By Drew Schwartz http://conspiracy-cafe.blogspot.ca/
April 4, 2016
The Panama Papers –
11.5 million 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.
Mossack Fonseca has ties to the £26 million Brink's-MAT robbery of 1983,
which British media called "the crime of the century". Thirty three of
its clients have been blacklisted by the US government for allegedly
doing business with Mexican drug lords, terrorist organisations and "rogue nations"
like North Korea and Iran. Its files have unearthed a secret, shady $2
billion (£1.3 billion) trail of money that leads to Vladimir Putin. One
of its clients played a crucial role in the Watergate scandal. Another
was convicted for the torture and murder of a US drug enforcement agent.
With a story this big – dubbed by Edward Snowden as "the biggest leak in
the history of data journalism" – it can be difficult to understand
exactly what's at stake. The Panama Papers are, unquestionably, insane.
But what do they have to do with you?
If you live in one of the 200 countries and territories that Mossack
Fonseca's clients call home – and, given the fact you're reading this
article, you probably do – the story of the Panama Papers is your story.
The money the law firm helps to hide should be used to pay for your
schools, your highways, your hospitals. The criminals it works with run
the most violent illegal organisations your country has ever seen. The
politicians who have taken and made bribes, dodged taxes and amassed
fortunes of unimaginable scale are your politicians.
Not long after the story broke, people started posting tweets along the
lines of: "Shock, horror: wealthy, powerful people are corrupt – why
should I give a shit?" Well, because of course you should give a shit.
To know this story – of hidden millions, of corruption, of murder and
bribery and power and betrayal – is to know your own. Here's how the
revelations came to be, and why you should care.
THE LEAK
A little over a year ago, an anonymous source reached out to the German newspaperSüeddeutsche Zeitung (SZ)
and offered them heaps of internal documents from Mossack Fonseca,
which specialises in selling offshore companies based in tax havens
across the globe. The source didn't ask for compensation. Instead, he wrote in an email to the paper that he wanted one thing: "To make these crimes public."
Over the next several months, SZ found themselves with about 2.6 terrabytes of data. They shared it with the International Consortium of Investigative Journalists (ICIJ),
allowing hundreds of reporters from more than 100 media organisations
in 80 countries to sift through the documents. After a year of research,
they've finally begun to figure out how Mossack Fonseca works – and to
uncover how a business that's never faced criminal prosecution could
have a bigger hand in corruption, bribery and crime than anyone ever
imagined.
READ ON VICE NEWS: The Panama Papers – Global Investigations Begin Following Damning Tax Haven Revelations
THE SCHEME
Offshore companies aren't illegal – not inherently, anyway. But using
them to hide assets from tax authorities, thwart investigations and and
protect criminals is.
Here's how this whole mess of a situation works:
An individual, often through a middle-man they're close to, pays Mossack
Fonseca to create a "shell company" – a business on paper, but in
reality, a storehouse for a shit-ton of money, whether in cold hard cash
or tied up in shares. Mossack Fonseca sets up the shell company
offshore in a place like Panama (where the firm is based), the British
Virgin Islands, or any other "tax haven" – a place where the true owner
of a company can be anonymous and their home country (which, typically,
doesn't know about the company in the first place) can't tax it.
Say a politician makes £100,000 pounds per year on salary, and for some
reason – bribes, business deals, all manner of shady shit – also makes
upwards of £1 million in some other way. If they put that money in an
offshore shell company, they can access it without being taxed for it.
Even if the shell company is discovered, it can't be tied directly to
the politician because the company is technically owned by someone else –
a stand-in owner who's appointed by Mossack Fonseca to run the company
on paper, but, in reality, doesn't own anything. To move the money, the
company pretends to make business deals: the Panama Papers reveal
thousands of fake share trades, million-dollar payments for
"consultancy" and huge payouts in "compensation" for cancelled
transactions.
"This is not business," money-laundering expert Andrew Mitchell QC told
BBC Panorama. "This is creating the appearance of business in order to
continually move and hide assets."
THE SCANDALS
Let's start with the big one: Vladimir Putin.
His boyhood friend, Sergei Roldugin – a major-league cellist and the
godfather of Putin's firstborn daughter – is listed as the owner of a
slew of offshore companies. They've been set up by Mossack Fonseca, and
they've received innumerable payments worth tens of millions, the Papers
revealed. However, it appears that the money's not actually going to
Roldugin. Instead, the ICIJ believes, it's going to Putin's closest
associates – and maybe even Putin himself.
