The leaked Panama Papers are still the subject of discussion amongst the media and politicians, especially those named in the documentsI have read an article in Al-Raya Newspaper, Issue No. 73, which concludes that America is behind these leaks, and my question is: Is it true that America is behind these leaks?
Moreover, what has been written about the leaks suggests that they are to strike at tax havens, meaning there is an economic aspect to this issue. However, did not find it in the article the extent of the the economic purpose behind these leaks. In other words, is the motivation for these leaks political, as stated in the article, or is there also an economic motive?
Please clarify this matter. Thank you.
As stated in the article, America is behind these leaks. This much is true. As for the question of the existence of an economic motive behind the leaks in addition to the political motivation that was stated in the article; yes, there is an economic motive, but the article focused the discussion on the political side of these leaks, and did not elaborate on other aspects.
All in all, we will highlight the subject of the leaks further, and elaborate, Allah willing, the political and economic motives for a clearer picture in all its aspects, and Allah alone grants success.
First, the reality of the Issue:
1 – At the beginning of April 2016 the world press was awash with news of the wealth and corruption of political heavyweights across the world. This had been revealed by the German newspaper Süddeutsche Zeitung after it received 11.5 million leaked documents covering the daily business of the Mossack Fonseca law firm from the time of its founding in Panama in 1977. It is worth mentioning that this leak to the German newspaper was received a year ago from a source the newspaper called “John Doe”, described by one of the founders of the company Ramon Fonseca.
As for the analysis of the information contained in this voluminous documents, it was handed over by the German newspaper to the International Consortium of Investigative Journalists (ICIJ) who collaborated with 370 journalists from around the world in the process of analyzing the information over a year ago, before the Panama Papers were dramatically released. While the leaks did not exceed 149 documents from the original 11.5 million (Alghad TV, 04/04/2016), they reveal the financial trades made in the tax havens by current and former Heads of State and political figures and businessmen. The leaks have sparked a global uproar, whereby analysts described the Panama Papers as the largest investigative data journalism leak in the history of mankind, and more dangerous than the famous WikiLeaks leaks.
The ICIJ revealed “that the documents were obtained first by the German newspaper Süddeutsche Zeitung before they took charge of distributing them to 370 journalists from more than 70 countries for investigation, with the hard work continuing for about a year.” (Al-Jazeera, 04/04/2016). “But the German newspaper says it has ‘received that information through a secret channel from an unknown source, without receiving money in return for that service, except for requesting the provision of non-specific security measures (immunity)…'”(Same source).
The documents contain data for more than 214,000 offshore entities in more than 200 countries around the world. The ICIJ added that “documents showed the involvement of a large number of international figures, including 12 heads of state and 143 politicians, in illegal acts such as tax evasion and money laundering through offshore companies” (Al-Jazeera, 04/04/2016).
Ramon Fonseca, one of the founders of the company, confirmed the authenticity of the documents cited in the investigations published in hundreds of newspapers. However, “he has denied that his company has committed any wrongdoing.” The two journalists in the German newspaper Süddeutsche Zeitung who obtained the documents confirmed that “We barely got to half of the available leaks, and in the coming days we will publish topics that concern a lot of countries that will top the headlines” (Al-Jazeera, 08/04/2016).
2 – The repercussions associated with this great journalistic earthquake led to the resignation of the Prime Minister of Iceland; British Prime Minister Cameron found himself in an embarrassing position, and Russian President Putin was enraged when forced to answer questions about himself. Many countries around the world opened investigations on their officials regarding this scandal, with the German newspaper and the ICIJ reporting that the next wave of these documents will be the most shocking.
With all this great political momentum, however, the amount of unimaginable amounts of money rolling in secret “offshore” transnational holding companies might suggest that the economic objectives behind these leaks are no less important than the political goals. Mossack Fonseca is one of the main legal firms that provide services across the world to those wanting to create offshore companies to manage vast fortunes of officials who do not want to disclose their identity while conducting financial transactions. This is done by burying them in bank hideaways called “tax havens”, and this is the same for real companies that want these legal facilities provided by the likes of Mossack Fonseca. It is somewhat analogous to working between the borders of countries in a “Free Zone” without paying taxes inside countries, except the sum agreed upon with the “tax haven” country at the founding of the offshore company. The Panama Papers are the correspondences 214,000 offshore companies established with Mossack Fonseca while using multiple tax havens.
