By now, most global citizens have heard of the Panama Papers, a document leak that surpasses all leaks in present memory. In fact, the papers represent nearly 3 terabytes of space spread out over more than 11 million documents. And legitimacy shouldn’t be confused with illegal or ambiguous actions. Yet topics like tax evasion are beginning to haunt celebrated entertainers and sports stars. Clients of Mossack Fonseca, the firm at the center of this scandal, are denying reports.
In the past decade, internal memos and correspondence letters have gained public trust, thanks to WikiLeaks and Edward Snowden. Suddenly, the general population has access to hidden files and directives and are able to make up their own minds. So does the public continue to trust the word of a celebrity or leaked documents?
Not to mention Prime Minister Sigmundur Gunnlaugsson’s step back from duties. The Icelandic official faced distress when over 10 percent of the nation rallied and called for him to step down. Reports of his resignation turned out to be false on April 5, 201, but later recanted. A spokesman clarified that “Progressive Party Vice-Chairman take over the office of Prime Minister for an unspecified amount of time.”
NPR spoke to Icelandic National Broadcasting Service’s Godjon Helgason, who restated Progressive Party Vice-Chairman Sigurdur Ingi Johannsson will hold the office as the country looks at alternatives. The ongoing dilemma does indicate an early election. The nation is in turmoil because of bad leadership decisions and there’s very little public confidence in how to proceed.
Political volleying resulted in an eventual resignation, but the calls for an emergency election have been turned down. NPR spoke to Icelandic National Broadcasting Service’s Godjon Helgason, who restated Progressive Party Vice-Chairman Sigurdur Ingi Johannsson will hold the office for the time being. The ongoing dilemma does indicate an early election. The nation is in turmoil because of bad leadership decisions and there’s very little public consensus on how to proceed.
How do you trust a government that’s proven itself to be unethical?
As Iceland sorts out the various details such as owning stock in a company connected with Iceland’s bank recovery, citizens wait to hear how national leaders will continue to work with a politician facing a total lack of absence of confidence by constituents.
On April 8, a raid on the El Salvador office collected paperwork and computers, indicting national citizens who purchased housing without reporting to officials. As embroiled officials across the world stack up, the actions of the firm show little regard for fully filing documents and more for collecting money for the elite.
A 40-year-old reputation decimated over questionable ethics and guidelines. While hacking is neither legal nor ethical, does the outcome balance out the actions of another?
— AFP news agency (@AFP) April 6, 2016
‘for civil humanitarian purposes’
But the real story lies in the shadowy underworld of running shell companies for the purpose of extending wars.
According to the International Consortium of Investigative Journals, some of the shells set up by Panamanian law firm Mossack Fonseca involved U.S. and U.N. sanctioned nations and individuals. One such location is war-torn Syria; where government sanctioned barrel bombs, Daesh’s attempts to rule, the ongoing warfare between rebels and President al-Assad’s regime, and the involvement of various ‘allies’ are destroying the nation.
In that unending destruction remain the lost and displaced lives of Syrians caught in the conflict.
When a hacker with a conscience released the data to Süddeutsche Zeitung, a Munich-based paper, a global consortium worked together to help analyze the data. What they never expected to find was how deep political secrets really go.
The U.S. Treasury Department’s blacklist enforcement unit, the Office of Foreign Assets Control (OFAC), announced in 2014 that U.S. citizens are banned from helping to fund the Syrian war. However, the sanction list does little to stop those providing money under the table and funneled through shell companies.
One example is Pangates International Corporation Limited, which the U.S. claimed had provided 1,000 metric tons of ‘avgas,’ a gas necessary to pilot military aircraft. A hefty accusation. Two other shells were tied into the Abdulkarim Group, a Syrian company with offices in Damascus: Maxima Middle East Trading Co. and Morgan Additives Manufacturing Co.
Maxima’s general manager Ahmad Barqawi and Pangate’s managing director Wael Abdulkarim also faced sanctions. Both resigned before the sanctions took effect. Working with a Russian oil and gas firms earned OFAC’s sanctions; though the company claims it was made in error. Instead Pangates claims they had no knowledge of such actions of the oil being used for barrel bombs.
Speaking to Reuters, the company claims to be “selling to non-Syrian firms who are not on the EU and US sanctions list” with little knowledge of intent but “to our information the product is used for civil humanitarian purposes.” So a third party, another connection to Mossack Fonseca denies any wrongdoing.
Yet it’s very clear that the paper trial reveals another situation entirely. While it’s not illegal to have a shell company—many legitimate reasons, like patent pending concepts or international home purchases, are common—the ultimate sign of deception is in ignoring due diligence for higher profitability. And this isn’t the firm’s first case of ignoring sanctions and legal actions.
While the founders believe they will need to be in charge of “due diligence” research with the United Kingdom branch in office due to the blunder, the fact of the matter is they didn’t stay abreast of the associate and firm’s actions, either.
