Huge document leak exposes how the wealthy and powerful hide money
ASSOCIATED PRESS
A marquee of the Arango Orillac Building lists the Mossack Fonseca law firm in Panama City today. German daily Sueddeutsche Zeitung says it has obtained a vast trove of documents detailing the offshore financial dealings of the rich and famous. The International Consortium of Investigative Journalism says the latest trove contains includes nearly 40 years of data from the Panama-based law firm, Mossack Fonseca.
WASHINGTON » A massive leak of documents has blown open a window on the vast, murky world of shell companies, providing an extraordinary look at how the wealthy and powerful conceal their money.
Twelve current and former world leaders maintain offshore shell companies. Close friends of Russian leader Vladimir Putin have funneled as much as $2 billion through banks and offshore companies.
Those exposed in the leak include the prime ministers of Iceland and Pakistan, an alleged bagman for Syrian President Bashar Assad, a close friend of Mexican President Enrique Pena Nieto and companies linked to the family of Chinese President Xi Jinping.
Add to those the monarchs of Saudi Arabia and Morocco; Middle Eastern royalty; leaders of FIFA, the international body that controls international soccer; and 29 billionaires included in Forbes Magazine’s list of the world’s 500 richest people.
Also mentioned are 61 relatives and associates of current country leaders, and 128 ther current or former politicians and public officials.
The leak exposes a trail of dark money flowing through the global financial system, stripping national treasuries of tax revenue.
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The data breach occurred at a little-known but powerful Panamanian law firm, Mossack Fonseca & Co., which has an office in Las Vegas, a representative in Miami and presence in more than 35 other places around the world.
The firm is one of the world’s top five creators of shell companies, which can have legitimate business uses but can also be used to dodge taxes and launder money.
More than 11.5 million emails, financial spreadsheets, client records, passports and corporate registries were obtained in the leak, which was delivered to the Suddeutsche Zeitung newspaper in Munich, Germany. In turn, the newspaper shared the data with the Washington-based International Consortium of Investigative Journalists.
Several McClatchy journalists joined more than 370 journalists from 78 countries in the largest media collaboration ever undertaken after a leak.
The document archive contains 2.6 terabytes of data.
As a registered agent, the Mossack Fonseca law firm incorporates companies in tax havens worldwide for a fee. It has avoided close scrutiny from U.S. law enforcement officials.
Mossack Fonseca denied all accusations of illegal activity.
“We have not once in nearly 40 years of operation been charged with criminal wrongdoing,” spokesman Carlos Sousa said. “We’re proud of the work we do, notwithstanding recent and willful attempts by some to mischaracterize it.”
The law firm’s co-founder, Ramon Fonseca, in an interview last month on Panamanian television, said blaming Mossack Fonseca for what people do with their companies would be like blaming an automaker “for an accident or if the car was used in a robbery.”
Yet plenty of criminals are named the documents, like drug traffickers and convicted fraudsters.
“The offshore world is the parallel universe of the ultrarich and ultrapowerful,” said Jack Blum, a white-collar crime attorney and an architect of the Foreign Corrupt Practices Act.
The archive, which dates to the late 1970s and extends through December 2015, reveals that 14,000 intermediaries and middlemen bring business to Mossack Fonseca.
No part of the world is untouched, including the United States.
States such as Delaware, Nevada and Wyoming register thousands of corporations annually, often without identifying the true owners. Some of the billions of dollars moving through the domestic economy come from anonymous foreigners who inflate real estate prices in places like Miami, buying properties outright in cash.
“We know (of) upwards to $6 to $10 billion a year laundered through the U.S.,” said Patrick Fallon Jr., head of the FBI’s financial crimes section.
The most extraordinary allegations in the archive revolve around Putin’s closest associates, including Sergey Roldugin), a close friend since the late 1970s when Putin was a young KGB agent.
Roldugin is a cellist for the St. Petersburg orchestra, yet his name appears as the owner of offshore companies that have rights to loans worth hundreds of millions of dollars. A Russian news service report in 2010 disclosed that he owned at least 3 percent of Bank Rossiya, Russia’s most important bank.
When Mossack Fonseca helped open a bank account in Switzerland on behalf of Roldugin, the application form asked if he had “any relation to PEPs (politically exposed persons) or VIPs.”
The one-word answer was, “No.” Yet, Roldugin is godfather to Putin’s daughter Mariya.
“Roldugin is, by his proximity to a serving head of state, clearly an exposed person,” Mark Pieth, a former head of the Swiss justice ministry’s organized crime division, told the ICIJ team.
The documents show how in 2008 a company controlled by Roldugin had influence over Russia’s largest truck maker Kamaz, joining with several other offshore companies to help another Putin insider acquire majority control of the company. They wanted foreign investment, and German carmaker Daimler later that year bought a 10 percent stake in Kamaz for $250 million.
The offshore company that connects many Putin loyalists is Sandalwood Continental Limited in the British Virgin Islands. Roldugin was a shareholder until 2012, as was Oleg Gordin, a little-known businessman whom incorporation documents describe as linked to “law enforcement agencies.”
The files also mention a company co-owned by Putin friend Yury Kovalchuk, the largest shareholder of Bank Rossiya. Kovalchuk was among those targeted by U.S. sanctions in 2014 in retribution for Russia’s invasion of Crimea. Another friend, Arkady Rotenberg, Putin’s judo partner and a billionaire construction mogul, openly obtained companies through Mossack Fonseca. The Treasury Department, when sanctioning him in 2014, suggested that the oligarch acted on behalf of “a senior official.”
That was widely believed to mean Putin, whose fingerprints were not on any offshore company.
“When you are the president of Russia, you don’t need a written contract. You are the law,” said Karen Dawisha, an academic, former State Department official and author of the acclaimed 2014 book “Putin’s Kleptocracy: Who Owns Russia?”
