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HSBC’s top brass have “no idea” about
Mossack Fonseca. Here’s a primer peppered with well researched links...
HSBC’s Money Laundering Nightmare (1): Mossack Fonseca
HSBC’s CEO Stuart Gulliver and Chairman Douglas Flint
put in an appearance in front of the Treasury Select Committee on Wednesday 25th
February. As usual with these banker-bashing shindigs, the session was tense,
with plenty of pointed questions and tortured responses that one could spend
weeks parsing.
The one question that really made me prick up my ears
was one from the very ferocious John Mann, MP. It’s around 15:51:00 in the
session video
(slow to load), and it goes like this:
Mann: …Mr Gulliver, quick one: just whether, with your
Panamanian setup, whether Mossack Fonseca was involved, directly or Indirectly?
Gulliver: I have no idea, and actually, that structure no
longer exists.
Casually saying “I have no idea”, to John Mann, on
this particular subject, might turn out not to have been all that clever.
To understand why, we need, for a start, some more
detail on this “Panamanian setup”, for instance, from Bloomberg:
Why is Mossack Fonseca styling itself “M.F.’?
Silverstein has a plausible explanation:
This sort of bogus
separation is a tactic employed by many big shell-firm incorporators, because
it allows the parent company to disavow any connection to its local offices if
the shit hits the fan from a legal standpoint. It’s sort of like how Walmart
might operate in Bangladesh, distancing itself from sweatshops by long and
complex supply chains. (Like Walmart, Mossack Fonseca has never been directly
prosecuted for the actions of its affiliates.) “These are seamless, vertically
integrated top-down organizations until the minute that a cop or investigator
comes along,” says Jack Blum, the money-laundering expert. “Then they
disintegrate into a series of unconnected entities, and everyone swears they
don’t know anything about anyone else in the system. It’s like a jigsaw puzzle
that’s assembled but suddenly falls apart when someone starts investigating.”
Silverstein’s own account of his visit to M.F.’s
office, for a little talk with the local director, bears this out. Patricia
Amunategui…
runs day-to-day
operations, though internal company documents I found in court records show she
works closely with Mossack Fonseca employees in Panama, such as Leticia
Montoya, the custodian of record for dozens of shell firms linked to Lázaro
Báez.
Amazingly, it’s now quite likely to get even worse. On
the very same day that Gulliver put in his tense appearance at the Treasury
Select Committee, the Süddeutsche Zeitung had this
(my English):
·
The
Mossack Fonseca Group, of Panama, is a well known provider of shell companies
used by tax dodgers and other criminals
·
Investigators
from the USA and other states have obtained the firm’s internal documents.
Other countries are interested. German tax investigators have bought data
relevant to Germany. On the basis of the documents, they are
now carrying out raids.
·
The
various groups of officials are operating with selections of firm’s records.
Süddeutsche Zeitung has all of the data in the internal Mossack Fonseca
documents at its disposal, more than 80 Gigabytes. Full evaluiation of the data
is nowhere near complete.
There’s more:
Thousands of shell companies, registered in the
Seychelles, the Bahamas, the British Virgin Islands or in Panama, built by
Mossack Fonseca Group, ordered and paid for by Banks, wealth managers
and lawyers from dozens of countries, can be found in the secret data on the
USB sticks.
…
Clearly, Mossack Fonseca has a problem.
Onlookers can only agree.
It’s a spectacular disaster. If, like Mossack Fonseca,
your entire business model is predicated on secrecy and deniablity, a massive
data leak, including gigabytes of emails, is the one thing that could kill you
stone dead.
Mossack Fonseca are likely to find out if it’s that
bad in the coming months. HSBC and other banks, such as Credit Suisse and Commerzbank (summarizing the German: big tax investigation
sparked by the Mossack Fonseca leak), will also have a problem.