Today’s New York Times has a story about U.S. citizens and residents who have shown up in the Panama Papers. The ICIJ has shared its documents with the Times, which has found at least 2,400 U.S.-based clients over the last decade.[fn1]
The story (which you need to read) details some of the services Mossack Fonesca provided for four wealthy U.S. clients: entrepreneur William R. Ponsoldt, former CEO and chair of Citigroup Sanford I. Weill, Boston Capital Partners managing parter Harald Joachim von der Goltz, and financial author and life coach Marianna Olszewski.
Clearly, at least some of the services Mossack Fonesca provided were legal; some, however, were remarkably shady (for example, it looks like some clients used the offshore structuring to evade gift taxes, and some clients explicitly wanted to set up offshore structures to hide money from potential judgment creditors).
How do we know that at least some of the transactions were shady? Email![fn2] From correspondence between an anonymous Washington state businessman and the firm:
“How does a US citizen legally get funds to Panama without the knowledge of the US government and how can those funds be profitably invested without the US government knowing about them?”
The reply came from Ramsés Owens, then a partner who helped run the firm’s trust division, offering clients “effective solutions to enhance your privacy, protect your wealth.” Mr. Owens laid out a basic menu of services: a package deal setting up an offshore company in what he promised would be a relatively cheap and quick transaction.
“We have right now a special offer by which we create a Private Foundation/company combination for a flat fee of US$4,500.00,” Mr. Owens said. “It includes Charter Documents, Regulations, nominee officers and directors, bank account and management of funds, provision of authorized signatories, neutral phone and fax numbers and mail forwarding services for both the private foundation and its underlying company.”
And how would this businessman get money to Panama without the U.S. government finding out? The firm had an answer for him:
“You can take the money in cash, you can do a bad investment; you can purchase something and not receive anything (an expensive piano, an expensive software),” Mr. Owens wrote. “You can receive an invoice from Panama or any other location and that would justify some of the outgoing moneys. You can also declare everything to the tax administration.
“Any decision you make, please be aware that you will have to sign a ‘disclaimer’ to us. We can only ‘suggest,’ but the final decision to take the money out of the country is fully yours, and under the professional opinion of someone in USA.”
This is just the tip of the iceberg, of course, and I expect that the Surly bloggers will have more to say after we’ve had some time to digest the U.S.-specific disclosures. In the meantime, you really should read the story.
[fn1] Which is just a fraction (roughly 1%, actually) of the total names in the Panama Papers, of course, but is more than I thought there would be.
[fn2] Seriously, how can anybody think that email is going to be private, even when it is set up to be?
The Surly Subgroup 