Second, the political consequences of the leaks:
Such leaks cannot be unintentional or coincidental, because they affect heavyweights such as the president of Russia and cannot thus be pulled off by small players. Following the strings of these leaks and the statements about them, one is able to show that America is behind them, and this is done through the following points:
1 – The German newspaper Süddeutsche Zeitung was the one chosen by the unknown source to share these documents. It specializes in security matters and often receives leaks from the German intelligence services when they want something published. The newspaper was the first to reveal in 2010 the location of the Mossad operations room in Austria, which was responsible for the assassination of al-Mabhouh in Dubai. It was the one which published leaks from the German internal intelligence services to the affect that the German national intelligence agency spied on European countries for several years on behalf of the US National Security agency (BBC, 30/4/2015). This scandal embarrassed Merkel infront of European countries. Further, the newspaper revealed that the targets for German spying on behalf of America included the French Presidential Palace, the Foreign Ministry and the European Commission as well as industrial and economic targets in Europe. It is worth mentioning that this disclosure was to ease the tension in Germany due to Snowden’s leaks that America is spying on a large-scale in Germany, including the tapping of Chancellor Merkel’s phone. This means that it was for an American purpose to dampen the tension in Germany on the grounds that there is spying taking place from the German side too.
It is clear that these US objectives have been achieved through the German intelligence services and through the publication of certain leaks in Süddeutsche Zeitung (SZ); ie that the US security strings have a link to this newspaper over past events prior to the Panama Papers. Süddeutsche Zeitung was the first newspaper to obtain a license from the American military administration in Bavaria on 6th of October 1945, five months after the end of World War II in Germany. The head of the newspaper, Hans Leyendecker, is a well-known German journalist, who was a CIA agent for a very long time. [http://whitetv.se/ 03/04/201]
Bradley Birkenfeld, an American citizen was the whistleblower of Swiss banks to the US authorities. He said regarding the Panama leaks: “If the National Security Agency, and the CIA, are spying on foreign governments, couldn’t they spy on a law firm like this?! They give information selectively to public opinion, which does not harm the United States in any way… there is something sinister behind these leaks”.(http://www.cnbc.com/2016/04/12/swiss-banker-whistleblower-cia-behind-panama-papers.html)
The WikiLeaks site mentioned in a tweet on its Twitter account that the leak of documents of the Mossack Fonseca firm was directly funded by the US government and the American billionaire George Soros (Al-Wafd, 09/04/2016). Further, Morgan Mossack (of German origin) who was the co-founder of Mossack Fonseca, is surrounded by suspicion given his link to the American CIA according to “previous intelligence files”.
Mossack offered to spy for the US Central Intelligence Agency (Elaph Egyptian site, 04/04/2016) and refused to comment on the Paper scandal (Elaph, 08/04/2016). The comments that are heard from the firm are from his founding co-partner Fonseca, who is an adviser to the President of Panama. It is notable that the firm had prior dealing with US intelligence. This was the very firm that was used by CIA agents in “what is known as the scandal of Iran – Contra in the eighties” (Russia Today, 12/04/2016).
2 – These documents were moved from the German newspaper to the ICIJ based in Washington a year ago, and there in Washington the data analysis of the Panama Papers took place (nearly 11.5 million documents) and continued throughout the year. It is an expensive process in which 370 journalists took part. The ICIJ is known for its crooked work, being the one that published in 2013 the $2.5 million worth of information stolen from 120,000 offshore companies. It is also the one that revealed in 2014 the contracts signed between multiple companies and Luxembourg to take advantage of tax concessions. In 2015, it also revealed the British bank accounts of HSBC in Switzerland. The ICIJ is funded, without a doubt, by several organizations linked to the CIA, like Ford, George Soros’ institution, etc (Voltairenet.org, 08/04/2016).
