Good morning! RFE/RL resumes its Panama Papers Live Blog coverage with this OCCRP piece on what the leak tells us about the Czech Republic.
The small Czech Republic looms large on the global scale of offshore business schemes. More than a quarter-million documents in the Mossack Fonseca trove have a Czech connection, while nearly 300 Czech clients and shareholders appear in the Panama Papers.
Among them are people prosecuted and sentenced for financial crimes, lobbyists, diamond traders or people linked to the biggest privatization and corruption scandals of the past two decades.
Money laundering requires a cooperative bank. Agents at Mossack Fonseca liked using a Czech bank called eBanka, now closed, on its list of banks who do not take the anti-money laundering resolutions too seriously. Such banks are willing to be flexible about rules and open bank accounts for murky companies from notorious tax-haven destinations such as the Pacific islands of Niue or Vanuatu. The list includes not only small regional or obscure banks, but also big international and respected banking houses.
In this respect, eBanka was one of the least discerning banks in the country. In one Mossack Fonseca email, an agent spelled it all out:
“Please understand that there is practically no bank in the World anymore, which still opens bank accounts in the name of offshore companies without the knowledge about the real ‘ultimate beneficial owner’ (UBO). Not even Panamanian banks do this, let alone Hong Kong. A major part of my work revolves around finding banks which have fairly relaxed conditions, but I have only come across one bank in the Czech Republic which opens accounts without info regarding the UBO (…) The only bank where we ever managed to open an account without naming the UBO at all was eBanka (Czech Republic).”Christine Lagarde, head of the International Monetary Fund, says it is time to "think outside the box" when it comes to tax policy. She expressed interest in an idea put forward by the charity Oxfam last year to create a "UN global tax body" that would give both wealthy and developing countries an equal voice in combating tax loopholes and tax havens.
She warned, however, that nation states would be unwilling to surrender their tax powers to the UN.
“We need to be aware of the massive hurdles and obstacles along the way because taxation for the last century or so has been defined, conceptualised, designed, implemented on a purely territorial sovereign basis. And if anything, levying taxation is considered as an attribute of sovereignty, and anything that takes away from that is going to be very strongly opposed by many countries in the world, many forces.”
Suedeutsche Zeitung is reporting that the CIA and other secret services made "wide use" of the services of Panamanian law firm Mossack Fonseca.
The Munich-based newspaper said Mossack Fonseca’s clients included “several players” in the 1980s Iran-Contra scandal, which saw senior US officials facilitate secret arms sales to Iran in a bid to secure the release of American hostages and fund Nicaragua’s Contra rebels.
The Panama Papers also reveal that “current or former high-ranking officials of the secret services of at least three countries... Saudi Arabia, Colombia and Rwanda” are listed amongst the company’s clients, the Sueddeutsche said.
Here's a big and very readable interview with Mar Cabra, editor of the Data and Research Unit of the International Consortium of Investigative Journalists (ICIJ), about the challenges of working with so much data.
Working with this data has been challenging for many different reasons. The first reason is, it’s huge—we’re talking about 2.6TB. The second reason is that it didn’t all come at the same time; we didn’t receive a 2.6TB hard drive. We had to deal with incremental information, and we also had to deal with a lot of images. The majority of the files are emails and database files. There are also a lot of PDFs and TIFFs, so we have to do a lot of OCR-ing for millions of documents.
So first, most of the leak was unstructured data. Second, it was not easy working with the structureddata. The Mossack Fonseca internal database didn’t come to us in the raw, original format, unfortunately. We had to do reverse-engineering to reconstruct the database, and connect the dots based on codes that the documents had.
We’ve had to do that with every leak we’ve received: We had to do it with Offshore Leaks in 2013, we had to do it with Swiss Leaks last year, and we had to do it again this year. Our programmer, Rigoberto Carvajal, is a true magician, because he has become an expert in reverse-engineering databases. He and Miguel Fiandor reverse-engineered the database, reconstructed the Mossack Fonseca internal files, and put it into a graphed-database format. And that’s the base of what we’re going to be doing in the new Offshore Leaks database—the improved version.
The New York Times today continues the topic of what the Panama Papers tell us about how the fine-art market works.
The International Consortium of Investigative Journalists, citing the documents, reported last week that the Russian billionaire collector Dmitry E. Rybolovlev used an offshore holding entity, created by Mossack Fonseca, to move his collection out of his wife’s reach during divorce proceedings.
Mr. Rybolovlev’s lawyers denied that the divorce had anything to do with his decision to transfer ownership of his art to the entity, Xitrans Finance Ltd., which he had established in the British Virgin Islands in 2002.
Mr. Rybolovlev’s wife, Elena, filed for divorce in 2008. According to the article, during the legal battle that ensued, correspondence sent to Mossack Fonseca stated that Mr. Rybolovlev used Xitrans to move his collection out of Switzerland to Singapore and London.
In a statement last week, the Rybolovlev family trust’s lawyer said the offshore arrangements “were set up completely legitimately for the purposes of asset protection and estate planning” and had been publicly disclosed in numerous publications worldwide.
Mr. Rybolovlev has spent more than $2 billion on museum-quality works byLeonardo da Vinci and other masters. He bought them with the help of Yves Bouvier, a Swiss art dealer and businessman who runs a storage facility at the Geneva Freeport, a warehouse complex. Mr. Rybolovlev has accused Mr. Bouvier of defrauding him in the purchases, a charge that Mr. Bouvier has denied.
The European Parliament plans to spend its afternoon session on April 12 discussing the Panama Papers. Here is a link to live TV coverage.
The European Union on April 12 is expected to announce new rules under which large corporations will have to disclose how much tax they pay in which EU countries and any activities in listed tax havens.
Lord Hill, the EU's financial services commissioner, said: "This is a carefully thought through but ambitious proposal for more transparency on tax.
"While our proposal on [country-by-country reporting] is not of course focused principally on the response to the Panama Papers, there is an important connection between our continuing work on tax transparency and tax havens that we are building into the proposal."
Country-by-country reporting rules already apply to banks, mining and forestry companies, according to an EU spokesperson.
Spain's acting industry minister says he does not know why his name appears in the Panama Papers and denies being an owner of a Panama-based shell company.
At a press conference Monday in Lanzarote, Soria said he never had any relationship with any companies in Panama, and refused to appear in Congress, citing the acting government’s position that it is not beholden to congressional oversight.
Soria said he has no idea why his name shows up on the list of directors of a company incorporated in the Bahamas in 1995.
This piece of information is part of a trove of 11.5 million documents from a Panama-based law firm that were leaked to the media. Other Spaniards whose names have cropped up in the Panama Papers include the filmmaker brothers Pedro and Agustín Almodóvarand an aunt of King Felipe VI’s.
Politico has doubts that the Panama Papers revelations will lead to concerted international action on tax evasion.
Supporters of tax reforms, including the European Commission and the U.S. government, hope the biggest offshore data leak in history will give new impetus to long-running efforts to bring order to the messy, secretive and competitive world of tax.
Others are not so sure. The reason is simple: Although any politician who promises to fight against tax evasion is on to a sure-fire vote-winner, national governments have shown a stubborn reluctance to share information, co-ordinate their moves and, least of all, harmonize tax regimes.
As if to underline those problems, Panama — the home of Mossack Fonseca, the law firm whose files were leaked — was never a signatory to voluntary tax agreements mandating transparency and due diligence. Those rules are set by the Financial Action Task Force (FATF), which has been trying to foster co-operation among governments ever since its founding in 1989.