The Scum Also Rises

It’s been a couple months since we’ve heard from the Panama Papers, the 11.5 million documents extracted from the Panamanian law firm of Mossack Fonseca, and detailing the financial shenanigans of the rich, famous, and connected.

After various revelations about Putin’s clique, David Cameron’s father, Li Xinping’s relatives, the prime ministers of Pakistan and Iceland, and a clutch of British celebrities, the story seemed to sort of fade away.

Which led me to wonder if the whole thing had been— as Putin’s defenders charged— a plant by Western intelligence agencies.  After all, no unseemly dealings of American politicians or financial figures were revealed.  Surely we’ve got crooks over here!

(There was also the argument that American tax law already is so riddled with loopholes that our billionaires don’t need to go to Panama to hide their money.)

That was before yesterday’s tranche of revelations, which involve 2400 US-based clients setting up at least 2800 overseas companies.

Many of these companies were set up for perfectly legitimate reasons— people who do business overseas need to have their money where they can access it.  But some of these companies were clearly set up for the purpose of keeping the US authorities in the dark over the very existence of billions of dollars.

And Mossack Fonseca seems perfectly willing to help them evade or skirt the law.

“How does a US citizen legally get funds to Panama without the knowledge of the US government and how can those funds be profitably invested without the US government knowing about them?”

The reply came from Ramsés Owens, then a partner who helped run the firm’s trust division, offering clients “effective solutions to enhance your privacy, protect your wealth.” Mr. Owens laid out a basic menu of services: a package deal setting up an offshore company in what he promised would be a relatively cheap and quick transaction.

“We have right now a special offer by which we create a Private Foundation/company combination for a flat fee of US$4,500.00,” Mr. Owens said. “It includes Charter Documents, Regulations, nominee officers and directors, bank account and management of funds, provision of authorized signatories, neutral phone and fax numbers and mail forwarding services for both the private foundation and its underlying company.”

With this legal structure in place, Mr. Owens went on to explain, any money placed in these accounts would essentially go into a black hole.

“If we create a Private Foundation and the underlying company for you, the funds become completely private (US cannot know) as soon as the funds are deposited under a bank account or investment account in the name of the underlying company or the private foundation.”

Set up a dummy foundation run by foreign sock puppets, hide the money in it, pay no taxes.

How do I get a terrific deal like this?  Wait.  No.  I can’t.  I don’t earn enough money.

I particularly appreciated this 2008 cir de coeur from an heiress:

“I feel VERY unsettled with this election and how the media is censoring information and spinning the American Public to vote Obama.  It is so obvious to me, that they are setting us up with a Socialist — but most people can’t see it happening before their eyes! It’s like propaganda that is brainwashing Americans to forget the Principles of Hard Work, Ingenuity, Risk and Boundless Success!”

Now mind you, that particular heiress was being given hundreds of millions of dollars that she had done absolutely nothing to earn!  If the US actually rewarded Hard Work, Ingenuity, and Risk with Boundless Success, she would be living on a steam grate and begging passersby for quarters.

Mr. Owens suggested shifting the money into a “charity” account, controlled by the firm on the family’s behalf, in increments of less than $100,000, so it would not be detected.

Oboy!  Phony charities!  This gets better and better!

I was a little disappointed that the current revelations don’t involve the sort of connections between money and politicians that we see elsewhere, but there may be more to come.  Stand by, and in the meantime take heart from the following statement from the lead prosecutor of the UBS offshore banking case:

“The more correspondence that you have between a U.S. person and a bank or law firm discussing tax issues and efforts at concealment, the stronger the government will see it as a potential case worth prosecuting.”

Yay!  Go troops!