The heads of the law firm at the centre of the Panama Papers scandal have been refused bail following their arrest by police in Panama.
Jürgen Mossack and Ramón Fonseca were taken into custody on Thursday as part of an apparently coordinated swoop by prosecutors across Latin America investigating the massive Brazilian Lava Jato scandal.
Their defence lawyers have confirmed that they will remain in custody. Elías Solano, for Fonseca, dismissed evidence against his client as “weak” and said: “It does not seem too difficult to show the lack of foundation to these allegations.”
Mossack’s lawyer Marlene Guerra told reporters he had been refused bail because “there is a risk of flight from the country, due to the financial means of our clients”.
She said the indictment process was ongoing. The Panamanian newspaper La Prensa reported that they were being charged with alleged economic crime, in the form of money laundering.
Guerra confirmed that their homes in the exclusive Altos del Golf neighbourhood had been searched along with their firm’s headquarters.
It was reported that a third Mossack Fonseca lawyer, Edison Teano, had also been taken into custody.
The government is reported to have confirmed that another search was made at the offices of a fourth employee, Sara Montenegro, who is legal director at Mossack Fonseca.
Panamanian authorities have questioned four individuals in connection with the case, which is understood to be part of an international investigation into hundreds of millions of dollars in political bribes allegedly paid by the Brazilian engineering corporation Odebrecht.
Brazilian investigators, with help from the Swiss authorities and journalists including reporters from La Prensa, have unearthed a network of offshore companies which they allege were used to funnel payments by Odebrecht.
In what appears to have been a coordinated action by law enforcement agencies across Latin America, Peru issued an international arrest warrant for former president Alejandro Toledo on Thursday. He is charged with accepting $20m (£16m) in bribes from Odebrecht.
Among the web of screen companies used to transfer tens of millions of Odebrecht funds are a number of entities represented by Mossack Fonseca. Among them, a Panama-registered Balmer Holding Assets SA. The identity of its owner was hidden by anonymous bearer shares, but investigators have found $7m was transferred from Odebrecht and connected companies to Balmer.
The Panama Papers revealed that a Mossack Fonseca representative agreed to a request by an agent acting for Balmer’s hidden owner to destroy correspondence regarding the company.
Gabriel Fonseca, Ramón’s son, told reporters outside the justice ministry: “They are wasting time putting pressure on my father … They already have all the electronic information, it’s in the ministry.”
Mossack Fonseca rebutted the charges on Twitter on Friday, describing the proofs gathered by the justice ministry as “documents taken from the internet that are the proceeds of a theft”.
The Panama Papers came to light following a leak of 11m files from the internal database of Mossack Fonseca.
