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How to hide a million dollars

Panama Papers reveal all

By Joseph Johns | Echo

World governments are reeling after the revelation of what is known as the Panama Papers. The International Consortium of Investigative Journalists (ICIJ) reported that the Panamanian law firm, Mossack Fonseca, set up shell companies, dormant accounts used to transfer money, for many high-ranking government officials, as well as celebrities and other notable individuals. The Panama Papers consist of more than 11.5 million documents.

The name itself harkens back to the Pentagon Papers released by a United States government analyst in 1971. To put it into perspective, the sheer size of this more recent data breach outweighs the Pentagon Papers 15 to 1.

Mossack Fonseca commented on their website that the reported activities of Mossack Fonseca and Co., while legal, have been misunderstood by those unfamiliar with the type of work that firms such as their own perform on a daily basis. The company emphasized that the establishment of tax havens is “legal and common” and that the company has always operated by the highest ethical standards.

The ICIJ accused the firm of knowingly creating shell companies which allowed Syrian government contractors who allegedly used the firm to hide millions of dollars’ worth of assets that have kept Syrian fighter jets in the air.

The United States blacklisted 33 companies that appeared in the Panama Papers. Some of these companies include DCB Finance in North Korea and Pangates International, a shell company set up by Mossack Fonseca in order to funnel money to the Syrian Government Air Force.

The United States Treasury Department commented that two Syrian nationally owned companies, Maxima Middle East Trading Co. and Morgan Additive Manufacturing Co., have links to both Pangates International and Mossack Fonseca. The Treasury Department accused Mossack Fonseca of knowingly representing Pangates International after the U.S. blacklisted the company for its role in providing aviation fuel to the Syrian National Air Force.

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Mexican drug lords have also been named as owners of offshore tax havens that used companies to hide their immense ill-gotten wealth from the drug trade between the United States and Mexico.

The Panama Papers also implicated Icelandic Prime Minister Sigmundur David Gunnlaugsson, British Prime Minister David Cameron, Russian President Vladimir Putin’s close friend Sergei Roldugin and the children of the President of Azerbaijan, along with hundreds of other top-ranking government officials in the affairs surrounding Mossack Fonseca.

The Icelandic Prime Minister has since resigned amidst calls from the President of Iceland to step down. Prime Minister Gunnlaugsson used Mossack Fonseca to create an offshore shell company, then sold his shares to his wife to avoid declaring this company in his economic interest statement.

Eight prominent Chinese Politburo members also appeared in the Panama Papers as owners of shell companies in multiple international tax havens. The People’s Republic of China responded by blocking all searches involving the terms “Panama” and “Panama Papers” in order to block a widespread awareness of the corruption in the Chinese government.

One surprising aspect of the Panama Papers is the lack of American client records. This could be due to the number of records yet to be searched, or the relative obscurity of Mossack Fonseca in the United States.

This story will surely continue to develop as more actors become known for their use of international tax havens. Arguably, the longest-lasting impact of this breach is the public’s knowledge about offshore companies and the firms that create them. While Mossack Fonseca has not broken the law, it has proven to be knowingly complicit in the advancement of worldwide terror, drug trafficking and tax evasion. The extralegal consequences of this breach have yet to appear for Mossack Fonseca, but will surely arise due to the number of people who are now aware of the illicit activities.

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