FacebookTwitterGoogle+RedditEmail

The Abuse of Privacy: Mossack Fonseca and the Panama Papers Leak

by

“Privacy is a fundamental human right that is being eroded more and more in the modern world. Each person has a right to privacy, whether they are a king or a beggar.” Few could disagree with the essence of this statement by Panamanian lawyer Ramon Fonseca, one of the founders of Mossack Fonseca, which has made the news in the last few days.

The Panamanian firm is known for one vital speciality: giving advice to an assortment of mainly powerful clients in areas of tax evasion, or minimisation, depending on the moral, and ethical take on the matter. Evasion tends to sound more sordid than minimization, which is the preferred gloss used by the experts in the field.

The masterminds behind the venture are Fonseca himself and German-born lawyer Jürgen Mossack. Both developed elaborate schemes in developing shell companies and trust accounts that have provided a smorgasbord of secretive options for clients. Those services are in turn sought by major banks whose clients wish to see more financial bang for the stored buck.

Mossack Fonseca has created, since 1977, an industrial complex of tax sheltering and clandestine consolidation spanning two hundred thousand clients, a web of shuttling and funnelling to evade the evil gaze, and pinching fingers, of the tax man. “These findings,” argues Gabriel Zucman, a keen economist on the subject at the University of California, Berkeley, “show how deeply ingrained harmful practices and criminality are in the offshore world.”[1]

Not that the shell company is a particularly wicked creation. For one, it is legal, despite having no employees on paper. The nominee director is bound to have no power, a move which permits the actual company owner to operate pseudonymously or anonymously. Such an entity can be created in a matter of minutes, and bought for such low prices as $2,000. Such behaviour is attributable to a financial system that is punctured and filled with options for those with heavy, and ultimately fleeting money bags.

Such companies, however, start becoming facilitating instruments for crime when they are deployed for certain enterprises, the traditional ones being money laundering and overt tax evasion. The line, however, is often murkey.

The seemingly secure doors to the world of Mossack Fonseca were compromised with the massive data link that has cast light on a seemingly impenetrable market of parked transactions. It involved a breach of the data centre at the company to the value of 2.6 terabytes, leading to the exposure of 11.5 million documents by the German paper, the Süddeutsche Zeitung, which subsequently shared the material with the International Consortium of Investigative Journalists.

Degrees of privacy matter in accordance to the responsibility of the person parking income in such havens. Political figures might well be happy to insist that citizens pay their due yet obtain finances in the course of their employ that may well be beyond scrutiny.

The world engendered by Mossack Fonseca is one distinctly hostile to that notion of transparent public service, enabling a network of advisors and followers to profit from the political system. The form that profiting takes varies from the ethical dispute about service itself, to the more sinister notion of laundering.

The client base, to that end, is illuminating. There are 12 current and former world leaders who are on the books, including the pro-Western Ukrainian President Petro Poroshenko and the Saudi King; and 29 Forbes-listed billionaires.[2] The Australian Tax Office alone is investigating 800 Australian residents in connection with the leak.[3]

What is particularly stinging in this regard are figures who have themselves railed against the sapping tendencies of corruption, seeing it as a disease in need of eradication. The family of China’s Xi Jinping, a figure keen to combat those malodorous “armies of corruption”, comes up in the collection. Money, as ever, smells differently depending on who owns it.

Regarding Poroshenko, the documents allege that this self-touted reformist leader, in 2014 “scrambled to find a copy of a home utility bill for him to complete the paperwork to create a holding company in the British Virgin Islands.” Such a move was dismissed by a representative of Poroshenko as having any bearing on “political and military events in Ukraine”.

Iceland’s prime minister, Sigmundur Gunnlaugsson, is also in some bother with the exposure. Millions from the country’s banks, it is alleged by the leaked documents, was effectively concealed in an offshore company under the name of Wintris Inc on the Caribbean island of Tortola in the British Virgin Islands.[4]

Having purchased the company along with his wife, Anna Sigurlaugh Pálsdóttir in 2007, the prime minister failed to declare that interest on entering parliament in 2009. To give it a good sense of theatre, Gunnlaugsson sold half of the company to his wife for the princely sum of $1.

“We can’t permit this,” fumed former finance minister Steingrímur Sigfússon. While there was nothing necessarily illegal about the venture, “the fact is you shouldn’t leave yourself open to conflict of interest.”[5] Such are the ways of the proverbial “banana republic”.

