Revealed!How confusion in Panama Papers firm led to its fall
The law firm whose leaked files became known as the Panama Papers spent months after the leak trying to identify the real owners of thousands of shell companies the firm set up in offshore jurisdictions.
Mossack Fonseca’s alleged know-your-client failures were exposed by a new leak of 1.2 million documents from the defunct firm — including emails, passport copies, and criminal case files from early 2016 through the end of 2017. The firm shut down at the end of March this year.
In April 2016, the International Consortium of Investigative Journalists or ICIJ published some of the 11.5 million documents from the firm that were leaked first to Süddeutsche Zeitung. The documents included details about more than 200,000 anonymous offshore companies used to hold secret bank accounts and other assets.
It’s not always illegal to own or control anonymous companies. But the companies are sometimes used to evade taxes, launder money, and hide assets.
The documents in the new leak also went first to Süddeutsche Zeitung and then to the ICIJ and its media partners.
On Wednesday, Will Fitzgibbon and Ben Hallman of the Organized Crime and Corruption Reporting Project (OCCRP) wrote about the final months of chaos at Mossack Fonseca before its collapse. Fitzgibbon and Hallman said:
Newly obtained documents reveal that Mossack Fonseca couldn’t identify tens of thousands of owners of companies it had registered in opaque, low-tax jurisdictions. Two months after the firm became aware of the records breach, it still hadn’t identified the owners of more than 70 percent of the 28,500 active companies it had registered in the British Virgin Islands, the firm’s busiest offshore hub, and 75 percent of its 10,500 active shell companies in Panama.
Panama-based Mossack Fonseca operated for nearly 40 years. At its peak it employed about 600 people.
In addition to Panama, the firm had offices and operations in Jersey, Isle of Man, Gibraltar, Belize, The Netherlands, Costa Rica, Malta, Hong Kong, Cyprus, British Virgin Islands, Bahamas, British Anguilla, Seychelles, and Samoa, among others.
A few months after the first documents leaked, the firm closed its offices in Jersey, Isle of Man, and Gibraltar.
In early 2017, Mossack Fonseca’s two principal partners — Jürgen Mossack and Ramon Fonseca Mora — were arrested in Panama for their alleged connection to Brazil’s Car Wash investigation.
They have denied any links to corruption in Brazil or other countries.
The newly leaked documents show how Mossack Fonseca tried doing damage control after the first leak. The firm hired media consultants and sent messages to intermediaries and clients, intending to reassure them that their personal information was safe. It didn’t work.
“One Swiss intermediary was totally fed up,” Fitzgibbon and Hallman said. “’By a lot of messages, you, MOSSACK, are trying to convince we clients that you are taking control of this unbelievable situation,’ Félix Chille wrote.”
“The message concluded: ‘This email will, probably, be intercepted like 11,600,000 other documents. I don’t care.'” FCPA Blog