The Panama Papers

The Panama based law firm Mossack Fonesca has apparently become the latest high profile victim of a major data breach, although the breach is hardly what is making headlines. The firms co-founder Ramon Fonesca, told Reuters in a telephone interview that his company had fallen victim to a “limited” but successful cyber breach. However, the head of the Panama based law firm seemed more concerned, not surprisingly with what he called “an international campaign against privacy” referring to the cache of 11.5 million breached documents that German newspaper Suddeutsche Zeitung received from an anonymous source and subsequently shared with one hundred other international media sources including the International Consortium of Investigative Journalists (ICIJ).

Very little attention is being given to the actual breach, how and when it occurred and who is responsible for it. The breach itself has been overshadowed by the serious nature of the allegations being made concerning the contents of the breached data and the high profile clients the data breach has revealed.

What is known about the breach is that an anonymous source contacted a Suddeutsche Zeitung (SZ) reporter named Bastian Obermayer via encrypted chat approximately one year ago offering encrypted internal documents from the law firm Mossack Fonesca.

The anonymous source contacted SZ’s Obermayer calling him or her self John Doe. John Doe claimed he/she was not seeking payment for the data dump, nor any other form of payment for the sensitive information short of some security issues. Claiming that his or her life was in danger, John Doe stated that there would never be a face-to-face meeting and that their contact would only ever be over encrypted channels which subsequently they frequently changed using code phrases to authenticate one another’s identity.

When Obermayer asked John Doe what his/her motivation was for exposing the information, Doe replied that it was simply “to make the crimes public”. Over a period of time John Doe subsequently leaked 2.6 terabytes of data to Suddeutsche Zeitung, 11.5 million documents, making it the largest and most notorious data dump to date. After Obermayer had seen portions of the leaked documents Suddeutsche Zeitung decided to contact the ICIJ to assist in the investigative reporting processes. The ICIJ had assisted SZ in the past with leak enabled offshore tax haven investigative reports on assets protected by Swiss bank HSBC.

On Sunday April 3rd 2016 the International Consortium of Investigative Journalists (ICIJ) published the inner works of billions of dollars of financial dealings transferred through vast numbers of offshore accounts handled by the Mossack Fonesca law firm. The ICIJ titled its article “Offshore Links Of More Than 140 Politicians And Officials Exposed” and that it did. The expose’ has been dubbed The Panama Papers by the media and is being described as the largest leak of inside information in history.

Some of the documents have been linked to the likes of: Syrian dictator Bashar al-Assad’s cousin Rami Makhlouf, relatives and close allies of Vladimir Putin, numerous companies black listed by the U.S. government including Petropars Limited, a company controlled by the Iranian government, and a shell company Ovlas Trading linked to Hezbollah just to name a few of MF’s notorious client list.

Below is a list of some of the key Mossack Fonesca players:

  • China Li Xiaolin, daughter of former Chinese premier Li Peng
  • China Jasmine Li, granddaughter of former fourth-ranking
    official in Chinese Communist Party
  • China France Patrick Henri Devillers, business partner of Gu
    Kailai, the wife of former high-flying Chinese politician Bo Xilai
  • China Deng Jiagui, brother-in-law of Chinese President Xi Jinping
  • Hong Kong Movie star Jackie Chan
  • Russia Rotenberg brothers – Boris and Arkady Rotenberg,
    childhood friends of Russian president Vladimir Putin
  • Russia Sergey Roldugin, close personal friend of Russian
    president Vladimir Putin
  • Syria Hafez and Rami Makhlouf, cousins of Syrian president
    Bashar Al Assad
  • UK Ian Cameron, father of UK prime minister
  • UK Pamela Sharples, Baroness and lifetime member of UK Parliament
  • UK Michael Anthony Ashcroft, former member of UK
    House of Lords
  • UK Michael Mates, member of UK parliament
  • Egypt Alaa Mohamed Hosni Mubarak, son of former president
    of Egypt Hosni Mubarak
  • Malaysia Mohd Nazifuddin Mohd Najib, son of prime minister
    of Malaysia Najib Razak
  • Saudi Arabia Mohammad Bin Naif Bin Abdulaziz Al Saud,
    Saudi crown prince
  • Malta Konrad Mizzi, Malta’s minister of energy and health
  • Argentina Soccer player Lionel Messi
  • Argentina Mauricio Macri, president of Argentina
  • Georgia Bidzina Ivanishvili, former prime minister of Georgia
  • Iceland Sigmundur Davíð Gunnlaugsson, Anna Sigurlaug
    Pálsdóttir, Iceland’s prime minister
  • Iraq Ayad H. Allawi, former prime minister of Iraq
  • Jordan Ali Abu-Ragheb, former prime minister of Jordan
  • Qatar Hamad Jassim J.M. Al Thani, former prime minister of Qatar
  • Qatar Sheik Hamad Bin Khalifa Bin Hamad Al Thani, Emir of Qatar
  • Saudi Arabia H.R.H. Prince Salman, King of Saudi Arabia
  • Sudan Ahmad al-Nirghani, former president of Sudan
  • United Arab Emirates Sheikh Khalifa Bin Zayed Bin Sultan Al
    Nahyan, president of the United Arab Emirates and Emir of
    Abu Dhabi
  • Ukraine Pavlo Lazarenko, former prime minister of Ukraine, convicted of money laundering, fraud and extortion
  • Ukraine Petro Poroshenko, president of Ukraine

