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Mossack Fonseca

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Mossack Fonseca & Co.
HeadquartersMossfon Building
Calle 54 Este
Panama City, Panama
No. of offices44[1]
No. of employees500+[2]
Key peopleRubén Hernández, CEO[3]
Date founded1977 (1977)
FounderJürgen Mossack and Ramón Fonseca
DissolvedMarch 2018
Websitemossackfonseca.com
Former Mossack Fonseca headquarters

Mossack Fonseca & Co. (Spanish pronunciation: [moˈsak fonˈseka]) was a Panamanian law firm and corporate service provider.[2][4] At one time it was the world's fourth-largest provider of offshore financial services. From its establishment in 1977 until the publication of the Panama Papers in April 2016, the company remained mostly obscured from public attention, even though it was a major firm in the global offshore industry and acted for approximately 300,000 companies. Prior to its dissolution, the company employed roughly 600 staff members spread across 42 countries.[5]

The firm received worldwide media attention in April 2016, when the International Consortium of Investigative Journalists published information about the financial dealings of the firm's clients in the Panama Papers articles. These articles were the result of analyzing an enormous cache of documents, dated from 1970 and 2015, which were leaked to the news media,[6] and which "implicated at least 140 politicians from more than 50 countries" in tax evasion schemes.[7]

On 14 March 2018, the firm announced that it was closing due to the damage inflicted to its finances and reputation by the discovery of the multi-billion-dollar money laundering schemes.[8]

History and practice areas

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Jürgen Mossack
Ramón Fonseca

The firm was founded by German lawyer Jürgen Mossack in 1977, and joined by Panamanian novelist and lawyer Ramón Fonseca in 1986.[9] It later added a third director, Swiss lawyer Christoph Zollinger.[10]

The firm specialized in commercial law, trust services, investor advisory, and international business structures.[11] It also offered intellectual property protection and maritime law services.[2][12] An internal memorandum revealed in the 2016 Panama Papers leak noted that 95% of the company's work consisted of "selling vehicles to avoid taxes".[13]

In 2013, the firm was described as one of seven that collectively represented more than half of the offshore companies incorporated in Panama.[14] The firm also housed several Panama-incorporated companies within its offices.[15] It was one of the largest firms in the corporate services industry.[16] However, the founder claimed that its volume represented only around 5% of the global financial services legal industry.[17] According to The Economist, the firm had 5 to 10% of the global shell company market,[18] and it was described as "tight-lipped".[16]

Offices and international practice

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The firm had nine offices in China,[16] several in Latin America,[19] others in the United States[11] and Europe, with two in Switzerland.[20] Lawyers from the firm were sent to foreign countries to promote business in Panama and Panamanian financial products.[21]

Mossack established operations in the British Virgin Islands in 1987, where it incorporated more than 100,000 companies.[22]

The firm was consulted by the country of Niue when it sought to become an offshore financial center, and managed that business exclusively for the country through its Panama headquarters.[23][24] However, American banks imposed embargoes on bank transfers to Niue in 2001, leading to a shutdown of the business in 2005.[22] Accounts of the firm's clients were moved from Niue to American Samoa.[10]

Controversies

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The firm had allegedly helped foreign citizens circumvent their local tax laws[10][25][26] and sometimes even international sanctions.[10][27] The firm's founder argued that it simply helps its clients achieve privacy, and that it complied with "know your customer" regulations.[17] On 20 October 2020, Germany issued international arrest warrants for the two founders of the firm.

Argentine money laundering

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Main article: The Route of the K-Money

In 2014, MF Corporate Services was subpoenaed by a hedge fund seeking to recover money from the Argentinian government. The fund alleged that MF had created shell companies to pass money from the government to Lázaro Báez, an ally of the Kirchner family.[10][22] Jürgen Mossack testified under oath that M.F. Corporate Services (Nevada) Ltd. had no affiliation with the Panamanian Mossack Fonseca, but the Panama Papers show that it was in fact a wholly owned subsidiary and Mossack Fonseca tried to hide the relationship, ordering emails and other computer footprints deleted.[28][29] Despite Mossack Fonseca's claim that it did not own MF Corporate Services, a Nevada judge ruled that the subpoena against Mossack Fonseca was valid.[22][30][31] The firm was fighting an order that it turn over the details of 123 shell companies created by an associate of a former President of Argentina.[28][32]

Commerzbank

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In February 2015, the firm was implicated in the German government's investigation of money laundering and tax evasion schemes at Commerzbank.[26][33]

