Tax Havens - Tax Justice Network - Panama Papers leaks

[TonyGosling]

The missing billions | UK Uncut
http://vimeo.com/44017057
by Small Axe Films
Please use earphones, or speakers if you can. The music sounds better . For full HD quality, please order a DVD hardcopy.
24minutes. A film about the impact of the cuts in the UK, and the alternative. The film centers on the court case being brought by UK Uncut Legal Action against HMRC over a tax deal done between the revenue and Goldman Sachs in 2010 that saw £20m wiped off the a banking giants tax bill.

This is a free documentary. Please spread it widely.

If you would like to support this film, and the legal action campaign, then please visit:
ukuncutlegalaction.org.uk
Donations are greatly appreciated.
You can also order hard copy DVDs from the website.

[TonyGosling]

Wealth doesn't trickle down – it just floods offshore, research reveals
http://www.guardian.co.uk/business/2012/jul/21/offshore-wealth-global- economy-tax-havens
A far-reaching new study suggests a staggering $21tn in assets has been lost to global tax havens. If taxed, that could have been enough to put parts of Africa back on its feet – and even solve the euro crisis


£13tn hoard hidden from taxman by global elite
http://www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offsho re-economy

• Study estimates staggering size of offshore economy
• Private banks help wealthiest to move cash into havens
Heather Stewart, business editor
guardian.co.uk, Saturday 21 July 2012 21.00 BST

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy". According to Henry's research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry's calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world's population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."

TUC general secretary Brendan Barber said: "Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.

"Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren't rich enough to avoid paying their taxes."

Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.

Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: "Where did all the money go? He took it off to Monaco!" Much of Green's retail empire is owned by his wife, Tina, who lives in the low-tax principality.

A spokeswoman for UK Uncut said: "People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don't want to pay for it."

Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals' financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.

"The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy," said Henry.

[TonyGosling]

The City of London and the Offshore sector - The Enemy Within
Rowan Bosworth-Davies -
http://rowans-blog.blogspot.co.uk/2013/05/the-city-of-london-and-offsh ore-sector.html

The City of London, the world's biggest tax evasion facilitator and money laundry has just been given some more good news, courtesy of George Osborne and the Coalition Government. The Chancellor of the Exchequer has just sent them a lightly coded message that their offshore revenue stream is guaranteed for the foreseeable future!

George Osborne has just chaired a G7 ministers' meeting at which the question of tax evasion and aggressive tax avoidance was on the agenda!

The Huffington Post reports that "...Osborne G7 Talks Sees Chancellor Criticised After Dodging Details On Tax Avoidance..."

Regular readers of this blog will recall my observations last week ("Lies, Damned Lies, and Civil Service Misinformation") about the likelihood of the UK Government doing anything too aggressively to challenge the offshore-sector and its control of the tax evasion/aggroidance (my shorthand for aggressive tax avoidance schemes) industry !

And so it has proved

George Osborne has now been criticised for failing to set out any concrete steps to promote economic growth or tackle tax avoidance during G7 talks, despite his insistence that the meeting with finance ministers and central bank chiefs was "successful and constructive."

Using such weasel words, and playing up the meeting for all it's worth, Osborne sought to make a great deal of how the meeting had made real steps in the debate on fiscal evasion issues.

However, when pressed on the substance of these discussions, the Chancellor declined to give any details of the talks, which were held on an informal basis in a country hotel in Buckinghamshire, but suggested there was more agreement between the rich nations making up the group on how to nurture the recovery.

With bromides like that, we are all the more informed!

He had the sense to say that he recognised that the larger G20 group - which includes emerging economic powers such as China, India and Brazil (3 of the world's leading tax evasion and funny money practitioners) - was now the "primary economic forum for setting the global rules of the game", which was another way of saying that the G7 nations, which generally represent the old, and moribund economies, were irrelevant, despite his insistence that they - the United States, Germany, Japan, the UK, Italy, France and Canada - still wielded "major economic firepower" as they represented around half the global economy between them.

Admitting that while there were "...still many challenges...", he said, "...this meeting confirmed that there are more areas of agreement between us on fiscal policy than is commonly assumed..."

Quite what that means in real terms is anyone's guess, but what it does not mean is that the British Government is going to be cracking down on the offshore sector any time soon.
How can I say that with such confidence? Well listen to Osborne's deliberately feeble use of language.

Mr Osborne said British overseas territories "need to do more" to end tax evasion.

Well, that's like saying the Taliban needs to do more to encourage greater female emancipation in Afghanistan! Ambitious, possibly; desirable, certainly; but ultimately futile and illusory!

Asked about the future of tax havens such as Jersey or the Cayman Islands, he said he had already been "very tough" in his message to them but wanted to see more action.

"...Of course we would like these jurisdictions to do more..," he said.

"...We want them to commit to some of the existing agreements that are in place on tax information and transparency and we have these initiatives which we are pursuing in the G8, for example around beneficial ownership, which we would also expect all jurisdictions to be able to sign up to..."

None of these comments amount to a row of beans in reality. He can send all the tough messages he likes, he can want them to do more, and sign up to vague initiatives about beneficial ownership, but this isn't going to change the reality of the situation that the offshore sector survives and thrives because wealthy people put their money there secure in the knowledge that it will be secure and kept in complete confidence

I have already discussed the futility of these plans at some length in a previous blog and nothing I read here from Osborne is going to change my views one iota. Because then comes the reality interlude, when the real world politique creeps in! He says;

"...Of course you have to respect that many of these territories have important industries and we don't want to unnecessarily damage them..."

Well, I should think not, and that is the underlying hidden message he has to send them, because these offshore areas generate a huge amount of money which the City of London, the enemy within, is waiting to receive. But at the same time, Osborne has to play the Perfidious Albion games! So he reverts to the default mode and trots out the shibboleths again.

"...But it is necessary to collect tax that is owed and it is necessary to reduce tax avoidance and the crown dependencies and the overseas territories need to play their part in that drive and they need to do more..."

"... We all agreed on the importance of collective action to tackle tax avoidance and evasion..," he said.

Well, no doubt they did, as they peeled their Plovers' eggs, and shovelled down the Boeuf a la Bordelaise! It's not difficult to agree to an assertion as bland as that, after all, ask yourself, what was being agreed to?

"It is incredibly important that companies and individuals pay the tax that is due and this is important not just for Britain and for British taxpayers but also for many developing nations as well."

You will note that the emphasis here is on the "...tax that is owed..." but expecting the crown dependencies and the overseas territories to do anything about it, has the same element of successful expectation as being the voting returning officer at the turkey farm when the Christmas vote is announced!

It is this kind of state-sponsored double-speak that makes the UK look positively mendacious. It is the kind of statement that is drafted by some clever young Treasury policy wonk who knows full well there isn't the slightest intention by anyone in Government to do the least thing about it

And why?

Because the UK Government is a hostage to the City of London and the City now ultimately determines all financial policies, and that is why I term them 'the enemy within'. The Government has quietly surrendered the lead role in defining the UK's future to the City of London, a non-elected, non-transparent, undemocratic group of elites, and the Government will dance to their tune.

This is why the Government's threats to break up the 'too big to fail, too big to jail' banks into small regional hubs is met by two fingers from Threadneedle Street! This is why the proposal to ring-fence the retail banks is met be a resounding raspberry from Throgmorton Avenue!

You see, the City of London no longer needs the UK, the boot is on the other foot, the UK needs the City! I used to believe that the Government was Sovereign, that Parliament was the final arbiter, and that confronted with a vague threat to 'take our business elsewhere' if too much pressure was applied to the City institutions to reform their game, was an empty threat, and I have previously urged the Government to call their bluff!

But I was wrong! The Government dare not call their bluff because the City of London isn't just a bunch of buildings inside four postal codes; it is a concept of enormous power, an exclusive entity, a very private members-only club into which outsiders are not invited to enter; it is a powerful clique which exerts huge influence and pressure; it is a Mafia! Even Her Majesty the Queen requests formal permission to enter the City of London on a special formal occasion (permission is always granted)!

The City doesn't exist to support this country, it exists for its own financial interests and the rest of us can go take a hike! It could, within a relatively short space of time, go offshore itself, indeed, it has already been described as the most powerful off-shore jurisdiction on earth! You don't need to be a palm-fringed island in the Caribbean to be an off-shore centre. The City has its own laws, and it only obeys those ones which Parliament enacts, when it pleases the suits so to do!

The amount of money that the City turns over each year is counted in Trillions of Pounds. As a fee, tribute, (bribe) to the UK Government to allow them to continue, the City contributes about 12% of the nation's GDP, in terms of the tax it agrees to pay on such profits as it sees fit to declare. The rest of its proceeds are very carefully squirreled away and are held in secure and confidential circumstances, and no-one is going to examine them!

The great financial crisis has brought the role of the City and its functions into greater notice and under more scrutiny, but we should not hold our breath hoping that Cameron or Osborne are going to do anything to bring this criminogenic enterprise to heel! They simply do not have the power to do it, and that is the problem.

When the Prime Minister or the Chancellor go down to the City to speak at their tables, you will note the degree of respect which is afforded to the men and women in fancy dress! They have to be respectful, because the City might take their ball away and go and play elsewhere, and they know that would be disastrous for them.

So they pay lip-service to the conventions, and they make sure they protect the City from any attempts that somewhere called 'Brussels' might make to impose their will on the City of London. Transaction taxes! Not on your Nellie, monsieur. Capital adequacy rules! Only if everyone else is signed up to the same calculations, mein herr! Anti-money laundering regulations! Now you are being fanciful, old boy!

In a time of the worst financial crisis any of us have ever experienced; at a time when we can see no light at the end of the austerity tunnel, the City of London continues to pursue its own path and writes its own pay cheque! Don't expect it to change its ways, because this is how it has always been done, the City of London is another country, and it is immune from the ordinary rules of engagement that attach to those outside the Square Mile.

No Government of the UK will ever dream of challenging its autonomy, they daren't! The men and women of the City will be allowed to carry on as they have done for centuries, and no-one there is going to be subject to the ordinary laws of the land, as long as they are working for the City and its collective owners! It is a sanctuary, a safe-haven from hue and cry, and as long as you play by its rules, you will be protected.

You don't have to take my word for it, just review the last 5 years worth of criminal financial scandals that have come out of the financial sector, and add up the number of players who have spent time at her Majesty's pleasure?

Not an awful lot!

So, when you read George Osborne's claims that he and his mates in the G7 are taking tax evasion seriously and calling upon the overseas territories to do more to tackle aggressive tax avoidance, you know that these are just empty words designed to give the impression of concern, but in reality, just going through the motions!

Nothing, but nothing is going to be allowed to undermine the hegemony of the offshore sector, it would be naive to think otherwise!

[TonyGosling]

Inside the storage city where treasure is buried deep
http://www.independent.co.uk/news/business/analysis-and-features/insid e-the-storage-city-where-treasure-is-buried-deep-9745516.html

Fine wine, cigars, paintings ... the Luxembourg Freeport has it all under lock and key – and away from prying eyes. But a band of artists see a new style of tax haven
JAMES MOORE Author Biography Friday 19 September 2014



It’s the sort of mismatch that might have David saying “this Goliath is a pushover compared with what you people are facing”.

In the blue corner is the Government of Luxembourg, its Grand Duke Henri, the Swiss businessman Yves Bouvier, and a legion of his ultra-high net worth clients.

In the red corner is Richtung22, a small arts collective, whose youthful and idealistic members have put themselves in the vanguard of an emerging front in the battle against tax avoidance.

Earlier this week around 500 people, including the Grand Duke, gathered to celebrate the official opening Mr Bouvier’s Luxembourg Freeport, a no-expense-spared creation sitting next to the cargo centre at the country’s Findel airport.

Occupying an 11,000 square metre site, with state-of the-art facilities for storing fine wines, cars, cigars and of course art, as well as other luxury items, it is the second storage centre opened by Mr Bouvier, who also owns the Singapore Freeport.

Together they could become part of a chain and similar operations are springing up all over the world. Beijing, for example, is preparing to join the club.

Originally known as bonded areas, freeports have a long history and were originally used to store commodities and manufactured goods, although more recently they have garnered an unwelcome reputation for smuggling and other illicit activity. Shell has called for their closure in the Philippines, with oil smuggling at facilities in the archipelago reckoned to have cost the Government hundreds of millions of dollars in revenue. And in 2003 authorities in Switzerland, home to several of the centres, announced they would return hundreds of antiquities stolen from sites in Egypt and subsequently stored there.