A Kremlin spokesman, Dmitry Peskov, said last week that ICIJ was publishing a “series of fibs” that amounted to a media “attack” on Putin. Peskov suggested that unknown “organizations and services” were behind the media reports.
This report contains information gathered by reporters working under the umbrella of the nonprofit International Consortium for Investigative Journalists.
33 responses to “Huge document leak exposes how the wealthy and powerful hide money”
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” companies linked to the family of Chinese President Xi Jinping” !! And he is leading an anticorruption campaign in China. Wonder how they will sweep this under the rug?
With this revelation, I won’t be surprised to hear of a “suicide” or other untimely demise of this guy. Must be a great embarrassment to the Chinese government. anyone who tries to bring this to Chinese media might “disappear”.
Wonder why they covered up the fact that the Clinton Global Initiative is also a very active player in this romper room for the well heeled and well connected.
As SecState Hilarious Hillary used her influence to milk donations in the millions for her “foundation” from world wide sources seeking favorable treatment from the USG.
What I would like to know is who the current and former US politicians are that partook in this scam that takes away from their own country. Shame on these people. To me, they are traitors as their money is enriching other countries at the expense of ours.
Well that screws Donald Trump and his friends now. Who said he doesn’t need the money, please they’re all greedy.
No wonder Putin remarked how he admired Trump; Trump is probably part of this fraternity of off-shore investors, like Putin and his close friends.
Something tells me you’re more likely to find the Clintons involved in this than Trump not that I like either.
How do you think The Bush Family, The Clinton’s, and YES–even Local Politicians receive monies and hide those BRIBES? The Bush Family, together with British Royalty, et al–own the majority of Mineral-Rights in Paraguay; just as a TINY EXAMPLE… (Kissinger, Rumsfeld, Rice, Obama’s, and on and on and on.., ad naseum.)
F.Y.I. : They are also often referred to as “FOUNDATIONS”.
“Blaming Mossack Fonseca for what people do with their companies would be like blaming an automaker for an accident or if the car was used in a robbery.”
Not even close. Mossack Fonseca is the dark-money equivalent of the auto “chop shop” that receives the stolen goods and runs them “through the laundry” so they become untraceable.
Too bad this article only covers Putin’s butthole buddies (to use the GI term). We want to hear more of the details about China, Mexico, Syria, Saudi Arabia, Iceland (!), Pakistan, Morocco, FIFA …
… and those 29 billionaires. I’m thinking of one billionaire in particular!
You must be thinking of Nancy Pelosi, Richard Blumenthal, Scott Peters or John Delaney.
Neither Nancy Pelosi, Richard Blumenthal, Scott Peters, nor John Delaney are billionaires. They range from just below $100 million to $200 million.
Don’t be shy, you’re talking about ol’Trump-D-Dump.
You’re reading too many FORBES publications… NO ONE reports their true-net-worth or where all of their Bank Accounts are domiciled. Only THE PEASANTS and FARDELS do that…
Look em up. Throw away the key.
I would not be surprised to find past Nei elected bureaucrats, Grabby Boy, and HART minions among the records for this corrupt company.
Extremely unlikely given the amounts in question. I seriously doubt it was even worth their time for a client trying to hide assets of $5 million or less.
choyd – You never know when it comes to bureaucrats and people of weak minds, easily corrupted.
I would be even more surprised if the words, Nei, bureaucrat, willful or 8th world didn’t appear in one of your posts.
advertiser1 – Not my fault if you attended the Nei’s failing education and I use words you cannot understand, never learned what they mean, how to use in a sentence.
Typical JARP reaction. Sad.
The headline and first paragraph are a little misleading. It’s not so much shell companies and the wealthy hiding ill-gotten gains as it is the corrupt, politically connected. We see the same thing here in the U.S. (Clinton Foundation?) How many Senators and Representatives enter Congress with middle class assets and depart as millionaires?
That’s why the don’t like it when Obama wants to tax the rich more. Make sense now?
Since this is America, I’m much more interested in what American companies are doing and could care less about Russia’s issues.
And what exactly will be done about this? ZERO.
Americans will just shrug their shoulders and say “So what, we are just little people”.
Don’t have money get into politics. With power now you can find the money for yourself.
Have billions use the politician to find more money cause they want a piece of it.
Have money and power do whatever you want.
It’s not about the different countries and their government, it’s about how these political leaders and people with power and money can use their countries for their own purposes. Making the people in the world thinking its about their country and patriotism to their country. Wars and conflicts are not what it appears to be. It is a game for the rich and powerful manipulated by even a greater power run by 7. We the people of the world are ponds in the chess game.
“Roldugin is a cellist for the St. Petersburg orchestra, yet his name appears as the owner of offshore companies that have rights to loans worth hundreds of millions of dollars. A Russian news service report in 2010 disclosed that he owned at least 3 percent of Bank Rossiya” Well, I guess the word is finally out about the Cellist’s Plan for World Domination. Ya’ll better start learning Bach, Brahms, Elgar, Saint-Saëns, etc.
What do have against Ligeti, Schnittke, Dutilleux, Lutoslawski?
“you”
I’m more concerned with the bassist than the cellist.
At least we know now what nobody is going to do nothing about. So why report on the what the rich has versus what we don’t have.
YOU have the ability to create CHANGE! Make NOISE–TALK ABOUT IT TO YOUR FRIENDS AND FAMILY. YES, they will think you are Crazy, but it’s the Crazy People throughout History–who, indeed–created/made a difference in society and The World did Change… “YOU” CAN DO IT!
I’d be more interested in knowing which US politicians are doing this sort of off shore banking. Like most SA articles, this one leaves you with more questions than answers.