Panama Papers Overview: Criminals, Politicians and the Unscrupulous Bankers and Lawyers Who Hide Their Money

The Implications from the Panama Papers Scandal Continues to Surprise.

The massive leak exposed efforts by the firm to establish secret shell companies and offshore accounts on behalf of many global power players.

Approximately one year ago, two German journalists working for Suddeutsche Zeitung were contacted by an anonymous source within Mossak Fonseca offering to hand over documents that show the firm is providing a structure designed to hide the source of money and evade taxes on that money for many of the world’s most powerful individuals. The number of documents was so vast, the two journalists, also members of the International Consortium of Investigative Journalists (ICIJ), sought the consortium’s assistance in the review of the documents. After the months-long investigation, the ICIJ simultaneously reported their findings, igniting a worldwide firestorm.

Many hundreds of people are implicated, but notably the documents reference 12 current and former world leaders, as well as 128 other politicians and political officials. Among the most well recognized are:

• Russian President Vladimir Putin
• Iceland’s Prime Minister David Gunnlaugsson
• Argentina’s President Mauricino Macri
• British Prime Minister David Cameron
• Pakistan’s Prime Minister Nawaz Sharit
• Syrian leader Bashar al-Assad
• Ukranian President Petro Poroshenko
• 8 current and former members of China’s ruling party
• Azerbaijan’s leader Ilham Aliyev
• King Salman of Saudi Arabia

Founded in 1977, Mossak Fonseca has long been known to the global financial and political elite. The firm, which has expanded to include more than 40 offices worldwide, offers the usual variety of legal services, but has garnered most of their business for a particular specialty—assisting foreigners in setting up Panamanian shell companies to hold financial assets while obscuring the identities of the real owners.

Many of the services offered by firms who create offshore entities can be used for legal purposes by lawful clients. But the documents leaked via the Panama Papers show that banks, law firms and other offshore players regularly fail to follow the legal requirements necessary to ensure their clients are not involved in criminal enterprises, tax evasion and political corruption. The files show that these ‘fixers’ and middlemen protect themselves as well as their clients by concealing suspicious transactions. In some instances, they have worked to thwart official investigations by backdating and destroying incriminating documents.

Beyond tax evasion penalties, what are the implications of these findings?

• Political fallout

Iceland’s Prime Minister was forced to resign following demonstrations in the country demanding he leave office. Gunnlaugsson was found to have secretly owned shares of the failed Icelandic Bank while presiding over negotiations that determined the fate of those shares.

These leaks also bring to light the corruption that exists when a country has nationalized much of their industry and natural resources. These documents illustrate a scheme in which money from the Russian State banks is skimmed and hidden in the offshore accounts of men with longtime ties to Putin. The Russian president’s inner circle controls over $2 billion in assets uncovered from these leaks alone. For years there has been suspicion around Lukoil and Gazprom assets lining the pockets of anointed Kremlin officials. Journalists will continue to follow the many trails these documents have uncovered and see what more comes to light.

Members of China’s ruling party appear to have obscured their holdings from the public as well. Now that their illicit activities have been revealed, the State is censoring Chinese journalists and demanding all reference to the Panama Papers be scrubbed from reports. Millions of dollars in bribe money and illegally confiscated assets have been sheltered, though due to the control the ruling party exerts, perhaps those implicated in the Panama Papers will emerge unscathed.

• Criminal Activity Exposed

The documents also illustrate a roadmap in which individuals mask ownership of offshore companies to avoid international embargos against Syria, Iran and North Korea. The leaked documents also contain the names of at least 33 people and companies who have been blacklisted by the U.S. government due to evidence they have done business with Mexican drug lords and terrorist organizations, including two of “El Chapo” Guzman’s money launderers. As I write this, journalists and authorities are sifting through the evidence of human traffickers who have benefitted from Mossak Fonseca’s services which hide their ill-gotten gains.

The details that have been released over the past week are just the tip of the iceberg. As journalists and intelligence agencies worldwide sift through this information, more links will be uncovered. At the moment, no US politician has been implicated in the scheme, though all the documents have not been thoroughly reviewed. Indeed Mossak Fonseca has created a shady web of shell company ownership that will take more time to unravel.