The new breed of freeports, however, have moved decisively upmarket. The one in Luxembourg is at pains to stress its legitimacy, and says it welcomes queries from journalists. David Arendt, managing director, says: “The legislative framework under which the Luxembourg Freeport operates guarantees total traceability of all goods stored and ensures that all activities strictly comply with international standards. The supervisory and enforcing authority is the Luxembourg customs authority, which has to vet all operators of the Freeport, who in turn have to declare in detail all incoming goods and outgoing goods.

[TonyGosling]

Corporate Media Gatekeepers Protect Western 1% From Panama Leak 320
3 Apr, 2016 in Uncategorized by craig
https://www.craigmurray.org.uk/archives/2016/04/corporate-media-gateke epers-protect-western-1-from-panama-leak/

Whoever leaked the Mossack Fonseca papers appears motivated by a genuine desire to expose the system that enables the ultra wealthy to hide their massive stashes, often corruptly obtained and all involved in tax avoidance. These Panamanian lawyers hide the wealth of a significant proportion of the 1%, and the massive leak of their documents ought to be a wonderful thing.

Unfortunately the leaker has made the dreadful mistake of turning to the western corporate media to publicise the results. In consequence the first major story, published today by the Guardian, is all about Vladimir Putin and a cellist on the fiddle. As it happens I believe the story and have no doubt Putin is bent.

But why focus on Russia? Russian wealth is only a tiny minority of the money hidden away with the aid of Mossack Fonseca. In fact, it soon becomes obvious that the selective reporting is going to stink.

The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

What do you expect? The leak is being managed by the grandly but laughably named “International Consortium of Investigative Journalists”, which is funded and organised entirely by the USA’s Center for Public Integrity. Their funders include

Ford Foundation
Carnegie Endowment
Rockefeller Family Fund
W K Kellogg Foundation
Open Society Foundation (Soros)

among many others. Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished.

Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland. A superannuated UK peer or two will be sacrificed – someone already with dementia.

The corporate media – the Guardian and BBC in the UK – have exclusive access to the database which you and I cannot see. They are protecting themselves from even seeing western corporations’ sensitive information by only looking at those documents which are brought up by specific searches such as UN sanctions busters. Never forget the Guardian smashed its copies of the Snowden files on the instruction of MI6.

What if they did Mossack Fonseca database searches on the owners of all the corporate media and their companies, and all the editors and senior corporate media journalists? What if they did Mossack Fonseca searches on all the most senior people at the BBC? What if they did Mossack Fonseca searches on every donor to the Center for Public Integrity and their companies?

What if they did Mossack Fonseca searches on every listed company in the western stock exchanges, and on every western millionaire they could trace?

That would be much more interesting. I know Russia and China are corrupt, you don’t have to tell me that. What if you look at things that we might, here in the west, be able to rise up and do something about?

And what if you corporate lapdogs let the people see the actual data?

UPDATE

Hundreds of thousands of people have read this post in the 11 hours since it was published – despite it being overnight here in the UK. There are 235,918 “impressions” on twitter (as twitter calls them) and over 3,700 people have “shared” so far on Facebook, bringing scores of new readers each.

I would remind you that this blog is produced free for the public good and you are welcome to republish or re-use this article or any other material freely anywhere without requesting further permission.

[TonyGosling]

Mossack Fonseca: The Nazi, CIA And Nevada Connections... And Why It's Now Rothschild's Turn
http://www.zerohedge.com/news/2016-04-03/mossack-fonseca-nazi-cia-and- nevada-connections-and-why-its-now-rothschilds-turn

For all the media excitement about the disclosed names in the "Panama Papers" leak, in this case represented by the extensive list of Mossack Fonseca clients, this is not a story about which super wealthy individuals did everything in their power, both legal and illegal, to avoid taxes, preserve their financial anonymity, and generally preserve their wealth. After all, that's what they do, and it should not come as a surprise that they will always do that, especially following last year's disclosure by the same ICIJ which revealed a list of 100,000 HSBC clients who had been dutifully avoiding the payment of taxes.

What the story is about is the nebulous world of offshore tax evasion and tax havens, which based on data from the World Bank, IMF, UN, and central banks, hide between $21 and $32 trillion, where registered incorporation agents and law firms in small Caribbean countries (and not so small US states) make the laundering of money and the "disappearance" of the super wealthy, into untracable numbers hidden behind shell companies, possible.

So, in order to learn some more about the real star of this story, the Panamanian lawfirm of Mossack Fonseca, we went to Fusion which has compiled a fascinating story of the company's history, founders, and key milestone events in its life.

These include the Nazis, the CIA, Mexican drug lords, and of course, the U.S.

First, here is the Nazi and CIA connection:

Jurgen Mossack’s family landed here in the 1960s. During World War II, his father had served in the Nazi Party’s Waffen-SS, according to U.S. Army intelligence files obtained by the ICIJ. Once in Panama, the elder Mossack offered to spy on communists in Cuba for the CIA. (Mossack Fonseca said the firm “will not answer any questions related to private information regarding our company founding partners.”)
Here is the connection to Mexican drug lord Rafael Caro Quintero, and perhaps to the DEA:

Many times Mossack Fonseca has had no clue which nefarious characters were doing what with the companies the firm created – as when Jurgen discovered in 2005, according to internal emails, that he was the registered agent and listed as the director for a company controlled by the Mexican drug lord Rafael Caro Quintero. The co-founder of the Guadalajara Cartel was convicted in Mexico in 1985 for the brutal murder of U.S. DEA agent Enrique “Kiki” Camarena. (Today, Quintero is again considered a fugitive by the US after walking out of prison in 2013 on a technicality).

Mossack Fonseca’s senior partners instructed an employee to carry out their resignation from the company upon the discovery. "Pablo Escobar was like a newborn compared to R. Caro Quintero!” Jurgen wrote in reaction to the news. “I wouldn't want to be among those he visits after he leaves prison!"
And then there is the state of Nevada:

In 2013, an Argentine prosecutor’s report linked Nevada-incorporated shell companies involved in a major corruption scandal to Mossack Fonseca. When those shell companies became the subject of a federal court battle in Nevada, the leaked files show, Mossack Fonseca employees took steps to remove paper records and to wipe computer files and phone logs at its Las Vegas office. One employee even traveled from Central America to Nevada to bring back files. “When Andrés came to Nevada he cleaned up everything and brought all documents to Panama,” according to an email dated Sept. 24, 2014.

Mossack Fonseca said it “categorically” denies hiding or destroying documents in its statement to the ICIJ: “Let us be clear that it is not our policy to hide or destroy documentation that may be of use in any ongoing investigation or proceeding.”

The leaked records also contradict sworn testimony by Jurgen Mossack, who told the federal district court that his firm was separate from “MF Nevada,” its office in Las Vegas, and had no control over it. Mossack Fonseca “has never maintained an office, establishment or principal place of business in Nevada,” Mossack testified in July 2015. But, according to the ICIJ investigation, internal documents show the opposite, indicating that the firm’s Panama City headquarters controlled MF Nevada’s bank account, and that the firm’s co-founders and one other official with the company owned 100 percent of MF Nevada.
Why is Nevada important? Because recall that according to a recent investigation by Bloomberg, "The World’s Favorite New Tax Haven Is the United States" ...



... and specifically several US states such as Nevada, Wyoming and South Dakota.

After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

“How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” wrote Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”
That money is rushing for one simple reason: dirty foreign - and local - money is welcome in the U.S., no questions asked, to be shielded by the most impenetrable tax secrecy available anywhere on the planet.

One may even say that nowadays, US-based tax havens are the new Switzerland, or Bahamas or, for that matter, Panama. Indeed, for most Americans, offshore tax haven are now meaningless with the passage of the FATCA law, which makes the parking of dirty US money abroad practically impossible. So where does that money go instead - it stays in the US:

Others are also jumping in: Geneva-based Cisa Trust Co. SA, which advises wealthy Latin Americans, is applying to open in Pierre, S.D., to “serve the needs of our foreign clients,” said John J. Ryan Jr., Cisa’s president.

Trident Trust Co., one of the world’s biggest providers of offshore trusts, moved dozens of accounts out of Switzerland, Grand Cayman, and other locales and into Sioux Falls, S.D., in December, ahead of a Jan. 1 disclosure deadline.

“Cayman was slammed in December, closing things that people were withdrawing,” said Alice Rokahr, the president of Trident in South Dakota, one of several states promoting low taxes and confidentiality in their trust laws. “I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland.”
And, to top it off, there is one specific firm which is spearheading the conversion of the U.S. into Panama: Rothschild.

Rothschild, the centuries-old European financial institution, has opened a trust company in Reno, Nev., a few blocks from the Harrah’s and Eldorado casinos. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.

* * *

For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”
Yes, Mossack Fonseca may now be history, and its countless uberwealthy clients exposed, but none other than Rothschild is now delighted to be able to fill its rather large shoes. In fact, someone with a conspiratorial bent may decide that today's dramatic takedown of the Panama "offshoring" industry was nothing more than a hit designed to crush the competition of domestic "tax haven" providers... suxh as Rothschild.

[TonyGosling]

Law firm at heart of ‘Panama Papers’ leak owned by Nazi’s son
http://www.timesofisrael.com/law-firm-at-heart-of-panama-papers-leak-o wned-by-nazis-son/
Erhard Mossack, father of one of Mossack Fonseca founders, served as combat soldier in Waffen SS during World War II
BY TIMES OF ISRAEL STAFF AND AFP April 4, 2016, 5:59 pm
Jurgen Mossack, co-founder of Panama law firm Mossack Fonseca t
Jurgen Mossack, co-founder of Panama law firm Mossack Fonseca that it is at the center of leaked documents revealing offshore accounts of politicians and celebrities around the world (Wikimedia Commons, Jandrade97, CC BY-SA 4.0)

Mossack Fonseca, the Panama-based law firm at the heart of the so-called “Panama Papers” scandal, is a discreet outfit with a roster of big-name clients and a quiet reputation for hiding money from the tax man.
But the company apparently also had another secret. One of its founders, Jurgen Mossack, is the son of a Nazi SS soldier who was a member of the “Totenkopf” (Death’s Head) fighting unit during World War II, the Daily Mail reported Monday.
Citing German media, the report said that Erhard served as a rottenfuehrer (senior corporal) in the SS’s combat branch, the Waffen.
The Waffen initially operated the concentration camps, and later recruited into its ranks many camp guards when it was formed into a combat division. However, Erhard likely only served in the fighting unit, which used the death’s head symbol as its insignia.
The symbol of the 'Totenkopf' fighting unit in the Waffen SS (c
The symbol of the ‘Totenkopf’ fighting unit in the Waffen SS (courtesy of ADL)
In 1948, Erhard moved his family from Germany to Panama, but returned with his wife in the 1970s. He died in the 1990s and his wife passed away five years later, the report said.
According to the International Consortium of Investigating Journalists (ICIJ), citing US Army records, “old intelligence files” showed the father had also offered to spy for the CIA during his time in Panama, apparently on nearby Cuba.
The cloak of secrecy that Mossack Fonseca wrapped around itself was ripped apart on Sunday, when media organizations around the world published information from a massive leak from the firm’s supposedly secure data center.
Politicians, sports stars and celebrities were named in the 11 million pages of documents, according to information starting to be released by the ICIJ, which is parsing the data.
So too were the techniques allegedly used by Mossack Fonseca to make money trails murky, including slavish use of offshore havens such as the British Virgin Islands and some Pacific Ocean nations.
The revelation detailing the offshore structures of many wealthy clients is a “crime” and an “attack” on Panama, the law firm maintains.
“This is a crime, a felony,” Ramon Fonseca, one of the founders of Mossack Fonseca, told AFP.
“This is an attack on Panama because certain countries don’t like it that we are so competitive in attracting companies,” he said.

Inside Mossack Fonseca
So who runs Mossack Fonseca, whose headquarters are housed in a fairly nondescript mirrored building in Panama’s business district?
One of the two lawyers who founded the firm more than three decades ago, Jurgen Mossack, was born in Germany in 1948 and moved to Panama with his family, where he obtained his law degree.
The other founder is Fonseca, born in 1952. He, too, got his law degree in Panama but also studied at the prestigious London School of Economics, and once said in an interview he had mulled becoming a priest.
Fonseca had a small business until he merged with Mossack and the two went after offshore business by opening offices in the British Virgin Islands.
The ICIJ said the leak shows that half of the companies the law firm incorporated ­ more than 113,000 ­ were done so in that fiscal paradise.
But Mossack Fonseca also branched out to the Pacific, to a tiny island nation called Niue.
According to the ICIJ, by 2001 the firm was earning so much from its offshore registrations on the island it was contributing 80 percent to Niue’s annual budget.
When the British Virgin Islands was forced to clamp down on some methods that had previously permitted anonymous ownership of companies, Mossack Fonseca moved business to Panama and to the Caribbean island of Anguilla.