The way that works is tricky. It's best explained, I think, by a
mind-blowing example that the ICIJ highlighted in their reporting:
On the 10th of February, 2011, an anonymous company in the British
Virgin Islands named Sandalwood Continental Ltd. loaned $200 million
(£140 million) to an equally shadowy firm based in Cyprus called Horwich
Trading Ltd.
The following day, Sandalwood assigned the rights to collect payments on
the loan – including interest – to Ove Financial Corp., a mysterious
company in the British Virgin Islands.
For those rights, Ove paid $1 (70p).
But the money trail didn't end there.
The same day, Ove reassigned its rights to collect on the loan to a Panama company called International Media Overseas.
It too paid $1.
In the space of 24 hours, the loan had, on paper, traversed three
countries, two banks and four companies, making the money all but
untraceable in the process. St. Petersburg-based Bank Rossiya, an
institution whose majority owner and chairman has been called one of
Putin's "cashiers", established Sandalwood Continental and directed the
money flow.
International Media Overseas, where rights to the interest payments from
the $200 million appear to have landed, was controlled, on paper, by
one of Putin's oldest friends: Sergei Roldugin.
The point is this: here, somebody with extremely close ties to Putin
traded $200 million for $1. That's just one of several transactions ICIJ
uncovered in Mossack Fonseca's files – totalling at least $2 billion –
that involves companies or individuals "uncomfortably close" to Putin.
As ICIJ points out, the money might be changing hands in secret because
it's being used as "payoffs" for aid from the Russian government or
big-ticket contracts. To boil what's at hand down to a word: corruption.
FIFA, it turns out, is more fucked up than we thought – and Mossack
Fonseca is involved. Four of the football organisation's 16 officials
indicted in the US for corruption used Mossack Fonseca to create
offshore companies. A member of FIFA's Independent Ethics Committee,
Pedro Damiani, did work for seven MF offshore companies tied to former
FIFA Vice President Eugenio Figueredo – the guy who was charged for
wire fraud, money laundering and racketeering in May of last year.
Additionally, it looks like there's no way Damiani didn't know that Hugo
and Mariano Jinkis – a father-son duo who allegedly bribed FIFA
officials with tens of millions for broadcasting rights to Latin
American matches – were doing something dirty. Damiani is now the
subject of an internal investigation by the very ethics committee he
helps to run.
Iceland's Prime Minister, who came to power after the collapse of
several major banks in his country, effectively owned an offshore
company (yep, you guessed it, set up by our friends at Mossack Fonseca)
that had major holdings in those same banks. I say "effectively"
because, though he once owned half of the company's shares, he's since
sold the rest to his wife. For $1. While it's unclear if the PM,
Sigmundur Gunnlaugsson, did anything illegal, he and his government
negotiated settlements with the same banks he held shares in. Since the
Panama Papers story broke, he's been called on to step down.
Every major scandal that the Panama Papers have brought to light is
equally (if not more) tricky to understand as this whole Putin business.
If you're interested in the evidence behind each shit-show, I'd highly
recommend exploring the ICIJ's website.
Iceland's Prime Minister Sigmundur Gunnlaugsson (Photo by Frankie Fouganthin via)
THE POINT
I could keep listing these scandals for days – exposing the questionable
financial affairs of the prime minister of Pakistan; the king of Saudi
Arabia; the children of Azerbaijan's president; the son of former
Egyptian President Hosni Mubarak; eight members of the Politburo,
China's main ruling body; even the shady dealings of Jackie Chan – but
for now, I think it's enough for you to know the numbers.
The Panama Papers uncovered a total of 61 family members and associates
of prime ministers, presidents or kings who use Mossack Fonseca's
services. The firm has helped hide billions of dollars from governments
across the globe – dollars that, ordinarily, would be subject to
taxation. It's done business with folks who looted millions from a death
benefits pool that was supposed to go to widows and orphans. And it's
been doing all this for 40 years now, undetected – until that anonymous
source got in touch with Süeddeutsche Zeitung.
We all have content nausea. Every day, hundreds of advertisements scream
at us from billboards and phone screens and televisions. We couldn't
listen to all the music released in the past six months over the course
of our entire lifetimes. We are buried in headlines, overwhelmed by the
amount of news we have access to and unsure, sometimes, of the best
place to turn for it. In an era where information is so abundant, it's
exhausting to try to consume it all.
The Panama Papers – more so, perhaps, than any piece of news you'll come
across in the next decade – isn't an easy story to understand. It'll
take a long while to figure it out – the dozens of media outlets
covering it haven't even sorted through all the documents they've been
given. But it's a story worth spending time on. Because, unlike so much
of what this world is inundated with, it is a story that applies to you.
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