Why the Panama Papers are Important for all citizens and what they say about the state of our World

Corporate Social ResponsibilityDummy CompaniesIcelandIcelandic GovernmentMoney LaunderingMoralityMossack FonsecaOffshoringPanama PapersPolitical CorruptionPolitical EthicsShell CompaniesTax Havens+-

I first caught hold of this incredible exposé on Sunday night when I happened upon a same-day recording of Iceland’s topical TV news program ’Kastljós’ in which Prime Minister Sigmundur Davíð Gunnlaugsson was repeatedly asked for his views on offshore tax havens and whether he had ever made use of such arrangements. He said no to every question and voiced his opposition to such underhanded behaviour only to be confronted with his own underhanded dealings in jointly setting up a dummy company with his partner, with the purpose of safeguarding some of their assets - each had signed multiple documents, and each had a 50% share in the dummy company Wintris Inc, set up by Panamanian law firm Mossack Fonseca, and staffed with dummy directors (Nominees) to conceal ownership. The Prime Minister denied knowledge of any of this - each time being confronted with the opposite truth, and finally ended by saying that it was all perfectly within the law as he had declared all his earnings to the taxman, yet not this particular one to the Nation or the Parliamentary register of vested interests.


To make matters worse, the assets were safeguarded in the black-listed tax haven of The British Virgin Islands / Tortola - on an Icelandic Government blacklist since 2003. In the end, Mr Gunnlaugsson sold his 50% share to his partner, the exact day before the Icelandic Government tightened the regulations on what ministers had to declare as commercial and financial interests on the Parliamentary register. Furthermore most of the assets were in the form of bank bearer bonds, and which happened to be direct claims on the estates of the collapsed Icelandic Banks, whose rehabilitation in part Mr Gunnlaugsson’s Government would be overseeing - a clear conflict of interests if there ever was one.


I have not had many occasions to utilise the term ’Moral Turpitude’, but Mr Gunnlaugsson seems totally devoid of any ethics or social conscience. Government ministers should be ethically just one rung down the ladder from clergymen ministers - in terms of decency and integrity. For numerous reasons Mr Gunnlaugsson should have apologised to the Icelandic Nation for bringing it into disrepute, before quietly falling on his sword.


Instead he initially refused to resign as he had done nothing wrong or illegal. Then he set off to see the President to obtain an official decree for dissolution of Parliament which he was planning to use to threaten his own and coalition parties to bend them to his will or be cast into assured mutual destruction. When that failed, as Presdident Ólafur Ragnar Grímsson saw through the charade. Mr Gunnlaugsson then seemed to have finally officially resigned - as reported by most of the world press, only then to announce that he had simply done a Nigel Farage - in terms of temporarily stepping aside for an unspecified interval before continuing on as normal. This man evidently has no morals and no shame, and who’s behaviour is unfortunately far from unique in Iceland, as we will see later.


The exposé came initially from German Newspaper - Süddeutsche Zeitung to which an anonymous whistle-blower from Panamanian law firm Mossack Fonseca leaked a total of 11.46 million extremely confidential documents and contracts, spanning over 40 years, and amounting to 2.62 Terabytes of data. The files were received in early August of 2015 and have been under detailed investigation since and in association with the ICIJ (International Consortium of Investigative Journalists) and including the independent Icelandic media company - Reykjavik Media. The connections are so well concealed that it has taken this long just to join some of the more significant dots together. What we do know though that is that there are thousands of individuals involved including 72 current and former heads of state as well as 216,000+ dummy / letterbox companies. As I am British-Icelandic, I will be mostly focusing on Iceland, which according to Süddeutsche Zeitung is one of the 3 most significantly active examples alongside Russia and Ukraine!


