By Doug Porter
As leaks of confidential documents go, the Panama Papers dwarf past disclosures. The story isn’t new: rich people use offshore shell corporations to avoid taxes. But the detail is stunning. And there is reportedly much more coming over the next month.
Enough documents to fill six hundred CD’s leaked from the law firm Mossack Fonseca reveal the dark money dealings of world leaders, celebrities and dozens of Fortune 500 billionaires. More than 370 journalists from more than 70 countries are following up on leads using corporate filings, property records, financial disclosures, court documents and interviews with money laundering experts and law-enforcement officials.
A much ‘smaller’ story impacting a much larger number of people in the US appears today in the Washington Post (via the Center for Media and Democracy) showing internal polling commissioned by Chambers of Commerce revealing a large majority of business owners being supportive of increasing minimum wages, paid sick leave and other reforms.
The Panama Papers
The role of the Panamanian Law firm as a facilitator in shell corporations has long been known, having been revealed in various singular investigations into money launderers by the New York Times (the Putin connection) and Vice in the past.
via Süddeutsche Zeitung, which cooperated with International Consortium of Investigative Journalists (ICIJ) in making the story public
Here’s a snip from Ken Silverstein’s December 2014 reporting at Vice:
Founded in Panama in 1977 by German-born Jurgen Mossack and a Panamanian man named Ramón Fonseca, a vice president of the country’s current ruling party, it later added a third director, Swiss lawyer Christoph Zollinger. Since the 70s the law firm has expanded operations and now works with affiliated offices in 44 countries, including the Bahamas, Cyprus, Hong Kong, Switzerland, Brazil, Jersey, Luxembourg, the British Virgin Islands, and—perhaps most troubling—the US, specifically the states of Wyoming, Florida, and Nevada.
Mossack Fonseca, of course, is not alone in setting up shell companies used by the world’s crooks and tax evaders. Across the globe, there are vast numbers of competing firms, and many of them register shells that are every bit as shady as Drex. Proof of this includes the case of Viktor Bout, who, in the 1990s, peddled arms to the Taliban through a Delaware-registered shell. More recently, in 2010, a man named Khalid Ouazzani pleaded guilty to using a Kansas City, Missouri, firm called Truman Used Auto Parts to move money for Al Qaeda.
Scattered news accounts and international investigations have pointed to Mossack Fonseca as one of the widest-reaching creators of shell companies in the world, but it has, until now, used an array of legal and accounting tricks that have allowed it and its clients to mostly fly under the radar.
How big is this story? Here’s a clue, via Fusion, which is one of many outlets with stories:
By one estimate — based on data from the World Bank, IMF, UN, and central banks of 139 countries — between $21 and $32 trillion is hiding in tax havens, more than the United States’ national debt. That study didn’t even attempt to count money from fraud, drug trafficking and other criminal transactions whose perpetrators gravitate toward the same secret hideouts.
The Guardian’s lead graphic
Here’s a snip from the McClatchy News story posted at the Union-Tribune:
The law firm’s co-founder, Ramon Fonseca, in an interview last month on Panamanian television, said blaming Mossack Fonseca for what people do with their companies would be like blaming an automaker “for an accident or if the car was used in a robbery.”
Yet plenty of criminals are named in the documents, including drug traffickers and convicted fraudsters.
“The offshore world is the parallel universe of the ultrarich and ultrapowerful,” said Jack Blum, a white-collar crime attorney and an architect of the Foreign Corrupt Practices Act.
The archive, which dates to the late 1970s and extends through December 2015, reveals that 14,000 intermediaries and middlemen bring business to Mossack Fonseca.
No part of the world is untouched, including the United States.
And here’s the real shocker. The Panamanian law firm is only number four in the hierarchy of companies doing this sort of business.
Just counting the ‘clean’ money, the top 1% of U.S. residents now earn 21% of total national income, up from 10% in 1979. So the Panama Papers story shows how inequality could even be worse than imagined.
The Greedy Grifters at The Chamber of Commerce
In San Diego, along with most of the rest of the country, the Chambers of Commerce have been at the forefront of groups opposing increases in the minimum wage, earned sick leave, maternity leave, and better scheduling practices.
Many of the same people pushing “trickle-down” economics have been adamant and spent a ton of money saying “No” to any actually achievable measure other than tax cuts for improving the lives of their employees.
It’s one of those “everybody knows” deals, where we were all supposed accept that a fear of financial ruin kept most businesses from doing the right thing. Now it turns out the “fear” was being ginned up by those who could most easily afford increased wages and benefits.
Following the recent successful effort to increase the minimum wage in California, the president and CEO of the North San Diego Business Chamber published an op-ed in the Union-Tribune replete with the usual warnings of business failure, cuts in schedules for hourly employees, and an increased chance of regional recession.
The Regional Chamber of Commerce, led by ex-Mayor Jerry Sanders, used funding from multinational corporations to create a “Small Business Coalition” to derail a city-wide minimum wage boost passed by the San Diego City Council. A grand total of two local businesses stepped up to the plate to play with the big boys. Current Mayor Kevin Faulconer’s political consultant Jason Roe was tapped to be the public face of this sham.