Online scrubbing
The law firm spent money to try to remove online references linking it to money laundering and tax evasion.
But other countries took an increased interest in what it was doing. In Brazil, it was named as being one of the parties within a huge bribery scandal unfolding involving the state oil company Petrobras.
It also came under scrutiny in the US state of Nevada, where a judge determined that it had willfully tried to cover up its management role over its local branch there.
Last month, Fonseca ­ who had also been an adviser to Panamanian President Juan Carlos Varela since 2014 ­ declared he was taking a leave of absence.
The step was to “defend my honor,” he said, as the Brazilian allegations piled up.

[TonyGosling]

But in further evidence of the UK’s centrality to the global networks uncovered in the papers, three British and Channel Island banks – HSBC, Coutts and Rothschild – were named among the 10 banks that most frequently request offshore companies for their clients.
Toby Quantrill, an expert in international tax avoidance at the Christian Aid charity said the leaks exposed to the extent to which UK-based middlemen and UK-administered tax havens are “at the very heart of this rotten system”.
Oxfam said the UK was in “a unique position” among the countries of the world to “clean up the murky world of tax havens”.
Mr Cameron has faced criticism for failing to secure reforms in all but two of the UK’s overseas territories and Crown Dependencies, which see would see major beneficiaries of offshore companies named in public registers.
The Prime Minister wrote to leaders of countries that operate as tax havens as far back as 2014 urging action. He is now facing pressure to take a harder line, and legislate for greater tax transparency in UK territories and dependencies.
Mr Quantrill said Mr Cameron had one month to take action ahead of May’s anti-corruption conference in London.
“The Prime Minister has the power to clean up a major chunk of the global financial system and in the light of the Panama papers, he should use it,” he said. “The UK must take immediate steps to reveal the real owners of business in the territories that we control so the public can know the truth.”
http://www.independent.co.uk/news/uk/politics/panama-papers-david-came ron-uk-tax-avoidance-tax-havens-overseas-territories-a6968791.html

[TonyGosling]

A reminder that HMRC actually rents its offices from a company registered in a tax haven
Posted a day ago by Bethan McKernan in news
http://indy100.independent.co.uk/article/a-reminder-that-hmrc-actually -rents-its-offices-from-a-company-registered-in-a-tax-haven--bJ2PgGt9e Z

Picture: JUSTIN TALLIS/AFP/Getty Images
A day on, the world is still reeling from the revelations of the Panama Papers leak, the full repercussions of which are yet to be felt.

Eleven million documents leaked from Panamanian law firm Mossack Fonseca detailing how the wealthy and powerful hide their money have also shone a light on just how central the UK and its institutions are to the global offshore system, used by many for the purposes of tax avoidance.

Over half of the companies listed in the document cache are registered in the UK or UK-administered tax havens, and three British and Channel Island banks (HSBC, Coutts and Rothschild) are in the top 10 who most frequently request the firm to incorporate offshore companies for their clients. There is no suggestion of any wrongdoing by the banks.

David Cameron's father Ian, six Conservative peers, three former MPs and several Tory donors are also linked to tax haven networks, the investigation alleges.

Despite the prevalence of offshore bank accounts and shell companies owned by UK based people and organisations, Her Majesty's Revenue and Customs Office (HMRC) has only prosecuted 11 offshore tax evaders in the last five years.

On top of that, this small detail about HMRC's regional offices which has re-emerged in light of the scandal seems like it just can't be true:


But it is.

HMRC pays rent on its 600 regional offices from a company called Mapeley Steps Limited, which is registered in the tax haven Bermuda, as the result of a private finance initiative (PFI).


PFIs were started by the Conservative government in the early 90s, and have been continued by all sitting governments since. They are agreements in which companies fund construction such as buildings, infrastructure or IT systems and then effectively lease them to the public sector.

They have been widely criticised as bad value for money for the tax payer, lining private interests' pockets at the expense of public services.

Experts estimate that PFI deals will cost the country £209bn over the next 35 years.

While all rental income on property in the UK is taxed, many campaigners have questions about why companies such as Mapeley Steps choose to incorporate their headquarters abroad rather than in the countries in which they do business.

An HMRC spokesperson told indy100 that the body treats all taxpayers impartially, regardless of size or structure.

We follow Civil Service guidelines when establishing contracts which assure value for money and that suppliers are compliant with their UK tax obligations.

We don't comment on identifiable taxpayers but we apply the law as firmly to those supplying us with services as to any other business.

[TonyGosling]

Land Registry faces privatisation
Government agency that documents ownership of land and property across England and Wales to be sold off after 150 years as state institution
House contract deeds stamped by the Land Registry http://www.theguardian.com/politics/2016/mar/24/land-registry-faces-pr ivatisation
Heather Stewart, Hilary Osborne and Rowena Mason Thursday 24 March 2016 19.35 GMTLast modified on Thursday 24 March 201623.25 GMT#
The Land Registry is being put for up for sale less than two years after the Liberal Democrats blocked previous plans for a £1bn-plus privatisation.
Union leaders criticised what they called the “cynical” timing. Mark Serwotka,general secretary of the Public and Commercial Services union, said: “Homebuyers and owners rely on the Land Registry to provide an impartial professional service and it must remain under public control, free from any profit motive and conflict of interest.
“It is utterly disgraceful that the government waited until the end of the day before MPs break for Easter to publish its consultation, but is a sure sign ministers know the strength and breadth of opposition they will face.”
The Land Registry employs more than 4,500 civil servants and plays an important role in the property market, holding 24m titles for the ownership of properties across England and Wales.
George Osborne is keen to press ahead with selling off £20bn-worth of public assets, including stakes in the bailed-out banks, by the end of this parliament, in what is expected to be the biggest wave of privatisations since Margaret Thatcher was in Downing Street..........

George Osborne ‘personally benefited’ from £6m property sale to tax-dodging company
http://evolvepolitics.com/george-osborne-personally-benefited-property -sale-tax-dodging-company/
By Summer Winterbottom - 6th April 2016
Chancellor George Osborne, who owns a 15% stake in his family’s business Osborne & Little Group Ltd, ‘personally benefited’ from the sale of £6m worth of property to a company based in the British Virgin Islands – a well-known tax haven.
First reported following an investigation by Channel 4 News in 2015, Osborne & Little Ltd teamed up with a company called Nightingale Mews Inc. to redevelop the site of its former headquarters.
Both companies jointly applied for planning permission, and once they were given the green light, Osborne & Little sold their site to the offshore firm for £6,088,000.
At this point in time in 2005, the soon-to-be Chancellor of the Exchequer was the beneficiary of a trust that owned at least a 15% stake in the family-run business, and so George Osborne would have ‘personally benefited’ from a chunk of this £6m windfall.
George Osborne & Little Nightingale Mews Tax Haven
However, it is not known exactly how much Mr Osborne personally received from the sale.

David Quentin, a Barrister and Senior Advisor to the Tax Justice Network said that Osborne & Little were fully aware that they were dealing with a company based in an offshore tax-haven, stating:
It’s quite clear that we’re dealing with an offshore company. If you look at this agreement, you see that the buyer company is named and then it’s expressly described as incorporated in the British Virgin Islands.”
He added that by basing itself in the British Virgin Islands, Nightingale Mews Inc would have avoided any tax on profits it made.
Instead of paying UK tax on that profit, it would be able to realise that profit tax free
Land registry records shows that after the redevelopment, Nightingale Mews Inc. sold the property for around £20m, with an estimated profit of £8m. By being based in a tax haven, the company avoided paying £2m in UK corporation tax.
Immediately following the sale of the property, Nightingale Mews Inc was dissolved, leaving no trace of any individuals involved in the deal.
Also Read This: The mainstream media has hijacked the English language for their own agenda. We need to take it back.
When Channel 4 News contacted George Osborne regarding the claims, his office refused to answer questions, stating that “This is a totally bogus and desperate story.”
With the Panama Papers scandal bringing the shady dealings of secretive offshore companies into the mainstream media, the resurfacing of this story will be a further embarrassment to a Chancellor who today terminated an interview when asked about his involvement with offshore companies.
George Osborne has also previously advocated ways of avoiding paying inheritance tax on The Daily Politics show, and it seems he is well versed on ways of skirting around the laws he is now tasked with implementing.
Osborne & Little have previously come under fire for paying not a single penny in corporation tax for seven years, despite paying out dividends worth £335,000 to shareholders in 2014. Payments that include a sum of £1,230 directly to George Osborne himself.
In 2012, George Osborne himself stated that tax avoidance is ‘morally repugnant’.

Help us Evolve Politics by subscribing

[TonyGosling]

Hey cool - embedded Osborne's tweet - it worked!

Tax evasion is not just illegal it's immoral.People evading tax should be treated same as common thieves.This agreement helps us tackle them

— George Osborne (@George_Osborne) October 29, 2014

[TonyGosling]

So there you have it, the information you need to know but which CNN, The Guardian, the BBC, CBC, the New York Times and all the rest of the media refuse to provide you so that you can properly assess the story they have propagated through the world media. The role of the western media is not to inform the public but, as Umberto Eco says, “to teach people how to think,” to manipulate opinion and action. Their suppression of that information is a lie and as that other great writer, Jose Saramago, wrote, they use “the lie as a weapon, the lie as the advance guard of tanks and cannons, the lie told over the ruins, over the corpses, over humanity’s wretched and perpetually frustrated hopes.” It is time for these people to be exposed for what they are and called to account for their deception of the people they claim to serve, for what greater crime can their be than to deceive the people?
http://journal-neo.org/2016/04/09/the-panama-papers-the-people-deceive d/

[TonyGosling]

Panama 'tax scam' lawyer is son of Nazi SS officer from dreaded Death's Head division who fled to South America then SPIED on Cuba for the CIA, brother reveals
Horst Mossack is German half-brother of Panama lawyer Jürgen Mossack
Told MailOnline unmasking of his sibling is 'shocking news, astounding'
Father was in the S.S. and after is thought to have been a CIA spy in Cuba
Horst was treated as shameful as a child after being born out of wedlock
Last saw half-brother Jürgen 60 years ago and says will never meet again
By ALLAN HALL IN BERLIN FOR MAILONLINE and ISABEL HUNTER and IMOGEN CALDERWOOD FOR MAILONLINE

http://www.dailymail.co.uk/news/article-3522538/I-shocked-astounded-Pa nama-tax-scam-lawyer-son-Nazi-SS-officer-dreaded-Death-s-Head-division -fled-South-America-SPIED-Cuba-CIA-brother-reveals.html

PUBLISHED: 11:31, 4 April 2016 | UPDATED: 15:18, 4 April 2016

The half-brother of Panama lawyer Jürgen Mossack (pictured) revealed that his father was a Nazi S.S. officer during the war, before spying on Cuba for CIA

The man behind a Panama 'tax scam' that guards the clandestine wealth of the global elite is the son of a Nazi SS officer from a unit known as the 'Death's Head division'.

Jürgen Mossack is at the heart of the biggest financial data leak in history, and has allegedly been helping world leaders, politicians and celebrities launder money, dodge sanctions and evade tax from his base in Panama.

It has now been revealed that his father, Erhard Mossack, was a member of the Nazi fighting unit known as the 'Death's Head division', a dreaded force during the Second World War.

Today, his half-brother Horst, has spoken of his 'shock and bewilderment' at the news of the unmasking of his half-brother.

He described the twisted family history that led to the estrangement of the siblings, both of whom raised by a man who not only fought with the Nazis but later joined the CIA to carry out espionage on Cuba.


The 68-year-old Horst last saw his sibling Jürgen 60 years ago when he left the town of Fürth in Bavaria bearing the name of his father Erhard.

Now living in the Black Forest region of Germany, Horst was born out of wedlock to a woman called Luisa Herzog.

'This was shameful in those days so I was put up for adoption,' he told MailOnline. 'My mother later went on to marry Erhard Mossack. I took that name later.

'What has come out of Panama is shocking news, astounding, bewildering even, but I can't say I feel shame because I have no connection in reality with him.

'I left all those years ago and we never had contact again. He was just a child, so how can I say what I remember of him? All I know is that I heard that he went to London and lived there for quite some time.

'He has a brother called Peter and a sister called Marion in Germany. Both my mother and their father are now dead.

'I remember that Erhard Mossack, their father, was in the S.S. I believe after the war he became a journalist.'

