What the Hell Are the "Panama Papers" Anyway?

I saw references to this last week but I was getting into the story late and didn't know the basics. Since it's a slow news day, seems like a good time to catch up.

I'm explaining this to myself while I'm pretending to explain this to you.

Basic plot: The Panama Papers are a massive leak of documents which illuminate a illicit system by which politicians, criminals, and criminal politicians stash away huge amounts of money secretly.

If I have this right -- and I'm not sure I do -- there are several big objections to this secret-money network. The first is that it's being used for tax avoidance -- fine, whatever, no big deal.

The other thing it's being used for is to hide money that maybe wasn't obtained all that legally. That's one thing as regards a criminal -- we expect his money to be ill-gotten -- but it's potentially more alarming when it comes to a politician.

This CNN article explains it.

What are the Panama Papers?

ICIJ [the International Consortium of Investigative Journalists] and an international coalition of media outlets investigated the trove of papers, which allegedly reveal a clandestine network involving associates of Russian President Vladimir Putin, and business ties between a member of FIFA's ethics committee and men whom the United States has indicted for corruption.

Why are they called the Panama Papers?

The more-than 11 million documents, which date back four decades, are allegedly connected to Panama law firm Mossack Fonseca. ICIJ reports that the firm helped establish secret shell companies and offshore accounts for global power players. ICIJ reports that a 2015 audit found that Mossack Fonseca knew the identities of the real owners of just 204 of 14,086 companies it had incorporated in Seychelles, an Indian Ocean archipelago often described as a tax haven....

Who is mentioned in the documents?

The documents reference 12 current or former world leaders, as well as 128 other politicians and public officials. In addition to allegations involving associates of Putin -- the Russian leader isn't himself mentioned by name in any of the documents -- and FIFA, the papers also accuse the prime minister of Iceland, Sigmundur David Gunnlaugsson, of having ties, through his wife, to an offshore company that were not properly disclosed, while Argentina's President Mauricio Macri is alleged to have failed to disclose links to a company in his asset declarations.

That's all I can quote from the article, but there are four other big points to take away from it.

The Prime Minister of Iceland has resigned in the wake of revelations of his connections to Panama Papers named funds.

The revelation of vast wealth hidden by politicians and powerful figures across the globe set off criminal investigations on at least two continents on Tuesday, forced leaders from Europe to Asia to beat back calls for their removal and claimed its first political casualty -- pressuring the prime minister of Iceland to step down....

The repercussions have come quickly. In Iceland, Prime Minister Sigmundur David Gunnlaugsson, confronted by demands for his resignation after documents revealing that he and his wealthy wife had set up a company in the British Virgin Islands led to accusations of a conflict of interest, asked his deputy to take over on Tuesday.

UK PM David Cameron has called for reforms to insure greater transparency of who owns money and where.

Cameron, it should be noted, is himself embroiled in the scandal -- apparently he benefited from tax shelter set up in Panama by his late father. Cameron's father was "named" in the Panama Papers, but I'm not sure that means that his father used the law firm implicated here in setting up all these tax shelters, or if it means he was simply "named," as in: "Hey, here's a name."

David Cameron has finally admitted he benefited from a Panama-based offshore trust set up by his late father.

After three days of stalling and four partial statements issued by Downing Street he confessed that he owned shares in the tax haven fund, which he sold for £31,500 just before becoming prime minister in 2010.

In a specially arranged interview with ITV News' Robert Peston he confirmed a direct link to his father’s UK-tax avoiding fund, details of which were exposed in the Panama Papers revelations in the Guardian this week.

...

He paid income tax on the dividends but there was no capital gains tax payable and he said he sold up before entering Downing Street "because I didn’t want anyone to say you have other agendas or vested interests".

...

"I obviously can’t point to the source of every bit of money and dad's not around for me to ask the questions now," Cameron said.

...

Downing Street initially insisted it was a private matter, but Cameron then said he had "no shares, no offshore trusts, no offshore funds". His spokesman later clarified: "The prime minister, his wife and their children do not benefit from any offshore funds."

Downing Street then said there were no offshore funds or trusts the family would benefit from in future, leaving questions about the past.

Cameron went after his critics, accusing them of participating in the same sort of money-hiding.