With governments continuing to insist on the necessity for citizens to pay their share of tax, and the battle of citizens, notably of enormous wealth, to evade such obligations, the argument for differing levels of treatment continue to gain force. The same goes for dealing with blacklisted companies engaged in the weirdly colourful world of terrorist finance and drug sales. All feature in the Panama Papers. Even privacy advocates and lawyers concede that celebrity and the public interest are matters that demand a different regime of treatment. Transparency for the powerful, in short, should be a fundamental aspiration in policy, as should sanctions against tax havens.

Notes. 

[1] https://www.occrp.org/en/panamapapers/overview/intro/

[2] https://panamapapers.icij.org/the_power_players/

[3] http://www.abc.net.au/triplej/programs/hack/setting-up-your-own-tax-haven-shell-company-takes-10-minutes/7297094

[4] https://uploads.guim.co.uk/2016/04/03/BV_288_Wintris_jb_clean_Redacted.pdf

[5] http://www.theguardian.com/news/2016/apr/03/iceland-pm-calls-snap-election-offshore-revelations

More articles by:

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

February 21, 2018
Cecil Bothwell
Billy Graham and the Gospel of Fear
Ajamu Baraka
Venezuela: Revenge of the Mad-Dog Empire
Edward Hunt
Treating North Korea Rough
Binoy Kampmark
Meddling for Empire: the CIA Comes Clean
Ron Jacobs
Stamping Out Hunger
Ammar Kourany – Martha Myers
So, You Think You Are My Partner? International NGOs and National NGOs, Costs of Asymmetrical Relationships
Michael Welton
1980s: From Star Wars to the End of the Cold War
Judith Deutsch
Finkelstein on Gaza: Who or What Has a Right to Exist? 
Kevin Zeese - Margaret Flowers
War Preparations on Venezuela as Election Nears
Wilfred Burchett
Vietnam Will Win: Military Realities
Steve Early
Refinery Safety Campaign Frays Blue-Green Alliance
Ali Mohsin
Muslims Face Increasing Discrimination, State Surveillance Under Trump
Julian Vigo
UK Mass Digital Surveillance Regime Ruled Illegal
Peter Crowley
Revisiting ‘Make America Great Again’
Andrew Stewart
Black Panther: Afrofuturism Gets a Superb Film, Marvel Grows Up and I Don’t Know How to Review It
CounterPunch News Service
A Call to Celebrate 2018 as the Year of William Edward Burghardt Du Bois by the Saturday Free School
February 20, 2018
Nick Pemberton
The Gun Violence the Media Shows Us and the State Violence They Don’t
John Eskow
Sympathy for the Drivel: On the Vocabulary of President Nitwit
John Steppling
Trump, Putin, and Nikolas Cruz Walk Into a Bar…
John W. Whitehead
America’s Cult of Violence Turns Deadly
Ishmael Reed
Charles F. Harris: He Popularized Black History
Will Podmore
Paying the Price: the TUC and Brexit
George Burchett
Plumpes Denken: Crude thinking
Binoy Kampmark
The Caring Profession: Peacekeeping, Blue Helmets and Sexual Abuse
Lawrence Wittner
The Trump Administration’s War on Workers
David Swanson
The Question of Sanctions: South Africa and Palestine
Walter Clemens
Murderers in High Places
Dean Baker
How Does the Washington Post Know that Trump’s Plan Really “Aims” to Pump $1.5 Trillion Into Infrastructure Projects?
February 19, 2018
Rob Urie
Mueller, Russia and Oil Politics
Richard Moser
Mueller the Politician
Robert Hunziker
There Is No Time Left
Nino Pagliccia
Venezuela Decides to Hold Presidential Elections, the Opposition Chooses to Boycott Democracy
Daniel Warner
Parkland Florida: Revisiting Michael Fields
Sheldon Richman
‘Peace Through Strength’ is a Racket
Wilfred Burchett
Vietnam Will Win: Taking on the Pentagon
Patrick Cockburn
People Care More About the OXFAM Scandal Than the Cholera Epidemic
Ted Rall
On Gun Violence and Control, a Political Gordian Knot
Binoy Kampmark
Making Mugs of Voters: Mueller’s Russia Indictments
Dave Lindorff
Mass Killers Abetted by Nutjobs
Myles Hoenig
A Response to David Axelrod
Colin Todhunter
The Royal Society and the GMO-Agrochemical Sector
Cesar Chelala
A Student’s Message to Politicians about the Florida Massacre
Weekend Edition
February 16, 2018
Friday - Sunday
Jeffrey St. Clair
American Carnage
Paul Street
Michael Wolff, Class Rule, and the Madness of King Don
Andrew Levine
Had Hillary Won: What Now?
FacebookTwitterGoogle+RedditEmail