Panama Papers is the name given to one of the largest financial scandals of the history. Basically it concerns the leak of 11.5 million documents regarding offshore companies managed by the Mossack Fonseca, a law firm and corporate service provider that worked from its HQ in Panama. During these days it came out the news that this company is going to close, because, they claimed, their reputation has been ruined from the scandal and they reported they have not been able to prove that no fraud was committed by them due to the media siege. In this page we will break down the different aspects and implications of the event that concerns politics, ethics and economy.
UK
Blairmore is the name of the offshore fund in which David Cameron’s late father has invested for almost thirty years. The revelation of the panama papers caused an earthquake into the British political environment, in fact PM David Cameron had to explain his position in front of the parliament. He claimed that it is true that is father has founded the fund, but not with the purpose of avoiding tax, but rather with the aim of working in an area where the used currency was the dollar, this would have brought advantages of the society due to its commercial and not familiar nature. Moreover, he said that he sold his quotes in the society before starting his political career in order to avoid conflict of interests. The scandal in the UK also involved the Ministry of the finance, several members in the House of the Lords and the chief of the HMRC (Her Majesty’s Revenue and Customs), that has been in charge of the investigations on the offshore funds in Panama.
ENI
Eni is an Italian multinational oil and gas company headquartered in Rome. For the prosecutor Fabio De Pasquale Saipem (ENI subsidiary), to sign contracts for 11 billion in Algeria, with the authorization of the former Eni vertices, Paolo Scaroni, ENI chief executive officer would have paid 400 million bribes. Basically, the offshore companies have been used by the Algerians to hold the bribes that ENI gave to them. Few doubts about ownership: Collingdale Consultant Inc., registered in Panama on July 10, 2007, has as its sole shareholder the son of the minister, Khaldoun Khelil, also representative of the company. Eni and the panama papers are also involved in another case of bribery in Nigeria. It is exactly one billion and 92 million dollars the alleged bribe that leads to the Nigerian investment agreement OPL 245, signed by Eni and then President Goodluck Jonathan. The figure flies to a bank account in London, to be then split into several sections. The majority, equal to 801 million dollars, in 2011 arrives at Malabu Oil & Gas Ltd, an offshore company.
RESIGNATION OF ICELAND PM
In 2007, Sigmundur Gunnlaugsson and his wife, created Wintris Inc via the law firm Mossack Fonseca. The company has been registered in the British Virgin Islands. In January 2009, Sigmundur Gunnlaugsson was elected as the Chairman of the Progressive Party, and in the 2009 parliamentary election was elected as a member of the national parlament of Iceland. On the last day of 2009, Sigmundur Davíð sold his share in the company to his wife for $1, just before a new law came into force that would have forced him to declare his ownership as a conflict of interest. Gunnlaugsson became PM following the 2013 national elections and he put all his efforts in order to fight demands from foreign creditors for full repayment by the Icelandic banks. In March 2016, it was revealed that, the wife of the Prime Minister was a creditor for Iceland’s three failed banks. Her company, Wintris Inc, was claiming a total of ISK 515 million from the three banks, due to losses incurred during the financial crisis. Following this revelation, a number of Icelandic MPs criticised the arrangement, with a former minister, asking for the PM to resign and for new elections. In the Panama Papers, released on 3 April 2016, not only the PM, but also the finance minister, and the interior minister, were implicated in having offshore tax arrangements. After days of protests, the 5th of April, the PM decided to resign.
ODEBRECHT
Odebrecht Organization is a Brazilian conglomerate consisting of diversified businesses in the fields of engineering, construction, chemicals and petrochemical. Odebrecht S.A. is a holding company for Construtora Norberto Odebrecht S.A., the biggest engineering and contracting company in Latin America, and Braskem S.A., the largest petrochemicals producer in Latin America and one of Brazil’s five largest private-sector manufacturing companies. Juergen Mossack and Ramon Fonseca, the founders of the Panamanian law firm at the center of the Panama Papers scandal, were arrested in Panama City the 11th of November 2016 and accused of being involved in a round of bribes paid by the Brazilian company Odebrecht. These are the same bribes that gave rise to the Lava Jato investigation, which overwhelmed former Presidents Dilma Roussef and Lula da Silva. According to the Panamanian general attorney Kenia Porcell, the information gathered by the investigators identify Mossack Fonseca as “an alleged criminal organization dedicated to hiding money of suspicious origin”. The Brazilian representatives of the Panamanian law firm would have received instructions to hide documents and evidence that would link Mossack Fonseca with the Lava Jato investigation. “Money from bribes was recycled in some companies and then returned to Panama completely cleaned up”. In a press conference before the arrest, Ramon Fonseca had denied any connection between the Panamanian law firm and the Odebrecht, which instead admitted the payment of bribes to Panamanian officials in exchange for tenders.
