Panama Papers revelation a ‘crime,’ says law firm

The revelation of the Panama Papers detailing the offshore financial structures of many wealthy clients is a crime and an attack on Panama, says Mossack Fonseca.
A security guard sit outside the office of Mossack Fonseca. The law firm is at the heart of the tax leak scandal. Arnulfo Franco / AP Photo
A security guard sit outside the office of Mossack Fonseca. The law firm is at the heart of the tax leak scandal. Arnulfo Franco / AP Photo

PANAMA CITY // The revelation of the “Panama Papers” detailing the offshore financial structures of many wealthy clients is a “crime” and an “attack” on Panama, the law firm at the heart of the scandal said Sunday.

“This is a crime, a felony,” Ramon Fonseca, one of the founders of the Panamanian firm Mossack Fonseca, told AFP.

“Privacy is a fundamental human right that is being eroded more and more in the modern world. Each person has a right to privacy, whether they are a king or a beggar,” he said.

Mr Fonseca also said he saw the data leak behind the revelations as “an attack on Panama, because certain countries don’t like it that we are so competitive in attracting companies.”

The leak from Mossack Fonseca’s supposedly secure data centre resulted in media around the world publishing stories on how wealthy politicians, celebrities and others used it to allegedly hide assets to avoid taxes or launder money.

Mr Fonseca, who was an adviser to Panama’s president, Juan Carlos Varela, until last month, described the exfiltration of the data as a “limited hack”.

There was as yet no suspect in the leak, he added, and he declined to speculate on any until proof emerged.

He stressed to AFP that Mossack Fonseca, which has been operating for nearly four decades and had created more than 240,000 companies, had never been “convicted or accused or any wrongdoing”.

He also underlined that “we have no responsibility in how these companies were used,” because the firm’s role was as an intermediary.

“As we have so many companies, some have problems — that’s normal,” he said. “But we are not responsible for them.”

Who runs Mossack Fonseca?

Mossack Fonseca is a discreet outfit with a roster of big-name clients and a quiet reputation for hiding money from the tax man.

That cloak of secrecy it wrapped around itself was ripped apart on Sunday when media organisations around the world publishing information from a massive leak from the firm’s supposedly secure data centre.

Politicians, sports stars, celebrities — many were named in the 11 million pages of documents, according to information starting to be released by the International Consortium of Investigating Journalists (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 countries in the Pacific.

So who runs Mossack Fonseca, whose headquarters are housed in a fairly nondescript mirrored building in Panama’s business district?

Juergen Mossack, one of the two lawyers who founded the firm more than three decades ago, was born in Germany in 1948 and moved to Panama with his family, where he obtained his law degree.

Mossack’s father was a Nazi in World War II, serving in Hitler’s Waffen-SS, according to the ICIJ, citing US Army records. It said “old intelligence files” showed the father had offered to spy for the CIA.

The other founder is Fonseca, born in 1952. He, too, got his law degree in Panama but also studied at the 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 per cent 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.

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 wilfully tried to cover up its management role over its local branch there.

* Agence France-Presse

Published: April 4, 2016 04:00 AM

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