Panama Papers: A Shot Heard Round The World

Standing on Shaky Ground

An anonymous person has leaked more than 11 million documents documenting how the rich and powerful hide their money in offshore tax havens. The documents were published Sunday by the International Consortium of Investigative Journalists (ICIJ), Süddeutsche Zeitung, the German newspaper, and several news organizations around the world, including the BBC, after a yearlong investigation. The actions described in the documents are not necessarily illegal, but some of the documents reveal a clandestine web of shell companies, their real owners concealed under layers of secrecy, and connections to firms in different tax havens. A coalition of more than 100 news organizations published a review of the documents yesterday. USA Today describes the treasure trove,

The cache exposes assets of everyone from political officials to billionaires to celebrities to sports stars that were previously undisclosed. The documents expose holdings of 12 current and former world leaders and details of the hidden financial dealings of 128 more politicians and public officials worldwide. Included: At least 33 people and companies blacklisted by the U.S. government because of links to wrongdoing, such as doing business with Mexican drug lords, terrorist groups or rogue nations such as North Korea and Iran. According to Sueddeutsche Zeitung, the Munich-based newspaper that obtained the trove of documents more than a year ago from an anonymous source tied to Mossack Fonseca [a law firm in Panama with 40 offices around the world], the “Panama Papers” include approximately 11.5 million documents — more than the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks and Swiss Leaks.

The leak of documents shows how the rich and famous can exploit offshore tax shelters and reveals an unprecedented pattern of corruption worldwide for 40 years, including maneuvers by major banks who created the hard-to-trace companies. World leaders or associates who have embraced anti-corruption platforms are featured throughout. The papers also allege a billion-dollar money laundering ring run by a Russian bank tied to associates of Russian President Vladimir Putin.

Difficult at this point to determine who violated any laws. Tax avoidance is a lawful standard-operating procedure for the rich. Tax evasion, however, and money laundering are crimes. The use of multiple transactions by shell companies that consist of little more than a name and a P.O. box, together with nominee owners who conceal the real parties in interest is inherently suspicious. Mossack Fonseca, the Panama law firm, specializes in creating opaque financial transactions involving equally opaque offshore banks.

Sorting through it all is going to take some time.

31 Responses to Panama Papers: A Shot Heard Round The World

  1. MichelleO says:

    I WONDER how many of your readers know who the Temptations are, professor?

    • masonblue says:

      Unless they’re really young, who hasn’t heard of the Temptations? They wrote the song, Shaky Ground.

      I think I know what you’re getting at. Shame to be ignorant. Never too late to discover and listen to great music.

  2. Gunnlaugsson and his wife owned a shell company named Wintris that purchased bonds issued by the three Icelandic banks. When the banks went belly-up during the 2008 financial collapse, Wintris was listed as a bankruptcy creditor.

    At some point, Gunnlauggson transferred his interest in Wintris to his wife for $1.

    He was elected Prime Minister, as a member of the right wing party that promised to clean-up banking corruption without disclosing his interest and his wife’s interest in Wintris, which is substantial.

    When the proverbial brown substance hit the fan with the Panama Papers disclosure of their connection to Wintris, he resigned temporarily (whatever that means) and is awaiting a decision regarding whether to hold a new national election.

    The liberal left wing Pirate’s Party is poised to pounce.

    What a great name for a political party!

    • girlp says:

      Hopefully more to come. This has turned out to be huge wow! I want to see what who will come out of the American companies I know Halliburton is one (Cheney in charge),

  3. From

    Who could have predicted that the global tax evasion by the world’s ultra-rich, made public this week with the release of the Panama Papers, was ushered in with the help of a free trade agreement?

    Turns out, Sen. Bernie Sanders did.

    In fiery speech before the U.S. Senate in 2011, Bernie Sanders declared his “strong opposition” to the “unfettered free trade agreements” with Korea, Columbia, and Panama—agreements that were being pushed for by both President Barack Obama and then-Secretary of State Hillary Clinton, Sanders’ current rival for the Democratic nomination.

    “Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens,” Sanders stated. “And, the Panama Free Trade Agreement would make this bad situation much worse.”

    • Malisha says:

      Yogurts? They are hurling YOGURTS??? OMG. Where do I live? What’s the fare to get to Iceland, where they hurl yogurt!?

  4. Two sides to a story says:

    Rachel Maddow mentioned on her show last night that American names have not yet been released from this dump, but just a matter of time. I can hardly wait!

  5. Brought to you by the International Consortium of Investigative Journalists (ICIJ)

    Play the exciting new game, Stairway to Tax Heaven

    Welcome to the secret world of offshore. Your goal is to navigate this parallel universe and hide your cash away. Don’t worry! Lawyers, wealth managers and bankers are there to help you.

    Pick a character and don’t get caught.

  6. From The Intercept: Icelandic humor, beginning with the journalist giving PM Gunnlaugsson an opportunity to hang himself.