MURDER OF A JOURNALIST
In the afternoon of Monday 16 October, a famous Maltese journalist, Daphne Caruana Galicia, was killed in the explosion of her car, on which a bomb was placed. Caruana Galicia was 53 years old and was a famous local investigative journalist, best known for the Panama Papers inquiries. The Times of Malta called Caruana Galizia «the most controversial journalist in Malta». He started working in journalism in 1987, as a columnist for the Sunday Times of Malta, and later became an editorialist and editor of the Malta Independent. His notoriety in recent years was mainly related to his blog, The Running Commentary, one of the most read of the island, where he published his investigations and editorials on local politics, which often contained very harsh (and personal) attacks against the most important Maltese politicians. His last post was published half an hour before his death. Caruana Galicia, in particular, had dealt with the Maltese implications of the Panama Papers: in 2016 she was the first journalist to report the news of the involvement of Konrad Mizzi, the current Maltese tourism minister, and Keith Schembri, head of the Muscat staff. She had also been included in a list :people who “would have shaped and rocked Europe in 2017”. In fact, in April 2017 Caruana Galicia published a series of articles accusing the wife of Muscat of owning an offshore company, through which he would receive a million dollars from the daughter of the president of Azerbaijan. The scandal had led Muscat (who is the leader of the Labor Party) to call for early elections, which he had won last June.
PANAMA PAPERS, DIAMOND EARNINGS GO OFFSHORE. THE BLOOD OF THE MINES REMAINS IN AFRICA
Koidu’s diamond mine is managed by Koidu Limited, an offshore company founded in 2003, for 750 dollars, in the British Virgin Islands by Mossack Fonseca, the Panama Papers scandal. The documents show that Koidu Limited is owned by Octea Mining Limited, owned by a series of offshore British Virgin Islands, Guernsey and Liechtenstein, controlled by Israeli billionaire Ben Steinmetz and his family. Many of the diamonds of the Koidu mine adorn rings and pendants sold by Tiffany, the American luxury jeweler, who has millions of dollars agreements with Koidu Limited for stone rights. Koidu Limited has now become one of the most controversial mining companies in West Africa. In 2007 and 2012 local citizens and workers staged protests over working conditions and environmental impact. Clashes followed, leaving some people killed by policemen on the ground: two in 2007 and two in 2012, including a 12-year-old boy. In 2015, the Sierra Leone authorities threatened to remove Koidu Limited’s license, accusing it, according to the Wall Street Journal, of delays in repaying loans to banks and the government. In the same year, some lawyers, on behalf of the city of Koidu, brought Koidu Limited to court, charging that they had not paid hundreds of thousands of dollars in local property taxes. The company, for its part, claims to have spent millions on the community, including buildings, buses and clinics. The diamonds of Koidu Limited appear for the first time in the Panama Papers in 2002, shortly after the end of the civil war in Sierra Leone. The private foundation of the Steinmetz family signs an agreement worth a million and 200 thousand dollars to buy the 50 per cent of the license granted by the national government for the exploitation of the Koidu mine. Koidu Limited has since become one of Mossack Fonseca’s most important customers in the mining industry. Among the hundreds of emails exchanged in more than 10 years, details about the group’s business, out of 5 banks between Sierra Leone and London, are out in the midst of a flurry of loans worth $ 170 million. Koidu Limited is one of 133 companies registered with Mossack Fonseca and connected to Steinmetz. The society BSG Resources dominates over all. The Steinmetz business in Guinea, which borders on Sierra Leone, has provoked reactions. In August 2014, the British Virgin Islands authorities required Mossack Fonseca to show hundreds of pages of letters, payments, meeting minutes, financial transactions in connection with a criminal investigation into BSG Resources. The allegations concerned alleged bribes paid to secure mining rights in Guinea. The allegations that BSG Resources lawyers later confirmed: the company they were assisting was under investigation in Britain, Switzerland and the United States. The professionals, however, challenged the Guinean government to have unlawfully revoked the mining rights to BSG. The BSG refused to answer specific questions. However, he confirmed that “the company resorts to offshore as part of its legitimate and fiscally responsible tax policy”. He also added that he “had no knowledge” of the “large number of companies”, among the 104 that appear to be related to Steinmetz and BSG in the Mossack Fonseca archives.
Financial Scandals 