The largest media collaboration ever undertaken has revealed the biggest financial information leak recorded in history. Containing 2.6 terabytes of data, it accounts for files that exceed over one thousand times the content released during the Wikileaks scandal of 2010. Amrit Santos attempts to provide a brief guide of the main structural concepts behind the scandal and the parties involved.
This article has been largely adapted from the information on the website of the International Consortium of Journalists, who are a governing body comprising of members from the world’s top news outlets. As it is still too early for criminal investigations to have occurred in order to present judicial findings, the claims being made by the ICIJ come from millions of emails, database files and PDFs that indicate ‘unorthodox’ financial practises. Navigating through this complex structure of what is essentially illegally obtained evidence and secondary sources, we make a judgement decision based on the authority and reputation of the admittedly limited sources available to us, in this case the ICIJ. Over the course of a year, a team of more than 370 journalists from over 70 countries secretly processed the files obtained from Mossack Fonseca, a small but powerful law firm based in Panama – one of the world’s top financial secrecy zones.
“They are not necessarily strictly illegal enterprises but may be used for money laundering and tax evasion”
The firm is a world leader in shell company creation – business fronts for ‘ghost companies’ that do not actually operate, nor have any significant assets such as office space or employees. They are also referred to as ‘offshore’ as the said ‘business transactions’ operate via far-flung tax havens, the British Virgin Isles mostly popularly in this case. They are not necessarily strictly illegal enterprises but may be used for money laundering and tax evasion.
Hundreds of entities are implicated in the Panama Papers case, from banks and celebrities to global governing bodies such as FIFA as well as current and former heads of state from around the globe, either directly or through association. They include British prime minister David Cameron, Russian president Vladimir Putin, the king of Saudi Arabia Salman bin Abdulaziz bin Abdulrahman Al Saud and the Icelandic Prime Minister Sigmundur Davíð Gunlaugsson. The current leaders of China and the Ukraine, whose positions have been built upon anti-corruption ideology, have also been implicated in the scandal. Banks who have facilitated the cash flow for the creation and management of these fictive business enterprises include HSBC and Société Général.
“We are essentially being confronted with the fact that the national institutions that are supposed to safeguard the world’s citizens are corrupt”
Over 11 million documents have been leaked from the Panamian law firm’s internal database and span a 40-year period. A whistle blower, the identity of whom remains anonymous, leaked the evidence to German newspaper Suddeutsche Zeitung. He claimed that his life was in danger and used encrypted chats to interact with Bastion Obermeyer, a reporter for the paper. In an interview with Wired, Obermayer declined to specifically state which methods were used to encrypt their communications but alludes to crypto apps like Signal and Threema. The scandal of such an affair is twofold: the information contained in the leaks has the potential to expose great financial injustices and unveil self-centred motivations from the world’s political leaders. However, the technically illegal hacking activity and breaches of confidentiality agreements justifies the whistle blower’s demand to remain anonymous.
The panic and mistrust that an event like this can instil should not be underestimated; we are essentially being confronted with the fact that the national institutions that are supposed to safeguard the world’s citizens are corrupt. To present overwhelming evidence that incriminates the powers that be in our society has potentially major implications, as has already been seen in the case of the Icelandic Prime Minister’s resignation as of Tuesday 5 April. The documents contain information on 29 of the richest 500 people in the world, including Jackie Chan, who has employed Mossack Fonseca to manage at least 6 shell corporations to manage his finances.
Mossack Fonseca also counts Ponzi schemers, drug kingpins, tax evaders and convicted sex offenders as clients. Whilst shell companies are not strictly illegal, it is not particularly clear what other purpose such entities would serve other than to be facilitators for criminal activity, as the numerous and seemingly random monetary transactions aim to diminish traceability.
“The King of Saudi Arabia has for example used his offshore company to purchase luxury yachts”
The law firm works tooth and nail to protect the anonymity of their clients (the identities of whom, shell companies are supposed to protect), and has practised destroying paper records from its Las Vegas branch as well as wiping information from phones and computers. The relationship with their clients is of utmost importance. Mossack Fonseca is still fiercely denying any wrongdoing, demonstrating the lengths they will go to in order to serve their clients’ interests. The levels of service received by South African fraudster Graham Maddock are described as ‘VIP’ in the firm’s records.
Despite their denial of any complicity, emails have been discovered amongst the firm’s employees, in which a pricing structure is devised for clients for whom they had agreed to backdate documents in order to gain advantage in personal financial affairs. The King of Saudi Arabia has for example used his offshore company to purchase luxury yachts. Co-founder Ramón Fonseca has shirked responsibility for the actions their clients may take, actions that are of course facilitated by the offshore companies his firm creates and manages for them.
“Evidence has been uncovered that indicate Mossack Fonseca helped facilitate the illegal trade of fuel to the Syrian military from bases in the UK and the USA”
As the ICIJ reports: “The offshore system relies on a sprawling global industry of bankers, lawyers, accountants […] to protect their clients’ secrets. These secrecy experts use anonymous companies, trusts and other paper entities to create complex structures that can be used to disguise the origins of dirty money”.
The potential social and political consequences following a leak of this scale are staggering, incredibly complex and far reaching in a climate embroiled in electoral buzz. It is also vital to recognise this scandal in the context of the fear and paranoia being bred under the ever-looming threat of terror and proliferating political disillusionment in an age where demagoguery has become a valid persuasion tool amongst the world’s major countries’ candidates. Evidence has been uncovered that indicate Mossack Fonseca helped facilitate the illegal trade of fuel to the Syrian military from bases in the UK and the USA, where laws had been imposed to prevent trade agreements of this kind with the region.
Secretive financial activity of this kind is not only illegal but also deeply immoral; as such, it can have devastating consequences. The International Consortium of Investigative Journalists’ website contains vastly more detailed information about all specific figures implicated and how Mossack Fonseca has been behind some of the biggest cover ups of the last century.
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