Monday Reads: Global Intrigue Edition

01093-2Good Afternoon!

We have the Wisconsin primary coming up tomorrow evening but I thought I’d take a break from political chaos to cover some global financial chaos today.  I’m not sure if you’ve heard about The Panama Papers yet  but there was a   “Giant Leak of Offshore Financial Records” this weekend that “Exposes Global Array of Crime and Corruption.  Millions of documents show heads of state, criminals and celebrities using secret hideaways in tax havens.”   The linked documents and lists of account names are eye popping.  Check out some of the global dirty rotten scoundrels and grab your pitchfork.

A massive leak of documents exposes the offshore holdings of 12 current and former world leaders and reveals how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies.

The leak also provides details of the hidden financial dealings of 128 more politicians and public officials around the world.

The cache of 11.5 million records shows how a global industry of law firms and big banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.

These are among the findings of a yearlong investigation by the International Consortium of Investigative Journalists, German newspaper Süddeutsche Zeitung and more than 100 other news organizations.

The files expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the president of Azerbaijan.

They also include at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.

One of those companies supplied fuel for the aircraft that the Syrian government used to bomb and kill thousands of its own citizens, U.S. authorities have charged.

“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley and author of “The Hidden Wealth of Nations: The Scourge of Tax Havens.” Zucman, who was briefed on the media partners’ investigation, said the release of the leaked documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy.

Que the James Bond theme.   The Guardian appears to be the paper that’s most on top of the story.  I’ve had a fascination with s0-called MTI5MDAyNzI5ODU0MDA1MjE4Treasure Isles for some time which offshore investment accounts of the world’s richest people since it appeared Mitt Romney had managed to plant some money offshore. This was revealed during his run for President. Most of the leaked accounts are from world leaders who are stealing their nation’s Treasury and probably take bribes. Nothing says I hate my country more than these things.

I’ve actually written about this before here because it is so fascinating.  As a former banker and a financial economist that studies the financial systems, I can state with assurance that this situation plagues nations  trying to develop because it takes much needed money out of circulation in the country.  It also is a major argument against giving the richest any more money.  They just take it straight out of the country where they gamble on the world’s financial markets.  Most of them couldn’t create a job if their life depended on it because they’re busy hiding their fortunes.

The Guardian, working with global partners, will set out details from the first tranche of what are being called “the Panama Papers”. Journalists from more than 80 countries have been reviewing 11.5m files leaked from the database of Mossack Fonseca, the world’s fourth biggest offshore law firm.

The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with the Guardian and the BBC.

Though there is nothing unlawful about using offshore companies, the files raise fundamental questions about the ethics of such tax havens – and the revelations are likely to provoke urgent calls for reforms of a system that critics say is arcane and open to abuse.

The Panama Papers reveal:

  • Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
  • A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend – a cellist called Sergei Roldugin – is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort where in 2013 Putin’s daughter Katerina got married.
  • Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
  • In the UK, six members of the House of Lords, three former Conservative MPs and dozens of donors to British political parties have had offshore assets.
  • The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
  • Twenty-three individuals who have had sanctions imposed on them for supporting the regimes in North Korea, Zimbabwe, Russia, Iran and Syria have been clients of Mossack Fonseca. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.
  • A key member of Fifa’s powerful ethics committee, which is supposed to be spearheading reform at world football’s scandal-hit governing body, acted as a lawyer for individuals and companies recently charged with bribery and corruption.
  • One leaked memorandum from a partner of Mossack Fonseca said: “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”

The company has flatly denied any wrongdoing. It says it has acted beyond reproach for 40 years and that it has had robust due diligence procedures.

The document leak comes from the records of the firm, which was founded in 1977. The information is near live, with the most recent records dating from December 2015.

James-Bond-Casino-Royale-Movie-Poster-Red-Clay-SoulThe data shared with journalists is huge and is more than was leaked by WikiLeaks in 2010 or Edward Snowden in 2013.

