The Panama Papers : The Revolution Will Be Digitized

The Panama Papers are a cache of over  11 million internal documents – 2.6 terabytes worth from Mossack Fonseca  and reveal secret offshore holdings from 128 politicians and public officials across the globe, including 12 current and former world leaders.

 Upon their release a global investigation was launched,  into the sprawling, secretive industry of offshore the world’s rich and powerful use to hide assets and skirt rules by setting up front companies in far-flung jurisdictions.

 The anonymous source of the information is known as John Doe.

Globalization and development have placed extraordinary pressures on human societies, posing unprecedented threats from transnational crime networks, and the actions of powerful figures in business and government.

The investigation marks one of the biggest leaks in journalistic history.

It is larger than the U.S. diplomatic cables released by WikiLeaks in 2010, and the secret intelligence documents leaked by NSA whistleblower, Edward Snowden in 2013.

Previous attempts to bring about transparency had flopped.

But now the world’s leading economies – the G20, G8 and Organisation for Economic Cooperation and Development – were apparently pursuing the theme with zeal.

Snowden on Twitter called the Panama Papers disclosure

“the biggest leak in the history of journalism.”

In June 2013, two Swiss lawyers held a private telephone chat.

They were annoyed.

In London, David Cameron had just given a speech.

The prime minister had promised to sweep away decades of offshore “tax secrecy” by introducing a central register.

Anybody who owned an offshore company would have to declare it to the authorities.

The G8 summit, to be hosted by Cameron on the shores of Lough Erne, in Northern Ireland, was looming.

Top of the agenda: how to stop aggressive tax avoidance.For much of the 20th century hiding your money was simple:

You got a lawyer, filled in a form and set up a Swiss bank account or offshore “shell company”.

 

Nobody asked questions.

For a couple of thousand dollars a year, it was possible to hide away profits where governments could never find them.

But in the UK, crown dependencies and overseas territories where financial services were the main source of jobs and income, times were changing.

In tropical tax havens such as the British Virgin Islands a chill wind – or at least the threat of one – was blowing.

One of the Swiss lawyers was Sandro Hangartner, the Zurich boss of the Panamanian law firm Mossack Fonseca.

The other man, his disgruntled caller, was Sascha Züger.

Züger’s company looked after the assets of some very wealthy South Americans.

In an email to his head office in Panama, Hangartner wrote:“Sascha is not very pleased about the development in BVI [British Virgin Islands].”He was now looking for “alternatives”Hangartner added – in other words other secret jurisdictions where a client might park their money.

 

As Hangartner admitted, the reason many clients used offshore structures, was to keep their identities confidential.

This was for a variety of reasons.

Often, one offshore company would own another, and another, like so many Russian dolls.

Now this elaborate system of concealment was under threat.

Based on a trove of more than 11 million leaked files, the investigation exposed a cast of characters who used offshore companies to facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking.

 

But ! The Panama Papers leaked documents that detail the inner workings of Mossack Fonseca, a law firm accused of helping drug lords, sports stars, Ponzi schemers, kings, presidents, prime ministers, FIFA officials, mafia members, high-profile thieves, high-ranking politicians, and at least one convicted sex offender launder money, evade taxes, and escape criminal prosecution—are a big deal!

Behind the email chains, invoices and documents that make up the Panama Papers are often unseen victims of wrongdoing enabled by this shadowy industry.

This is their story 

Mossack Fonseca

documents were first leaked to German newspaper Süddeutsche Zeitung and were released in April 2016.

Investigative journalists in countries around the word have been sifting through them ever since.

“The source wanted neither financial compensation nor anything else in return, apart from a few security measures,”

Süddeutsche Zeitung said of its confidential source.

The newspaper shared the documents with the International Consortium of Investigative Journalists (ICIJ) and the Organized Crime and Corruption Reporting Project (OCCRP).

ICIJ launched a global reporting effort involving 107 media organizations in 78 countries.

Eastern European leaders, specifically,  and Poroshenko, feature prominently in the documents.

But the leaks also tie several other leaders, including Iceland’s prime minister, to secret offshore companies and dubious deals.

Just two days after the leak appeared, Icelandic Prime Minister Sigmundur David Gunnlaugsson announced his resignation.