Petrobras

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Main article: Operation Car Wash

In January 2016, employees of the firm's Brazilian office were charged in relation to the ongoing Petrobras corruption scandal. In that case, a judge alleged that "Mossack Fonseca provided services for the opening of offshore societies, and at least four agents were involved in a scheme to launder money."[34] The firm has responded that the Brazilian office is a "franchise" and not controlled by the main office in Panama.[22] The firm's founder resigned from his advisory position to the Panamanian government to focus on the Brazilian allegations, and says the firm has been cleared.[17]

Panama Papers leak

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Main article: Panama Papers

On 3 April 2016, the German newspaper Süddeutsche Zeitung (SZ) announced that 11.5 million confidential documents from the firm had been leaked to them. These documents, dubbed the Panama Papers, reveal how clients hid billions of dollars in tax havens.[35] Comprising documents dating from the 1970s to the present, the 2.6 terabytes of data was given to SZ in 2015 by an anonymous source. Because of the amount of data, SZ enlisted the help of the Washington-based International Consortium of Investigative Journalists (ICIJ).[36][37][38]

The firm says that this coverage has "misrepresented" their work.[39] In its full statement[40] the company asserts that it conducts due diligence on potential clients, "routinely denying services" to those who are "compromised", and "routinely resigns from client engagements" when ongoing due diligence and/or updates to sanctions lists reveal problems. In addition, however, the company has said that responsibility for potential legal violations may lie with failures or lapses by other institutions given that:

approximately 90% of our clientele is comprised of professional clients, such as international financial institutions as well as trust companies and prominent law and accounting firms, who act as intermediaries and are regulated in the jurisdiction of their business. These clients are obliged to perform due diligence on their clients in accordance with the KYC (Know Your Customer) and AML (Anti-money laundering) regulations to which they are subject.

The company informed clients on 3 April 2016, that files had been obtained through a hack of the company's email server.[41] Forbes has suggested that the firm's information security was poor, running old versions of key tools;[42] other vulnerabilities have since been discovered.[43]

Shortly after the leak, Panamanian, Peruvian, and Salvadorian police raided the local offices of Mossack Fonseca.[44]

On 14 March 2018, the firm announced that it would be shutting down as a result of the economic and reputational damage inflicted as a result of the Panama Papers leak, together with what it described as "unusual actions by certain Panamanian authorities".[8]

On 20 October 2020, prosecutors in Cologne, Germany, issued international arrest warrants for firm partners, Panamanian Ramón Fonseca and German-born Jürgen Mossack. With the firm noted as central to the investigation, charges against the two founders include accessory to tax evasion and forming a criminal organization.[45]

The founders of the law firm have been on trial since 26 June 2023 in a court in Panama City for alleged money laundering. The prosecution has asked for up to 12 years in prison for Jürgen Mossack and Ramón Fonseca for concealing assets linked to the Operation Car Wash case. It also requested sentences for 26 other people and the acquittal of four other defendants.[46]

[edit]
Main article: The Laundromat (2019 film)

Steven Soderbergh directed a film, The Laundromat, from a screenplay by Scott Z. Burns that was based on the 2017 book written by journalist Jake Bernstein about the Panama Papers investigation, Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite (Macmillan), in which actors Gary Oldman and Antonio Banderas portray firm founders Mossack and Fonseca, respectively.[47] The Laundromat premiered at the Venice Film Festival on 1 September 2019,[48] followed by a screening at the Toronto International Film Festival.[49]

After its theatrical release, on 27 September 2019, Netflix began digital streaming of The Laundromat internationally on 18 October 2019,[50] following a failed attempt by the firm's founders to halt its release.[51] In December 2019, in MOSSACK FONSECA & CO., S.A., et al., Plaintiffs, v. NETFLIX INC.,[52] a U.S. District Court Judge ruled that the film was understood by audiences to be "fictionalized for dramatization"; did not defame Mossack and Fonseca; and that it was protected under the First Amendment to the United States Constitution as free speech.[53]