German media have reported that Erhard served as a Rottenfuehrer - roughly corresponding to a senior corporal - in the Waffen, or fighting arm, of the dreaded S.S.

What has come out of Panama is shocking news, astounding, bewildering even, but I can't say I feel shame because I have no connection in reality with him.

Horst Mossack, half-brother of 'Panama Papers' lawyer Jürgen Mossack
The Sueddeutsche Zeitung in Munich, one of the publications in the global alliance of newspapers which unmasked the activities of Jürgen Mossack's firm in Panama, said Erhard served in a 'Death's Head' unit of the S.S.

These were the units which ran the concentration camps. But if he was in the Waffen S.S. it probably meant he served in the Third Waffen S.S. Panzer Division Totenkopf.

Most of the division's initial enlisted men were recruited from concentration camp guards and others were members of militias that had committed war crimes in Poland.

Due to its insignia, it was sometimes referred to as the 'Death's Head Division'. Members of the division committed war crimes - one of them against British soldiers.

The Le Paradis massacre was carried out by members of the 14th Company of the division.

It took place on May 27 1940, during the Battle of France, at a time when the British Expeditionary Force was attempting to retreat through the Pas-de-Calais region during the Battle of Dunkirk.

Soldiers of the 2nd Battalion, the Royal Norfolk Regiment, had become isolated from their regiment. They occupied and defended a farmhouse against an attack by Waffen S.S. forces in the village of Le Paradis. After running out of ammunition, the defenders surrendered to the German troops.

British soldiers had become isolated from their regiment and occupied and defended a farmhouse (pictured) against an attack by Waffen S.S. forces in the village of Le Paradis. They eventually surrendered to the Germans, but were machine-gunned after surrendering with survivors killed with bayonets

But the Germans machine-gunned the men after surrendering, with survivors killed with bayonets. Two men survived with injuries, and were hidden by locals until they were captured by German forces several days later.

According to the Sueddeutsche, Erhard was captured by the Americans in Munich after the war with a list of Nazi 'Werewolf' members upon him.

The Werewolf units were intended to fight on as a guerrilla force after the surrender, but this never happened.

The newspaper said it applied to the German Federal Intelligence Service, the BND, for information about him. The BND confirmed documents existed on him but said they would not be released becauve this could endanger 'the well-being of the Federal Republic of Germany or one of its members'.

In 1948 he left Germany with his family to settle in Panama, and later returned to Munich with his wife during the 70s. He died in the 1990s, his wife followed five years ago.

According to reports, U.S. Army intelligence archives hold a file on him as he allegedly offered his services to the U.S. government as an informant, claiming 'he was about to join a clandestine organisation, either of former Nazis now turned Communist... or of unconverted Nazis cloaking themselves as Communists.'

An Army intelligence officer wrote that the offer to spy for the U.S. might simply be 'a shrewd attempt to get out of an awkward situation'.

Nevertheless, the old intelligence files indicate that Mossack's father later ended up in Panama, where he offered to spy, this time for the CIA, on Communist activity in nearby Cuba.

The children Peter and Marion returned to Germany in the 1970s; brother Peter is the Honorary Consul for Panama based in Frankfurt.

In 1952 a book by Erhard Mossack was published in Germany called The Last Days of Nuremberg, detailing the capture of the city to American forces in 1945.

Horst Mossack says he believes the father of Jürgen was the author.

He added; 'I don't expect I will ever see Jürgen again. If I did I would ask him exactly what went on.'

Meanwhile, the second man behind the Panama firm, a lawyer named Ramon Fonseca Mora, has been revealed to be an award-winning novelist famous for his salacious plots.

But the 63-year-old Panama native's storylines may cut closer to home than his readers realise.

As a young man Fonseca reportedly wanted to be a priest, before age and materialism took over. On joining forces with partner Mossack, he told a journalist in 2012, 'Together, we have created a monster.'

In among accounts he follows on Twitter are a fair amount of 18+ accounts - at first glance the naked bottom of 'Horny Cherry' sits alongside the official account of the President of Argentina Mauricio Macri.

Fonseca is currently on a leave of absence, according to the ICIJ, which is part of 100 outlets to have worked together on the leak.

[TonyGosling]

Offshore in central London: the curious case of 29 Harley Street
On a central London street renowned for high-class healthcare sits a property that houses 2,159 companies. Why has this prestigious address been used so many times as a centre for elaborate international fraud?
by Oliver Bullough
Tuesday 19 April 2016 06.00 BST 1525 Shares
http://www.theguardian.com/business/2016/apr/19/offshore-central-londo n-curious-case-29-harley-street

On 10 November, 2003, Gerry Florent, and Ralph Abercia, plus his son, Ralph Jr, left the Bellagio Hotel in Las Vegas, and drove to the Stirling Club, a high-end private venue just off the Strip. They were to attend separate meetings with Sir Richard Benson, but had met each other that morning, when they were collectively coached on the etiquette expected of them: speak only when spoken to, stand when he comes in. They were happy to comply. This was a man who had bailed out the Queen, after all.


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Both Florent and the Abercias wanted the same thing from Sir Richard: money, of which he had plenty. Sir Richard, who was portly, balding and elderly, explained to them that he owned a company named Sherwin & Noble, which was worth billions and was prepared to finance their business projects. At their meetings, the prospective investors received a glossy spiral-bound summary of S&N’s balance sheet, which showed it to be a financial firm of significant size.

Florent wanted $55m to buy land on which to build a hotel in Florida; the Abercias needed $105m for an “aquarium/entertainment complex” in Houston. In return for the money, all Sir Richard asked was that they pay advance fees (two payments of $412,250 each from Florent, and two payments of $787,500 each from the Abercias) to signal their commitment to the projects. If S&N decided not to go ahead with the loans, the fees would be repaid.

The investors left Las Vegas, instructed their lawyers to wire the first tranche of the fees over, and settled down to wait for their money. They waited. And they waited. When they rang or faxed the S&N office in London, they were reassured that there was nothing to be concerned about. But, over the next few months, Florent and his business associates became suspicious. They held off wiring the second half of the fee, and brought in a private investigator, who discovered that S&N, far from being worth billions, was an empty shell company. The glossy booklet detailing its assets had been copied from the banking company HBOS, with the names changed.

Thus, the fraud fell apart. The Abercias, who had wired the whole fee asked of them, were devastated. “That was a lot of money,” Ralph Sr told a local journalist. “We’re still paying the damgum thing back.”

The whole saga had been scripted by a conman named Lal Bhatia. Sir Richard Benson was an actor. He had never rescued Buckingham Palace from foreclosure. The billions and the knighthood were fictitious. S&N had no assets, beyond a registered presence at a house in London – 29 Harley Street.

Eight years later, on the other side of the world, representatives of a Dutch shipping company named Allseas met the businessman Marek Rejniak to finalise an investment proposal. Allseas had €100m in cash, but it needed more if it was to build a vessel to dismantle oil rigs. The company was looking for ways to increase its capital. Rejniak claimed his team could double any investment in 30 days, and provide €1.2 billion within three years.

At the meeting, which took place on 16 October 2011 in Malta, Rejniak claimed to have links to the US Federal Reserve, the Vatican and the Spanish House of Aragon, which gave him access to lucrative forms of secret trading in financial instruments known as medium term notes. The actual buying and selling would be done in London by someone named Luis Nobre, described by Rejniak as an “A1 trader”. (His companies were called The LARN Holdings and ERBON Wealth Management, their names being derived respectively from Nobre’s initials, and from his surname spelt backwards.)

The next day, Allseas transferred the whole €100m to Rejniak’s Maltese company, and Rejniak sent the money to LARN’s account in London. Once it was in London, Nobre began to spend it.

Nobre is Portuguese. His long, dark hair has a few strands of silver threaded through it, and his beard is carefully groomed. At his trial for fraud at Southwark crown court, which ended in February with him being jailed for 14 years, he wore beautifully cut pinstripe suits, his tie always matching his pocket square. (The police have not yet tracked down his fellow fraudster Rejniak.) Before Nobre’s arrest, he had lived in a suite at Marylebone’s five-star Landmark Hotel, where he left £100-plus tips. The money he defrauded ran through his investment companies, which were – just like S&N – registered at 29 Harley Street.

No 29 Harley Street does not look like a centre of intricate intercontinental fraud. It is a handsome stone-fronted terraced house, a couple of minutes’ walk from the shops and the tourists of Oxford Street. It is five storeys high, with a bay window on the ground floor, an intricate steel balcony at first-floor level, and a stone balustrade just under the roof. Its front door is dark wood, with brass fittings.

Until his death in 1991, this was the home and place of business of Professor Ronald Raven, an internationally renowned surgeon, philanthropist, soldier, pianist, amateur theologian and connoisseur of porcelain. During his lifetime, 29 Harley Street was a trove of beautiful objects: paintings, furniture, clocks, ornaments that he had collected during almost half a century in residence.

Photographs taken towards the end of his life show him to have been grey-haired and distinguished, the very epitome of the successful medical practitioner on a street that has long been synonymous with high-class healthcare. Over the decades, doctors like him have imbued Harley Street with an aura of authority; an aura that surrounds any venture based here.

There are dozens of properties on Harley Street still used by doctors, but No 29 is not one of them. Instead, it is home to a company named Formations House, which, since it was founded in 2001, has made a business out of conjuring corporate vehicles from the West End air. The house is currently home to 2,159 companies, for which it operates as a large, ornate and prestigiously located postbox and answerphone. There is nothing illegal in this but some have used this address for improper purposes.

In its promotional literature, Formations House makes much of its location, stating for example, that: “all your postal [sic] will be received in Central London at a prestigious Harley Street business address”. Company formation agents create the vast majority of the 585,000 new companies formed each year in the UK, and a Harley Street address helps this one stand out from the crowd. Companies are both easy and cheap to establish in Britain – and the process is almost entirely unmonitored. Nobre and Bhatia are far from the only criminals to have realised that they are pretty much the perfect weapon for fraud.

It is an article of faith in modern politics that creating companies should be as easy as possible. They are the building blocks of capitalism, helping investors to form joint ventures, while limiting their exposure to losses if the ventures go wrong. Since Margaret Thatcher came to power in 1979, the UK government has gradually made creating companies easier, and the number of them on the corporate register has grown accordingly. In 1978, 744,000 companies were registered in the UK. By 1989, there were a million. By 2001, there were two million.

Formations House has made a business out of conjuring corporate vehicles from the West End air
This was in an era when applications still had to be filed on paper. “Before the digital age this was often a costly and laborious task,” lamented the World Bank’s 2015 Doing Business report, which included a case study of Britain’s deregulation of the sector. “It involved visits to Companies House, long lines and the higher costs associated with postal mail. Company founders often had to hire solicitors to handle paperwork.”

In 2001, the government did away with all that, and Companies House – the institution that registers British corporations, after which the name of Formations House is presumably modelled – introduced online applications. A boom began, and there are now 3.5m companies registered in the UK.

Dozens of company formation agents popped up to take advantage of this new system – among them Nadeem Khan and his wife Danielle Ardern, the founders of Formations House.

In the most basic sense, company formation agents simply create companies for people who do not want to do it for themselves. The sector has expanded, however, in all sorts of directions: most notably by creating “shelf” companies. Shelf companies are ready-made and available for purchase. Their advantage to the purchaser is that they give a reassuring impression of longevity to what is essentially a brand-new operation, since they have documents extending back years.

What are the Panama Papers? A guide to history's biggest data leak
What is Mossack Fonseca, how big is it, and who uses offshore firms? Key questions about one of the biggest ever data leaks
Read more
By law, all British companies must have two things: a director, who runs the company, and a shareholder, who owns it. They can also (but do not have to) have a secretary who, in a legitimate operation, takes on much of a director’s work. To create shelf companies, company formation agents need directors and secretaries. And this is when things start to get complicated, because they use other companies to do jobs designed for humans.

As soon as companies were involved in owning other companies, as well as being their directors and secretaries, it became extremely difficult to discover who really controlled them (ie who was the “beneficial owner”, the person who received any benefit from the company). In February 2004, for example, Formations House created three companies: Corporate Nominees, Legal Nominees, and Professional Nominees. The second company owns the other two, while itself being owned by the first company. The third company is secretary for the other two, while its own secretary is the first company. The second company is director of the other two, while its own director is the first company. These three companies then became directors, secretaries and shareholders of other structures, in an increasingly baffling multidimensional web of crisscrossing lines of control. If you looked for the companies’ real owners, the most you could eventually discover was that the original three all owned, controlled and managed each other.

