US hedge fund sues 'Panama Papers' law firm

New York tycoon Paul Singer's Elliott Management Corp accused the law firm Mossack Fonseca of helping Argentine clients hide money. (AFP/Aaron Tam)

WASHINGTON: The law firm at the centre of the Panama Papers scandal is under fresh attack, facing a lawsuit from the powerful US hedge fund that successfully sued Argentina.

New York tycoon Paul Singer's Elliott Management Corp. accused the law firm, Mossack Fonseca, of helping Argentine clients hide money as Elliott was pursuing the Argentine government to pay off defaulted bonds.

The lawsuit filed in a Nevada court in late May and obtained by AFP Wednesday focuses on Mossack Fonseca's business of setting up anonymously-owned companies and trusts for clients often seeking to hide funds offshore from tax and legal officials.

In the Panama Papers dossier of records stolen from the company and revealed in April, Mossack Fonseca is shown as having facilitated the creation of more than 200,000 secret offshore companies.

The lawsuit says that while it was pursuing its claims against Argentina, in 2014 Elliott's unit NML Capital sought help in identifying and tracing assets linked to some shell companies registered in Nevada.

But it said that Mossack Fonseca, though having evident close links to "MF Nevada" - a corporate services provider linked to those shell companies - insisted in the court that the two only had very limited ties.

For that reason, Mossack Fonseca insisted it could not provide the data the NML wanted.

The release of the Panama Papers in April, the new suit said, included documents that demonstrated the two firms were in fact "inextricably entwined" and that Mossack Fonseca had obstructed justice by not cooperating to provide the information required.

The documents "reveal that MF Nevada and Mossack Fonseca knowingly, willfully, and wrongfully obstructed NML's discovery efforts and attempted to impede the court's proper exercise of its jurisdiction," the lawsuit said.

The suit says that because Mossack Fonseca's evasive tactics resulted in numerous hearings and filings, NML "should be reimbursed for the very substantial legal fees it incurred as a result."

The lawsuit comes just weeks after Argentina finally gave up its 15 year fight against NML and other hedge funds and paid off their bonds in a multi-billion dollar deal that earned NML huge profits.

Argentina had branded NML a "vulture" for buying its defaulted debt on the cheap and litigating for full payment.