Some Key Players

Heads of State and Government

Sigmundur Davíð Gunnlaugsson, Prime Minister of Iceland (Temporarily stepped aside!?! April 5 2016)
Mauricio Macri, President of Argentina
Salman, King of Saudi Arabia
Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates and Emir of Abu Dhabi
Petro Poroshenko, President of Ukraine

Former Heads of State and Government

Hamad bin Khalifa Al Thani, former Emir of Qatar
Ahmed al-Mirghani, former President of Sudan
Pavlo Lazarenko, former Prime Minister of Ukraine
Ion Sturza, former Prime Minister of Moldova
Bidzina Ivanishvili, former Prime Minister of Georgia
Ayad Allawi, former Acting Prime Minister of Iraq
Ali Abu al-Ragheb, former Prime Minister of Jordan
Hamad bin Jassim bin Jaber Al Thani, former Prime Minister of Qatar


Other Government Officials (Iceland)

Bjarni Benediktsson, Minister of Finance
Ólöf Nordal, Minister of the Interior
Júlíus Vífill Ingvarsson, Member of Reykjavík City Council (Resigned April 5 2016)


Well-Known Personalities

David Geffen, Hollywood mogul, co-founder of DreamWorks
Gianni Infantino, president of FIFA
Michel Platini, former president of UEFA
Ian Cameron, Businessman and father of British Prime Minister David Cameron
Jackie Chan, Hong Kong movie star
Lionel Messi of Barcelona and Argentina footballing fame
Nick Faldo, English Golfer
Nico Rosberg, German Formula 1 Driver
Pedro Almodóvar, Spanish Film Director
Tina Turner, Swiss-based Singer


Mossack Fonseca, the Panama Connection + Shell / Dummy / Letterbox Companies


This scandal is bigger than all the ’___gates’ that have come before it, and centres entirely around a single Panamanian law firm - Mossack Fonseca which has offices in 27 countries. From certain angles it looks like a fairly conventional legal concern, albeit a very successful one, when in fact and according to one of its main Partners - Ramsés Owens, as much as 95% of its work is in the area of tax avoidance and evasion.


In fact Mossack Fonseca has created more than 216,000 dummy companies to serve its Clients. These dummy companies are staffed by ’Nominees’ or figurehead directors - actual staff members from the law firm, which conceal the identities of the real owners and beneficiaries of these financial instruments. These figureheads earn a basic fee for fronting said companies, and wholly conceal the true and principal beneficiaries which have the actual ’Power of Attorney’ to manage and control those assets.


In the case of the Icelandic perpetrators - some 800 shell companies have been created for 600 or so individuals - most of whom are still to be officially revealed, we know for sure that 414 of these were initiated by the Icelandic Landsbanki Luxembourg outpost who instructed Mossack Fonseca to set up and assign those dummy companies on behalf of its Icelandic Clients.


4 Mossack Fonseca employees are prominent ’Nominee Directors’ of the various Icelandic Shell companies - George Allen, Jaqueline Alexander, Marta Edghill and Carmen Wong - each fulfils circa 3,000 company Nominee posts!


Often the identities of the real owners are so well concealed, that assets cannot be moved without the signatures and decrees of the Nominees. It has to be said that however significant and however much this is, it’s still only the tip of the iceberg as it’s only one law firm in Panama, which is only one of scores of countries which offer such services.


Dirty Money / Money Laundering and Overseas Tax Havens


The main / only genuine reason you would make use of these kinds of financial instruments / arrangements is to conceal assets and wealth from your nation’s financial / tax authorities in order to minimise, evade or avoid paying taxes entirely. The very nature of how ownership is masked, and how the paper trail is covered up - means that even if governments had access to bank balance sheets - which they quite obviously don’t, there would typically be no way for them to trace the real owners from the registered bank accounts.


It is chiefly unscrupulous people of varying professions and callings - usually well outside the bounds of any national legal frameworks who engage in such activities. Having any sort of asset in any of these Tax Havens means your are attempting to conceal your activities in some way. Even if you declare a nominal sum of value, it really does not mean anything as it really could be anything - it’s a kind of Schrödinger’s cat - there is no way for your government to find out just how much you may have squirrelled away in such fashion.


Anyone who engages in these activities must be tainted by association alone - you are an accomplice within a framework of illicit dealings and very much part of the problem rather than part of any sort of solution. There is no place for politicians, particularly active ministers of governments to be involved in these tax havens in any way - if you are implicated, you are at least partially corrupt, and should resign from office.


Legal vs Ethical


Iceland’s constitution and legal framework is in many ways too young, and too naive. Iceland has failed to truly significantly tighten up its legislature since the financial crash of 2008 and there are still far too many loopholes and areas simply not covered by legal frameworks which can be exploited by the less civic and less society-minded.


When each of the Icelandic perpetrators is interviewed, they take the stance of ’We acted within the law’ ’we did nothing wrong legally’. Which is of course suspect but expected behaviour for less scrupulous lawyers and businessmen. Yet ministers of Parliament should be acting in society’s best interests - they are servants for and of the people. They should certainly not be using loopholes for personal gains / benefit - which are to the detriment of society as a whole.


Although Iceland proudly claims the seat of the first official democratic Parliament - ’The Althing’. Iceland is quite naive in contemporary statesmanship / statecraft, and far too often its politicians are exposed as essentially conniving, power-hungry, self-serving opportunists whose needs come way ahead of the state or the country.


It’s the same kind of behaviour we see in tyrannical dictatorships around the world, but for a country like Iceland which prides itself on social justice, equality and the Scandinavian model of an egalitarian approach to everything, it’s very galling to be occupying the same space as visibly more corrupt states versus the societal nirvanas of Denmark, Norway and Sweden.


Iceland, Landsbankinn and Politics


As you can see above, Iceland has 3 active government ministers implicated in this scandal, all of whom should justly resign for failure to show integrity, transparency and common decency. It is just not fitting that these public servants should be in possession of shell companies where their identities of ownership are concealed. It just does not marry up with their position. By the same degree, the local vicar should not rightly be seen whoring, gambling and shooting up drugs - it is not befitting of their station or sponsored role in society.


It will soon be day 4 of the scandal proper, and the only one that has resigned so far is the rather lowly Reykjavik City Councillor Júlíus Vífill Ingvarsson. All of Iceland was cheering for a brief moment when we thought Sigmundur Davíð Gunnlaugsson had resigned; yet his spokesman came back with a statement that he had merely just temporarily deferred his role to his party deputy and would be stepping aside for an indeterminate period after which he would like to return to business as usual!


It has to be said that the vast majority of Icelanders think this is all totally crackers - around 80% according to latest polls, yet there are still some weird echelons of Icelandic society who seem to think there is nothing wrong with politicians behaving in such a surreptitious and intransigent manner. Most of the civilised world sees the error of Mr Gunnlaugsson’s ways, but he sees nothing wrong at all - for after all, he only bent some small rules which didn’t really apply to him or his specific situation any way, and as he declared some nominal amount to the taxman, which they have not a gnat’s chance in hell of ever properly evaluating or validating, people should really just get off his back and allow him to get on with his own interpretation of public service ...


As far as I am concerned 6 politicians have been implicated, and so far only one of the minor ones has removed themselves from office - this means that there are still 5 to go. Bjarni Benediktsson, Minister of Finance and leader of the Independence Party is still trying to grasp at the reins of power in shuffling ministers around and continuing the governance of the nation, despite the public’s vote of no confidence in this current bunch of misguided loons.


Mr Benediktsson had a shell company set up in the Seychelles for the purposes of facilitating the purchase and sale of a property in Dubai. Of course he declared some nominal sum to the taxman, his ownership was entirely concealed, and he swears no profit was made, in fact that he sustained a loss and the company was then wound up. Yet some funds from the sale of said property were deposited in Mr Benediktsson’s personal account at that famous Icelandic Bank (not) - ’Julius Bär’ in Switzerland. With the Icelandic taxman having no means as to ascertain value or validity of taxable amounts volunteered on Mr Benediktsson’s tax returns. In interviews he stated that he though the shell company was based in Luxembourg, and had no idea really that it was in the tax haven of the Seychelles. This same man still thinks he can helm the government and help sort out the ’Offshoring Problem’ exposed by the Panama Papers and which he in fact is one of the key participants and perpetrators!