The U.K. Prime Minister, under fire for being slow to come clean about the scale of his offshore financial holdings, returned to the offense in Parliament, saying that most of the people baiting him were just as happy to use offshore tax havens when it suited them....

Cameron Sr. was one of thousands of people named in the 'Panama Papers' leak last week, that documented in exhaustive detail how a Panamanian law firm, Mossack Fonseca, had helped wealthy people around the world move their assets offshore....

"Such funds, including those listed outside the U.K, are included in the pension funds of local government, most of Britain’s largest companies, and indeed, even some trade unions," Cameron said, with a dig at the (largely) left-wing opposition lawmakers across from him.

Well, to the extent Cameron's involved, I'm guessing it's just on the level of a legal but politically unpopular tax shelter. Cameron's always been wealthy, as far as I know.

On the other hand, there's Vladimir Putin.

President Putin has denied "any element of corruption" over the Panama Papers leaks, saying his opponents are trying to destabilise Russia.

Mr Putin was speaking for the first time since the leak of millions of confidential documents from the Panama-based law firm Mossack Fonseca.

The papers revealed a number of offshore companies owned by close associates of Mr Putin.

They suggest the companies may have been used for money laundering.

One of the "associates" of Putin who has some holdings via the Mossack Fonesca network is a cellist, who is the godfather to one of his children.

This cellist has, it is alleged, personally controls $100 million in the system.

He denies the money came from Putin or by any illicit means.

So how did he get the money?

It's all very simple: People donated it to him. To induce him into selling them cellos for their children.

No, seriously:

The Russian cellist linked by the Panama Papers to a money trail of billions has spoken out for the first time since the story broke.

In a story published by the Guardian last Sunday, the musician Sergei Roldugin was identified as an old friend of Vladimir Putin linked by documents from the leak to a number of offshore companies with cash flows of up to $2bn (£1.4bn).

A week later, in a 20-minute segment aired on Russian state television, Roldugin dismissed the idea that he was fabulously wealthy or was safeguarding money and assets for Putin.

Without directly answering the allegations that he personally controls a series of assets worth at least $100m, Roldugin insisted his "wealth" was merely a series of donations from rich businessmen in order to purchase expensive musical instruments for young Russians.

"Of course I went around to everyone I could and asked for donations," said Roldugin, who runs the House of Music in St Petersburg.

Of course. That's how we bloggers amass $100 million, too.

Some speculate that Putin himself leaked the Panama Papers, but it sure seems like he tarred himself pretty good with his leak. At least it seems that way to me. Who knows the crooked trails of a KGB agent's thinking.

China is, of course, implicated as well.

The papers point also to China, suggesting that family members of eight current or former senior Communist Party leaders have offshore companies set up by the document aggregator, Panama-based law firm Mossack Fonseca. The brother-in-law of Chinese President Xi Jinping is among those named.

To the extent China even bothers refuting the allegations, they claim, along with Putin, that foreign agents are merely plotting to undermine them.

So: a global scandal about shady deals and big money.

My only question is: When does Hillary Clinton make her appearance?

Well... funny I should mention that.

Almost lost among the many revelations is the fact that Russia's biggest bank uses The Podesta Group as its lobbyist in Washington, D.C. Though hardly a household name, this firm is well known inside the Beltway, not least because its CEO is Tony Podesta, one of the best-connected Democratic machers in the country. He founded the firm in 1998 with his brother John, formerly chief of staff to President Bill Clinton, then counselor to President Barack Obama, Mr. Podesta is the very definition of a Democratic insider. Outsiders engage the Podestas and their well-connected lobbying firm to improve their image and get access to Democratic bigwigs....

Sberbank (Savings Bank in Russian) engaged the Podesta Group to help its public image...

It's hardly surprising that Sberbank sought the help of Democratic insiders like the Podesta Group to aid them in this difficult hour, since they clearly understand how American politics work. The question is why the Podesta Group took Sberbank's money. That financial institution isn’t exactly hiding in the shadows--it's the biggest bank in Russia, and its reputation leaves a lot to be desired. Nobody acquainted with Russian finance was surprised that Sberbank wound up in the Panama Papers.

Read John Schindler's article for the questions he'd like answered here. Crucially, though the Podesta brothers claim Sherbank is a private institution, it's actually state-owned -- and therefore Vladimir Putin's own bank.

posted by Ace at 03:30 PM

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