Chris Zollinger, a partner in the firm, did not want to lose the business of Rami Makhlouf, cousin to Syrian dictator Bashar al-Assad. After British Virgin Islands officials demanded information on one of his accounts, Mossack Fonseca suddenly located information tying the sanctioned leader to their client list. Zollinger indicated since only “allegations (rumors)” and no facts connected the sanctions, Makhlouf should stay as British bank HSBC had no problem with the Syrian.
Later, he told the German paper “my comment in the e-mail was wrong, which I regret,” but still touted that the business had no idea of Makhlouf’s use of the money.
According to the official statement, “our client was a bank in Geneva, Switzerland, which we cannot name due to a strict confidentiality agreement, and it is they who were responsible for dealing with the final beneficiary. Immediately upon learning that he was related to nefarious persons and activities we resigned as registered agent.”
Ultimately responsibility of action goes to those knowingly providing fuel for bombs to kill and maim for the sake of war. However, those companies, channels, and networks were not created in a vacuum and a lot more people ignored very important warning signs in order to move up the chain of command.
— Sam Tamiz (@SamTamiz) April 4, 2016
Raising a red-flag
In “The Gift of Fear”, Gavin de Becker describes how denial of instincts and intuition leads to building a case against any behaviors that are easily explained. “Denial is a save-now-pay-later scheme, a contract written entirely in small print.”
It’s easy to relate the concept to citizens ignoring signs of duplicity for the sake of not rocking the boat. “In the long run, the denying person knows the truth on some level, and it causes a constant low-grade anxiety.”
Imagine you have an inkling that an associate of an associate is providing financial assistance to questionable enterprises. You might want to ignore the behaviors because the person seems to be different than what your instinct says. Or your job is on the line. But in the end, you’re going to be worried about the outcome for those around the questionable party.
That scenario doesn’t count the anxiety when the true nature of the scheme is revealed. Empathetically, you not only feel bad for your friends, but those who were murdered during shady dealings. The insidious nature of not creating conflict out of personal convenience hurts people. And that pay–later contract will continue to haunt; did you do enough or was the bottom line more important?
Was it worth being silent for the sake of productivity and career advancement?
A Mossack Fonseca spokesman told the ICIJ, they must communicate with authorities “as soon as they have knowledge of a client of theirs having been either convicted or listed by a sanctioning body.” Adding the firm “never knowingly allowed the use of our companies by individuals having any relationship with North Korea, Zimbabwe, Syria and other countries.” The company also works with agencies by continuing to work as middlemen until actions may be taken against the sanctioned and blacklisted parties.
But does the evidence confirm such a defense?
Self-audits on multiple locations indicate a lack of evaluation or real investigation into the clients before setting up the accounts. If the incident had happened in only one location, there would be an obvious indicator of where the responsibility lies. However, multiple locations shows a downward slide from the top execs who are training and promote the various leadership roles.
In connection to Iranian funds and shell company Petropars, founder Jürgen Mossack took the firm to task.
“Everybody knows that there are United Nations sanctions against Iran, and we certainly want no business with regimes and individuals from such places! Not because of OFAC, but out of principle.” Clearly violating business ethics and principles, but a comprehensive policy on OFAC and sanctions wasn’t available until 2015.
“Anybody having had to do anything with this company, at absolutely all levels, should have realized immediately that the names associated with it were Iranian names. A red flag should have been raised immediately.”
But if Mossack believed the company was violating principles in the case of Petropars, which was dropped in 2010, did he remain in denial about what the business was really doing? How much anxiety did leadership ignore in order to gain such powerful business acquaintances? How can the company not do a deeper exploration when it’s often third parties even signing documents in the set up?
According to the ICIJ’s leaked documents, money from the shell companies helped to imprison young, orphan girls, using them for sexual power exchanges with little care of the damage being done. The Russian elite then sold the girls for sex. Due diligence, indeed. One survivor feared a foster father would rape and abuse her based on the experience.
“After this rape, I was aching all over. I very much started fearing men.” A lifetime of psychological rebuilding because money was more valuable than human life. The survivor is now left “fearing they only wanted one thing.”
Mossack Fonseca ignored documents showing pedophilic behavior by one client. And helped shelter $400 million away from Uganda, which is more than the annual GDP. Victimization is more than war crimes. It’s the complete obliteration of those deemed lesser by the elite.
Ugandans faced little medical supplies in emergency crisis. Citizens asked to bring their own supplies to the hospital while those using the tax shelter had every medical opportunity available. Children born in poverty when poverty had the potential to be eliminated.
Just because something is legal doesn’t make it just. And the behaviors of the Panamanian firm read as corruptible. The cost of that corruption involves the lives of many millions as powerful regimes and rebels fight against one another in multiple countries and regions.
Lady MacBeth would like a word.