Imagine having been part of Mossack Fonseca from its beginning. It’s April 2016, nothing has gone wrong in decades, and you are making significant amounts of money by helping your clients bypassing laws, fiscal impositions and regulations. But suddenly, everything changes. And the Mossack Fonseca’s fraudulent empire, finally, collapses.
Now, let’s take a step back and try to give an all-round view of not only one of the most popular financial scandals in history, but also one of the biggest data leaks ever.
Mossack Fonseca was a law firm based in Panama, at the very centre of the Panama Papers scandal. The company was founded in 1977 by the lawyers Jürgen Mossack and Ramón Fonseca, and it was specialized in commercial law and investor advisory services. It rapidly became a law firm of worldwide importance, placing itself as the fourth global provider of offshore financial services.
However, Mossack Fonseca was also involved in a series of legal controversies, related to money laundering and tax evasion.
The very first scandal in which the company was dragged in, and we can consider it the prelude of the Panama Papers, was the so-called “Route of the K-Money”. Specifically, one fully-owned subsidiary of Mossack Fonseca, MF Corporate Services, was convicted for money laundering in Argentina.
Despite Jürgen Mossack denied any connection between MF Corporate Services and Mossack Fonseca, later investigations proved otherwise.
And then, the leak happened. The Panama Papers have definitely been one of the largest data breaches in history, for a total of 2.6 Terabytes of information (to understand the magnitude of the event, just think that the Offshore Leaks of 2013 amounted to 260 Gigabytes, and the Wikileaks Cablegate data breach of 2010 only to 1.7 Gigabytes).
On April 3rd, 2016, the German newspaper Sueddeutsche Zeitung, thanks to an anonymous informer, published 11.5 million leaked documents, property of Mossack Fonseca.
In particular, the Panama Papers contained encrypted confidential financial information, that regarded a huge number of well-off individuals and public officials: the names ranged from politicians to celebrities and businesspeople. The information was more than detailed, containing e-mails, contracts, transcripts and other documents.
The leaked documents showed how Mossack Fonseca used more than 200,000 companies, registered in tax heavens like the British Virgin Islands, the Bahamas, Panama and the Seychelles; these companies were used to anonymously hold bank accounts and properties.
Moreover, the company habitually accepted to operate in business activities aimed at tax evasion, money laundering and, in general, legal elusion.
About the consequences of the Panama Papers scandal, these have been serious and numerous. Among the names shown by the leaked documents, politicians and public figures were, of course, the most impacted.
For example, Iceland’s Prime Minister Sigmundur David Gunnlaugsonn and Pakistan’s Prime Minister Nawaz Sharif were forced to resign. Also the father of British Prime Minister David Cameron was revealed to have been client of Mossack Fonseca, having avoided paying taxes for more than 30 years.
But these names were just the tip of the iceberg: the Panama Papers showed also the Ukrainian President Petro Poroshenko, several members of the Chinese President Xi Jimping’s family, the Russian President Vladimir Putin, and many others.
At a global level, the main impact of the scandal can be read from an ethical viewpoint: income inequality exists, and the richest ones keep trying to enlarge this gap.
That said, at the end of the breach, the question that everyone really wants to ask, but that has no answer as of now, is “Who leaked Mossack Fonseca?”. Who really hides behind the Panama Papers scandal?
On May 6th, 2016, the person (or the people) behind the Panama Papers data leak decided to contact the Deutsch newspaper “Sueddeutsche Zeitung” under the fake name John Doe. In this occasion, John Doe published his manifesto, where he summed up the reasons that had justified the leak, and explicitly criticized the governments that did not protect whistle-blowers, but instead prosecuted them, claiming that “Legitimate whistle-blowers who expose unquestionable wrongdoing, whether insiders or outsiders, deserve immunity from government retribution, full stop.”
We could think about John Doe as the Edward Snowden of tax evasion, that, contrarily to Snowden, decided to remain anonymous, in order to maintain himself endangered. In his manifesto, John Doe wrote “For the record: I do not work for any government or intelligence agency, and I never have”, and stressed out that his decisions were completely personal and autonomously-taken and driven not by political reasons, but ethical ones.
The scenario described by John Doe’s manifesto is characterized by an immoral and corrupted environment of injustice, wealth inequality and misconduct. He explicitly declared the failure of financial regulators, tax authorities, courts, media and legal companies. These, according to John Doe, all embody the foundation of democracy and modern society, but are unfortunately mined by scandals like the Panama Papers one.
In conclusion, the Panama Papers have surely been an important step in contemporary financial history, raising public interest in complex and little-discussed themes such as wealth inequality, corruption, fiscal evasion and tax heavens.