The Tip of The Iceberg

National Public Radio did an interesting “All Things Considered” interview between show host Mary Louise Kelly and a reporter named Jake Bernstein about the so-called “Panama Papers.”

Over 11 million records were leaked from a leading Panama law firm that specializes in offshore accounts.

With Leak Of ‘Panama Papers,’ A Glimpse Of World’s Fiscal Underbelly

KELLY: … Mossack Fonseca is based in Panama … A massive leak – more than 11 million records from the law firm’s files is shedding light on how dark money flows through the global financial system. The records also are shedding light on offshore holdings of a dozen former and current world leaders.

Jake Bernstein is a Pulitzer Prize-winning reporter with International Consortium of Investigative Journalists. The group has spearheaded a year-long investigation at dozens of news organizations into these leaked documents. And Jake Bernstein, first off – I’ve got to ask – how did you get the documents?

JAKE BERNSTEIN: This came through a German newspaper called Suddeutsche Zeitung. And they’re the ones who obtained this extraordinary leak. It’s more than 11 million documents that allows us a view into a secret world of hidden money that we’ve never seen before.

KELLY: OK. Tell us some of the highlights of what you found. What was the most surprising thing?

BERNSTEIN: Well, we found the financial holdings of 12 current and former world leaders, 128 public officials, 33 companies and people sanctioned by the United States because of evidence that they’ve done business with Mexican drug lords or terrorist organizations or rogue nations like North Korea or Iran. We found a network that’s connected to Vladimir Putin, the President of Russia, that seems to have moved around $2 billion through a network of banks and secret offshore companies.

KELLY: We should note there’s nothing illegal about having an offshore company, about using offshore accounts. Take, say, with the Putin example for a moment, what is the takeaway here for what you found with these Russian accounts?

BERNSTEIN: You know, there’s a whole group of people around President Putin who have become incredibly wealthy during his tenure. And the U.S. Treasury Department has called it a corrupt regime. And they’ve sanctioned a number of these people. But they’ve never really provided evidence about their activities. And for the first time, we get to see some of that evidence.

KELLY: OK, circle back to the law firm at the center of this web, Mossack Fonseca …

BERNSTEIN: It’s one of the top-five incorporators of offshore companies in the world. These are the companies that can be used to hide ownership of assets. And most people wouldn’t know about it because generally when they are big scandals, they don’t really focus on the middlemen. But, for example, right now there’s a big scandal in Brazil that has touched the president, the former president. It could be one of the biggest corruption scandals in Latin American history. And Mossack Fonseca is right in the middle of it. And Brazilian prosecutors have called it a money laundering machine.

KELLY: What does Mossack Fonseca say when you have put these questions to them about the revelations coming up through records leaked from their firm?

BERNSTEIN: Well, they say they just create the companies. The analogy they like to use is that they’re a car factory, and they aren’t responsible once the car leaves the factory. But what’s clear from the records is that their involvement continues during the life of the company.

I mean, they create sham directors and officers of these companies who then have to sign official documents like bank account openings. And we also know that Mossack Fonseca has legal responsibilities to know their customers and their activities … [and] most of the clients at Mossack Fonseca are law-abiding. [But] What we see though is a huge number of convicted criminals where there’s supposed to be more due diligence, where it’s clear that people have already committed crimes and they have used these offshore companies either to commit them or to hide the proceeds. [National Public Radio]

On another level, for a major law firm with a fiduciary responsibility to its clients and presumably some commitment to confidentiality, to manage to have 11 million of its confidential documents hacked, leads one to ask a whole raft of questions about the “loosey-goosey” ways of business, business ethics, the law, and Internet security in Panama.

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