Wednesday, April 6, 2016 at 5:37 AM

Leaked ‘Panama Papers’ Affirm more than Reveal Offshore Banking Secrets

Posted by Anthony L. Hall

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No doubt you’ve seen or read trending reports on the “historic leak” of data, dating back 40 years, from the Panamanian law firm, Mossak Fonseca.

The data provides rare insights into a world that can only exist in the shadows. It proves how a global industry led by major banks, legal firms, and asset management companies secretly manages the estates of the world’s rich and famous: from politicians, Fifa officials, fraudsters and drug smugglers, to celebrities and professional athletes.

(Süddeutsche Zeitung, April 3, 2016)

But this is hardly news, let alone “Breaking News”: Leaking the Pentagon Papers was a bombshell because they revealed that the U.S. government was lying about the nature of its involvement in Vietnam. Leaking the Panama Papers is not because they merely affirm what is generally known about offshore tax-dodging and money-laundering schemes.

Not to mention the truly rare insights the “Swiss Papers” provided in this regard just a year ago:

The largest and most damaging Swiss bank heist in history doesn’t involve stolen money but stolen computer files with more than 100,000 names tied to Swiss bank accounts at HSBC, the second largest commercial bank in the world…

60 Minutes, working with a group called the International Consortium of Investigative Journalists (ICIJ), obtained the leaked files. They show the bank did business with a collection of international outlaws: tax dodgers, arms dealers and drug smugglers — offering a rare glimpse into the highly secretive world of Swiss banking.

(CBS News, February 8, 2015)

I’m on record commenting – in “Unlike NSA Leaks, HSBC Leaks Actually Serve Public Interest,” February 10, 2015 – on the rogue’s gallery of tax dodgers and money launderers this investigation outed. More to the point, many of the names that popped up in the Swiss Papers are popping up in the Panama Papers too.

Alas, in this age of Twitter and Snapchat, even news of the discovery of life on Mars would probably trend for only a day, before the next trending topic knocks it out of public consciousness.

Screen Shot 2016-04-04 at 10.12.42 AMThat said, much is being made about documents implicating “the dirty dozen.” These are heads of state who feature as silent ringleaders in schemes that have fleeced their people of billions. But it’s hardly surprising that leaders of totalitarian regimes and dictatorships – from Europe to Asia through the Middle East and Africa – figure so prominently.

Still, for the record, among the “power players” outed are the heads of state of Argentina, Ukraine, and the UAE; close relatives and associates of the heads of state of Great Britain, Russia, China, Syria, Malaysia, Mexico, and South Africa; and celebrities, including Argentinian Soccer star Lionel Messi, British entertainment guru Simon Cowell, and Chinese movie star Jackie Chan, just to name a few.

Yet Russian President Vladimir Putin can be forgiven for thinking he’s “the main target of Panama Papers leak” – as the New York Daily News headlined its sensational report on Monday.

The problem of course is that targeting Putin as a kleptomaniac is about as consequential as targeting Trump as a demagogue. Nothing indicates this quite like the litany of reports over the years that have outed Putin as the biggest political crook in history … all to no avail.

I have decried his immunity/impunity in this respect in many commentaries – from the “Putinization of Russia…,” November 2, 2006 to “Ukraine’s Orange Revolution Turns ‘Red,’” February 25, 2014, which includes the following excerpt on point.


[Putin] makes quite a show of standing in solidarity with despots like Ben Ali of Tunisia, Yanukovych of Ukraine, and Assad of Syria. But he does so only because he lives in mortal fear that the popular uprisings that toppled them might topple him too. Period.

1420660749_1_9_mEtY16BL-2This is why he must’ve been a little unnerved yesterday when even pro-Russian Ukrainians began calling for Yanukovych’s head. This, after they got a glimpse at the obscenely opulent, Louis-XVI lifestyle he was living at their expense. So just imagine what Putin’s peasant supporters in Russia would want to do to him. After all, he lives a lifestyle that’s a thousand times more extravagant than Yanukovych’s, having amassed billions in ill-gotten gains over the years as a KGB officer turn politician.

After eight years in power, Putin has secretly accumulated a fortune of more than $40bn. The sum would make him Russia’s (and Europe’s) richest man.

(“Putin, the Kremlin Power Struggle and the $40bn Fortune”, London Guardian, December 21, 2007)

Trust me, Putin lords over a kleptocracy that has fleeced public funds on such an unprecedented scale, it makes the kleptocracies African despots lord over seem petty. Which of course is why he is so anxious to stoke the combustible geopolitical crisis in Ukraine to deflect the international media from drawing unavoidable parallels between Yanukovych’s dubious accumulation of wealth and his.

Far better, for example, to get Russians drunk with pan-Russian pride than to have them pose sober questions about the billions he and his cronies embezzled from the $50-billion price tag for the Sochi Olympics.


