Tuesday, April 05, 2016

Panama's Mossack Fonseca Has Certainly Become Very Famous Over The Weekend... Here's Why


I bet everyone inside Fortress Hillary in Brooklyn breathed a sign of relief when the Panama Papers of money launderers and assorted financial criminals started leaking and didn't show any Clintons, Mezvinskys or any of the other shady characters they've surrounded themselves with. I'm told, though, there's plenty more to come. The first political casualty seems to be Sigmundur David Gunnlaugsson, the right-wing prime minister of Iceland who had set up a secret company in the British Virgin Islands to shelter investments with his rich partner, Anna Sigurlaug Pálsdóttir, who he later married. He didn't disclose his investment when he ran for Parliament, even though it included shares in 3 of Iceland's failed banks. Though there is mounting pressure on him to do so, as of this writing, he hasn't resigned yet. People are running around Reykjavik chanting the old slogan from the 2008 financial collapse, "Vanhæf ríkisstjórn," roughly "unfit/unqualified Government." Do you watch The Vikings on the History Channel? You don't want to piss these people off. [UPDATE: Gunnlaugsson resigned today.]

This is what Bernie had to say during the debate on the Panama Free Trade Treaty supported by Republicans and the Republican wing of the Democratic Party. Hillary supported the treaty, of course. But read Bernie's statement carefully:
Lastly, let me say a brief word about Panama and the Panama free-trade agreement. Panama's entire economic output is only $26.7 billion a year or about two-tenths of 1 percent of the U.S. economy. Nobody can legitimately claim that approving this free-trade agreement will significantly increase American jobs.

Then why would we be considering a stand-alone free trade agreement with Panama ? It turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in offshore tax havens. The Panama Free Trade Agreement will make this bad situation much worse.

Each and every year, the wealthiest people in our country and the largest corporations evade about $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.

According to Citizens for Tax Justice:

A tax haven... has one of three characteristics: it has no income tax or a very low rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters. Panama has all three of those... They're probably the worst.
 This is the (very) short version of what this whole Mossack Fonseca scandal is all about. The secret files:
Include 11.5 million records, dating back nearly 40 years-- making it the largest leak in offshore history. Contains details on more than 214,000 offshore entities connected to people in more than 200 countries and territories. Company owners in billionaires, sports stars, drug smugglers and fraudsters.

Reveal the offshore holdings 140 politicians and public officials around the world-- including 12 current and former world leaders. Among them: the prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.

Document some $2 billion in transactions secretly shuffled through banks and shadow companies by associates of Russian President Vladimir Putin.

Include the names of at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.

Show how major banks have driven the creation of hard-to-trace companies in offshore havens. More than 500 banks their subsidiaries and their branches-- including HSBC, UBS and Société Générale-- created more than 15,000 offshore companies for their customers through Mossack Fonseca.
The story is humongous around the world but has been tamped down here in the U.S. So far 140 politicians and thousands and thousands of millionaires and billionaires-- from around the world-- have been exposed as tax evaders. The Russian government dismissed it as just some standard Putinphobia. He can use that same tactic Hillary uses-- how his enemies just always have it out for him, which is true, but doesn't mean he doesn't sometimes commit some crimes, like squirreling away $2 billion. Others named include relatives of Chinese leaders including President Xi Jinping, David Cameron's crooked father, Pakistani Prime Minister Nawaz Sharif, well-known criminal Petro Poroshenko, the President of Ukraine, and some nuclear bomb-building North Koreans. I think this story will have legs.

Kevin Brady (R-TX), chairman of the House Ways and Means Committee announced he plans to draft American international tax reform legislation immediately. (The horse went thataway!) The main purpose will, of course, be to lower taxes on the rich and on corporations. Matthew Yglesias did a solid explanation of what's going on with this whole mess yesterday.
Mossack Fonseca is not a household name, but the Panamanian law firm has long been well known to the global financial and political elite, and thanks to a massive 2.6 terabyte leak of its confidential papers to the International Consortium of Investigative Journalists it's about to become much better known. A huge team of hundreds of journalists is pouring over the documents they are calling the Panama Papers.

The firm's operations are diverse and international in scope, but they originate in a single specialty-- helping foreigners set up Panamanian shell companies to hold financial assets while obscuring the identities of their real owners. Since its founding in 1977, it's expanded its interests outside of Panama to include over 40 offices worldwide, helping a global client base to work with shell companies not just in Panama but also the Bahamas, the British Virgin Islands, and other notorious tax havens around the world.

The documents provide details on some shocking acts of corruption in Russia, hint at scandalous goings-on in a range of developing nations, and may prompt a political crisis in Iceland.

But they also offer the most granular look ever at a banal reality that's long been hiding in plain sight. Even as the world's wealthiest and most powerful nations have engaged in increasingly complex and intensive efforts at international cooperation to smooth the wheels of global commerce, they have willfully chosen to allow the wealthiest members of Western society to shield their financial assets from taxation (and in many cases divorce or bankruptcy settlement) by taking advantage of shell companies and tax havens.

If Panama or the Cayman Islands were acting to undermine the integrity of the global pharmaceutical patent system, the United States would stop them. But political elite of powerful western nations has not acted to stop relatively puny Caribbean nations from undermining the integrity of the global tax system-- largely because western economic elites don't want them to.

UPDATE: And, Yes, We Have An Americano

One of the first Americans identified in the rapidly unfolding Panama scandal is high-profile notorious Wall Street sleaze-bag Benjamin Wey, president of New York Global Group. You may recall that he was indicted last year on 8 counts of securities fraud, stock manipulation, money laundering, and wire fraud for his role in a fraudulent scheme to profit from undisclosed, controlling ownership interests in several companies. His wife, sister and two of his attorney's were also indicted for "the aiding and abetting of violations of the antifraud provisions and the disclosure and reporting provisions of the federal securities laws." Among the American politicians he had bribed with campaign contributions are sleazy pro-Wall Street Democrats from the corporate wing of the party: New Dems Joe Crowley and Sean Patrick Maloney and Blue Dog Steve Israel (with a $20,000 "contribution" to the DCCC on September 30, 2013). Wey has also given money to the most corrupt of the Vegas politicians, Harry Reid. The revelations will only get more interesting. This morning's Chicago Tribune:
Benjamin Wey is a U.S. citizen and president of New York Global Group. He was indicted last year, along with his Swiss banker, Seref Dogan Erbek, on securities fraud charges. Wey's alleged scheme to conceal a true ownership interest in publicly traded companies was at the heart of the charges. Wey is accused of using offshores set up with Mossack Fonseca to disguise complicated transactions between Chinese operating companies and publicly traded U.S. shell companies.

The two "are believed to have profited in the tens of millions, while victim shareholders were left holding the bill," Diego Rodriguez, an FBI official involved in the case, said in a statement at the time of indictment.
Crowley and Maloney, widely considered two of the most corrupt of the Wall Street-owned New Dems, have refused to divest themselves of the bribes from Wey. Needless to say, the DCCC won't give up the $20,000 Steve Israel brought in from him either.

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At 9:23 PM, Blogger Kim Kaufman said...

Wikileaks slams Panama Papers as being Soros-funded hit job

or, more precisely, Soros and USAID (State Dept.). Remember: Soros gave $7m or $8m to Clinton LLC campaign. I don't think #PanamaPapers is what it seems yet.


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