There is a connection to the US through Miami. The Miami World Herald reports the connection between black money and the Miami real estate boom.

The firm’s leaked records offer a glimpse into the tightly guarded world of high-end South Florida real estate and the global economic forces reshaping Miami’s skyline.

And MF’s activities bolster an argument analysts and law-enforcement officials have long made: Money from people linked to wrongdoing abroad is helping to power the gleaming condo towers rising on South Florida’s waterfront and pushing home prices far beyond what most locals canafford.

The leak comes as the U.S. government unleashes an unprecedented crackdown on money laundering in Miami’s luxury real-estate market.

Buried in the 11.5 million documents? A registry revealing Mateus 5’s true owner: Paulo Octávio Alves Pereira, a Brazilian developer and politician now under indictment for corruption in his home country.

A Miami Herald analysis of the never-before-seen records found 19 foreign nationals creating offshore companies and buying Miami real estate. Of them, eight have been linked to bribery, corruption, embezzlement, tax evasion or other misdeeds in their home countries.

That’s a drop in the ocean of Miami’s luxury market. But Mossack Fonseca is one of many firms that set up offshore companies. And experts say a lack of controls on cash real-estate deals has made Miami a magnet for questionable currency.

Probably the most direct result of the link is the call for an election to replace Iceland’s PM who was caught with an account.PC0436_l

Iceland’s prime minister is this week expected to face calls in parliament for a snap election after the Panama Papers revealed he is among several leading politicians around the world with links to secretive companies in offshore tax havens.

The financial affairs of Sigmundur Davíð Gunnlaugsson and his wife have come under scrutiny because of details revealed in documents from a Panamanian law firm that helps clients protect their wealth in secretive offshore tax regimes. The files from Mossack Fonseca form the biggest ever data leak to journalists.

Opposition leaders have this weekend been discussing a motion calling for a general election – in effect a confidence vote in the prime minister.

On Monday, Gunnlaugsson is expected to face allegations from opponents that he has hidden a major financial conflict of interest from voters ever since he was elected an MP seven years ago.

This should be huge and there’s no doubt that a number of Americans may show up . It should also spur a movement for regulation if the Dems give good spin and the Republicans cower from fear of their angered populist base.  I want to spend more time analyzing this and will provide you with some more thoughts when I can.  I’ll be with students the next few days so you’ll  have to be patient and let me know if you’re interested.

You can read “How Reporters Pulled Off the Panama Papers, the Biggest Leak in Whistleblower History” at Wired. This article covers the leak process and the reporter with the original contact.

The Panama Papers leak began, according to ICIJ director Ryle, in late 2014, when an unknown source reached out to the German newspaper Suddeutsche Zeitung, which had reported previously on a smaller leak of Mossack Fonseca files to German government regulators. A Suddeutsche Zeitung reporter named Bastian Oberway says that the source contacted him via encrypted chat, offering some sort of data intended “to make these crimes public.” But the source warned that his or her “life is in danger,” was only willing to communicate via encrypted channels, and refused to meet in person.

“How much data are we talking about?” Obermayer asked

“More than you have ever seen,” the source responded, according to Obermayer.

Obermayer tells WIRED he communicated with his source over a series of encrypted channels that they frequently changed, each time deleting all history from their prior exchange. He alludes to crypto apps like Signal and Threema, as well as PGP-encrypted email but declines to say specifically which methods they used. Each time the reporter and source re-established a connection, they would use a known question and answer to reauthenticate each other. “I’d say ‘is it sunny?’ You’d say ‘the moon is raining’ or whatever nonsense, and then both of us can verify it’s still the other person on the device,” Obermayer says.

After seeing a portion of the documents, Suddeutsche Zeitung contacted the ICIJ, which had helped to coordinate previous tax haven megaleaks including a 2013 analysis of leaked offshore tax haven data and another leak-enabled investigation last year that focused on assets protected by the Swiss bank HSBC. ICIJ staff flew to Munich to coordinate with Suddeutsche Zeitung reporters.