See also

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References

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  1. ^ "Mossack Fonseca closes Luxembourg office days before bosses arrested" Luxembourg Times, 13 February 2017
  2. ^ a b c The Legal 500 > Mossack Fonseca Archived 7 April 2016 at the Wayback Machine The Legal 500
  3. ^ Mossack Fonseca se une al Programa “Mi Escuela Primero” Archived 7 April 2016 at the Wayback Machine, SumaRSE, 15 December 2015.
  4. ^ "Panama Papers law firm Mossack Fonseca to shut down after tax scandal". Reuters. 14 March 2018. Retrieved 4 October 2021.
  5. ^ "Mossack Fonseca: inside the firm that helps the super-rich hide their money". The Guardian. 8 April 2016. ISSN 0261-3077. Retrieved 19 January 2017.
  6. ^ "Panama Papers: Why should we care? The Panama Papers leak shows that it is not just the global tax system that is broken, but global governance itself". Al Jazeera. 6 April 2016. Retrieved 11 April 2016.
  7. ^ "Trumpworld's Corruption Is as Globalized as the Ultra-Rich the President Mingles With" Foreignpolicy.com - The Slate Group, 12 October 2020
  8. ^ a b "Mossack Fonseca law firm to shut down after Panama Papers tax scandal". The Guardian. 14 March 2018. Archived from the original on 14 March 2018.
  9. ^ Graham, David A. (4 April 2015). "What is Mossack Fonesca, the Law Firm in the Panama Papers?". The Atlantic. Archived from the original on 9 October 2019. Retrieved 5 April 2016.
  10. ^ a b c d e Silverstein, Ken (3 December 2014). "The Law Firm That Works with Oligarchs, Money Launderers, and Dictators". Vice. Vice Media. Retrieved 16 December 2014.
  11. ^ a b "Mossack Fonseca: About the Group". MossFon.com. Mossack Fonseca & Co. Archived from the original on 7 April 2016. Retrieved 4 April 2016. Our ... professionals specialize in trust services, wealth management, international business structures, and commercial law, among other areas.
  12. ^ Arauz, Raquel (26 November 2014). "The Importance of Registering Your Brand". Mossack Fonseca. Archived from the original on 7 April 2016. Retrieved 8 March 2013.
  13. ^ Garside, Juliette; Watt, Holly; Pegg, David (3 April 2016). "The Panama Papers: how the world's rich and famous hide their money offshore". The Guardian. Retrieved 14 April 2016.
  14. ^ Alma Solís (8 March 2013). "Acciones al portador provocan divisiones" (in Spanish). La Estrella de Panamá. Archived from the original on 13 March 2013. Retrieved 8 March 2013.
  15. ^ José María Olmo (15 February 2013). "González pasa al ataque contra el SUP por las acusaciones sobre su ático". El Confidencial. Retrieved 8 March 2013.
  16. ^ a b c "Shells and shelves". The Economist. 7 April 2012. Retrieved 8 March 2013.
  17. ^ a b c Webber, Jude (5 April 2016). "Mossack Fonseca founder dismisses Panama Papers as 'witch hunt'". Financial Times. ISSN 0307-1766. Retrieved 5 April 2016.
  18. ^ "The Panama papers: A torrential leak". The Economist. 9 April 2016. Retrieved 9 April 2016.
  19. ^ "Panama Papers: Secret offshores trace back to Brickell condo featured on 'Miami Vice'". miamiherald. Retrieved 5 April 2016.
  20. ^ Gerber, Samuel (24 February 2010). "O wie schön ist Panama – für Steuerflüchtlinge". Handelszeitung. Retrieved 8 March 2013.
  21. ^ "Panama's the Place to be". Isle of Man Examiner. 1 November 2001. Archived from the original on 13 April 2013. Retrieved 8 March 2013.
  22. ^ a b c d e Hamilton, Martha (3 April 2016). "Panamanian Law Firm Is Gatekeeper To Vast Flow of Murky Offshore Secrets". International Consortium of Investigative Journalists. Retrieved 4 April 2016.
  23. ^ Findley, Michael G.; Nielson, Daniel L.; Sharman, J.C. (23 January 2014). Global Shell Games: Experiments in Transnational Relations, Crime, and Terrorism. Cambridge University Press. ISBN 9781107729681.
  24. ^ Fossen, Anthony Van (1 January 2012). Tax Havens. University of Queensland Press. ISBN 9781921902239.
  25. ^ Trevor Cole (27 January 2011). "How I learned to avoid the taxman in the British Virgin Islands". The Globe and Mail. Retrieved 8 March 2013.
