The latest massive leak: The Panama Papers

News reports are emerging of the massive leak of documents (2.6 terabytes in size) from the Panamanian law firm Mossack Fonseca that provided off shore tax havens for wealthy people. The leak was originally given to a German newspaper Süddeutsche Zeitung. An anonymous person approached the newspaper and said that he would provide them this massive trove of documents. The source did not want anything in return, financial or otherwise, but demanded that it all be done over encrypted channels because of the danger to his/her life, and that s/he would leave it up to them to decide what should be published. The manner of the leak is remarkably similar to that of Edward Snowden and it seems clear that the new leaker had followed his example.

The background of how the arrangement was made and the data transferred can be read here. [Warning music comes on for the first minute or so.]

The data provides rare insights into a world that can only exist in the shadows. It proves how a global industry led by major banks, legal firms, and asset management companies secretly manages the estates of the world’s rich and famous: from politicians, Fifa officials, fraudsters and drug smugglers, to celebrities and professional athletes.

Like with the Snowden files, the data trove was so massive that the initial recipient sought the assistance of around 400 journalists from more than 100 media organizations to do the analysis.

The Guardian has published a whole set of stories on the papers. Names have already been mentioned in the documents such as Russia’s president Vladimir Putin, Iceland’s prime minister Sigmundur Davíð Gunnlaugsson and his wife, Ukraine’s president Petro Poroshenko, Pakistani prime minister Nawaz Sharif, and the former prime minister of Iraq Ayad Allawi. In days to come you can expect to hear more names being revealed. Many of them will be family and friends of political figures, like the late father of British prime minister David Cameron.

One thing I have noted so far is the relative paucity of US and Western European politicians among the names revealed so far. I am not sure if such names will be forthcoming later. The ICIJ (International Consortium of Investigative Journalists) that is analyzing the documents has created a website for dissemination of the information that list all the names revealed so far. One thing that you can be sure is that this is just the tip of the iceberg because it involves just one offshore tax shelter company, however large it may be. The people exposed will be those who were unlucky enough to use that company. But if this starts a snowball effect and other companies also have their information revealed, you can be sure that more familiar names will become known.

Some of those whose names have been released have taken the position that they have done nothing illegal. And this may be technically true.

Generally speaking, owning an offshore company is not illegal in itself. In fact, establishing an offshore company can be seen as a logical step for a broad range of business transactions. However, a look through the Panama Papers very quickly reveals that concealing the identities of the true company owners was the primary aim in the vast majority of cases. From the outset, the journalists had their work cut out for them. The providers of offshore companies – among them banks, lawyers, and investment advisors – often keep their clients’ names secret and use proxies. In turn, the proxies’ tracks then lead to heads of state, important officials, and millionaires. Over the course of the international project, journalists cooperated with one another to investigate thousands of leads: they examined evidence, studied contracts, and spoke with experts.

This information released so far shows how the world’s wealthy use all the tricks in the book to avoid paying taxes that ordinary people must pay. And since the wealthy set the rules, they can makes ones that benefit themselves. In other words, ordinary people effectively subsidize the lives of the wealthy. It illustrates the truism that what is scandalous nowadays is not what is illegal but what is legal.

UPDATE: Glenn Greenwald comments on the revelations and also picks up on the similarity between the Panama Papers and the Snowden documents and how they reveal how the oligarchy works.

But illegality was never the crux of the scandal triggered by those NSA revelations. Instead, what was most shocking was what had been legalized: the secret construction of the largest system of suspicionless spying in human history. What was scandalous was not that most of this spying was against the law, but rather that the law — at least as applied and interpreted by the Justice Department and secret, one-sided FISA “courts” — now permitted the U.S. government and its partners to engage in mass surveillance of entire populations, including their own. As the ACLU’s Jameel Jaffer put it after the Washington Post’s publication of documents showing NSA analysts engaged in illegal spying: “The ‘non-compliance’ angle is important, but don’t get carried away. The deeper scandal is what’s legal, not what’s not.”