    “Well, it’s important to rebuild trust in Icelandic society, towards government, obviously, but also the financial system and our way of doing things,” Gunnlaugsson said. “We want to show that we are leaving no stone unturned.”

    “In Iceland, like in most Nordic societies,” he added, “we attach a lot of importance to everybody paying his share. Society is seen as a big project that everyone needs to take part in, so when somebody is cheating the rest of society it is taken very seriously.”

    That long buildup, which was also broadcast in full by Iceland’s RUV, made the culmination of the interview, when the prime minister refused to answer questions about not having disclosed his share in a shell company owned with his wife, all the more devastating.

    Within hours of the revelations, Gunnlaugsson and Wintris had become the subject of jokes and memes online.

    “The hipp­est ice cream shop in town, Val­dís, is of­fer­ing a new ice cream flavour today: Wintris,”** the Iceland Monitor reported on Monday. “‘It’s sour with a dose of arrog­ance and we don’t particul­ar­ly recomm­end it,’ says an advert on the Val­dís Face­book site. The ice cream is a mixt­ure of lemon sor­bet and vanilla ice cream and is availa­ble with a tax deducti­on.”

    **Wintris is a company registered in the British Virgin Islands that had bonds in three Icelandic banks that collapsed in 2008.

  7. jsandero says:

    It seems as if lawmakers often want to get in on these schemes.. just look at how they seem to “cash out” from “public service”… and so they will not lift a finger to stop this sort of thing. Unless there is a law proscribing something… it is easy peasy to just create A, B or C which avoids existing law. It’s lawyers who work for banks and financial “institutions” who create these “instruments” and vehicles to skirt the existing law.

  8. Make no mistake. This scandal is Yuuuge.

  9. Here’s an article about the Prime Minister of Iceland, who is ensnared in the scandal.

    Iceland PM calls for dissolution of parliament after tax scandal

  10. girlp says:

    I’m hearing the US citizens involved have not been named yet but the identities of these people will be revealed soon, US VP Cheney is highly likely to be on this list…we will see. Maybe he will finally be charged with a crime although he still should have been charged with war crimes.

  11. racerrodig says:

    Evidently using fictitious companies in big business is now vary common. I discovered that in this massive mortgage fraud we’re dealing with the Trust that Deutsche Bank / Ocwen loan servicing claim our mortgage was pooled into actually does not exist.

    According to the SEC, when this fraud was in it’s heyday they simply whipped a name out of thin air when they needed to. The attorney form them admitted to our new attorney that the Pooling and Servicing Agreement does not exist.

    If the PSA does not exist, then the Trust cannot exist…….hence the mortgages disappeared into cyber-space.

    Gee………..if I tried that, I’d be in a federal prison.

    • girlp says:

      The lack of regulation of our financial systems is astounding we have not learned from the past.

    • Yep. We have a double standard: criminal laws for the poor; none for the rich

      • racerrodig says:

        Prof……….you would never believe what we have uncovered in the last few months or so. We fired our attorney and hired a new one. Since it seems they all know each other around here and evidently are in cahoots, we hired a guy from 100 miles away who has beaten these shysters badly. (see Kemps vs Countrywide)

        It looks like our old attorney was getting some backdoor money from Deutsche Bank / Ocwen since both lawyers agreed to a mutual dismissal of their Complaint and our Counter Complaint to which my wife and I had no idea. Since Ocwen / D.B. were 15 months in default as to answering ours, and I kept telling him to file a Default along with a Summary Judgement Motion, why would he fail to do so.

        It looks like their guy was telling our guy they would prevail since the bank is to big to fail and all that. For the last 3 months our guy kept telling us to take another BS Modification. One that was $500.00 + more a month and for 40 years !!

        They can’t can’t produce a single legal document due to the forgery and a backdated, by 30 months, bogus Assignment.

        Then their guy call our new attorney and when our guy was asking questions, their guy stated flat out there is no Pooling & Service Agreement, which means there cannot possibly be a mortgage since if there is no PSA, there is no Trust to have any of them pooled into.

        I spoke with a guy at the SEC last year who stated flat out the mortgage fraud that started years ago is now rearing it’s ugly head and it was only a matter of time.

        Don’t count on the govt for help however, no matter what they say.

        It should get interesting.

        • Your lawyer had a conflict of interest, which is a kind description of a bribe. Probably worth bitchin’ him to the bar association, even though bar associations have been known to look after their own.

          I’ve kind of been following this litigation from afar and it has always seemed to me that the R/E properties are immune from forfeiture because the lenders didn’t comply with the recording requirements for the mortgages. The absence of a pooling and service agreement eliminates the only argument they have, albeit a weak one.

          Seems like you’ve got a slam dunk, as a matter of law.

          But the corruption factor is Yuuge. Difficult to overestimate its importance and you’re right about the government. Seems like it often functions like a coconspirator on the side of the banks.

          Poisonous snakes everywhere.

          Good luck. Keep us informed.

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