  26. ^ a b Leyendecker, Hans (25 February 2015). "Steueraffäre erschüttert Commerzbank" (in German). Retrieved 26 February 2015.
  27. ^ Cox, Simon (4 April 2016). "Panama Papers: Mossack Fonseca 'helped firms subject to sanctions'". BBC News. Retrieved 5 April 2016.
  28. ^ a b Hamilton, Martha M. (3 April 2016). "Panamanian Law Firm Is Gatekeeper To Vast Flow of Murky Offshore Secrets: Files show client roster that includes drug dealers, Mafia members, corrupt politicians and tax evaders — and wrongdoing galore". ICIJ. Retrieved 23 April 2016.
  29. ^ "Unlocking Mossack Fonseca: The key's in Sin City". The Economist. 16 April 2016. Retrieved 23 April 2016.
  30. ^ Heuer, Mike (18 March 2015). "Judge OKs hunt for Argentine millions". Courthouse News Service. Retrieved 4 April 2016.
  31. ^ Pearson, Sophia (13 August 2014). "Singer Gets OK to Chase Argentina Money Trail to Nevada". Bloomberg.com. Retrieved 5 April 2016.
  32. ^ Romig, Shane; Pḗrez, Santiago (7 April 2014). "Hedge Fund Seeks Assets in Nevada in Battle Over Argentine Debt: NML Takes Aim at Associate of Cristina Kirchner and Her Late Husband". The Wall Street Journal. Retrieved 23 April 2016.
  33. ^ Braecher, Michael (9 March 2015). "In Panama, a German King of Shell Companies". Handelsblatt Global Edition. Archived from the original on 7 April 2016. Retrieved 4 April 2016.
  34. ^ "Mossack Fonseca employees face charges in Brazil". La Prensa. 28 January 2016. Retrieved 4 April 2016.
  35. ^ Harding, Luke (3 April 2016). "Revealed: the $2bn offshore trail that leads to Vladimir Putin". The Guardian. Retrieved 3 April 2016.
  36. ^ "Data trove offers glimpse of how the rich hide their money". The New York Times. Associated Press. 4 April 2016. Retrieved 4 April 2016.
  37. ^ Bilton, Richard (4 April 2016). "Panama Papers: Mossack Fonseca leak reveals elite's tax havens". BBC News.
  38. ^ "The Panama Papers". International Consortium of Investigative Journalists.
  39. ^ "Statement Regarding Recent Media Coverage". Mossack Fonseca. 4 April 2016. Archived from the original on 5 April 2016. Retrieved 5 April 2016.
  40. ^ "Statement Regarding Recent Media Coverage" (PDF). Mossack Fonseca. Archived from the original (PDF) on 6 April 2016. Retrieved 8 April 2016.
  41. ^ Urreiztieta, Esteban (3 April 2016). "Los papeles de Panamá: Pilar de Borbón, Messi y Almodóvar, entre los investigados". El Español. Retrieved 5 April 2016.
  42. ^ Fox-Brewster, Thomas (5 April 2016). "From Encrypted Drives To Amazon's Cloud – The Amazing Flight Of The Panama Papers". Forbes. Retrieved 5 April 2016.
  43. ^ "SQL injection vuln found at Panama Papers firm Mossack Fonseca". The Register. 11 April 2016. Retrieved 15 April 2016.
  44. ^ Goodman, Leah McGrath (14 April 2016). "Panama Papers: Is the U.S. Giving Mossack Fonseca a Pass?". Newsweek. Retrieved 15 April 2016.
  45. ^ "German arrest order for Panama Papers lawyers faces hurdle" Associated Press, 21 October 2020
  46. ^ "Concluye juicio en Panamá contra fundadores de Mossack Fonseca por caso "Lava Jato"". SWI swissinfo.ch (in Spanish). 3 July 2023. Retrieved 5 October 2023.
  47. ^ "Panama Papers FAQ: All You Need to Know About The 2016 Investigation" International Consortium of Investigative Journalists 21 August 2019.
  48. ^ "Venice Film Festival Unveils Lineup The Hollywood Reporter, 25 July 2019
  49. ^ "Toronto Film Festival: 'Joker,' 'Ford v Ferrari,' 'Hustlers' Among Big Premieres" Variety, 23 July 2019
  50. ^ "Netflix Dates 'Marriage Story,' 'Laundromat' and Other Fall Award Films" The Hollywood Reporter, 27 August 2019
  51. ^ "Firm at Center of Panama Papers Sues Netflix Over 'The Laundromat'" The New York Times, 16 October 2019
  52. ^ "Case 2:19-cv-09330-CBM-AS Document 75", UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA. Filed 12/23/20 p. 1 (ID #:990)
  53. ^ "Judge rejects Panama Papers law firm’s libel case against Netflix over 'The Laundromat'" International Consortium of Investigative Journalists, 1 April 2021
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