I can’t wait to follow the money frankly.  International Financial Economists try to estimate the flows of dark and black currency around the world and its impact on a nation’s capital accounts. This may give us a hint of the level and types of activities as well as their frequency.  Like I said, I’m chomping at the bit like an Ann Romney dressage horse to get the actual activity details.  Meanwhile, enjoy the international outing of the billionaires who have more in common with each other than the people in their countries.

Anyway, here’s a few other links to keep you busy!

From Newsweek: White City: The new urban blight is rich people

From Bloomberg News: Louisiana Crisis Shows Risks of Republican Candidates’ Tax Plans

Voters in Wisconsin’s Republican primary Tuesday can choose among Donald Trump, John Kasich and Ted Cruz, all of whom promise tax cuts that could cost as much as $10 trillion in revenue over 10 years — and an ensuing economic boom as spending is unleashed. Yet voters need look no further than Louisiana, Kansas and Oklahoma to see what happens when economies fail to grow as promised.

From Washington Monthly (satire):  Apologies to Bernie Sanders By Mark Kleiman

From The Economist: Sin and politics: The link between a scandal in Alabama and the rise of Donald Trump

New York Magazine:  OPERATION TRUMP:  Inside the most unorthodox campaign in political history.

WAPO:  American policy fails at reducing child poverty because it aims to fix the poor. If we want to help kids, it’s time to focus on money, not marriage.

From CNN: Conservative challengers lose key Supreme Court voting rights case

In a unanimous result, the court said a state can draw legislative districts based on total population. At issue in the case was the “one person, one vote” principle dating back to the 1960s, when the court held that state legislative districts must be drawn so they are equal in population.

What’s on your reading and blogging list today? 


68 Comments on “Monday Reads: Global Intrigue Edition”

  1. ANonOMouse says:

    “I want to spend more time analyzing this and will provide you with some more thoughts when I can. I’ll be with students the next few days so you’ll have to be patient and let me know if you’re interested.”

    I’m very interested in the story, but more interested in knowing which of our Pols are tangled up in this mess.

    • dakinikat says:

      Yea. I would love to see those documents.

    • babama says:

      Yes, please! When you have time. I skimmed the coverage in the Guardian and Huff Po yesterday and thought right away, “I’d really like to know what Dakinikat has to say about this and recommends to read about it.” I don’t think I’ve ever thanked you for all you’ve written that’s helped me better understand our economic and financial systems. I was raised working class and can stretch a dollar with the best, but was not taught anything about investing, finance, or the big picture. I made it all the way through my MA (systems counseling) without ever taking an econ class. It was your writing about the financial crisis that first brought me to Skydancing. Reading here has informed me, yes, but it’s also helped me learn to interrogate the issues on my own. My understanding is better and I am able to share information with my family, friends, and coworkers with a confidence I didn’t have before. Your good work and influence has made a difference in our lives. Thank you!

      • dakinikat says:

        Thx! I’m waiting to see the details. What’s coming out now is mostly high level info and names. I want to see where the money went besides Miami luxury properties.

    • joanelle says:

      me too!

    • Fannie says:

      Very interested in this story, and already thinking about FIFA, and world Soccer.

    • NW Luna says:

      Definitely interested!

  2. Jslat says:

    Speaking of voting rights and population, does anyone know if Maricopa County AZ is working toward opening more polling places for the general election? The lack caused voter suppression in the Mar. 22 primary.

    • ANonOMouse says:

      I saw that earlier today. I’m not surprised. I just hope that it doesn’t depress the vote going forward. The article about no such thing as momentum is true, but perceptions do affect people. I want to see the campaign on the upswing again. I just wish NY wasn’t 2 weeks away.

      • Fannie says:

        Me too Mouse…….I’ll be clocking in.

      • Valhalla says:

        Me three. As long as Clinton is within 10 pts, she’s still on track to win the nomination according to 538. But I just want her to start putting him away. I’m tired of his supporters nastiness and ignorance.

        And now he’s hurting not only Clinton for the GE, but his own ideals. I was always going to vote for Hillary but I was originally glad he was in the race because the tooics he campaigns on are important. But instead of taking the opportunity to really educate people on his message, which would have been a very good thing, he’s hardening opinion against it. Recently I’ve seen so many Clinton supporters who liked him fine who have now become totally fed up with him.

    • Funny, someone on twitter was sailing a Clinton/Frank ticket…

      • dakinikat says:

        That would be interesting! I think she’ll pick a young up and comer though for the good of the future of the party.

        • Delphyne49 says:

          I read somewhere last month that Julian Castro has a good chance of being on her list for VP. Imagine – 8 years of a woman who followed a black man as POTUS and then a Mexican for the next 8 years. The Republican party will implode. 🙂

          • Fannie says:

            Hope so.

          • ANonOMouse says:

            It’s the best of all scenarios. I will feel fortunate to have lived to see our first Woman POTUS, but I doubt I’ll make it to our first Latino POTUS. But, if Hillary becomes POTUS and he is the VP, we’ll get to see two History making events at the same time. The first woman POTUS and the first Latino VP. What a wonderful day that will be. Now, if we can get an AA woman on SCOTUS and an Asian SCOTUS, we will be moving this country in the direction it should have gone in 50 years ago.

          • William says:

            Well, I must say that my opinion is that Castro would not be a good VP candidate. I saw him do the keynote in ’12, and I saw him interviewed lately, too. I don’t really see what his credentials are for this very important position, other than the ethnicity. And I think the choice would leave Hillary open to being criticized for just that.

            Now, I realize that there are not many great choices. The obvious homerun choice is Sherrod Brown, but he may really not want to do it. But I hope that Hillary does not try to make an ethnic statement here. I understand the wish for many to have a variety of different ethnicities become President, but I would not want that kind of thing to eclipse real competence. Maybe Castro is more gifted and insightful than I have perceived him as, but I still would rather have someone who has either been a governor of a major state, or a respected senator, or maybe in a stretch, a congressperson. Castro has been mayor of San Antonio, Texas, and HUD Secretary. Does he know anything about foreign affairs, or complex executive issues? Hillary will make the choice, of course. I thought that Bill Clinton’s choice of Gore was a great choice; that is the kind I would like to see her make.

  3. dakinikat says:

    STUNNER: NYT Reports that Bernie Considers His Campaign Strategy a ‘Character Assault’ on Hillary

  4. dakinikat says:

    Sanders Raised $16 Million From the Unemployed and Retired
    Sanders, who eschews super-PACs, has raised more money for his campaign than any presidential candidate, Republican or Democrat, other than Hillary Clinton.

    I wonder how much of it should be paying student loans, too.

  5. ANonOMouse says:

    Bernie Sanders, the candidate that rails against Big Pharma, Big Oil, Big Banks holds stock in the very companies he condemns.

    This explains his reluctance to release his complete tax returns.

    • dakinikat says:

      Probably because his wife did them and her accounting skills already ran a university into a ground and fraud investigations.

    • William says:

      It is the :”money fact,” and should be widely disseminated. And I hope that the media does not let up on the tax records. As you suggest, there is a reason why he does not want to release any of them. Can you imagine Sanders making money off the Wall Street “rigged casino” by buying stock in multinational companies?

      • ANonOMouse says:

        Sanders hasn’t rang “true” to me from almost the beginning of this campaign. There was a time when I liked him as a U.S. Senator because I thought him to be “honest”. I was wrong. When he began promising things that he couldn’t deliver on I knew that his campaign was an exercise in vanity. If you go into a room full of starving people and promise them a smorgasbord of free food, for as long as they live, some will believe you capable of it. This also explains why Bernie does so poorly among people over 45 and especially poorly among 65+. We know Bullshit when we see it.

    • babama says:

      Glass house, meet stones. It’s darn near impossible to live on Earth and be pure and perfect. Real life = messy & complicated. I’ve come to think that BS’s appeal to purity is actually counter revolutionary.

      • William says:

        Historically, there have been people who professed to be pure and incorruptible, and the vast majority of them were not; and the few that may have been, were so rigid and docrinaire that they burned or guillotined people for their alleged heresies and lapses. It was their ticket to gaining power; acting as if they adhered to a higher set of values than their fellows. And Sanders, who is in the hip pocket of the NRA; who takes money from all sorts of business interests, and probably invests in them; who will not release any records of anything, is getting away with pretending to be this sanctified figure. And the reason is the Clinton Derangement Syndrome of the media, which enthusiastically gives him cover for this charade.

    • Ron4Hills says:

      I don’t begrudge Bernie a nickle. He is entitled to earn whatever he legally can doing whatever he likes. It is just the Oh so holy holy holier than thou that makes me sick.

      • bostonboomer says:

        I begrudge him taking money from naive supporters by claiming he still has a chance to win the nomination. He’s a grifter.

      • ANonOMouse says:

        I absolutely don’t begrudge him making money legally, but I do have a problem with him railing against the very companies that are putting money in his pocket while accusing Hillary of having no integrity because she won’t release her speeches to Wall Street. He needs to release his tax records so that folks can see that the very companies he condemns line his pocket through investment. Nothing bothers me more than hypocrisy.

  6. janicen says:

    Juicy stuff on the Panama Papers. It’s the kind of thing that you believe is happening in the abstract but when you learn that it really is and these world leaders are stealing from their own countries it just makes you sick. Looking forward to more analysis, dak. Thank you.

  7. bostonboomer says:

    Susan Sarandon’s ex is now saying stupid stuff for Sanders. Tim Robbins:


    • janicen says:

      Oh ffs and WE’RE the low info voters?

    • Sweet Sue says:

      That’s too bad; I assumed Tim was smarter than Susan.

      • ANonOMouse says:

        He married her so he couldn’t be too smart! 🙂

        • Pat Johnson says:

          Actually, they never married although they have been together for 20 years before they broke up.

          • ANonOMouse says:

            Honey, if you stay with someone for 20 years, you’re married. I’ve been with my wonderful gal for nearly 32 years and in July we’ll celebrate the first anniversary of our legal marriage, but before then we’ll celebrate the our 32nd anniversary of the actual years we’ve been together.

        • Fannie says:

          Got one tongue sticking out my mouth……..hehehehe.

    • Delphyne49 says:

      Here’s what Al tweeted about this – I couldn’t stop laughing when I read it!

  8. babama says:

    I’ve just finished a quick read of this BS interview w/ NY Daily News editorial board. I have to get dinner made and will give it a closer read. My first impression is inconsistent, dangerously unprepared, unaware and complacent. Melissa over at Shakesville used the word “disastrous” to describe it and I don’t think she’s exaggerating.

    It’s looking to me like BS thinking embodies a mindless convergence of revolutionary socialism and dude bro-libertarianism. A kind of ‘have your free pot and smoke it too’ attitude. That’s an intersectionality I can live without! WTH, he makes a moral argument for breaking up big banks which are “destroying the fabric of America”, but no moral argument for crime victims ability to sue gun manufacturers, whose products destroy lives and ruin futures. In the past, I viewed BS as a standard bearer for a left progressive viewpoint that I want at the tables of power. Now I think he’s on the way to becoming an embarrassment who discredits the cause.

    • NW Luna says:

      I want Sanders hammered on his lack of plans for anything he promises. And on his slander that Hillary has PACs and he does not.

    • Joanelle says:

      Oh boy, they are hitting on ’emails and the FBI’ again. Why hasn’t anyone made a big deal (comparison) of Rice’s and Powell’s of their personal usage?

  9. madamab says:

    Hey, Skydancers. We have some sad news over at TW. We’d appreciate it if you’d come over and take a look.