By Andreï-Bogdan Sterescu
What’s the deal with the Panama Papers?
Money Laundering is the act of making dirty money look clean. This is the purpose of offshore companies and tax havens: to hide the assets of the client so that they can’t be traced by tax authorities and international law enforcement agencies. Important to note firstly is that having money offshore is not necessarily illegal, but certainly of very ambiguous legality. Money laundering works by the creation of fictitious entities or dummy companies which are filed in places where ownership information is safely guarded behind local laws and regulations, like protection from wealth inquiries. Usually the true shareholders’ names are concealed and the companies are run by shadow boards and sham directors. Providers of such services include lawyers, banks and investment firms who use proxies to hide the information, which, if traced, leads back to high-ranked officials, politicians, heads of states and millionaires.
One such organization that incorporates dummy companies and protects them is Mossack Fonseca, a law firm from Panama. On April 3rd, 11.5 million documents providing data on around 214,000 companies in 21 offshore jurisdictions were released by Sudetendeutsche Zeitung in collaboration with The International Consortium of Investigative Journalists, Le Monde, La Nacion, L’Espresso, the BBC, The Guardian, WDR, El Confidencial, NDR and Sonntags Zeitung. The data covers nearly 40 years of rogue activities, providing entirely new insight about how money flows through the global financial system and its underground counterpart. The leakage started around 2 years ago when Vice first published an article by Ken Silverstein on the activities of Mossack Fonseca. In 2015, Sonntags Zeitung was contacted by an anonymous source that submitted encrypted internal data from Mossack Fonseca. The number of documents continued to grow until it reached around 2.6 terabytes of data, making it the biggest leak in history. Companies like Mossack Fonseca are key players in a secret industry used by the world’s rich and powerful to grease the wheels of an underground financial network. Offshore finances are used to facilitate financial frauds, arms trade, drug trafficking, bribery and tax evasion, with the facilitators of those practices benefiting from their victims in war zones, in countries ran by oligarchs and people suffering from the drugs trade. The Panama Papers reveal information on the offshore companies of businessmen, former or current heads of state (72 so far), sportsmen, and various mafia groups. These companies are connected to relatives, advisors, or friends of these aforementioned figures, a list including David Cameron’s father, Ian Cameron; the former King of Spain’s Sister; the King of Saudi Arabia, Salman bin Abdulaziz; friends and relatives of Vladimir Putin; Iceland’s PM; the President of Argentina; the President of Ukraine; Lionel Messi; Michel Platini and many others. This is how deep criminal practices are entrenched in the world of offshore companies and tax havens, and how vast this rogue industry really is.
Most of the documents will remain secret, as the information is now in the hands on some big corporate media outlets like the BBC and the Guardian, so a big revelation of western capitalism and its hidden practices should not be expected. Nonetheless, ever since Julian Assange and the Wikileaks War Logs, Snowden and the Global Surveillance Disclosure and now the Panama Papers there are more reasons to doubt the world as it is perceived and experienced, the practices of governments, of officials, of bankers, businessmen, celebrities, the rich and the people on TV, in the media and running for office. The Panama Papers come from just one offshore law firm with information regarding just a few offshore jurisdictions; it is presumable that there are many more mountains of hidden papers, yet to be leaked.
First of all we have to inform ourselves: