This week we have seen the leak of 11.5 million financial documents over a period from the 1970s to December 2015 from the Mossack Fonseca law firm in Panama to the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists. These documents allegedly reveal the identity of individuals involved in creating shell companies, ponzi deals and tax evasions schemes.
The law firm at the center of the leak is only one of many law international firms involved in setting up off-shore accounts in places like the Bahamas, Panama and the British Virgin Islands. The offshore corporations are not criminal per se in nature but are often used by unscrupulous types to secret away money for nefarious purposes.
The leak of the proprietary, sensitive information is remarkable not only in the breadth of the information (estimated to be 1,000 times more megabytes than the Wikileaks data) but in the number of world leaders, political figures and celebrities outed for creating offshore corporations associated with money laundering and other financial mischief.
At the moment, the major media outlets are reporting on the obvious crooks and scammers, like President Putin and his cronies who reportedly funneled 2 billions dollars through dummy corporations. The vast majority of the massive amount of data is still unreleased to the public. Journalists have said that the next wave of incriminating information and individuals of interest will be released in May.
The information is organized in a manner like the Wikileaks information that can be searched by offshore entity and the names of the clients and officers. The names of all of the cruise lines, the dummy corporations created to be the owners of cruise ships, and the principals of the cruise-related companies need to be analyzed.
The cruise industry is, of course, essentially an offshore industry designed to avoid U.S. income tax and labor / wage / environmental laws. Corporations like Royal Caribbean, registered in Liberia, and Carnival, registered in Panama, are exactly the type of companies motivated to avail themselves of tax-avoiding mechanisms, or associate themselves with people and companies that do like the Mossack Fonseca law firm and their ilk.
Forbes said today that "the International Consortium of Investigative Journalists and 100 reporting partners around the world started publishing stories on Sunday that tied 140 politicians, 29 billionaires and at least 33 blacklisted people to 214,000 offshore entities. The impact of the leak could reverberate for months."
The cruise industry already has the distinct benefit of large loopholes in the U.S. tax code which permit the major cruise lines to avoid virtually all U.S. taxes. So perhaps nothing of significance regarding the major cruise lines will come from scrutinizing the Panama Papers. But the offshore cruise catering, food and beverage, ship chandler companies and crewing agents which do business with the cruise industry need to be searched in the Panama Papers database. Of course the names of politicians and leaders of Caribbean and Central American countries, which are heavily dependent on income generated by the cruise industry, also need to be scrutinized.
The Nation reported that when asked why none of the information so far seemed to implicate many US-based individuals or businesses, the editor of Süddeutsche Zeitung said, “Just wait for what is coming next.”
People in the cruise industry and doing business with the industry are probably waiting for the other shoe to drop.
The International Consortium of Investigative Journalists (ICIJ) has an interesting and informative web site where you can follow the investigation and also sign up for email updates.
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Image and video credit: International Consortium of Investigative Journalists.