The Panama Papers, Bastian Obermayer and Frederik Obermaier, 2016
The real owners (or if they are more cautious, their lawyers) are generally given a power of attorney by the nominee directors to access bank account of the safe. In most cases, no one but the bank, the nominee directors and Mossack Fonseca knows about this power of attorney.
Both the CPI (Center for Public Integrity) and ICIJ (International Consortium for Investigative Journalists) are financed by donations, one of the main donors being the left-leaning billionaire George Soros.
Fonseca is currently an advisor to the Panamian President Juan Carlos Varela with a seat in the cabinet, as well as being a deputy chairman of the governing party, Panamenista.
Mossfon employees hire a firm called Marcatrade to carry out what experts call ‘online reputation management’: if someone types in ‘Mossack Fonseca’ they should not be immediately confronted with negative articles on the first few pages of results.
The Stolen Asset Recovery Initiative (StAR), a joint project between the World Bank and the UN Office on Drugs and Crime. StAR looks for money that autocrats and dictators have stolen from their own countries.
Our data sketches out how entangled almost all German banks were or are in the offshore system. Of course, not every case involves assistance with tax evasion – but as we shall see, a great many do. Even state owned banks help clients to cheat the state.
The Makhlouf case (friend of Assad’s family in Syria) demonstrates why the existence of anonymous shell companies poses an existential threat to millions of people. Because they can help dictators to circumvent sanctions imposed by the international community. Because they can help brutal leaders to plunder the country they rule. And because they allow them to hide these stolen assets in shell companies, although the related account is often located in Switzerland or Luxembourg.
The name of the former Uruguayan FIFA vice President Eugenio Figueredo, one of the six officials arrested in Zurich, appears in connection with several companies. One is Cross Trading S.A. established in the Seychelles, in Nevada and in Niue. The contract cover exclusive Ecuadorian TV rights to the UEFA Champions League, the UEFA cup and the UEFA super cup – all for astonishingly low sums of money. The Contract are is Mossfon’s possession because UEFA sent the documents relating to these TV rights to the attention of Cross Trading SA in Niue (where Mossack Fonseca has staff). According to the contracts, the company paid a total of just under $140,000 for all exclusive TV broadcasting rights. We calculate that Cross Trading would have sold on the UEFA TV rights at a premium of $600,000 in the years between 2003 and 2009. Cross Trading bought TV rights cheaply from UEFA and sells them on to Teleamazonas for a much higher sum (typically 3 to 4.5 times more).
Annan Junior (son of Kofi Annan, UN Secretary General) owns two shell companies in the British Virgin Islands and a third in Samoa. Until at least 2015, the co-owner (of one Virgin Islands account) was the son fo the prominent former senator of Nigeria. A few year previously, Kojo Annan had been involved in some controversial business, namely the scandal surrounding the Iraqi Oil-For-Food programme. Annan was working for a company that supervise the delivery of a UN relief aid to Iraq (he was cleared of any wrong doing by an internal investigation)
There are also countless reports in which they freely admit that the European interest income tax introduced in 2005 will boost business with this or that client. The tax is only applicable to accounts held by EU citizens, not to accounts held by Panamanian companies. The tax functioned as a turbo boost for business at companies like Mossack Fonseca. The share of accounts held through offshore companies rose by 10% in Switzerland alone. The number of private individuals registered as account holder sank accordingly.
And it gets even more absurd: in the data we find file after file containing masses of blank, signed pages. Empty white pages, with the signature of three nominee directors in various combinations. Sometimes the signatures are at the bottom, sometimes in the middle, sometimes at the top. These pages could become anything. A purchase agreement, a new power of attorney, the closure of a company.
According to the charity Oxfam, the top 1% of the global population has more wealth than the rest of the world put together. It’s hardly surprising that a booming industry has formed around this one percent, existing solely by adding to this tremendous wealth.
According to the British author Tom Burgis (2015), you ought to imagine what’s happening in Africa like this: and invisible looting machine is working to plunder the continent. A coalition of corrupt dictators, unscrupulous large corporations and ruthless banks, all working hand in hand, united by their greed.
Experts estimate that more than $50billion flows out of Africa every year. On top of this African states avoid paying about $38 billion in taxes, because companies operating there divert their profits to tax heavens, as revealing in 2013 by a group of experts led by Kofi Annam.
The minister of petroleum of Angola, José Maria Botelho de Vasconcelos, appears in the data as beneficiary of Medea Investments Ltd. The Company was established in Niue in September 2001.
Tax havens, hedge funds, Mossack Fonseca, world hunger; for him (Jean Ziegler, Special rapporteur on the Right to Food) is all one and the same. Everything is connected and mutually dependent.
A year after Beny Steinmetz, one of the richest men in the world, acquired the mining rights, his company BSGR (Beny Steinmetz Group Resources) sold half of the Simandou arm of his business empire to the Brazilian mining company Vale for an incredible $2.5 billion. According to media reports, the company didn’t pay anything up front to the Guinean state for the mining rights. It had apparently declared that it was prepared to invest $165m in the iron-ore filed in the future. The annual budget of the Guinean government at that time was $1.2bn: BSRG received twice as much. The Independent referred to the BSGR-Vale deal as “the corruption deal of the century”.
According to Forbes, the 100 richest Chinese people have accumulated fortunes worth more than $450bn, which is an average of $4.5bn each.
FIFA Vice president Eugenio Figueredo was arrested in Switzerland last year. Argentinian TV rights agents Hugo Jinkis and his son had three shell companies incorporated by Mossack Fonseca, all with the same name, Cross Trading, but based in three different tax havens: the island of Niue, the US state of Nevada and the Seychelles. Bribes worth millions to secure broadcasting rights for football tournaments were channel through the accounts of the Cross Trading companies.
The Tax Justice Network wrote in 2008 in a memorandum for the UK House of Commons Treasury Committee: ‘within the financial sector it would have been impossible for the current credit crunch to have happened if offshore had not existed’
Mossack Fonseca does not tend to have links to the big corporations (such as Amazon etc.), which is why this topic is barely touched on here.
The world of organized crime in all its many forms makes use of the offshore industry just as much as fraudsters and criminals acting individually, using it to erase its tracks and conceal its crimes. The irresponsibility witnessed in the offshore centers of this world is the result of laws that can be changed. The first big step would be to introduce and effective system for the automatic exchange of information about bank accounts. The British authorities would then automatically know about any accounts held by British citizens. What is needed as well is a globally transparent register of companies. It would have to list the real owners of companies and foundations – and providing false information would have to be made a criminal act.
Note too, that tax secrecy is not in itself a universal human right. In part of Scandinavia, such as Norway, tax records have been public for years.
According to Tax Justice Network, Africa loses out on twice as much money through tax evasion as it receives in development aid.
Mosack Fonseca used its influence to write and bend laws worldwide to favour the interests of criminals over a period of decades. In the case of the island of Niue, the firm essentially ran a tax haven from start to finish. Prime Minister John Key has been curiously quiet about his country’s role in enabling the financial fraud mecca that is the Cook Islands.