3 – There are many analysts and watchdogs that believe that America was behind the Panama Papers scandal, and their evidence is the absence of any American names and their companies from the Panama Papers. They have noticed that there is relatively little documentation of American politicians and businessmen and American institutions. The McClatchy Newspapers group is the only American news organization that participated in the analysis of documents, and no other major and large newspapers or American media agencies participated. Newspapers that participated in the analysis of documents found only four Americans mentioned in the documents, who have all been charged in the past with financial crimes such as fraud and tax evasion. I.e. the four were known criminals from before and no new information was unearthed about Americans.
The French Minute Newspaper has confirmed this observation. It indicated “that the failure to mention the United States in the Panama Papers has fueled suspicions among everyone that the CIA is behind the leak for instability in some countries, especially Russia”.
The newspaper reported that from China to Russia through to the United Kingdom, the disclosure of the Panama Papers exposed the involvement of many prominent officials around the world without so far pointing out the main player in global financing, which is the United States of America. The paper concluded by saying that “despite the justifications offered by the US about the lack of its link with these leaks, all doubts are hovering around it in light of the old policy it followed based on the revelation of dirty leaks in order to influence the opponent and create a state of frenzy and instability in the world at the time it determines, according to the course of events in order to serve its interests.” (Akhbarelyoum, 09/04/2016)
4 – These leaks included political figures that America intended to shaken, weaken, and expose, with the main ones being:
a – Putin. The first wave of leaks focused on Putin’s men. This is considered a part of the broader US political game, which raises problems for Russia in the Caucasus, Central Asia, Ukraine, and the most recent but not final development being the removal of Russia from participating in the recent nuclear summit set in Washington. The Kremlin’s response was direct, whereby its spokesman Peskov accused Washington of being behind the leaks, saying, “The majority of workers in the ICIJ are not journalists, but many of them are current and former employees of US State Department and the CIA and other bodies of US intelligence.” He stressed, “We know who funds this institution” (Russia Today 4/4/2016).
Putin said, in the context of questions and answers via Russian television regarding the Panama Papers, “No matter how bizarre the matter, this information is not credible, and we have the impression that it does not come from journalists but from men of law.” Putin questioned: “Who is practicing these provocations? We know that they are employees of official US organizations.” He stressed that the German newspaper Süddeutsche Zeitung, which revealed the scandal, “belongs to the media group belonging to the US financial institution, Goldman Sachs” and predicted more of such provocations with the approach of the Russian parliamentary elections in September.” (Ash-Shurooq, 14/04/2016)
b – The leaks included the British prime minister himself, who appeared disorderly in dealing with this issue, and his popularity actually declined 8 points during the week of the leaks despite the disclosure of his tax records and the fact that the issue citing him in the Panama Papers only amounted to 30,000 sterling pounds! Nevertheless, this is a critical time for the British prime minister who wants to throw his weight to push the British public to vote for the survival of Britain in the European Union. Cameron, faced questions, criticisms and demands to reveal his tax records after his father’s name was mentioned in the Panama Papers; documents showed that Cameron’s father Ian was a client of the legal services firm Mossack Fonseca and used secret measures despite the legality of investment in the company outside Britain. Cameron stressed in an interview with British ITV News that he paid all taxes due on the interest earned by the sale of those shares, pointing out that the objective of the establishment of the company by his father was not for tax evasion. (Arabi 21, 16/04/2016)
c – The leaks included China as well, with the papers revealing that “The brother-in-law who can’t be named is none other than Deng Jiagui… Deng is among a handful of elite Chinese with family ties to at least eight current or former top leaders named in reporting and documents about offshore holdings published this week by the International Consortium of Investigative Journalists (ICIJ). In addition to Deng, the papers note in-law ties to Liu Yunshan and Zhang Gaoli, who are on the Communist Party Politburo Standing Committee, the seven-member group that ultimately rules China. Also appearing in the leaked documents from a Panamanian law firm is a host of relatives of four former politburo members.” (The Washington Post, 7/4/2016) There is no doubt that this contributes to the concern of the Chinese President and affects to some extent China’s political movements.