The Center on Media and Democracy, well-known for authoritative research on the Koch Brothers and ALEC, has released video footage of a closed-door webinar with top GOP pollsters instructing Chamber of Commerce lobbyists to ignore internal survey data showing that Chamber members across the country overwhelmingly support progressive workplace policies including raising the minimum wage, providing paid sick days, and increasing paid family leave:
via PR Watch
During the hour-long webinar, which was hosted by the Council of State Chambers in February 2016, LuntzGlobal consultants present the results of an internal survey of 1,000 C-suite executives who are either current or prospective Chamber members. The poll finds that – contrary to the Chamber’s lobbying agenda – 80 percent of current or prospective Chamber members support raising the minimum wage, 73 percent support paid sick days, 78 percent support predictive scheduling policies, 72 percent support increased maternity leave time, and 82 percent support increased paternity leave time, among other policies.
In the webinar, a LuntzGlobal consultant asks about the poll findings: “So what do these results all have in common? Well quite frankly, they’re all empathetic.” In response, the consultants advise Council of State Chamber lobbyists on messaging and strategies to help their members get over their empathy and to undermine and change their members’ views: “So what we’ll try to do is actually give you a few helpful hints on how to actually combat these [workplace reform efforts and their popularity among business leaders] in your states…”
…The LuntzGlobal survey reflects a national sample of business owners and executives who are registered voters and who are members of the local, state, or U.S. Chamber of Commerce or match the profile of executives that the chambers would want to attract. In all, 73% were CEOs or owners; more than half (59%) had revenues of between $50 million and $500 million; 39% had fewer than 100 employees while another 41% had 100-499 employees. The results included 250 responses per region (East, Midwest, South, West), with results weighted among all states in each region.
From the Washington Post:
via PR Watch
Luntz then provided some tips on how to defuse that support, such as suggesting other poverty-reduction methods like the Earned Income Tax Credit. “Where you might find some comfort if you are opposing it in your state is, ‘how big of a priority is it against other priorities?’” he said. “Most folks think there are bigger priorities. Creating more jobs rather than raising the minimum wage is a priority that most everyone agrees with. So when you put it up against other issues, you can find other alternatives and other things to focus on. But in isolation, and you ask about the minimum wage, it’s definitely a winner.”
Sixty-three percent of respondents said they belong to a chamber of commerce, whether on the local, state, or federal level — suggesting that the groups’ public statements might be out of step with their members’ beliefs. The materials shed light on how some business trade associations operate, and why they’ve continued to oppose minimum wage increases even as the rest of the public thaws towards them.
Yay! For the Supreme Court
Breaking news, as I’m getting ready to publish, via the Los Angeles Times:
A conservative effort to shift political power away from fast-growing communities of immigrants fizzled Monday when the Supreme Court unanimously upheld the current widely used method of counting all persons when drawing up election districts. The justices ruled that creating voting districts “on the basis of the total population” is constitutional and need not change.
“History, our decisions and settled practice in all 50 states and countless local jurisdictions point in the same direction,” said Justice Ruth Bader Ginsburg.
The outcome preserves the status quo and is likely to be welcomed by Democrats and immigrants-rights advocates.
On This Day: 1968 – Martin Luther King Jr. is assassinated in Memphis, where he had been supporting a sanitation workers’ strike. In the wake of this tragedy, riots break out in many cities, including Washington, D.C. 1981 – Henry Cisneros became the first Mexican-American elected mayor of a major U.S. city, which was San Antonio, TX. 1999 – The Colorado Rockies and the San Diego Padres played the first major league season opener to be held in Mexico. The Rockies beat the Padres 8-2.
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Doug Porter
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Cannot express how relieved I was to see you broadcast the Shell Game in your column. I’m no wimp, but I had actually teared up when I first read what the Big Leak revealed. I coincidentally am just finished reading THIEVES OF STATE: Why Corruption Threatens Global Security. A great investigation on government gangsta operation by Sarah Chayes, a one-time NPR correspondent who lived in Afghanistan. Your insights always nail it.
Like Bonnie Bekken, I’m in awe of your coverage, Doug Porter. You just pinned down the size of this story. What is being revealed by the Mossack-Fonseca leak is the enormity of criminal behaviour among leaders, worldwide and local. And maybe it’s a good thing that the larger, still muscular thugs of world journalism are waiting for orders on how to handle this thing. Panama Papers, as they’re being called, are staining international oligarchs and local tyrants at a pace we can absorb. Everybody will have to come to these stories in time. It will effect the Democratic party’s nominating process for sure. People in the business of politics and the politics of business, are going to have their pants and pantsuits dragged in the mud left behind by the ghouls they’ve been dealing with. One of the most significant global revelations still to come seems to be the entities selling arms to the murderous movements in Africa and the Eastern Islamic world. Is it possible that American capitalists who beat their chests about ISIS are among those making money off selling ISIS the arms and explosives? And for local folks, the Chamber of Commerce’s suppression of the attitudes of 80 percent of its members is confirmation of the magnitude of evil done by boys ins blue suits. Great job of work by you and your brothers at the small outlets of truth.
Iceland’s prime minister is only the first to fall in what will likely be a long row of dominoes.
the “american” who came to my mind as i’ve read about panama was job exporter willard (republican darling “mitt”).
greed = the most destructive mental illness of all…
The NY Times is out today, April 07, with a story on Panama’s central role in money-laundering for the dirty rich. It teases at the role of U.S. “financial institutions” in the tax shelter business; no names yet. But the story’s worth a read.