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Founders of law firm at center of Panama Papers controversy arrested

Panama's attorney general has accused the founders of law firm Mossack Fonseca of corruption. The two lawyers were already caught up in another scandal following the release of the Panama Papers last year.

On Saturday, authorities in Panama arrested the founders of the law firm at the center of the Panama Papers scandal as part of a separate investigation involving widespread corruption in Brazil.

Attorney General Kenia Porcell's office said police arrested Jurgen Mossack and Ramon Fonseca (photo), founders of the Mossack Fonseca law firm, over information that "allegedly identifies the Panamanian firm as a criminal organization that is dedicated to hiding assets or money from suspicious origins."

The pair is suspected of establishing offshore accounts that allowed the Brazilian construction company Odebrecht to channel bribes worth around $800 million (752 million euros) to countries across Latin America. The company agreed with the US Justice Department last year to pay a record $3.5 billion fine over the revelations.

Logo Mossack Fonseca (Reuters/C. Jasso)

The Mossack Fonseca law firm in Panama City

Panama's president implicated

Porcell said the yearlong investigation was aided by prosecutors in Brazil, Peru, Ecuador, Colombia, Switzerland and the US. Earlier in the week, authorities raided the firm's offices and searched the homes of the two founders.

The firm has denied any association with Odebrecht. Following the raid on their offices, however, Fonseca, a former adviser to Panama's president, Juan Carlos Varela, said Varela had admitted to receiving bribes from the company.

"President Varela told me - may lightning strike me if I lie - that he had accepted donations from Odebrecht because he couldn't fight everyone," Fonseca said.

Panama Stadt Ermittler durchsuchen Kanzlei Mossack Fonseca (Getty Images/AFP/E. Grimaldo)

Police raided the Mossack Fonseca law firm in April 2016

Not the first scandal

Mossack Fonseca had already garnered notoriety after emerging at the center of an international scandal following the release of the Panama Papers last year. Millions of documents stolen from the firm, detailing thousands of offshore entities including some used for illegal purposes, were leaked to the press in April.

Following the founders' arrests on Saturday, defense attorney Elias Solano called the accusations "weak" and said he would fight the charges.

The two men formally face charges of money laundering.

blc/jm (Reuters, AP)

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