d – The leaks have included a number of current and former Muslim rulers but they are insignificant for two reasons: first because they are agents for America and Britain. It included American agents like Makhlouf’s sons who surround Assad in Syria, and King Salman in Saudi Arabia and the sons of the ousted Mubarak in Egypt and many others, as well as Britain’s agents like the Princes of Qatar and the UAE and the former Prime Minister of Jordan Abu Al Ragheb, and others. The second reason is that these rulers are already despised and so the paper leaks do not add anything that draws attention, and the public do not care about them.
Thus, scrutinizing the political dimension behind them shows that it is America behind these leaks.
Third, the economic dimension:
America sought economic objectives from these leaks mainly to achieve two central aspects. First: elimination of tax evasion, and in particular from US firms that possess massive wealth and taxation on whose wealth would create revenue for America domestically. The second: to expose tax havens and specifically British ones in order to jolt the British economy and attract capital in these havens towards America to help revive the US economy. This is elaborated as follows:
1 – The globalization policy followed by the US during President Clinton’s term led many American capital owners to place their wealth outside its borders. The US wants to break down the barriers of countries and to colonise them economically.
US companies were searching for prey in weak stock markets, and US industrialists were as ever looking for cheap labour. America succeeded in financially controlling many other economies through globalization; on the other hand, American capitalists also found a way to evade heavy US taxation because they did not want to return to the borders of their country’s tax system and reduce their profits. In order to complete the system of globalization and to facilitate capital movement, the introduction of a new type of transnational company structure – the so-called “offshore” firm – emerged. Companies could thus be registered in one country but be active in another, and and deposit their money in a third, while being run by another company from a fourth country, and so forth.
These non-illegal procedures have led to the distortion of the actual capital owner and thus American capitalists were in a position to evade a large amount of their government’s taxes via these ‘front organizations’ (shell companies) by concealing the names of the real owners and registered owners back home in the USA. Since they are registered in countries and islands with a weak tax system, most of the offshore companies pay lump sums each year to the host country at their inception (the tax havens countries); thus, capitalists worked and profited without having to pay actual-value taxes in the countries they were predominantly based in (e.g. the USA).
2 – This is from the viewpoint of tax evasion; however, from the angle of corruption, especially for politicians with massive capital, the Swiss banks were a hideout of the enormous amounts of dirty money. But with the advent of global openness and the onset of increased globalization and the emergence of the offshore organizations, this opened up new horizons for these politicians in order to bury their illegal wealth.
Britain was quick to ease the tax systems for many of the territories under British Crown Dependencies in the Caribbean such as the Virgin Islands, Jersey and Guernsey, the Isle of Man, as well as some of its follower-agent countries like Cyprus, Dubai and the Seychelles in the Indian Ocean. Thus, small islands became big tax havens that host astounding amounts of capital from the fortunes of corrupt officials and real trade companies, who flee from their countries’ taxation systems.
What Britain did was to copy America in some of its states like Wyoming, Delaware, Nevada and in some countries under its control like Panama. It is worth mentioning that this service – and the financial operations of the firm Mossack Fonseca and similar operations – are entirely legal, but they open the door for “tax evasion” and concealment of wealth, which is seen as a morally contentious issue for companies in the public eye.
Although the owners of tax evading companies carry out actual business operations in stock markets and other places, corrupt officials’ funds are not used in actual trade, so they use the system of offshore companies as a way to hide and bury wealth in these jursidictions. Therefore, they or their representatives hire law firms like Mossack Fonseca to manage their wealth, and so these firms managed to establish financial funds with huge capital that reflects the enormous volume of accumulated wealth through government corruption in many countries. These financial funds are used for the invasion of weak stock markets in order to loot them, a scheme that is actively facilitated by officials in that country through a network of corruption and large bribes in order to facilitate their work in that country.