To solve problems like this, in 2008 parliament decided that companies must have at least one real person as a director. In response, company formation agents signed up people who, for a fee, would declare themselves directors of newly created companies. Edwina Coales, a serial director of companies registered at 29 Harley Street, is or has been an officer at 1,560 of the companies listed on the Companies House website.

And that’s only the start of it. Formations House does not just create companies in Britain, but also in Gambia, Hong Kong, the Seychelles, the British Virgin Islands, Ireland, the US state of Delaware, Panama, Gibraltar, Jersey, the Isle of Man, Belize and Mauritius. Its website boasts of having formed more than 450,000 corporate entities: that is more companies than there are in Jersey, Guernsey and the Cayman Islands put together. It has 25,000 shelf companies available for purchase right now, with nominee directors, secretaries and shareholders available too. Yet, its office is not in a tax haven in the Caribbean or the English Channel. It is right in the heart of central London, half an hour’s walk from the Houses of Parliament, churning out companies for whoever wants them. Media outlets in Britain, the US, Norway, Italy, Ukraine and Romania have all made allegations of fraud against certain companies registered at 29 Harley Street.

Khan and Ardern (nee Coales) were born in November 1960 and February 1959, respectively. Not much is known about Ardern, but Khan, who claimed to have been born in the Middle East before obtaining British citizenship, gained a certain prominence after the 9/11 attacks. Under the pseudonym of Sam Soloman (or, often, Solomon), Khan presented himself as an expert on Islam, and spoke widely, particularly in North America, to audiences eager to hear about the religion. In a talk available on YouTube, he claims to have studied the Koran for 15 years, to have converted to Christianity, to have been sentenced to death for apostasy, and then to have fled into exile, where he dedicated himself to exposing the faith he turned his back on. The film shows him as bald, bearded, and stocky, with an encyclopedic command of Islamic scripture, and a deep distrust of Islam.

In 2006, the outspoken Ukip MEP Gerard Batten commissioned Soloman/Khan to write a Charter of Muslim Understanding, which Muslims should sign to signal their abhorrence of violence, acceptance of equality, and rejection of certain aspects of Islamic tradition. It did not gain much (or, indeed, any) traction, and Soloman gradually faded from view as a commentator.

He had plenty of company formations to keep him busy, however. The Formations House website is available in French, German, Russian, Italian, Spanish and Arabic, and welcomes clients from all over the world. When Formations House created Sherwin & Noble (it was initially called Q&Q, then renamed, presumably to make it sound posh enough for “Sir Richard Benson”), Khan was its shareholder and secretary, his wife Ardern was its director, and “Sam Soloman” was the person to be contacted if Companies House had any queries.

As the years went by, Khan and Ardern began to distance themselves from the companies they formed. When Formations House created companies for Nobre – The LARN Holdings Ltd, and ERBON Wealth Management Ltd – in 2011, the secretary was Nominee Secretary Ltd, a Harley Street shell owned by Corporate Nominees Ltd, and thus by the triangle of interlocking companies at the heart of Formations House. Nominee Secretary Ltd’s director was the serial nominee Edwina Coales, born 16 April 1935. It is not known how Coales’ relationship with Formations House began, but it is perhaps relevant that she was born 23 years before Ardern and that her surname is the same as Ardern’s maiden name.

Formations House has abided by the letter of British law, but successfully created structures that are all but impossible to penetrate for anyone trying to discover who really owns them.

“If organised crime depends on financial secrecy, untraceable shell companies are the most important means of providing it,” wrote the authors of a 2012 study of company formation agents, Global Shell Games. “Shell companies that cannot be traced back to their real owners are widely held to be one of the most common means of laundering money, giving and receiving bribes, busting sanctions, evading taxes, and financing terrorism.”

In the book, the authors tracked to what extent company formation agents in different countries requested their clients identify themselves before selling them shelf companies. In Britain, almost half of agents were happy to sell a company without checking the identity of the person buying it. If the agent does not record the beneficial owner of a company, then there is no way law enforcement officers can discover that information. And that is a problem, because the qualities that so endear companies to legitimate businessmen are just as attractive to organised criminals. Fraudsters like to obscure their identity and avoid liability as much as, if not rather more than, the next man. It is simply easier to commit fraud if you can do it anonymously, unobtrusively, and behind the protective cover of a prestigious London address.

Formations House has abided by British law, but created structures that are all but impossible to penetrate
“The question for me is this: as a police officer, what would I like?” asked Commander Chris Greany of the City of London police, the force that leads efforts by UK police to fight fraud. “Well, I’d like everything to be locked down tight, of course I would, but that isn’t the real world in which we all live. Society wants convenience, doesn’t it? And the price of convenience today is there might be fraud on the back of it.”

Formations House is probably no better or worse than any of its competitors, of which there are around 300 listed in the Yellow Pages, it is just more visible. Its address is so unlikely that few journalists can resist mentioning the Harley Street connection when a company such as Sherwin & Noble, The LARN Holdings or ERBON Wealth Management gets caught up in a fraud prosecution. And that has left a paper trail over the years, showing quite how many people have been ripped off by companies created in Professor’s Raven old home.

Illustration by Michael Kirkham
Illustration by Michael Kirkham
VAT fraud may lack the glamour of some of the scams laid bare by the Panama Papers, but few financial crimes are more prevalent or more damaging. Her Majesty’s Revenue and Customs (HMRC) estimates that the UK misses out on £500m to £1bn every year, from VAT being claimed back illegally. Across the whole of the EU, the “VAT gap” – the amount missing through non-compliance or non-collection – was estimated in 2013 at €193bn. That would be enough to pay off Ireland’s entire national debt, with a few billion left over to help the Greeks.

In the most common scam, shelf companies move shipments of high-value goods (typically, mobile phones) in and out of EU states and pick up VAT repayments each time. The first company imports the goods, and sells them on via a chain of companies, which charge VAT on every sale. The final company then exports the goods, and claims back from the Treasury the VAT it has paid, while the first company disappears without passing on the VAT it has charged. The fraudster has thus earned free money, without having to do anything but register a series of sales. To commit the crime, all they require are several shelf companies, with their own bank accounts and VAT numbers, so they can do business with each other. You can buy such companies from a number of outlets, including Formations House. On its website Formations House does not give a price for this product, but competitors provide similar vehicles for as little as £59.99). It is a near-perfect crime, almost impossible to uncover as long as the fraudster does not get greedy.

We know about the most famous scam to have involved 29 Harley Street precisely because the criminals did not follow that advice. Aoife Madden, an actress and the niece of a member of the Northern Irish assembly, and an Iraqi investor, Bashar Al-Issa, along with three associates, used one corporate vehicle, Evolved Pictures Limited (registered at 29 Harley Street), to invoice another for services supposedly related to the production of a film. They then tried to claim back £1.5m in VAT and almost as much again in film tax relief, a tax break designed to encourage film-making. Their crime was to claim it without actually making a film, and to charge VAT without passing it on to the Treasury.

“Falsely claiming VAT that is not due is illegal, so we are pleased that instead of this film flop going straight to DVD, these small-screen z-listers could go straight to jail,” said John Pointing, HMRC’s assistant director of criminal investigation, following their conviction in 2013.

The five did indeed go to jail, but they remained curiously naive fraudsters. While awaiting trial, they set to making a film – called, improbably, Landscape of Lies – in the forlorn hope that its existence would erase the crime they had committed by not making one in the first place. The film was shot on the cheap. Its Middle Eastern scenes had clearly been filmed somewhere in the Home Counties, and its star was ex-GMTV weather girl turned Loose Women presenter Andrea McLean. Madden and Al-Issa neglected to tell the cast or the director they hired – an ex-bouncer named Paul Knight – that they were awaiting trial, however. When the case started, he was left without payment. So he looked for compensation at their company’s registered office.

“After about three months of trying, I thought well, I’m just going to turn up on the doorstep, mate,” Knight told me. The prospect of Knight turning up on anyone’s doorstep is a daunting one – he is a big bloke, but that didn’t do him any good in this case. “Lo and behold, you realise that the * Harley Street address was just a building with a few letter boxes. It kind of put the final cherry on the cake,” he said.

He had discovered one of the great features of a corporate structure, which is how totally it can distance the owner from anyone trying to track them down. Knight never got his money, though Landscape of Lies gained a certain notoriety and indeed won an award at the Las Vegas film festival. (The festival rescinded the Silver Ace, however, after realising it had given a prize to a feature used as an unsuccessful alibi.)

If it was difficult for a Brit to discover that a registered address at 29 Harley Street was meaningless, it was even harder for a Ukrainian. In the early years of Viktor Yanukovych’s presidency, investigative journalists in Kiev could see that a piece of state-owned land in a forest outside the capital had been illegally privatised, but they did not know who by. The lakeside property, which was near the village of Sukholuchya, was transformed in the years after Yanukovych was elected in 2010 into a luxury residence, complete with a shooting range, chapel, yacht harbour, outdoor barbecue area, and more.

The owner was clearly rich and influential, but any attempt to definitively track down his identity came up against Astute Partners Limited, registered at 29 Harley Street, legal owner of the Ukrainian company that owned the land. Astute Partners was owned by Blythe (Europe), another Harley Street company, which was in turn owned by P&A Corporate Services Trust, registered at the Liechtenstein offices of an Austrian lawyer named Reinhard Proksch.

Why would a wealthy Ukrainian want to own property via central London? According to Borys Danevych, a Ukrainian lawyer who has himself struggled to identify the owners of shell companies while investigating corporate structures, a key reason 29 Harley Street was chosen as a base was that it looked prestigious, but in reality was just a front. Astute Partners had to declare its shareholder, but that shareholder was a trust in Liechtenstein, which does not reveal company ownership, so the declaration was meaningless.

Ukrainian court proceedings last year showed that the actual owner of the property was Yanukovych, who was overthrown in 2014. Proksch denies any wrongdoing, or any connection between Astute Partners and Yanukovych, and in 2014 insisted the companies belonged to “UK/US and UAE based clients and foreign investors”. The Ukrainian judge was not convinced, however, and the court took the land back into state ownership. Proksch failed to reply to my calls and emails requesting comment.

On a recent Friday afternoon, I decided to incorporate myself. I registered for a profile on the Companies House website, entered the information it asked for, chose a name for my company, and paid for it – all in just nine minutes. Some 36 hours later, on the Sunday morning, the email came through that my incorporation was successful. Oliver Bullough was now sole shareholder and director of Crooked Crook Crook Limited (under which name I receive a surprising number of letters. Just the other day, I was offered corporate car hire). Crooked Crook Crook is free to conduct business, its liabilities limited by legal guarantee, and no one at Companies House asked for any proof that the information I provided was accurate. It cost me £15.

The lack of checks is not wholly surprising. There were 200 new companies registered last year for every one of Companies House’s 3,000 employees, on top of the millions of regulatory filings that existing companies make. There is clearly no way such a small number of people can process this mound of paperwork, which is why the accuracy of the registry relies on the honesty of the people providing it with information.

If registering a birth or death was this easy, the opportunities for mischief would be endless. You could create as many “persons” as you liked, then use them to claim benefits, vote, register businesses, or apply for a passport, then kill them off if they got into trouble. The rights of companies are more limited, but the opportunities for fraud are almost as broad.

From 2010 to 2013, cold callers harassed thousands of British households with claims that land near the Brazilian seaside town of Fortaleza would rocket in price thanks to the then-forthcoming World Cup. The cold callers seemed plausible, and 600 people put up a total of £19m. But, in 2013, the Insolvency Service stepped in, forcibly winding up a group of related companies involved in the scam, among them Pantheon Limited, and Pantheon Realty Consultancy Limited, both registered at 29 Harley Street.

The only culprits the authorities could find were Ismael Rajabi and Ahmed Mohammadi, both from Afghanistan, whose names appeared on the companies’ registration documents. They are real people, but Companies House had, of course, not checked if they actually were the owners of the companies, which they were not. The real shareholders vanished, taking the investors’ money with them, and all the law could do was disqualify Rajabi and Mohammadi from being directors for 11 years.

Some of the defrauded investors asked Chris Corney, a solicitor from Carter Lemon Camerons in London, to look into launching a civil action to recover their money. He advised them against it, since bringing a case would have cost them more than it could have recovered. “London is such a free-for-all. We think of it as an orderly, well-regulated, law-bound economy, and you realise that actually it’s incredibly laissez-faire. You’ve got to run an awfully long way before the authorities will engage with you,” he said.

Yet Companies House’s “policy team” insisted that this wide-open system was key to keeping Britain in business: “The aim of UK government is to not impose burdens of unnecessary regulation on companies, and risk discouraging people from setting up and running a business, the vast majority of whom are honest.”

