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Panama Papers: Historic Data Leak Ties High-Ups To Offshore Money Laundering

By Becky Padilla
Published on: 10:10 PST, Apr 4, 2016

A slew of documents being referred to as the Panama Papers infers the biggest leak since Edward Snowden’s infamous spill of information, revealing internal documents from Mossack Fonseca, a Panamanian-based law firm dealing in offshore accounts. These documents tie hundreds of people in high up places to questionable offshore accounts that scream of money laundering.

And it’s not the first time.

Sex, Lies and Panama Papers

Ok, no sex, but due to the names of several Icelandic public officials being on a list of internal documents dubbed the Panama Papers, there are enlightening interviews, along with plenty of lies, deflections, documents, shell companies and offshore tax havens. The 11.5m documents and 2.6 terabytes of information were shared by an anonymous source with the Süddeutsche Zeitung (SZ), a german newspaper, which shared with The International Consortium of Investigative Journalists (ICIJ), who has been an integral part of an ongoing investigation.

But this story doesn’t begin yesterday when the internal Panama Papers were first leaked. Iceland went through a collapsed banking crisis back in 2008 that sent several high-ranking officials to prison, and several banks into insolvency, due to the same behavior as is suspected with this latest batch of leaked information. The special prosecutor who went after those involved back then has become very popular to Icelanders over the last seven years. Olafur Hauksson has seen 27 executives sentenced to prison for their role in the crisis in 2008, and Icelanders have been very supportive of his efforts and results. Those in charge are still trying to rebuild both their financial status and society’s trust in the institutions. This leak probably won’t help.

Fast forward eight years to an interview last month between a Swedish TV channel and Sigmundur Gunnlaugsson, Prime Minister of Iceland, when the SZ was looking into the Prime Minster’s connection to these same offshore companies which are listed in the Panama Papers, and at least one of which is connected directly to him. In his own words, Gunnlaugsson declared what sounds like an honorable belief system.

“Iceland, as in all Nordic societies…we attach a lot of importance to everybody paying his share because…well society is seen as a big project that everybody needs to take part in, so when somebody is cheating the rest of society, it is taken very seriously in Iceland.”

And yet, when asked point blank if he had ever been involved with or personally held offshore accounts with one company in particular, Wintris, Inc. (remember this name), and whether he disclosed this information like he should have, one doesn’t need a degree in Psychology to identify his guilt markers. When the journalists presented him proof of his connection—a certificate that authorized 1,000 shares to him, and then showed the Share Transfer Agreement documenting his sale of his one-half interest in that company to his future wife (who owned the other half) in 2009 for the sum of one U.S. dollar, he swore everything had been reported to the tax authorities, stammered about being tricked into the interview, and walked out of it.

Despite the push for his resignation, Gunnlaugsson is refusing to step down.

The Leaks That Keep on Giving

Mossack Fonseca is the world’s fourth largest law firm dealing in offshore accounts. Even though it has offices worldwide, it is based in Panama, thus the dub “Panama Papers”. The Panama Papers are an “unprecedented leak of 11.5m files from” this law firm’s database, The Guardian reported this morning. Involved in this historic data leak are not only well over 100 politicians and public officials, but dozens of current and former national leaders including Vladimir Putin, their families, and close associates from around the world who have been using these offshore tax havens for decades.

Offshore structures can be set up quite legitimately for business or estate planning purposes. However, they are also used by individuals with less savory goals like hiding money of significant amounts or from questionable sources, via shell companies and offshore accounts. The documents are still being investigated, however CNN Money reported that according to the ICIJ, they do include names of “people and companies blacklisted by the U.S. government because of links to drug trafficking and terrorism.”

The Panama Papers also show, the ICIJ reported, the existence of “a clandestine network operated by Putin associates that has shuffled at least $2 billion through banks and offshore companies.” However, the Putin camp calls this information a media “attack” and “another series of fibs.”

Another interesting link to Gunnlaugsson’s involvement in particular is that in 2010, Wikileaks published a list of confidential information related to the banks involved in the 2008 crash. Wintris, Inc. (remember that name?) was on it as a creditor. It had also been listed as a creditor in 2009 of Landsbanki, and also held bonds at Glitnir. All three of those banks went insolvent in the 2008 crash. According to an insider, SZ reported, the value of those bonds equalled some EUR 3.6 million (approximately $4M U.S.).

A Couple Degrees of Separation

The Panama Papers show that Mossack Fonseca did not usually deal directly with company owners but with intermediaries such as accountants, lawyers, banks and trust companies, or “nominees” who had no actual control or ownership of assets. Data from the Panama Papers shows that most of the intermediaries in Europe were most heavily concentrated in Switzerland, Jersey, Luxembourg and the United Kingdom. Attempts at finding the true owners of these companies is sometimes difficult because of said nominees.

To give an idea of how large the Panama Papers leak is compared to other well-known information sharing, check out this graphic.

The Panama Papers leak is the largest piece of confidential, internal data to be shared to date. The degree of fallout from its discovery is yet to be seen, but its effects could be felt worldwide.

[Photo by Pall Stefansson/Getty Images]

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