution, bribery, arms sales and drug trafficking is not easily spent, and requires a bit of finessing. Sending that money ricocheting around between opaque companies "run" by Panamanian citizens and based in far-flung island nations helps to obscure its origins. (See also, Top Ten Caribbean Tax Havens.)

Or alternatively, the money may have perfectly legitimate sources, but the client is concerned with its destination. Many of Mossfon's customers did not want their money to end up with tax authorities (tax evasion is illegal) or as the subject of divorce proceedings. Tax evasion may not seem to be on par with laundering drug money, but as the International Consortium of Investigative Journalists (ICIJ, SZ's partner in the investigation) points out, the $400 million in taxes that Mossfon helped an oil company evade in Uganda exceeds the country's national health budget. In other cases, Mossfon's clients used funds to back terrorists and sanctioned regimes.

Who's Been Implicated?

Who hasn't? The Panama papers contain information linked to 140 public figures, including 12 current and former leaders of countries. The names mentioned below are anything but comprehensive, but they provide a hint of the scale of the leak.

Sigmundur Gunnlaugsson, Prime Minister of Iceland, was the Panama Papers' first casualty, resigning in response to massive protests two days after the leak (although he briefly tried to backpedal that decision). Gunnlaugsson and his wife owned a British Virgin Islands-based (BVI) shell company call Wintris Inc., which held close to $4 million in bonds. Gunnlaugsson, elected as a reformer in the depths of Iceland's banking crisis, had previously stated in public that he did not own an offshore company.

Other world leaders directly implicated in the leak include Mauricio Macri, President of Argentina; Petro Poroshenko, President of Ukraine; and Salman bin Abdulazziz bin Abdulrahman Al Saud, King of Saudi Arabia.

A number of leaders are indirectly linked to Mossfon, through friends, relatives or associates. These include Xi Jinping, President of China, whose brother-in-law has at different times controlled three different BVI-based companies; Najib Razak, Prime Minister of Malaysia, whose son was a director of a BVI-based company; David Cameron, Prime Minister of Britain, whose father helped found an investment fund holding nearly $20 million, much of it in bearer shares; and Vladimir Putin, President of Russia, whose close friends own a plethora of offshore companies connecting them to other Kremlin insiders. (See also, Is Vladimir Putin the Richest Man in the World?)

Aside from world leaders, a number of banks have been shown to do have done business with Mossack Fonseca, including UBS Group A.G. (UBS), HSBC Holdings PLC (HSBC), Credit Suisse Group A.G. (CS) and Royal Bank of Canada (RY).

Where Are the Americans?

Conspicuously absent from the list are American leaders, leading some to speculate about a cover-up by the ICIJ – which is funded by groups including the Ford Foundation and Rockefeller Family Fund – and other "corporate media" outlets (other conspiracy theories pin the origin of the leak on the CIA). That is probably not the case. Rather, the lack of Americans seems to result from a combination of strict IRS policies regarding offshore accounts and the relative ease of setting up an anonymous shell company "onshore," so to speak, in Wyoming, Nevada or Delaware

We'll probably have to wait for another leak to learn about homegrown corruption, but in all fairness the Panama papers are not totally devoid of American names. These include Robert Miracle of Washington state, who was sentenced to 13 years in prison in 2011 for wire fraud and tax evasion. Other American Mossfon clients boast similar rap sheets, but there are no presidents, senators or corporate leaders in sight.

Can I Read The Panama Papers?

Then again, how would we know for sure? Investopedia has not had the opportunity to review the Panama Papers directly, nor – barring some impressive hacking skills – can you. The leak has not been released to the public or law enforcement because, according to SZ, it contains private information that has no bearing on public interest. WikiLeaks has criticized SZ's stance, calling the approach "1% journalism" and demanding that the data be released. Given that nearly 400 journalists have had access to the data, it is not inconceivable that large portions will make it onto the internet unedited, but for now you can only get them in filtered form.