So, if it is this easy to create a company, why employ an agent to do it? Simply, company formation agents do more than create companies, they also answer the phone, receive post, and do other administrative tasks. The Las Vegas fraud would have been impossible without the semblance of legitimacy these services provided, for example, and the proceeds contributed to the torrent of dirty money that pours into London each year.

Prime Minister David Cameron has pledged to cleanse Britain of this ill-gotten cash. His government has made it possible for anyone to search Companies House for free on the internet, and, from June, new companies will have to publish their beneficial owners – the people who really control them. That information provided will not be checked any more thoroughly than it is now, however, which leaves law enforcement agencies as overstretched as ever.

So, are the company formation agents who offer these services breaking the law? Nigel Kirby, deputy director of the National Crime Agency’s Economic Crime Command, told me his team was investigating several agents, though he declined to specify which ones, and hoped to hand evidence to the Crown Prosecution Service this year. He said prosecutions could be brought under several sections of 2015’s Serious Crime Act. Among the new law’s provisions is one that obliges professionals to cease a business relationship if they are unable to discover the true identity of their client. “If you don’t do so, you’re liable to two years, and an unlimited fine,” Kirby said.

If his team does investigate Formations House, however, it may come up against the same difficulties that I did in finding anyone to talk to. Company filings record that Edwina Coales, the serial Formations House nominee who is still director of 49 companies, lives in a flat on Crawford Street in central London. However, when I visited the flat, the man who answered the door told me Coales had died “around two years ago”. Danielle Ardern, meanwhile, has no registered address except her office at 29 Harley Street, where I failed to find her when I showed up recently.

The door buzzed open into a grand, marble-floored hall leading into the depths of the house. A staircase rose up to the left, and pictures of Egyptian antiquities hung on the walls. A young man emerged from a corridor to ask my business, and then ushered me into a conference room, where I waited until a young woman, with long dark hair and a slight European accent, came to ask what I wanted. I explained that I was interested in what happened in the building, and she looked concerned. “We would normally require information in writing, you understand,” she said. “Most publications can be not very positive, so we are careful.” She wrote down her email address in my notebook, told me her name was Charlotte, and showed me out. I emailed her a list of questions about her place of work, but she did not reply to them, or return the phone messages I left for her.

And that left just Nadeem Khan, the refugee from religious persecution turned enabler of fraud on a grand scale. We know slightly more about him, thanks to the prosecution of Nobre, the Portuguese conman. After Nobre was arrested on 3 December 2011, the money he had obtained from Allseas was frozen. But Nobre continued to live in expensive hotels in Mayfair and St James’s, with the funds coming from his Wembley-based lawyer Buddika Kadurugamuwa. (In February, she was convicted on one count of transferring criminal property, but avoided jail.)

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Although the police informed Nadeem Khan by fax in December that Nobre was under arrest, Khan continued to deal with him, and only filed a suspicious activity report on 6 January 2012, the day he was visited by a police officer. According to the prosecution, Khan did rather more than just sell companies to Nobre. “His actions … were key in allowing Nobre to launder more of the stolen Allseas money,” the barrister’s opening note stated.

Prosecutors said Nobre had paid Khan £160,000 before the funds were frozen, nominally to buy four shelf companies. In reality, Khan used that money to finance pre-paid credit cards funded via a Cypriot bank and thus gave it back to Nobre by an obscure route, allowing the fraudster to keep spending Allseas’ money even while on police bail. Nobre appears to have thought that filing a suspicious activity report protected him from any criminal liability. “We assumed that it was [approved], we had the all-clear to deal with him, so we continued to deal with him,” Khan told police, according to comments quoted by the prosecuting barrister.

Khan assumed wrong, and was charged alongside Nobre and Kadurugamuwa. He died last year, shortly before the trial began, so the jury had no chance to decide the merits of the crown’s case against him. However, considering the sheer volume of frauds that have been publicly linked back to his office on Harley Street, it is hard not to wonder whether he played a similar role in other crimes too. He presumably would have charged handsomely for these backdoor services, as he did for the London phone numbers, the fax forwarding, the accountancy, and all the other legitimate services his company provided for his clients. If he did, where is the money? And, perhaps more importantly, who now owns this business in the heart of London that some have used for fraud?

Formations House Ltd is owned by Nominee Director Ltd, which is owned by another Harley Street company – our old friend Legal Nominees Ltd. Professional Nominees Ltd is still the secretary for Legal Nominees, and Corporate Nominees Ltd is still a director. The other director, required by law to be a person, is a 37-year-old Pakistani man, who plays the same role in 1,033 other companies. But the business structure has changed since this triangle of companies was created in 2004 to guard the inner sanctum of Formations House. Perhaps it was not quite impenetrable enough.

Since at least 2014, 200,000 shares in each of Legal Nominees Ltd, Corporate Nominees Ltd, and Professional Nominees Ltd have been owned by Sigma Tech Enterprises, which is registered at a service address in Hong Kong. There, however, is no company with that name on the Hong Kong corporate register. The Formations House website says that any disputes over the company’s privacy policy will be decided under Seychelles law, so the whole 29 Harley Street operation may ultimately be owned on an Indian Ocean archipelago, although we cannot be sure, since the Seychelles does not open its corporate register.

Public discussion about offshore tends to focus on the Seychelles, the British Virgin Islands or Panama: sunny places for shady people; remote countries full of dodgy money. But if 29 Harley Street tells us anything, it is that offshore isn’t a place, it’s an idea. Formations House is about as offshore as a place can be, and our government appears powerless to bring it back onshore again.

Main illustration: Michael Kirkham

[ian neal]

Swiss banker whistleblower: CIA behind Panama Papers
April 12, 2016, CNBC

http://www.cnbc.com/2016/04/12/swiss-banker-whistleblower-cia-behind-p anama-papers.html

Bradley Birkenfeld is the most significant financial whistleblower of all time, so you might think he'd be cheering on the disclosures in the new Panama Papers leaks. [He] was a banker working at UBS in Switzerland when he approached the U.S. government with information on massive amounts of tax evasion by Americans with secret accounts in Switzerland. By the end of his whistleblowing career, Birkenfeld had served more than two years in a U.S. federal prison, been awarded $104 million by the IRS for his information and shattered the foundations of more than a century of Swiss banking secrecy. In an exclusive interview Tuesday from Munich, Birkenfeld said he doesn't think the source of the 11 million documents stolen from [Panama City-based law firm Mossack Fonseca] should automatically be considered a whistleblower like himself. Instead, he said, the hacking ... could have been done by a U.S. intelligence agency. "The CIA I'm sure is behind this, in my opinion," Birkenfeld said, [pointing] to the fact that the political uproar created by the disclosures have mainly impacted countries with tense relationships with the United States. "If you've got NSA and CIA spying on foreign governments they can certainly get into a law firm like this," Birkenfeld said. "They selectively bring the information to the public domain that doesn't hurt the U.S.. That's wrong. And there's something seriously sinister here behind this."

Whistleblower Says CIA Behind Panama Papers Leak

http://www.theeventchronicle.com/panama-papers/whistleblower-says-cia- behind-panama-papers-leak/#

By Carey Wedler

A former Swiss banker-turned-whistleblower has accused the CIA of playing a key role the Panama Papers leak, which implicated numerous foreign leaders, companies, organizations and individuals in offshore tax evasion, among other offenses. Bradley Birkenfeld, a former American banker for Swiss firm UBS, told CNBC “the CIA I’m sure is behind this, in my opinion,” in an interviewconducted Tuesday from Munich.

Birkenfeld originally blew the whistle on American tax evaders using Swiss bank accounts to divert their funds away from the reach of U.S. authorities. He served two-and-a-half years for his involvement and was released from prison in 2012. Pursuant to whistleblower policy, Birkenfeld was awarded $104 million of the $780 million settlement UBS was forced to pay as a result of his cooperation with authorities. Since his release from prison in 2012, he has said he wants “to force the government to explain why it was so aggressive in prosecuting him, but let nearly everyone else involved in the scam get off with light penalties or none at all.”

Focusing on the CIA on Tuesday, Birkenfeld was careful to note his comments were his “opinion,” but nonetheless offered strong observations on the scope of the data leak, which is the biggest in history.

“The very fact that we see all these names surface that are the direct quote-unquote enemies of the United States, Russia, China, Pakistan, Argentina and we don’t see one U.S. name. Why is that?” Birkenfeld said. “Quite frankly, my feeling is that this is certainly an intelligence agency operation.”

Asked why a U.S. spy agency would release information that damages U.S. allies, like David Cameron, Birkenfeld said he was likely “collateral damage” in the purported overarching scheme to smear American adversaries.

He suggested the CIA had a calculated role in the way the leak was presented to the public:

“If you’ve got NSA and CIA spying on foreign governments they can certainly get into a law firm like this,” Birkenfeld said. “But they selectively bring the information to the public domain that doesn’t hurt the U.S. in any shape or form. That’s wrong. And there’s something seriously sinister here behind this.”

Birkenfeld’s comments seem even more perceptive considering German newspaper Sueddeutsche Zeitung reported Tuesday that “secret agents and their informants have made wide use of [Mossack Fonseca’s] services,” as translated by Raw Story. Sueddeutsche Zeitung originally received the leaked data from an anonymous whistleblower before handing it over to the International Consortium of Investigative Journalists (ICIJ).

“Agents have opened shell companies to conceal their activities… Among them are close intermediaries of the CIA,” the German publication noted. Other individuals reportedly mentioned in the leaks included players in the infamous 1980s Iran-Contra scandal, in which the CIA was involved. The Iran-Contra scheme involved the U.S. selling weapons to Iran in exchange for the release of American hostages, then using the profits to fund anti-communist rebels in Nicaragua.

Though the CIA was not explicitly named in Sueddeutsche Zeitung’s report, their “intermediaries” were. Regardless, these revelations taken alongside Birkenfeld’s suspicions can mean one of two things: either Birkenfeld is wrong, or the CIA actually is involved with the Panama Papers and considered reports on their “intermediaries” to be “collateral damage,” as Birkenfeld suggested of Cameron.

Regardless, the Panama Papers leak has faced scrutiny beyond Birkenfeld’s. Wikileaks has called on the ICIJ to make all data from the 11,500 leaked pages available to the public.

Wikileaks also said, “If you censor more than 99% of the documents you are engaged in 1% journalism by definition.”

Gerard Ryle, Director of the ICIJ, has said, “We’re not WikiLeaks. We’re trying to show that journalism can be done responsibly,” and the ICIJ has noted it will not release all of the data. However, it will continue to release parts of the leak in the coming months.

Wikileaks also took to Twitter to accuse the ICIJ of being a “Washington DC based Ford, Soros funded soft-power tax-dodge” that “has a WikiLeaks problem.”

Further, the publishing organization accused ICIJ and the Organized Crime and Corruption Reporting Project, with whom ICIJ shared the data, of launching an attack against Russian president Vladimir Putin:

“Putin attack was produced by OCCRP which targets Russia & former USSR and was funded by USAID & Soros,” Wikileaks tweeted. Another Twitter post later clarified the Panama Papers were not an “attack” against Putin, but that “DC organization [ICIJ] & USAID money tilt coverage.” USAID, the U.S. Agency for International Development, has been previously accused of corruption. Billionaire George Soros has been accused of influencing narratives in the mainstream media.

Regardless of who was behind the leak — and who may or may not be clandestinely pulling the strings on the flow of information — the CIA has faced similar accusations of media manipulation before. Otto Ulfkotte, the former editor of the Frankfurter Allgemeine, a large German publication, said he was bribed by the CIA to write pro-American stories.

“It is not right what I have done in the past. To manipulate people and make propaganda,” he said in 2014. “I was bribed by billionaires, I was bribed by the Americans not to report exactly the truth.” Explaining how this relationship began, he said:

“Germany is still kind of a colony of the United States… And being a colony it is very easy to approach young journalists from transatlantic organizations.”

Noting that “all journalists from really respected and recommended big German newspapers” tend to be members of such transatlantic organizations, he said:

“They invite you [to see]the U.S. They pay for that, they pay all your expenses and everything, so you are bribed, you get more and more corrupt, because they make you good contacts. You won’t know that those good contacts are, let’s say, ‘non-official’ covers or officially people working for Central Intelligence Agency or other American intelligence agencies… so you make friends, you think you are friends, and you cooperate with them. They ask you, ‘Well, could you do me this favor? Could you do me that favor?’ And so your brain is more and more brainwashed.”

