By Clare Baldwin and Paul Carsten
HONG KONG/BEIJING (Reuters) - The law firm at the centre of the "Panama Papers" offshore tax haven controversy has written an apology to a Chinese banking client as it seeks to shore up its Asian business following a massive leak of financial data last month, according to a copy of the letter seen by Reuters.
The letter was written by Mossack Fonseca in response to queries from the Chinese bank about compliance with global financial standards. It is not known whether there were similar communications with other financial institutions, but the letter shows at least one bank client in the firm's biggest market was concerned by issues raised in the publicity surrounding the leak.
In the undated letter to the mid-tier Shanghai-based lender, signed by Mossack Fonseca's regional general manager, the shell company specialist said it "deeply regrets" any misuse of its services or the companies it set up.
"If the unauthorised illegal leaks from Mossack Fonseca company servers have created any inconvenience for (the bank) and your clients, we wish to once again apologise," it added.
A Mossack Fonseca spokesperson said reporting of the leak had "deepened confusion" about the nature of its business.
"As such, we are routinely speaking to our clients and other related parties that have questions to explain that ... nothing in the illegally obtained cache of documents suggests we have done anything wrong or illegal," the spokesperson said in an emailed statement.
Leaks from the Panama Papers, named after the law firm's central American home base, have embarrassed some leading politicians around the world with their chronicling of a shadowy world of offshore holdings and hidden wealth.
The source who provided the letter requested that the state-owned bank not be named to protect their identity due to the sensitivity of the subject in China. A former Mossack Fonseca employee in China said the bank was a major client.
Mossack Fonseca has also replaced several key staff in a shake-up of its operations in China, according to a person familiar with the matter and a second former employee.
Relatives and business associates of eight senior Chinese Communist Party figures – including President Xi Jinping's brother-in-law - are named as beneficiaries of offshore holding companies in the leaked documents. None have made any comment and it was not clear if any were clients of the Shanghai bank.
ASIA SHAKE-UP
The letter to the state-owned bank was signed by Maria Mercedes Sadowski, who became regional general manager for Asia in January 2016, according to her LinkedIn (NYSE:LNKD) profile.
The second former employer, who was dismissed from Mossack Fonseca earlier this year, also said Sadowski had arrived in Asia at the start of the year and initiated a shake-up that saw roughly half a dozen departures across its eight offices in Greater China.
In response to Reuters' emailed questions to Sadowski and the firm, the Mossack Fonseca spokesperson said that "our plan in China and elsewhere is to continue to serve our clients".
The former employee said Sadowski had replaced Austin Zhang, who had headed Mossack Fonseca's Asia business from its busiest office in Hong Kong since the early 2000s. But it was unclear whether Zhang had severed all ties with firm.
Contacted by Reuters on the messaging app WeChat in April, Zhang hinted he had left. A keen photographer, he said he would be willing to talk about his art, but "if it's for other things then it would not be necessary. I am no longer in that group".
He then stopped responding to messages.
Following the reports about the links to relatives of Chinese officials, China has moved to limit access to online coverage of the "Panama Papers" story within its borders, with state media denouncing Western reporting on the leak as biased.