Martha r flagged a new story at Suddeusche Zeitung from “John Doe,” the source for the Mossack Fonseca revelations, on what he intended to accomplish and what he feels needs to be done. I’m posting on his manifesto to encourage you to read it in full and circulate it.
The whistleblower, John Doe, states his underlying objective was to tackle “massive, pervasive corruption” that promotes and perpetuates income inequality. He is encouraged by the debate so far but stresses that the underlying behavior was criminal and needs to be treated as such:
Shell companies are often associated with the crime of tax evasion, but the Panama Papers show beyond a shadow of a doubt that although shell companies are not illegal by definition, they are used to carry out a wide array of serious crimes that go beyond evading taxes. I decided to expose Mossack Fonseca because I thought its founders, employees and clients should have to answer for their roles in these crimes, only some of which have come to light thus far. It will take years, possibly decades, for the full extent of the firm’s sordid acts to become known.
And he throws down the gauntlet:
The prevailing media narrative thus far has focused on the scandal of what is legal and allowed in this system. What is allowed is indeed scandalous and must be changed. But we must not lose sight of another important fact: the law firm, its founders, and employees actually did knowingly violate myriad laws worldwide, repeatedly. Publicly they plead ignorance, but the documents show detailed knowledge and deliberate wrongdoing. At the very least we already know that Mossack personally perjured himself before a federal court in Nevada, and we also know that his information technology staff attempted to cover up the underlying lies. They should all be prosecuted accordingly with no special treatment.
In the end, thousands of prosecutions could stem from the Panama Papers, if only law enforcement could access and evaluate the actual documents. ICIJ and its partner publications have rightly stated that they will not provide them to law enforcement agencies. I, however, would be willing to cooperate with law enforcement to the extent that I am able.
However, he also points out how whistleblowers, such as Edward Snowden, Bradley Birkenfeld, and Antoine Deltour have all been prosecuted, and they are not alone.
He calls for company registers to be made public, an issue our Richard Smith has identified as key and has been pursuing in New Zealand and other countries. But he is not optimistic that this will change soon:
Prime Minister John Key of New Zealand has been curiously quiet about his country’s role in enabling the financial fraud Mecca that is the Cook Islands. In Britain, the Tories have been shameless about concealing their own practices involving offshore companies, while Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network at the United States Treasury, just announced her resignation to work instead for HSBC, one of the most notorious banks on the planet (not coincidentally headquartered in London). And so the familiar swish of America’s revolving door echoes amidst deafening global silence from thousands of yet-to-be-discovered ultimate beneficial owners who are likely praying that her replacement is equally spineless.
It should come as no surprise that the official response to the Panama Papers scandal has been to leave this glaring loophole open. For instance, yesterday, the FACT Coalition made a new statement: Anti-Money Laundering Experts Deeply Concerned by Administration’s Flawed ‘Panama Papers’ Response. A key section (boldface original):
“The loopholes in the final Treasury rule allow banks to open accounts for companies without having any idea of the identity of the people who ultimately own or control that company. Without this critical information, banks can’t determine whether the people behind the company are on a sanctions list, a drug kingpin list, or are public officials who may be stealing from their countries treasury or trying to stash their bribe money in U.S. banks,” noted Heather Lowe, legal counsel and director of government affairs at Global Financial Integrity.
And in some ways, John Doe buried the lead (boldface ours):
The media has failed. Many news networks are cartoonish parodies of their former selves, individual billionaires appear to have taken up newspaper ownership as a hobby, limiting coverage of serious matters concerning the wealthy, and serious investigative journalists lack funding. The impact is real: in addition to Süddeutsche Zeitung and ICIJ, and despite explicit claims to the contrary, several major media outlets did have editors review documents from the Panama Papers. They chose not to cover them. The sad truth is that among the most prominent and capable media organizations in the world there was not a single one interested in reporting on the story. Even Wikileaks didn’t answer its tip line repeatedly.
So much for those who wonder why the papers weren’t given to Wikileaks.
And one has to assume that the media outlets that were approached about the Panama Papers and declined included the New York Times and/or the Washington Post. The irony here is that, as Richard Smith has pointed out, Panama isn’t a the tax haven of choice for Americans save for low-level types, such as drug lords. Panama law firms use mainly the British Virgin Islands; the bank that is most deeply implicated is HSBC. Yet the reflex of these unnamed media outlets was to decline to cover the story. Who were they trying to protect?
And he finally turns to a fundamental issue, the corruption of the bar:
But most of all, the legal profession has failed. Democratic governance depends upon responsible individuals throughout the entire system who understand and uphold the law, not who understand and exploit it. On average, lawyers have become so deeply corrupt that it is imperative for major changes in the profession to take place, far beyond the meek proposals already on the table…If the industry’s shattered economics were not already evidence enough, there is now no denying that lawyers can no longer be permitted to regulate one another. It simply doesn’t work. Those able to pay the most can always find a lawyer to serve their ends, whether that lawyer is at Mossack Fonseca or another firm of which we remain unaware. What about the rest of society?
We’ve documented the consequences of the breakdown of legal standards on multiple fronts: lawyers first allowing their clients to ignore the securitization procedures set forth in their own contracts, followed then by factory-style foreclosures, including fabrication of affidavits and title documents on a mass scale. And rather than use the massive abuses as leverage to force mortgage servicers to provide more loan modifications, which for borrowers who still had some income, would have been a better outcome not just for them but also for investors, the Federal government and all but one state validated this pervasive misconduct and gave the mortgage-industrial complex a massive bailout in the form of the National Mortgage Settlement of 2012. Servicers continue to engage in abusive practices and are seldom punished. In credit cards and for medical debts, debt collectors, again with the assistance, make a business of buying invalid debt and collecting from consumers who don’t know how to combat their fraud.
John Doe concludes:
The collective impact of these failures has been a complete erosion of ethical standards, ultimately leading to a novel system we still call Capitalism, but which is tantamount to economic slavery. In this system—our system—the slaves are unaware both of their status and of their masters, who exist in a world apart where the intangible shackles are carefully hidden amongst reams of unreachable legalese. The horrific magnitude of detriment to the world should shock us all awake. But when it takes a whistleblower to sound the alarm, it is cause for even greater concern. It signals that democracy’s checks and balances have all failed, that the breakdown is systemic, and that severe instability could be just around the corner. So now is the time for real action, and that starts with asking questions.
Historians can easily recount how issues involving taxation and imbalances of power have led to revolutions in ages past…It doesn’t take much to connect the dots: from start to finish, inception to global media distribution, the next revolution will be digitized.
Or perhaps it has already begun.