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Business News/ News / World/  Mossack Fonseca, the law firm at the heart of the Panama Papers
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Mossack Fonseca, the law firm at the heart of the Panama Papers

Mossack Fonseca is reportedly the fourth largest provider of offshore services, 'acting for more than 300,000 companies' worldwide

Photo: ReutersPremium
Photo: Reuters

The Economist, in a 2012 story about off-shore company services providers, titled ‘Shells and Shelves,’ described the Panamanian law firm Mossack Fonseca as “tight-lipped". The story added that of the two big offshore providers in Panama (the other is Morgan & Morgan) Mossack Fonseca was “believed to be an industry leader."

Four years later, Mossack Fonseca is at the heart of arguably the biggest data leak in history, thanks to an anonymous source of information who, over a year ago, leaked around 11.5 million documents (approximately 2.6 terrabytes of data) to German newspaper Süddeutsche Zeitung, which in turn shared the cache with others, including the International Consortium of Investigative Journalists (ICIJ).

The documents, a small part of which are now in the public domain through the 107 media outlets investigating the papers, show how some members of the global elite, including world leaders, their close associates and family members, besides businessmen and celebrities engaged the firm to incorporate companies in tax havens like the British Virgin Islands and Panama.

Mossack Fonseca is reportedly the fourth largest provider of offshore services, “acting for more than 300,000 companies" worldwide. The Guardian, one of the newspapers investigating the Panama Papers, says: “The firm is Panamanian but runs a worldwide operation. Its website boasts of a global network with 600 people working in 42 countries. It has franchises around the world, where separately owned affiliates sign up new customers and have exclusive rights to use its brand. Mossack Fonseca operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies Guernsey, Jersey and the Isle of Man."

The firm’s origins go back to the times when “American banks helped turn Panama into a financial center, and the country emerged as a tax and money-laundering haven in the 1970s after the government passed some of the world’s strictest financial-secrecy rules," according to a December 2014 profile of the company by VICE News.

It added: “That likely encouraged Mossack Fonseca to establish itself here (Panama) in 1977. The financial-secrecy rules didn’t just promise foreign investors confidentiality—they made it a crime for banks to disclose any information about clients unless they were ordered to by a court in a case that involved terrorism, drug trafficking, or another serious offense (tax evasion was specifically excluded from that category)."

The VICE News report described the company thus: “If shell companies are getaway cars for bank robbers, then Mossack Fonseca may be the world’s shadiest car dealership."

The founders of the law firm, especially German-born Jurgen Mossack, come from rather interesting backgrounds. Mossack is the son of a Nazi officer who moved to Panama in the 1960s. Mossack’s father, Erhard, “had been a member of the Waffen-SS, the notorious armed wing of the Nazi Party during the World War II," according to the ICIJ. While in Panama, Erhard would later offer to spy for the US Central Intelligence Agency (CIA) “on Communist activity in nearby Cuba."

Jurgen Mossack earned his law degree in Panama in 1973, did a brief stint as a lawyer in London, and then returned to Panama to start the firm that would later merge to form Mossack Fonseca & Co.

His partner, Ramon Fonseca, a Panamanian, was born in 1952, and studied law and political science at the University of Panama and the London School of Economics, reports the ICIJ.

“As a young man," it added, “he once recalled, he hoped to save the world, first yearning to be a priest and later working for six years at the United Nations in Geneva." Until recently, Fonseca was an advisor to the President of Panama, Jose Carlos Varela. Fonseca also headed the ruling Panameñista Party before being dismissed over his alleged involvement in money laundering activities which are now the subject of an investigation—Operation Car Wash—in Brazil.

It was in 1986 when the two firms—headed by Mossack and Fonseca respectively—merged into Mossack Fonseca.

Fonseca is reported to have told a journalist, “Together, we have created a monster." Their most notable clients over their last three decades of operations, as revealed in the Panama Papers, include world leaders such as the Prime Minister of Iceland Sigmundur Davíð Gunnlaugsson, Pakistan Prime Minister Nawaz Sharif’s family members, Ukrainian Prime Minister Petro Poroshenko and close associates of Russian President Vladimir Putin. It also served as a registered agent for footballers Lionel Messi, Leonardo Ulloa, Gabriel Heinze and Ivan Zamorano.

The VICE report concludes, “When you work with Mossack Fonseca there are a lot of dirty secrets to keep, so being tight-lipped is perhaps the most essential part of doing your job." Sadly, for Mossack Fonseca, in the words of Jurgen Mossack, “The cat’s out of the bag. So now we have to deal with the aftermath."

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Published: 05 Apr 2016, 01:44 PM IST
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