3 – After America fought its expensive wars in Iraq and Afghanistan, it was more in need of money, especially when the global economic and financial crisis exploded in 2008. Then came the banking sector battles and currency battles, which still continue unabated to this day. The famous European banks such as Barclays, Credit Suisse, Deutsche Bank and Standard Chartered etc came under severe sanctions by US Bank regulators and the focus now has shifted from this economic war towards tax evasion, with a view to exposing tax havens and bringing the money into the US banking system. In many respects, this war is yet to conclude, which drove the United States to make great strides in exposing secret Swiss banks. (http://www.wsj.com/articles/inside-swiss-banks-tax-cheating-machinery-1445506381)
Moreover, it seems that the tax havens used by British companies and politicians are among the prime targets. The newspapers reported that the island of Panama is most popular as a British tax haven, and that the number of British companies that have been registered and were part of the leaks are 113,000 out of 215,000. (http://www.wsj.com/articles/panama-papers-raise-pressure-on-u-k-to-rein-in-offshore-tax-havens-1459966548). Nicholas Shaxson, author of Treasure Islands, a book about tax havens, said that “London is the epicentre of so much of the sleaze that happens in the world”. This is described by a British expert calling London the centre of a “spider’s web” (http://www.channelnewsasia.com/news/world/panama-papers-reveal/2672152.html).
4 – With the weakness of tax collection, the US debt rose unprecedently and continued to rise in a form that threatens the future of America as a superpower. When President Obama came to office on 20th of January 2009, the total federal debt amounted to $10.6 trillion, and according to the latest statistics, the debt rose to more than 19 trillion dollars. The 2016 budget plan signed by Obama included raising the debt ceiling from $18.5 trillion to $19.6 trillion and under the dynamic debt growth it seems that the US government will be forced to raise the debt ceiling again (Russia Today, 02/02/2016).
As a result, America began searching for big money across the world to prevent the bankruptcy of the American economy. It began this policy through a campaign to break restrictions of the secret deposits in Swiss banks, and finally succeeded in breaking the privacy strongholds used in those banks. Thus, Swiss banks have become obliged to disclose the files of US citizens to the US government. Indeed, America started attacking the global economic sectors that are far from its influence.
Although the United States stresses the collection of taxes in America, what Oxfam mentioned (the Egyptian Youm7, 15/14/2016) regarding 50 giant US corporations hiding $1.4 trillion in tax havens is the essence of what America is looking for from the leak of the Panama Papers. Here we can say with certainty that America, through the leaked documents, also aims to revive its economy and not only strike the President of Russia, China, and British Prime Minister. This view is enhanced if we know that the volume of money hidden in those hidden islands as being estimated to be at 30-40 trillion dollars (Russia Today, 5/4/2016). This is real astronomical wealth that the world has never known before. This is the sort of wealth that can have a significant impact on the US economy and state. There is no doubt that this is a significant gain if America was able to attract these funds to be taxed in the United States.
5 – America wants to achieve both economic aims: to prevent tax evasion operations and bring big fortunes of the corrupt back to its shores. It was clear also in the first comment by President Obama on the issue of the Panama Papers when he said: “In the news over the last couple of days we’ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big global phenomenon. It is not unique to other countries because frankly there are folks here in America who are taking advantage of this same stuff,” the President said. “A lot of it’s legal, but that’s exactly the problem. It’s not that they’re breaking the laws, it’s that the laws are so poorly designed that they allow people, if they’ve got enough lawyers and accountants, to wiggle out of responsibilities that ordinary citizens have to abide by”. (https://www.whitehouse.gov/the-press-office/2016/04/05/remarks-president-economy-0)
Thus, once again, studying deeply the economic dimension confirms that America is behind these leaks.
Finally, it is not surprising that such documents exist that reveal the corruption of those at the head of the capitalist enterrise today. The lack of values present (except for the material value) in such unscrupulous people is evident. This ideology is evil, and this evil will not go away as long as this ideology dominates the world as it does currently. The world will be a better place when the governing evil of capitalism is eradicated, together with all man-made systems not legislated by Allah.
28 Rajab 1437 AH