He said many reporters in countries around the world “play the [role of]respected journalists but if you look behind them you’ll find they are puppets on the string of the CIA.”

Though some may discount Ulfkotte’s account because it was not corroborated by a third party — and the interview aired on Russia Today, Russia’s state-funded news agency — the CIA has been known to work with other newspapers, including the Los Angeles Times, to manipulate news stories in their favor.

Regardless of whether or not Birkenfeld is correct in his assessment of the CIA’s role in the leaks, his statements on CNBC provide, at the very least, cause for continued skepticism among the many interests and motivations driving the ongoing leak.

[Whitehall_Bin_Men]

2018 Secrecy Ranking
https://financialsecrecyindex.com/

1. Switzerland
2. USA
3. Cayman Islands*
4. Hong Kong
5. Singapore
6. Luxembourg
7. Germany
8. Taiwan
9. United Arab Emirates (Dubai)
10. Guernsey*
11. Lebanon
12. Panama
13. Japan
14. Netherlands
15. Thailand

* British overseas territory or crown dependency. If Britain's network were assessed together, it would be at the top.

See full index here



Financial Secrecy Index 2018


The Financial Secrecy Index ranks jurisdictions according to their secrecy and the scale of their offshore financial activities. A politically neutral ranking, it is a tool for understanding global financial secrecy, tax havens or secrecy jurisdictions, and illicit financial flows or capital flight.

The index was launched on January 30, 2018.

Map1 Map2
Please click here to access the interactive overview map Please click here to access the interactive detailed map
Shining light into dark places

An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world. Secrecy jurisdictions - a term we often use as an alternative to the more widely used term tax havens - use secrecy to attract illicit and illegitimate or abusive financial flows.

Illicit cross-border financial flows have been estimated at $1-1.6 trillion per year: dwarfing the US$135 billion or so in global foreign aid. Since the 1970s African countries alone have lost over $1 trillion in capital flight, while combined external debts are less than $200 billion. So Africa is a major net creditor to the world - but its assets are in the hands of a wealthy élite, protected by offshore secrecy; while the debts are shouldered by broad African populations.

Yet all rich countries suffer too. For example, European countries like Greece, Italy and Portugal have been brought to their knees partly by decades of tax evasion and state looting via offshore secrecy.


2018 Secrecy Ranking
See full index here

1. Switzerland
2. USA
3. Cayman Islands*
4. Hong Kong
5. Singapore
6. Luxembourg
7. Germany
8. Taiwan
9. United Arab Emirates (Dubai)
10. Guernsey*
11. Lebanon
12. Panama
13. Japan
14. Netherlands
15. Thailand

* British overseas territory or crown dependency. If Britain's network were assessed together, it would be at the top.

See full index here
A global industry has developed involving the world's biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients. 'Competition' between jurisdictions to provide secrecy facilities has, particularly since the era of financial globalisation really took off in the 1980s, become a central feature of global financial markets.

The problems go far beyond tax. In providing secrecy, the offshore world corrupts and distorts markets and investments, shaping them in ways that have nothing to do with efficiency. The secrecy world creates a criminogenic hothouse for multiple evils including fraud, tax cheating, escape from financial regulations, embezzlement, insider dealing, bribery, money laundering, and plenty more. It provides multiple ways for insiders to extract wealth at the expense of societies, creating political impunity and undermining the healthy 'no taxation without representation' bargain that has underpinned the growth of accountable modern nation states. Many poorer countries, deprived of tax and haemorrhaging capital into secrecy jurisdictions, rely on foreign aid handouts.

This hurts citizens of rich and poor countries alike.

What is the significance of this index?

In identifying the most important providers of international financial secrecy, the Financial Secrecy Index reveals that traditional stereotypes of tax havens are misconceived. The world’s most important providers of financial secrecy harbouring looted assets are mostly not small, palm-fringed islands as many suppose, but some of the world’s biggest and wealthiest countries. Rich OECD member countries and their satellites are the main recipients of or conduits for these illicit flows.

The implications for global power politics are clearly enormous, and help explain why for so many years international efforts to crack down on tax havens and financial secrecy were so ineffective, it is the recipients of these gigantic inflows that set the rules of the game.

Yet our analysis also reveals that recently things have genuinely started to improve. The global financial crisis and ensuing economic crisis, combined with recent activism and exposure of these problems by civil society actors and the media, and rising concerns about inequality in many countries, have created a set of political conditions unparalleled in history. The world's politicians have been forced to take notice of tax havens. For the first time since we first created our index in 2009, we can say that something of a sea change is underway.

World leaders are now routinely talking about the scourges of financial secrecy and tax havens, and putting into place new mechanisms to tackle the problem. For the first time the G20 countries have mandated the OECD to put together a new global system of automatic information exchange to help countries find out about the cross-border holdings of their taxpayers and criminals. This scheme is now being rolled out, with first information due to be exchanged in 2017.

Yet of course these schemes are full of loopholes and shortcomings: many countries are planning to pay only lip service to them, if that -- and many are actively seeking ways to undermine progress, with the help of a professional infrastructure of secrecy enablers. The edifice of global financial secrecy has been weakened - but it remains fully alive and hugely destructive. Despite what you may have read in the media, Swiss banking secrecy is far from dead. Without sustained political pressure from millions of people, the momentum could be lost.

The only realistic way to address these problems comprehensively is to tackle them at root: by directly confronting offshore secrecy and the global infrastructure that creates it. A first step towards this goal is to identify as accurately as possible the jurisdictions that make it their business to provide offshore secrecy.

This is what the FSI does. It is the product of years of detailed research by a dedicated team, and there is nothing else like it out there. We also have a set of unique reports outlining detailed offshore histories of the biggest players in the game.

Click here for the full 2018 ranking. For further questions, click here.

[TonyGosling]

Where All That Davos Money Sleeps at Night
https://whowhatwhy.org/2018/01/26/davos-money-sleeps-night/

An Unending and Growing Web of Money Laundering and Tax Evasion
Panama Papers, Paradise Papers
Photo credit: Adapted by WhoWhatWhy from VectorOpenStock / Wikimedia

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With the annual gathering of global financial elites taking place this week in Davos, and all the recent news focusing on money laundering, taxes and the .0001 percent, it seems an appropriate time to take another look at where so much of the wealth-that-dare-not-speak-its-name is being stashed.

Back in 2016 we learned that a Panamanian law firm had become a kind of digital safe-deposit box for tainted money and tax evaders. WhoWhatWhy has extensively covered this story, which laid bare something like an alternative global financial system — an incredibly complex web of offshore accounts, lawyers, guns and money.

In the wake of Davos and the ongoing revelations about Deutsche Bank, it seems important to take a fresh look at the “Panama Papers.” My guest for this week’s WhoWhatWhy podcast is journalist Jake Bernstein, who has devoted years to uncovering and explaining what is really going on behind the scenes of international finance.

One can’t help wondering: How many owners of the private jets at Davos have Panamanian accounts?

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Full Text Transcript:

