Yesterday more than hundred news organizations simultaneously broke a wall of secrecy surrounding the financial transactions of prominent business and political figures in more than a dozen countries. The source of the articles is a treasure of 11.5 million pages of documents leaked from the files of Mossack Fonseca, a law firm in Panama, that is described as the fourth largest offshore law firm in the world. The firm specializes in creating shell companies that conceal assets for various reasons, including tax avoidance.
The source of the leak has not been disclosed, but appears unrelated to Wikileaks or other known transparency activists. The German daily Süddeutsche Zeitung, based in Munich, received the documents about a year ago, and shared them with the International Consortium of Investigative Journalists (ICIJ) for analysis. ICIJ then released the papers to selected media, including the UK Guardian, but not the New York Times.
Among the Panama firm’s clients whose dealings are now transparent, according to the New York Times, were
President Mauricio Macri of Argentina; President Petro O. Poroshenko of Ukraine; Prime Minister Sigmundur David Gunnlaugsson of Iceland; the former interim prime minister and vice president of Iraq, Ayad Allawi; King Salman of Saudi Arabia; the former emir of Qatar, Hamad bin Khalifa al-Thani, and its former prime minister, Hamad bin Jassim bin Jaber al-Thani; and the Argentine soccer star Lionel Messi, according to the consortium.
The cellist Sergei Roldugin, a close friend of President Vladimir V. Putin of Russia, was also named in the documents. The Guardian described Mr. Roldugin as being at the center of a $2 billion scheme “in which money from Russian state banks is hidden offshore.”
Mossack Fonseca also counted among its clients close associates of President Bashar al-Assad of Syria, according to the BBC, and eight current and former members of China’s Politburo. Dozens of influential donors and politicians in Britain have also been named, including Ian Cameron, the father of Prime Minister David Cameron, who ran an offshore investment fund that avoided paying taxes in the United Kingdom, according to The Guardian. Mr. Cameron died in 2010.
The documents have set off an unprecedented avalanche of exposure of corruption in high places. The reflex reaction of some commentators is to see the material as an indictment of some “bad apples.” The sheer scale of the documentation released so far — more is to come — points rather to a systematic and structural pattern. It’s well to remember that this law firm is only the fourth largest of global firms that specialize in this business.
The material released so far confirms in hard detail what probably most people in the world have long suspected, namely that the financial, legal, and political system is rigged to make the rich richer at the expense of the poor. Some of the obvious mechanisms that generate and sharpen economic inequality — property law and tax policy foremost among them — have been documented and understood for many years. The hidden strings that reinforce this engine of inequality and hide many of its spoils are now coming into sharper focus, thanks to the Panama Papers. This trove of papers is further vindication, if any were needed, of the points made by the Occupy movement and the campaign theme of Bernie Sanders.
One immediate consequence of these revelations was a demonstration by tens of thousands of people in Iceland yesterday, demanding the resignation of Prime Minister Gunnlaugsson, whose offshore shenanigans are laid bare in the papers. It promises to be an interesting period now.