#PanamaPapers — the scandal is pretty much legal

“I am not a crook”

In the past few days, hundreds (if not thousands) of media reports have linked the Panamanian wealth management firm Mossack Fonseca to a series of financial crimes. The massive “Panama Papers” leak documents the firm’s involvement in facilitating activities that may constitute fraud, money laundering, and theft, including by officials at the highest levels of governments worldwide. But the real scandal is that most of what Mossack Fonseca and the rest of the wealth-management industry do is perfectly legal.

Anyone reading this article can evade taxes, or even dabble in offshore finance, without expert intervention. With just an Internet connection and a few thousand dollars, anybody can create shell corporations and other offshore vehicles in a matter of minutes. It’s child’s play to dodge taxes, debts, child support, and so on by putting assets in one of those structures — though there is a risk of getting caught, audited, and possibly prosecuted.

But that’s not what many of the world’s richest people are doing: They can afford the privilege of defeating the spirit of the laws without violating them formally. What Mossack Fonseca and its counterparts all over the world really provide is the expertise that allows their clients to stay just on the right side of the law — or far enough into the legal grey zones that the clients have a real chance to prevail if they end up in court. That’s why many of the people who have seemingly been exposed by this leak will likely never face charges of any kind. To the extent that Mossack Fonseca’s work facilitated crime, that was a bug rather than a feature…

Some of the activity uncovered in the Panama Papers will turn out to be illegal. But if past is prologue, then the majority of what we learn from the leak will merely be embarrassing for those exposed — showing them to be opportunistic and perhaps unethical, but not criminal.

RTFA for all the gory details. It ain’t anything your favorite Senator, Congress-critter or Presidential candidate doesn’t already know. Some of them are likely to be practicing what Mossack Fonseca have been preaching for decades.

3 thoughts on “#PanamaPapers — the scandal is pretty much legal

  1. Chump says:

    BBC News, July 22, 2012. “Tax havens: Super-rich ‘hiding’ at least $21t” http://www.bbc.com/news/business-18944097 “A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study. The figure is equivalent to the size of the US and Japanese economies combined.”

  2. Heads up says:

    The Panama Papers leaker speaks out, with a tantalizing offer for law enforcement” http://qz.com/678286/the-panama-papers-leaker-speaks-out-with-a-tantalizing-offer-for-law-enforcement/ “The anonymous source responsible for the surfacing of the Panama Papers has issued a statement on the website of the journalism consortium that has been sorting through the document trove. https://panamapapers.icij.org/20160506-john-doe-statement.html The unidentified whistleblower, writing under the name John Doe, rules out some of the speculation about his or her identity—”I do not work for any government or intelligence agency, directly or as a contractor, and I never have”—and makes a tantalizing offer to the authorities: “In the end, thousands of prosecutions could stem from the Panama Papers, if only law enforcement could access and evaluate the actual documents. ICIJ and its partner publications have rightly stated that they will not provide them to law enforcement agencies. I, however, would be willing to cooperate with law enforcement to the extent that I am able.”
    ICIJ refers to the International Consortium of Investigative Journalists, which on May 9 will release a second helping of information gleaned from some of the 11.5 million documents taken from the Panamanian law firm Mossack Fonseca. https://panamapapers.icij.org/20160426-database-coming-soon.html

  3. Update says:

    “Panama Papers Probe Faces Major Setback as Stiglitz Quits Team” http://www.telesurtv.net/english/news/Panama-Papers-Probe-Faces-Major-Setback-as-Stiglitz-Quits-Team-20160806-0002.html Nobel Prize-winning economist Joseph Stiglitz quit a committee set up to investigate the alleged lack of transparency in Panama’s financial system, Reuters reported Friday. tiglitz and Swiss anti-corruption expert Mark Pieth joined a seven-member commission tasked with probing Panama’s notoriously opaque financial system, but they say the government of President Juan Carlos Varela reneged on a commitment to make the final report public.
    “I thought the government was more committed, but obviously they’re not,” Stiglitz told Reuters. “It’s amazing how they tried to undermine us.”
    The Panamanian government defended the committee’s “autonomous” management in a statement issued later on Friday, and while it said it regretted the resignations of Stiglitz and Pieth, it chalked them up to unspecified “internal differences.”

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