Significantly, reports are that the Panama Papers do not implicate any Americans of note. But this too is hardly surprising; not least because, even before the Swiss Papers, Wikileaks was disrupting the confidentiality of offshore banking secrets. It was clearly only a matter of time before law firms in offshore jurisdictions – that help clients dodge sanctions, evade taxes, and launder money – were hacked.

15Therefore, any American who held undisclosed foreign accounts would have been well advised to accept the quasi-amnesty the IRS offered with its 2014 Offshore Voluntary Disclosure Program.

There are also the mandatory disclosures that came when the United States prevailed upon most countries to sign on to its 2010 Foreign Account Tax Compliance Act (FATCA). The declared aim of FACTA is to “uncover offshore tax evasion by U.S. taxpayers.” Notable signatories include Caribbean tax havens once favored by Americans, namely, the Cayman Islands and The Bahamas. As a native of the latter, I could not be more supportive of laws (or leaks) that make the rich and crooked apprehensive about using my country to hide and/or launder their money.

Finally, the U.S. Tax Code has become riddled with so many tax-avoidance loopholes, they render most tax-haven schemes redundant. To say nothing of the fact that states like Delaware and Nevada now compete with (offshore) tax havens when it comes to incorporating shell companies to hide cash. Shamefully, as “fallout” from the banking crisis demonstrated, the scandal is that it’s perfectly legal for the rich in America to avail themselves of all kinds of schemes to avoid taxes, hide assets, and get richer.

Mind you, law firms are still doing for non-American clients in these tax havens what Mossack Fonseca is accused of doing for its clients in Panama. Indeed, if Putin’s moneymen only laundered two of his forty billion in ill-gotten gains through Panama, chances are that they laundered similar amounts through other tax havens like Hong Kong; you know, spreading the wealth (and risk) around. Moreover, the BBC reports that tax havens hold up to $30 trillion in undisclosed accounts.

Hence, it’s only a matter of time before leaks from the Luxembourg Papers, the Singapore Papers, the Turks and Caicos Papers, et al. become global headlines.

Screen Shot 2016-04-05 at 2.21.59 PMFor now, though, none of those outed in the Panama Papers could have been sweating more bullets than Prime Minister Sigmundur Davíð Gunnlaugsson of Iceland:

Iceland’s prime minister faces a vote of no confidence after the files disclosed offshore holdings linked to him and his wife. He has said there is ‘nothing new’ in the reports, but walked out of a TV interview when quizzed on it.

(London Guardian, April 4, 2016)

Too bad for him, he’s not a de facto dictator – like China’s Xi Jinping and most of the other political leaders implicated. For their control over the press in their respective countries is such that they are effectively insulated from the fallout, no matter how deeply implicated.

By contrast, news reports in Iceland on this story incited such outrage that thousands took to the streets to demand Gunnlaugsson’s resignation. It was only a matter of time before he was toast. He resigned yesterday.

Meanwhile, Russia Today (RT), Putin’s version of CNN, is the only network reporting on the Panama Papers as if they exposed the way Britain has transformed its former colonies in the Caribbean into tax havens for wealthy Britons.

2154As it happens, the father of British Prime Minister David Cameron is implicated. He founded and helped manage an offshore fund out of The Bahamas, which evaded taxes on profits for over 30 years, until his death in 2010. But the sins of this father were all RT needed to frame Cameron for Putin’s offshore crimes … as alleged.

Never mind that Cameron has been in the vanguard of world leaders calling for an end to bank secrecy laws that enable the kinds of tax-evasion and money-laundering schemes the Panama Papers exposed. Indeed, his advocacy forced the surviving managers of his father’s offshore fund to relocate to Ireland in 2012.

RT targeting Britain in this fashion also serves as payback for Britain indicting Putin for the London hit on former Russian spy Alexander Litvinenko. I commented on this sensational indictment in “British Inquiry Finds Putin Ordered Hit. No Sh*t,” January 27, 2016.

Not to mention that targeting Britain deflects from the fact that the Panama Papers expose Putin as a venal hypocrite. After all, they show him privately allowing members of his inner circle to hoard billions offshore. This, while he was publicly ordering Russian oligarchs to repatriate their billions in overseas investments to help resuscitate Mother Russia’s flatlining economy. I commented on his order, which no oligarch could refuse, in “Prokhorov, Russian Owner of NBA Nets, Exposed,” March 26, 2014.

But it’s worth noting that RT’s reporting is entirely consistent with the propaganda Putin has propagated to fuel his presidency – almost from day one. And the “big lie” he continually prevails upon Russian media to report (without any hint of irony) is that his mistakes, misdeeds, and misappropriations are nothing more than Western propaganda intended to undermine Russia’s greatness.

In any event, here’s to the next leak of offshore papers….

Until then, bear this in mind: During Leona Helmsley’s notorious trial for tax evasion in 1989, one of her employees testified to her abiding belief that, “Rich people don’t pay taxes. Only poor people pay taxes.” Trust me, folks, this revealed the perversely entitled motto that far too many rich people still live by.

Related commentaries:
HSBC tax cheats
Putinization of Russia
Ukraine’s Orange Revolution
British inquiry

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