Ramon Fonesca Mora has denied any wrong doing on the part of the Panamanian law firm and released a lengthy denial statement of the media’s allegations in which he details the firms services provided and the legitimacy of their actions on behalf of its clients. In a response to the Guardian Mossack Fonesca wrote

Many of the circumstances you cite are not and have never been clients of Mossack Fonseca. We have always complied with international protocols … to assure as is reasonably possible, that the companies we incorporate are not being used for tax evasion, money laundering, terrorist finance or other illicit purposes.

But the law firm is no stranger to controversy over their forty plus year span; more recently (prior to the Panama Papers) in January 2016 the firm was involved in an ongoing corruption investigation called Petrobras (Operation Car Wash) in which four employees of the firm’s Brazilian office were charged with allegedly providing services for the opening of offshore societies, for the purposes of money laundering. In 2015 the firm was implicated in another money laundering and tax evasion scheme in the German government’s investigation of Commerzbank. And in 2014 Mossack Fonesca’s MF Corporate Services was subpoenaed in a case where a hedge fund was suing to recuperate money from the Argentinean government. Mossack Fonesca claimed they were not the owner of MF Corporate Services, but a Nevada judge disagreed and upheld the subpoena. The fund alleges that MF created shell companies to facilitate money passing from the government to a principal alley of the Kirchner family, Lazaro Baez.

The ICIJ has alleged that the firm is an active participant in money laundering globally and in aiding its foreign clients in tax evasion of their resident countries. The data that was provided in the leak shines the spot light onto a global industry that can typically only operate in the shadows of anonymity; an offshore industry that only the world’s richest and most powerful participate in. The data leak spans from 1977 all the way through to the closing of 2015 exposing the fact that law firms and banks as well as other entities frequently do not follow the legal requirements of the offshore industry regulations to ascertain that the clients they serve are not involved in criminal activities, political corruption or tax evasion.

To say that this is just the tip of the iceberg is certainly an understatement and the fallout from this data breach will be felt worldwide. It is almost certain there will be United States citizens to show up on the list although none have been named so far, but the fact that Mossack Fonesca has offices in Nevada would indicate a strong likelihood of that prospect. In an election year, where the majority of Americans have expressed their disdain against political elites and an increasing income inequality atmosphere should any political ties or connections come out it could certainly influence who the next president will be.

Panama Papers Update: April 5, 2016

Prime Minister Gunnlaugsson To Resign

The first shoe has fallen in the Mossack Fonesca scandal as Iceland’s Prime Minister David Gunnlaugsson is said to be resigning, according to his party. Later Gunnlaugsson quit before a scheduled vote of no confidence, just hours after requesting the president to dissolve parliament, maneuvering that would have brought about a new election.

The Mossack Fonesca data leak has caused widespread protests, which it would appear the Prime Minister has succumbed to. Documents leaked from the Panama Papers indicated that Gunnlaugsson’s wife was listed as the owner of an offshore company with large interests in Icelandic banks, and as the country’s people endure economic hardship the fact that the couple was essentially stashing cash to avoid paying taxes has created public outrage.

Mossack Fonesca has continued to deny any wrongdoing.

As France announced it would be putting Panama back on its blacklist of countries that are considered uncooperative tax jurisdictions, this is said to have prompted Panamanian President Juan Carlos Varela to issue a statement at a news conference through his chief of staff, saying that the country may retaliate. Chief of staff, Alvaro Aleman stated that no Panamanian company has been accused of committing a criminal act and added, “We are not going to allow Panama to be used as a scapegoat by third parties. Each country (implicated) is responsible.”

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