 

Documents contained in the leak showed that his wife owned an offshore company with links to some of Iceland’s collapsed banks, a touchy subject in a country brought to the brink of ruin during the 2008 financial crisis.

Thousands of people had taken to the streets demanding that Gunnlaugsson leave office; by some estimates, the crowd represented as much as 6.6 percent of Iceland’s small population.

Dealing in offshore business is not illegal.

Eastern Europe’s elite have for years used them to keep their assets out of reach of company raiders, for example.

But the use of offshore tax havens in the manner and to the extent the Panama Papers shows by heads of state and top officials, raises serious questions.

More than 500 banks registered nearly 15,600 shell companies with Mossack Fonseca, with HSBC and its affiliates accounting for more than 2,300 of the total.

Dexia and J. Safra Sarasin of Luxembourg, Credit Suisse from the Channel Islands and the Swiss UBS each requested at least 500 offshore companies for their clients.

An HSBC spokesman said,

“The allegations are historical, in some cases dating back 20 years, predating our significant, well-publicized reforms implemented over the last few years.”

They highlight how Ukrainian President, Petro Poroshenko increased his wealth after being elected in 2014 and while his soldiers were dying in eastern Ukraine.

They also show secret offshore companies linked to the families and associates of Egypt’s former president Hosni Mubarak, Libya’s former leader Muammar Gaddafi and Syria’s president Bashar al-Assad.

They reveal others controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the Azerbaijan’s president.

In all, they include at least 33 people and companies blacklisted by the U.S. government due to evidence that they’ve done business with Mexican drug cartels, extremist organizations like Hezbollah or rogue nations like North Korea and Iran.

The Panama Papers’ biggest revelations and fallout

ICIJ explains the revelations this way:

The documents show that banks, law firms and other offshore players have often failed to follow legal requirements that they make sure their clients are not involved in criminal enterprises, tax dodging or political corruption. In some instances, the files show, offshore middlemen have protected themselves and their clients by concealing suspect transactions or manipulating official records.

Some revelations of particular interest include:

• Putin’s close friend, concert cellist Sergei Roldugin, agreed to be a front for the Russian president to launder $2 billion to offshore accounts.  The operation was run by Bank Rossiya, which is under American and European sanctions following Moscow’s annexation of Crimea.
• Poroshenko became the sole shareholder in an offshore British Virgin Islands company while his army was surrounded and hundreds of troops were slaughtered by Russian forces in the eastern town of Ilovaisk in August 2014.
• Iceland’s prime minister, found to be using offshore tax havens, this week could face calls in parliament for a snap election after the leaks came to light.
• The files contain details of offshore dealings conducted by British Prime Minister David Cameron’s late father. Cameron has led the push in Britain for tax-haven reform.
• World-famous soccer player Lionel Messi and his father were found to be owners of Panama company Mega Star Enterprises Inc., adding to a list of shell companies known to be linked to the star. His offshore dealings are currently the target of a tax evasion case in Spain.

Of course, there are many more, all of which can be found here.

Mossack Fonseca in a statement insisted it has complied with all laws and regulations.

 

“For 40 years Mossack Fonseca has operated beyond reproach in our home country and in other jurisdictions where we have operations,” the law firm said in a statement.

“Our firm has never been accused or charged in connection with criminal wrongdoing.”

In January 2019, Turkish court has sentenced journalist Pelin Ünker to 13 months’ imprisonment for her participation in reporting the Panama Papers.

Ünker published the true (and undisputed) facts about former Binali Yıldırım and his sons, whose ownership of Maltese companies was revealed in the leaks.

Despite the truth of the matter, Ünker was convicted of “defamation and insult.”

Ünker is a member of the International Consortium of Investigative Journalists.

The ICIJ’s director, Gerard Ryle, condemned Ünker’s jail sentence of 13 months, as the latest in a long series of attacks on free speech in Turkey.

“This unjust ruling is about silencing fair and accurate reporting. Nothing more,” Ryle said. “ICIJ commends Pelin Ünker’s brave and truthful investigative reporting and it condemns this latest assault on journalistic freedom under Turkish president Recep Tayyip Erdoğan’s autocratic rule.”

Journalist Pelin Ünker sentenced to jail in Turkey over Paradise Papers investigation [Julian Borger/The Guardian]