As a service to our readers, we provide transcripts with our podcasts. We try to ensure that these transcripts do not include errors. However, due to time constraints, we are not always able to proofread them as closely as we would like. Should you spot any errors, we’d be grateful if you would notify us.
Jeff Schechtman: Welcome to Radio WhoWhatWhy. I’m Jeff Schechtman.
In the debate over taxes, we hear a lot about offshore funds, the repatriation of corporate dollars, and how lowering the marginal tax rate will bring all this money pouring back and stimulate the economy. Unlikely. Particularly because what we don’t hear about is the almost hundreds of trillions of dollars that are hidden from view in a complex web of offshore accounts, tax havens, laundered money, corrupt banks and nations that have created a kind of alternative financial system.
Back in April of 2016, leaked documents from a Panamanian law firm, known as the Panama Papers, began to shed light on this universal flow of tainted money. More recently, the Paradise Papers brought this corruption to the doorstep of the White House. Covering every step of it has been my guest, journalist Jake Bernstein.
Jake Bernstein is a two-time Pulitzer Prize winner, a senior reporter on the International Consortium of Investigative Journalists that originally broke the Panama Paper story. It is my pleasure to welcome Jake Bernstein here to Radio WhoWhatWhy to talk about Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite.
Jake Bernstein, thanks so much for joining us.
Jake Bernstein: No, thank you so much for having me, Jeff.
Jeff Schechtman: I want to go back first to talk a little bit about the Panama Papers, what they were and how they were leaked.
Jake Bernstein: Sure. The Panama Papers ended up being well in excess of 11.5 million documents that came from a Panamanian law firm called Mossack Fonseca and this law firm had been, well, either leaked or hacked. The information had found its way to a German newspaper called Suddeutsche Zeitung and they, in turn, gave it to a group called the International Consortium of Investigative Journalists, ICIJ.
ICIJ ended up sharing it with more than 300 journalists around the world, who collaborated on investigating the data and writing stories about what they found, and then, all dropping their stories simultaneously on the same day in April in 2016.
Jeff Schechtman: It’s ironic, I suppose, that it was a German publication that was the first to get this, given if we look at the history, as you outlined it, of this law firm, Mossack Fonseca, that it has these origins and roots going all the way back to Nazi Germany.
Jake Bernstein: I think that could very well be part of it.
Another reason was that the Germans had gotten an earlier leak from the law firm of a smaller subset of information and already written some stories. So I think that’s part of the reason they came to the attention of the leaker, who remains anonymous. We still do not know where exactly those 11.5 million documents came from.
The other thing is that the Germans have a long history of paying for this kind of information. The German government, not the media, but the German tax authorities routinely buy information about German private citizens, tax evaders who are trying to hide their money in neighboring countries, like Luxembourg or Lichtenstein. Bankers fill CDs full of information about these German account holders, cross the border, and sell it to the German government. So, there’s more of a … history of using this kind of data and being aware of it.
Jeff Schechtman: We’ve long known about tax havens and about offshore money. Talk a little bit about the scope of this as it’s revealed in the Panama Papers.
Jake Bernstein: I think you’re absolutely right. We’ve long known about it in sort of isolated incidents and little exposes or court cases, things like that. But what this really allowed for was a macro view of this world and how it evolved over time.
Mossack Fonseca formed in the mid-’80s and there are companies actually in the data that are much older than that. We found a company that went back to the 1930s, so you could really see the whole scope of this system. Mossack Fonseca was doing business around the world, all over Latin America and Europe and Africa and everywhere in between, so you could really get a sense of how this system developed, how it morphed, the differences between different jurisdictions, how it changed over decades, and it was all available through this data.
Jeff Schechtman: What’s fascinating in looking at the early history of Mossack Fonseca is that it sort of feels like a modern-day startup. There was a couple of guys that figured out a need, a problem that existed, and filled it in a way that gave them a kind of monopoly.
Jake Bernstein: You’re so right in the sense that their timing was perfect. They had a vision, which was of a business model that was low-volume/high … high-volume/low-cost, excuse me, and it’s kind of like the McDonald’s of the Secrecy World.
They came up with this idea right at the time where computerization made it possible to do this kind of mass, wide-scale business, and also at a time when there was incredible wealth being created in the developing world, and these new wealthy people didn’t necessarily trust their countries. They wanted to get their money out, they wanted to use these offshore companies, so they hit the moment perfectly.
The high-volume/low-cost business model worked great because when they started, really, all that was required for creating an anonymous shell company was you created the company, and you didn’t ask very many questions. It was, you know, think of those monkeys, right? See nothing, hear nothing, say nothing? So you created this company, and then, you stuck it in a file. You forgot it for a year until it’s time to invoice the client to renew the company, and so, you could do high-volume/low-cost.
But what happened was, over time, there started to be new vetting requirements and new due diligence requirements, but they had already released 115-plus companies into the wild. So as Ramon Fonseca said to me, “You know, we created this monster, and then, we were handed a comb and told to comb it and it proved impossible.”
Jeff Schechtman: So, in doing what they did, they created a level of complexity that made them and, I guess, firms like them — and they really had the market cornered — essential for anyone who wanted to do business in this offshore world.
Jake Bernstein: Yeah. It’s actually quite widespread, this business, and they were in the top five. There’s a lot of different organizations that do it.
But, really, when I talk about the Secrecy World, and it’s not a phrase that I coined myself, it’s actually a phrase that I found within the documents themselves, but we’re talking about not just a system of tax havens. We’re also talking about sort of secret bank accounts in places like Singapore and Switzerland, and we’re talking about the intermediaries, the registered agents who create these companies or foundations or trusts, but also lawyers and accountants and bankers that go to these intermediaries and ask for the companies on behalf of their clients.
It’s an entire infrastructure and the ones who really want to do concealment, there’s lots of different layers. You might have an anonymous company, but the anonymous company is owned by a foundation, and the foundation is owned by a trust and it crosses across three different places. It’s in Jersey, and it’s in Panama, and it’s in the British Virgin Islands, and there’s lots of different steps. You’re hiding your activities with each step a little bit deeper, making it harder for law enforcement or tax authorities or business partners or your wife to find out exactly what you’re doing.
Jeff Schechtman: Talk about the role that authoritarian leaders played in building up this business, because they took advantage of this, particularly in areas of money laundering and getting money out of various countries.
Jake Bernstein: Absolutely. That is a great insight. We see a lot of that in the Panama Papers. Azerbaijan is a great example, right, and so, the children of the ruler of Azerbaijan have property all over the country, all over the world, in London and different places like that, in Switzerland, Monaco. They also have monopolies of certain key industries inside the country. But they need to get that money out of Azerbaijan, and so, they use these offshore companies to do that.
One of the most sort of interesting insights that we gleaned from the Panama Papers was we found heretofore unknown anonymous shell companies with people around Vladimir Putin, including the godfather of Putin’s eldest daughter, a classical musician, named Sergei Roldugin, who nobody even knew was a businessman. But he was ostensibly the owner of several offshore companies that were doing incredibly complex and very interesting and high-dollar business activities. So this is a system that is used by rulers to deflect what they’re actually doing, in some cases, is robbing the states that they control.
Jeff Schechtman: How aware did Mossack Fonseca need to be in terms of being up-to-date on political nuance in the world? To what extent were they reacting to, and to what extent were they influencing some of that, as it relates to offshore funds?
Jake Bernstein: Oh, that’s a very good question. They were very cognizant of different rules, of different activities by different powers to try to curtail this business, and they were part of a global movement to fight back against that.
For example, the organization of, well, the OECD, the Organization of … I can’t even remember the full title of it. But it’s the group of developing nations that tries to sort of create rules for trade and other things. They tried to curtail some of this business, rein in the tax havens. Mossack Fonseca was part of a group of tax havens and intermediaries and others, including certain libertarian Washington-based think-tanks that really launched a campaign to try to stop the OECD from reining in this business, so they were very cognizant of that kind of thing.
Then, they also were very aware of how this … I mean this is a system that evolves. It’s almost an organic creature, right? So one of the big offerings that they had for a long time was something called bearer shares. Bearer shares are kind of fascinating because it’s essentially a certificate, a piece of paper, and whoever holds the piece of paper owns the company. Prosecutors and government hate this because it’s ideal for money launderers. I can give you a piece of paper and, suddenly, you own the company. The company can hold an asset, and I can move assets around without anybody knowing about it.
So, systematically, countries started to either restrict or outlaw completely bearer shares. The BVI was one of the early ones to do that, the British Virgin Islands, and when they did that, you can see a spike in company and corporations in Panama which still allowed these bearer shares. I think Mossack Fonseca was very aware of how this system evolved and moved around from place to place so that they could continue selling this kind of secrecy.
Jeff Schechtman: Beyond money laundering, and even illegally moving money out of these countries by authoritarian leaders, one of the other areas that was part of this was the degree to which illicit activity was part of what the money was used for. It appears that so much of this money was either used for, or came from, things like illegal drug dealing and human trafficking. Talk a little about that.
Jake Bernstein: Yeah. It’s quite extraordinary. We have to say that this system can be used legally, right, and even though one of the Mossack Fonseca lawyers said in an email, sort of in a moment of private candor, that almost 95% of what they do is helping their customers legally avoid taxes. There was a huge amount of criminality that was also involved. We found Mexican cartels and Russians who were involved so they, literally, had boats where they were treating people who they had dragooned into being sailors as actual slaves.
Then, we saw a tremendous number of scamsters and Ponzi schemers. It seems like after Bernie Madoff did his master fraud in the United States, every major fraud in every country had their own sort of mini-Madoff, so you see a number of them in the Panama Papers. There was the Argentinian Madoff, for example, and he was running his scam through anonymous offshore companies that were bought through Mossack Fonseca.
So there were all kinds of things like that and, again, it was the anonymity and the lack of transparency that allowed them to do this.
Jeff Schechtman: To what extent did tax authorities around the world, including the Internal Revenue Service, try and track all this down, or do anything about it?
Jake Bernstein: My goodness, that’s a good question. There’s a chapter in my book Secrecy World about this extraordinary IRS agent named Joe West, who was sort of given a task of actually researching how this world functioned, and coming up with a menu of ideas of how they could go after Americans who were using tax havens to evade taxes.
Then he came up with a whole bunch of good ideas and the IRS ended up doing one of them and had some success with it. But Joe West was so frustrated by the bureaucracy, and by the resistance that he encountered within the agency, that he ends up retiring early and giving up on the whole thing.
The IRS, in their defense, has been savagely cut back by the Republican Congress. They do not have the resources that they need. It’s very hard to break through the secrecy behind these intermediaries, these tax havens. They do not give out information willingly. The IRS is a little bit worried about attorney-client privilege when there are lawyers involved in this kind of stuff, so there’s a lot of obstacles.
It takes great resources for governments to break through it, to track this information. They really need leaks and whistle-blowers and things like that, and those things don’t come along every day, so it’s been a big challenge for governments to get their hands around it.
Jeff Schechtman: What impact, if any, have the Panama Papers had in curtailing any of this activity?
Jake Bernstein: Well, there’s been hundreds of investigations and criminal inquiries that have been launched around the world over this stuff, and then, there’s been direct political fallout in different places.
The prime minister of Iceland was forced to resign when it was revealed that he had a secret company that Icelandic voters didn’t know about. The president of Pakistan was removed from office because his family was using offshore companies to buy property in London, and sort of hard to explain where the money came from. The minister of industry for Spain was also forced to resign. So there’s been political repercussions in a number of places, and then, there have been open investigations and prosecutions out of this.
It also, I think, has raised awareness about how this system works. As you sort of said so eloquently in the beginning, this massive shadow economy, trillions of dollars are flowing through it, and most people are not aware of it, even though we live with the impacts in soaring property prices in places like New York and Miami and Los Angeles, and in taxes that aren’t paid for health care and infrastructure and education and police and stuff like that. But we don’t really know how the system works, and these leak investigations have given us a window into it that we otherwise wouldn’t have.
Jeff Schechtman: Talk a little bit about the subsequent release and leaking of what were called the Paradise Papers, what they were, and how they were sort of the next step in learning more about this story.
Jake Bernstein: Well, the Paradise Papers came from a law firm called Appleby primarily, which is based in Bermuda. Appleby was very different from Mossack Fonseca, in that they were smaller and they were more exclusive, so they handled a lot of corporate clients like Nike and Apple. They had a lot more Americans, more than 30,000 I think, or American customers.
What they were doing was generally more legal, more above-board, but had, in some way, the same impact. They helped their customers avoid billions of dollars in taxes. But you see a lot more sort of high-dollar Americans, both Democrats and Republicans, all kinds of business stripes.
Appleby kind of gives us a different perspective. They were not as freewheeling as the Panamanians. The Panamanians were much more open and loquacious on email. Appleby was more guarded and more careful. But it gave us sort of a different perspective on how this world works.
Jeff Schechtman: Talk a little bit about Panama, and why it became the epicenter of so much of this.
Jake Bernstein: You know, Panama’s incorporation law was passed, I think, in the 1920s, or maybe even before, maybe it was around 1919. They cribbed their company incorporation law from Delaware, among other US states. They sort of copied it and, originally, it was about shipping. They were pushing Panama, because of the canal, as an idea where people could register ships, and get away from the kind of regulation and oversight that people had if they tried to register their ships in United States.
From there, it sort of morphed into companies for reasons other than ships. It really sort of took off during the dictatorship of Trujillo where he kind of opened up the country for money launderers and for drug traffickers and the banking system and offshore anonymous companies, and it sort of grew from there.
Jeff Schechtman: One of the things you write about is the degree to which all of this money played such a critical role in both Russia, in particular, with respect to Putin, and in China. Tell us a little about that.
Jake Bernstein: Well, this is interesting in that, again, it’s sort of legal, right, in many cases, a sort of workaround.
Russians, for example, had been offshoring now for quite a bit. There was a bit of a rush, a land rush, with the fall of communism. People were involved in all kinds of businesses, some legitimate, some not so much, and they wanted to legitimize these overnight fortunes. They also are somewhat distrustful of their government. The rule of law is shaky, at best, in Russia, and so, people get their money out, if they can, and there’s been a huge drain. I mean Putin himself sort of ironically has castigated Russians for moving their money offshore.
China is sort of another example of this. China sort of embraces capitalism, but their system of government and their business system doesn’t quite catch up with the entrepreneurial fervor that is unleashed. So, they need a workaround and the workaround is this offshore system.
The government kind of knows it and turns a blind eye to it and, in some cases, encourages it. It allows you, say, if you want to import machinery into China, it can be very difficult, right? But if you have an offshore company that is created to buy the machinery, and then, you are a foreign subsidiary, instead of an actual Chinese person importing that machinery into China, it’s easier to do.
This happened all around the developing world where they had archaic rules or they had corrupt governments and it allowed the citizens to sort of sidestep a lot of that by creating these companies in tax havens. It also allowed them to avoid paying taxes. In many cases, if their financial wherewithal was coming from corruption, it allowed them to hide their crimes.
Jeff Schechtman: To what extent are the rules constantly changing, and how important is it for those that are doing this with money around the world, to really have the resources of people like Mossack and Fonseca to really fully understand the changing landscape?
Jake Bernstein: That is a fantastic question because the system is constantly evolving.
One of the things that has changed, and I think the Panama Papers is part of that change, is the bar to entry has risen a bit because the requirements are greater now for vetting clients and things like that, and you have to go further afield to get the absolute CSP (corporate service provider) that the people wanted. What Mossack Fonseca was really trying to do was make this available to the merely rich. Now, I think it’s become a little bit more exclusive, now more the province of the uber-wealthy, the truly wealthy, so that has been one of the changes.
The other change, I think, is that there had been other avenues where people go. So whereas the British Virgin Islands was a place that a lot of people created companies, they’ve gotten a little bit tighter under demands for due diligence. So people had moved to places like Dubai or Singapore, or money laundering has embraced bitcoin because it offers the kind of secrecy and the lack of transparency that has tightened up a bit in the offshore world.
Jeff Schechtman: What role, if any, has technology played in making all of this possible? Because there’s a kind of creative destruction side to all of this.
Jake Bernstein: No, you’re absolutely right. I think technology has made it available in a way that was not possible before. This is one of the things that Mossack Fonseca really prided themselves on. They felt that they were cutting edge as far as technology was concerned, and they really tried to systematize their business.
It also allowed them to do things like they created their own personal tax haven, in a Pacific island called Niue, which is a spit of sand with 500 inhabitants. They created their own Mossack Fonseca tax haven out of Niue, but the tax haven is actually run out of their offices in Panama. So if you wanted a Niue company, you contacted them and they had all of the templates and the information. The deputy registrar of the Niue Ministry that created companies was a Mossack Fonseca employee. He had a stamp and you hit Print. Once you got the name and the company number, it just kicked out a company in less than an hour.
You can only really do that when you have computerization, so I think it was a big factor in making this world much more accessible.
Jeff Schechtman: Is there any reason to think that this sunlight, this exposure to all of this, is going to do anything to curtail this, or just chase it somewhere else?
Jake Bernstein: Boy, that’s a good question. I think that the only thing that’s going to curtail this or reform it will be an active citizenry. People in places like Europe and United States who recognize that there’s a connection to their lives, that the tax evasion has a direct connection to the services they receive and what’s available for them, and that idea that there’s now a transnational class of people who are not bound by the rules that we are bound by and most people are bound by, that they have apartments all over the world and bank accounts all over the world, and even though they might make their money in the United States they don’t feel obligated to pay taxes here or pay their input into society.
So I think that the key thing is these leaks have sort of pulled back the curtain. We can see how this business works and we could see the effects of it. So, hopefully, citizens will start to demand that there’s more accountability and more transparency. That’s the only way it really changes.
Jeff Schechtman: Jake Bernstein. His book is Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite. Jake, I thank you so much for spending time with us here today on Radio WhoWhatWhy.
Jake Bernstein: No, thank you, Jeff. It’s been great.
Jeff Schechtman: Thank you. And thank you for listening and for joining us here on Radio WhoWhatWhy. I hope you join us next week for another Radio WhoWhatWhy podcast. I’m Jeff Schechtman.
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