I am so bored with hearing politicians claim that they did nothing wrong, and failing to see the dubious nature of their activities. More importantly the silence of their party colleagues is deafening. They are all guilty of corruption by collusion in improper conduct and not speaking out for social justice or maintaining the solemnity or honour of their public office.


Another dark spectre has reared its ugly head again - this time in the guise of that old financial gargoyle ’Landsbankinn’ which all Brits and Dutch folk should justifiable loathe for the Icesave debacle. That bank is very much at the heart of this scandal too, with its Luxembourg branch being connected to 414 of the 800 or so Icelandic shell companies thus far known about. The other Icelandic banks changed their names and images in the aftermath of the crash, but conceivably the worst offender maintained all its known brand markers - bar Icesave obviously. I feel Landsbanki is now sullied beyond conceivable restoration - it needs a serious rehabilitation and a hard re-start even.


Iceland’s brand cachet has not sunk this low since 2008. Most of the country has been industriously trying to build back up its International reputation, only now for Iceland’s politicians, financiers and crooked businessmen to threaten Iceland’s commercial interests yet again.


So far only 3 shell companies have been fully exposed - Gunnlaugsson’s ’Wintris Inc’, Benediktsson’s ’Falson & Co’, and Nordal’s ’Dooley Securities’. For each, the identified parties claim that nominal values were declared to the taxman, and no profits were ever made. Yet these were quite evidently concealed identity companies contained in offshore tax havens - which is surely bad enough on its own! They all finagled their way around declaring vested interests, subverting their public offices and acted wholly selfishly to exploit the tiniest loophole to the letter of the law, rather than the spirit of their office.


Iceland’s International reputation amongst civilised nations will be ruined for some time unless these perpetrators swiftly remove themselves from office - it’s already way overdue.



World Leaders, Politicians, Businessmen and Crooks


We all know and expect, and are not surprised that various criminal enterprises - drug traffickers, smugglers, gun runners, Brink’s-MAT gold bullion robbers and the like are connected to these activities, it kind of stands to reason and goes with the territory. These are classic scenarios for facilitating money laundering, which every criminal organisation needs to a greater or lesser degree. Some businessmen are rather crooked in their dealings, espousing the very worst capitalist values in exploiting their fellow man and polite society in any which way they can. I am myself a fan of meritocratic capitalism - hard work and free enterprise which always maintains a healthy commitment to social responsibility. But the occult nature of these essentially criminal activities and this manner of skulduggery boils the blood in quite a different fashion.


Sure I can picture the old tyrant dictators of old - the Gaddafi’s, Hussein’s, Mugabe’s and the like exploiting these financial instruments to allow them to further abuse their own national resources to an ever greater degree and keep their ill-gotten gains one additional step away from their deserving public. Yet we see leaders of the supposed civilised free world, actual active members of government - civil servants in our employ going behind our backs and conspiring against the populace.


There’s a very famous saying ’You are known / judged by the company you keep’. Which means the politicians who engage in such activities are no better than the crooked businessmen and immoral criminals that do the same. We the world must drive such people out of office, for they work far more for their own benefit than that of the society which employs them and grants them the power they wield. We need to work together to stamp out this sort of thing lest it becomes the norm.


In Iceland’s case there are still millions missing from the financial crash, which were swiped from the public and the public purse. A lot of this looks like the banks conspired to strip assets out of the country and hide them away in impenetrable secret silos. Iceland still has a number of ’Robber Barons’ as such somewhat hiding in exile and maintained by their offshore piggy-banks. There are far too many disguised criminals at large asset-stripping their nations and stashing their ill-gotten gains in overseas hidey holes.


We the International community must shine a light to expose and eradicate such activities - which strip away funds from essential health and social services and frequently fund ever more unpalatable activities like criminal enterprises and terrorism. We must weed these people out of public office to ensure brighter futures for us all ...

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