Panama law firm Mossack Fonseca founders arrested

PANAMA CITY: The two founders of the Panamanian law firm Mossack Fonseca, the law firm at the center of the "Panama Papers" scandal, were arrested on Thursday, their defence attorney Elías Solano told a Spanish newspaper.

The arrests came hours after Panamanian prosecutors raided offices of the firm on possible corruption charges linking to a Brazilian company.

Panamanian prosecutors raided the offices of Mossack Fonseca, the law firm at the center of the "Panama Papers" scandal, seeking possible links to Brazilian engineering company Odebrecht, the attorney general´s office said on Thursday.

"Raid of offices of law firm that created limited liability companies in Brazil linked to #LavaJato #PanamaPapers," the attorney general´s office said on Twitter, without providing more details.

Juergen Mossack and Ramon Fonseca, who is also a former adviser to Panama’s president Juan Carlos Varela, were taken into custody by police in Panamian capital, Solano told Spain’s El Mundo newspaper.

The Panama Papers, which consist of millions of documents stolen from Mossack Fonseca and leaked to the media in April 2016, provoked a global scandal after showing how the rich and powerful used offshore corporations to evade taxes.

Ramon Fonseca, a partner at Mossack Fonseca, denied that his firm had a connection to Odebrecht, which has admitted to bribing officials in Panama and other countries to obtain government contracts in the region between 2010 and 2014.

"Mossack Fonseca has no relationship with Odebrecht, nor with any other Lava Jato company," Fonseca told reporters, referring to companies involved in the so-called Lava Jato probe centered on Brazil´s state-run oil company Petróleo Brasileiro SA.

"They´re using me to divert attention," he said.

Fonseca also accused Panamanian President Juan Carlos Varela of directly receiving money from Odebrecht, Latin America´s largest engineering company.

"He (Varela) told me that he had accepted donations from Odebrecht because he could not fight with everyone," Fonseca said, without giving more details.

At a media conference, Varela denied he received donations from Odebrecht, saying he would make all donations to his political campaign public on Friday.

Odebrecht did not respond immediately to requests for comment.