Ottawa, May 26: The law firm at the centre of the Panama Papers leak broke its own policies by setting up an offshore company for a Canadian billionaire under criminal investigation, news outlets reported today.
The daily Toronto Star and public broadcaster CBC, which are members of the International Consortium of Investigative Journalists, reported that Mossack Fonseca had agreed to do work for Chinese-born David Ting Kwok Ho despite concerns about his legal woes and his prominence.
Ho, who emigrated to Canada in 1986, had been charged with possession of cocaine, the unlawful confinement of a prostitute at his Vancouver mansion, and possession of an unregistered loaded pistol.
He pleaded guilty to the latter two charges in 2012 and was given a suspended sentence, community service and a fine.
A year earlier when the charges were still pending, however, Mossack Fonseca took him on as a client. In addition to the charges, a background check had found Ho was a "politically exposed person" because of his membership in a prominent family in China.
His grandfather once ran one of the world's largest tobacco companies.
In international finance, so-called PEPs are considered as posing a higher risk for corruption and bribery. In public statements, Mossack Fonseca has insisted that it conducts rigorous due diligence before taking on a PEP client.
But in Ho's case, according to the International Consortium of Investigative Journalists, this amounted to a web search and asking Ho questions about his legal troubles that went largely unanswered.
"The client is much annoyed by question after question from us," read an email from Mossack Fonseca's Shanghai branch to its Panama offices, saying Ho wished to proceed urgently with incorporation.
It also noted that Ho was no longer involved in politics, and said his alleged crimes were not economic crimes. Mossack Fonseca registered Harmonyworld Investment Co. Ltd.
for Ho in the Seychelles on July 12, 2011. Ho's lawyer told the Toronto Star his offshore corporation was reported to the Canada Revenue Agency.