The owners of the law firm at the centre of the Panama Papers scandal have been arrested by police in connection with a separate probe into corruption in Brazil.
Jürgen Mossack and Ramón Fonseca were refused bail after they were held last week in connection with an investigation into the Lava Jato scandal, which revolves around allegations that executives at state-controlled oil firm Petrobras took bribes in exchange for awarding contracts at inflated prices.
Both men were charged with money laundering offences before being remanded in custody, the Panamanian attorney general said.
Kenia Porcell told reporters authorities had discovered information which “allegedly identifies the Panamanian firm as a criminal organisation that is dedicated to hiding assets or money from suspicious origins”.
During a press conference, Porcell told reporters that Mossack Fonseca’s Brazilian representative had been instructed to conceal evidence of illegal activity relating to the Lava Jato case. Prosecutors argue the law firm set up offshore accounts that allowed those embroiled in the scandal to secretly funnel bribes to other countries.
“Put simply, the money comes from bribes, circulated via certain corporate entities to return bleached or washed to Panama,” Porcell said, confirming charges had been pressed against four individuals, including the founders of Mossack Fonseca.
The partners were arrested last Thursday and charged on Saturday after 48 hours of questioning.
Fonseca’s lawyer was quoted by the Guardian as saying evidence against his client is “weak”, while Mossack’s legal representative said the two men had been denied bail due to the fact that their significant wealth made them flight risks.
Speaking outside the Panamanian Justice Ministry, Fonseca’s son said: “They are wasting time putting pressure on my father… They already have all the electronic information, it’s in the ministry.”
In a statement issued after its founders were taken in for questioning, Mossack Fonseca said: “We reiterate that, in our view, all the actions that the prosecution has taken against the firm today are an attempt to divert attention from those who really merit a deep and proactive investigation from the authorities on crimes that have already been confessed.
“In the more than ten months since the beginning of this investigation, caused by a suspiciously unreported crime committed against our firm, they have not presented a single piece evidence that shows us guilty.”
It has been alleged that Mossack Fonseca has links with Brazilian engineering company Odebrecht, which has admitted to bribing officials in a number of countries to win public contracts.
Last year’s Panama Papers leak revealed that hundreds of wealthy individuals and public officials from countries all over the world had used shell firms set up by Mossack Fonseca to avoid tax, commit fraud, launder money and avoid sanctions.