#PanamaPapers is the hashtag trending on Twitter.
Sport celebrities, mafia members and world leaders hiding wealth in offshore shell companies managed by Panamanian law firm Mossack Fonseca have been exposed by this massive leak.
Edit 4/4/16
Mossack Fonesca have released a statement about this leak: http://www.scribd.com/doc/306839585/Declaration-de-Mossak-Fonseca-en-anglais
I had one of these accounts when I lived/worked overseas. It wasn't with Mossack, but another company that does the same thing. What it allowed me to do was create a savings account for myself that was not beholden to the vagaries of any one government and their policies. As an American, living in Hungary, working for companies in the EU, the Balkans, Britain, and Hungary, this greatly simplified things for me. I could just transfer money into that account from my bank, and the money was safe and accessible any time I wanted to. I was also able to diversify my investment in markets beyond what the limited American system would allow. I could invest in riskier investments than the American banking system would allow, if I wanted to. (I made ~20% return on one of these investments, so, yay!) But the way the account worked also opened it up for possible abuse. Sure, if I had been a drug or arms dealer, I could have passed my money through a couple of these accounts and investments and washed it clean. And no doubt there were people who did this. What's going to happen - and is already happening here in this thread - is that anyone with one of these accounts is going to be painted with the "nefarious nogoodnik" brush, regardless of whether they are using their accounts for evil or not. Mossack Fonseca provided a financial service. Some people abused it, some used it responsibly. Please remember that as this story unfolds, and millions of legitimate people get tarred and feathered by internet wannabe do-gooder vigilantes.
As an American, living in Hungary, working for companies in the EU, the Balkans, Britain and Hungary... did you declare that income to the US? Because if you don't disclose foreign holdings on your federal tax return, you open yourself up to total forfeiture, massive fines and possible prison time. Friend of mine discovered this when she traded her shady accountant for a less-shady one. She had to restate 4 years of income because of holdings she had in a B&B in Columbia. And that's pretty much the bottom line - "diversify my investment in markets beyond what the limited American system would allow" is the exact sort of financial engineering that the Treasury Department clamps down on. Sure - it's your money and you'll do with it what you want but when people whinge about offshoring reform and tax fraud and and and this is exactly the shit they're talking about. Just because you're a good person with an offshore account does not mean that people with off-shore accounts are virtuous. I probably would have done the exact same thing but I also would have acknowledged that the offshoring of my funds was a necessary evil for a job that the Treasury Department discourages you from taking through brutal disincentives.
I did at first. But I made below the poverty level in the US, so I kept getting refunds. Which seemed particularly shitty... taking money out of the US, that I didn't need, and spending it overseas. It didn't seem right. Then Hungary joined the EU. But not the EMU, that is, the European Monetary Union (there are several different levels of "joining" the EU), and nobody was really clear how to do the financial stuff properly, because the rules hadn't been defined. And nobody wanted to take on the job of figuring out my finances, because I made too little for anyone to be really interested in. I was working as a Civilian Contractor across Bosnia and Kosovo... but Kosovo didn't officially exist as a country, it was a part of Serbia, which the US did not have diplomatic relations with, so I couldn't do business with Serbia, but I wasn't, I was doing business with Kosovo, through the US Army, which was operated out of Mainz Kastel in Germany, and operating there as several different companies - local and foreign - depending on which part of the organization I was dealing with that day, etc... And any time I brought my finances to someone to try and sort them out, they'd ask, "Why the hell are you doing all this? Just put it in an offshore account and use it as your retirement plan. Sheesh... that's what everybody else does." And then 9/11 happened, and the US financial system went crazy, and nobody would touch me with a 10-foot pole. So, I tried to do it right, but gave up and just did the accepted norm like everybody else. And, naturally, all those loopholes and all that uncertainty is exactly why the nogoodniks found such a warm and snuggly place in the offshore banking craziness.
