PANAMA CITY: Panama mounted a fierce defense of its crucial financial services sector today, trying to head off a feared international clampdown on its offshore business in the wake of the "Panama Papers" leak. 

Diplomats accredited to the small Central American nation were called to the foreign ministry to hear officials argue that it was unfair to single out Panama in the scandal. 

They heard "what is the truth about Panama," the state secretary for communication, Manuel Dominguez, told AFP. 

The government has also written a harshly worded letter to the head of the OECD, Angel Gurria, attacking a statement he made describing Panama as "the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities." 

Those accusations were false, "unfair and discriminatory," Deputy Foreign Minister Luis Miguel Hincapie wrote in the letter, which was obtained by AFP. 

Gurria and others relying on reports from the Panama Papers were seeking to "distort the facts and tarnish the reputation of the country," Hincapie wrote. 

Panama also has warned it could retaliate against France if it makes good on a promise to put the country back on France's blacklist of "tax havens" -- a status that would cause transactions in Panama to be viewed as likely tax-dodging gambits. 

The aim of the pushback is to protect Panama's discreet nexus of law firms and banks from a concerted international move to curtail business with it. 

The financial sector accounts for seven per cent of Panama's gross domestic product, and attracts big multinationals to the small country. 

But the hack obtaining 11.5 million documents from Mossack Fonseca, the law firm at the center of the scandal, has exposed the workings of offshore companies and the deliberately obscured lines of ownership that hide who really benefits from them. 

Exposure of the secret Mossack Fonseca files has dealt a blow to Panama's efforts to shed a reputation as a hub for shady deals. 

Early this year, the nation managed to get off a "gray list" of countries not deemed to be doing enough to fight money laundering after introducing a number of reforms putting some curbs on anonymous ownership of companies. 

But the Organization for Economic Cooperation and Development (OECD) insists Panama falls well short in implementing international standards for the automatic sharing of tax information. 

France today urged the OECD to follow its lead by putting it on a global list of "uncooperative countries.

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