Proving that certain behavior is “legal” does not prove that it is ethical or just. That’s because corrupted political systems, by definition, often protect and legalize exactly the behavior that is most unjust. Vital journalism does not only expose law-breaking. It also highlights how corrupted political and legal systems can be co-opted by the most powerful in order to legally sanction atrocious and destructive behavior that serves their interests, typically with little or no public awareness that it’s been done.

In such cases, as Jaffer put it, “The deeper scandal is what’s legal, not what’s not.” The key revelation is not the illegality of the specific behavior in question but rather the light shined on how our political systems function and for whose benefit they work. That was true of the Snowden leak, and it’s true of the Panama Papers as well.


  1. Lassi Hippeläinen says

    There is also a practical reason why western billionaires don’t appear in Panama papers: they don’t need Panamian middlemen. They have their own lawyers, and can operate directly with tax havens. For Americans the nearest is Bahama. An innocent looking “offshore fishing vacation in Nassau” may involve bigger fish than you thought.
    BTW, the biggest tax haven by far is City of London.

  2. Devocate says


    They do realize it is a trap, right? Those names not revealed on the first go around, get released to a different group on the second, thus exposing the first’s concealment, and implicating them.

  3. says

    ” …among the manes revealed so far…”
    Typo or brilliant irony? ‘Good ones’ indeed!!!!!
    (I knew all those boring hours in Lat. would come in handy 🙂

  4. Mano Singham says


    I only wish I was that good at irony (or knew any Latin)! I have corrected the typo.

  5. says

    Nooooooo!!!!! Noooooo! I feel bad now 🙁
    Mea maxima culpa
    (Of course you really SHOULD have replied with something like “well one of you actually caught my joke!” That’s what I would have done : -) )

  6. says

    Names have already been mentioned in the documents [from the Panamanian law firm] such as Russia’s president Vladimir Putin

    Mossack and the Cossack.

    Kidding aside, this has the potential to make Occupy Wall Street look like a minor blip. I would love it if this destroyed the whole rotten system.

  7. Numenaster says

    richardelguru, what IS the joke? I only know manes as either lion hair or mid-level demons. I’d like to recognize the joke if I meet it again.

  8. sonofrojblake says

    I heard another reason why there are unlikely to be many US names revealed: some relatively recent pact on information sharing between the US government and Panama would mean no US billionaire with any sense would go through there -- it would be too high risk. They’d use other channels.

  9. Nick Gotts says

    It’s emerged now that over half the companies registered by Mossack Fonseca are registered in the British Virgin Islands, which is a British Overseas Territory in the Carribean. I’ve just listened to Dominic Grieve, a senior Tory MP, making it clear on the BBC that the UK government has absolutely no intention of interfering with the tax avoidance industry based in such British territories, and regards it as completely legitimate for the rich and large companies to avoid tax in this way. That the rich should move their assets around to avoid tax was spoken of as if it was a fact of nature, beyond human control. All this was scarcely challenged by the interviewer, who did not even raise the vast increase in economic inequality to which the mobility of financial capital in order to avoid tax has made a huge contribution.

  10. Nick Gotts says

    I should add to #10 that it’s standard practice for UK governments to put up former ministers to make their excuses, rather than current ones, when they know they haven’t a leg to stand on.

  11. says

    Unfortunately, the US domestic tumbril industry has been destroyed by arbitrageurs. In the name of Irony, we’ll probably have to import them from China.

  12. says

    PS -- the offshore tax havens probably won’t have a lot of US money in it. Because rich americans have loads of “legal” ways to avoid taxes, which make them mostly unnecessary for our plutocrats. All those “foundations” and “charitable trusts” … they’re tax shelters. In the US you don’t need an anonymized shell corporation, you just do like Trump or Romney or Bush did: take daddy’s money and start your own investment firm, then you’re not making any money, the firm is -- you’re just the main/only shareholder (typically a small number of shares are given to the accountancy as payment) and when the company liquidates its assets, you get a substantial return on your initial investment. Of course you collect a suitable management fee as well as getting access to the company’s generous insurance, car plan, residential stipend, administrative support staff, and company jet.

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