Right. And again - my friend with the B&B isn't out to screw anybody either. But as you said, the structure lends itself well to profiteers. Anyone with IRA-grade money in an offshore account is likely to have to pay taxes on it if someone bothers to enforce things. The shady accountant that offshored my friends' money? My accountant, too - also Hans Zimmer's accountant. Of the three of us, I was the least worried because the IRS has got to be pretty fucking bored to come after my ass. Kinda like you - assuming your money was still in an offshore account, a freelance technical writer who did a stint with IFOR 15 years ago is far less interesting than, say, David Cameron.
I am most curious about what the documents have on Putin. I've read an article on the linked website regarding his second-hand financial accounts and wonder whether there's more, as well as whether there will be consequences of any amount of mass.
I have that impression from the inside, as well. I've never heard of the protests on the street that people've been holding after Putin was "elected" for the third time (legally, but trickily still) - and yet, apparently, they happened amass. That's one of the things I have only learned from international documentaries about Russia. As much as I'd love to see the national revolt (people showing their strength to the oppressive government that's been holding them hostage for 25 years now - this would be an epic showcase of character, whatever form it would take), a more reasonable expectation would be that of international pressure affecting internal politics or the president directly. I'm eager to learn what happens afterwards. For now... I did a quick newsscout around Russian agencies. It seems like the news are being silenced on the issue, with the focus of attention being on Petro Poroshenko (since he's the Ukrainian president, and apparently, Russia wants the whole of the Ukraine now) and, oddly, the Icelandic whoever the politician is. When it does come up, it's most often Dmitry Peskov, press-secretary of the Kremlin, immaturely brushing the happenings off as "trying to destabilize situation in Russia" (look who has their eyes closed on the dozens of other people affected pretty seriously) and "having been expecting a better journalist investigation" (the results of which have apparently served the same purpose: to throw a shadow on Madder Russha). What a fucking shame.
Mossack Fonseca apparently has 600 people working in 42 countries and has acted for more than 300,000 companies. That is incredibly wide ranging for a couple of guys that do not have 1st world law degrees. Interesting that the firm also runs E-volusoft "a company created to respond to the growing demand that exists today for digital storage solutions and the electronic management of documents and images."
I'm impressed that so many journalists managed to quietly work together for months to get that out here. But now one is left wondering what will come of it. Will things actually be shaken up, or will it simply be in the news for a few weeks and then disappear from public interest?
So one of the things in Piketty's Capital that none of the pundits picked up on was the observation that between 40 and 70% of the wealth in the world is unreported, hidden in offshore accounts... and that one aspect of the USA PATRIOT Act that gets very little play is it beefed the fuck out of the Bank Secrecy Act such that the USA has the most viciously stringent investigation and seizure instruments in the world. He even argued that one of the reasons for the past decade of US prosperity was the fact that the US treasury department actually had the instruments and reach necessary to force compliance with its foreign disclosure requirements, radically increasing the amount of taxes the US was able to collect on monies held in foreign accounts. 2.6 TB of "here's where the money is" might be of interest to the Treasury Department.
From the numbers I've seen, if we seized all that money, it would pay off the entire national debt and a third more ($20 trillion illegal money, $15 trillion debt). Of course, I'm not sure if it's legal to seize all the money, or just the unpaid taxes. My instinct is that it's legal to at least freeze it all. Also, who would have guessed I'd one day be cheering for the PATRIOT Act?
The people whose monies have ever made a loop through the US financial system are likely to find any of their funds within the US or its banking agreement signatories seized. Not all of them, but enough to cover the taxes that are being sheltered. Having looked over the list, most of the people getting busted are the ones that don't have any money going through the US precisely because of the Bank Secrecy Act. It'll be interesting to see how it shakes out. Because there are so many countries involved, and because everyone is going to have their own spin on it, I don't really know how it's going to matter... I'm actually not optimistic that much will change, but I imagine attempts to loosen US banking laws are not going to go through as easily.