Malta's prime minister to resign amid investigation of [Panama Papers] journalist's killing

The Law Firm That Works with Oligarchs, Money Launderers, and Dictators

Founded in Panama in 1977 by German-born Jurgen Mossack and a Panamanian man named Ramón Fonseca, a vice president of the country's current ruling party, it later added a third director, Swiss lawyer Christoph Zollinger. Since the 70s the law firm has expanded operations and now works with affiliated offices in 44 countries, including the Bahamas, Cyprus, Hong Kong, Switzerland, Brazil, Jersey, Luxembourg, the British Virgin Islands, and—perhaps most troubling—the US, specifically the states of Wyoming, Florida, and Nevada. . .

Mossack Fonseca, of course, is not alone in setting up shell companies used by the world's crooks and tax evaders. Across the globe, there are vast numbers of competing firms, and many of them register shells that are every bit as shady as Drex. Proof of this includes the case of Viktor Bout, who, in the 1990s, peddled arms to the Taliban through a Delaware-registered shell. More recently, in 2010, a man named Khalid Ouazzani pleaded guilty to using a Kansas City, Missouri, firm called Truman Used Auto Parts to move money for Al Qaeda. . .

But a yearlong investigation reveals that Mossack Fonseca—which the Economist has described as a remarkably "tight-lipped" industry leader in offshore finance—has served as the registered agent for front companies tied to an array of notorious gangsters and thieves that, in addition to Makhlouf, includes associates of Muammar Gaddafi and Robert Mugabe, as well as an Israeli billionaire who has plundered one of Africa's poorest countries, and a business oligarch named Lázaro Báez, who, according to US court records and reports by a federal prosecutor in Argentina, allegedly laundered tens of millions of dollars through a network of shell firms, some which Mossack Fonseca had helped register in Las Vegas. . .

These laws attracted a long line of dirtbags and dictators who used Panama to hide their stolen loot, including Ferdinand Marcos, "Baby Doc" Duvalier, and Augusto Pinochet. When Manuel Noriega, commander of the Panama Defense Forces, took power in 1983, he essentially nationalized the money-laundering business by partnering with the Medellín drug cartel and giving it free rein to operate in the country. Noriega reliably supported American foreign policy in the region—and for years the CIA had him on its payroll—but the US lost patience when he opposed American efforts to topple the leftist Sandinista government in neighboring Nicaragua. That helped lead to the 1989 invasion of Panama that ousted Noriega and returned to power the old banking elites, heirs of the J.P. Morgan legacy. . .

The new government of President Guillermo Endara, a corporate lawyer who was sworn in on an American military base a few hours after the invasion began on December 20, 1989, offered a kinder, gentler face than Noriega's regime. But since then he and his democratically elected successors have done little to address the country's most obvious problems: corruption and poverty. A recent US government report said that Panama is "plagued" by fraud and international tax evasion, all of which are "major sources of illicit funds.". . .When he worked at Mossack Fonseca, Owens drew on his expertise about the competitive advantages of incorporating companies on the South Pacific island of Niue. In 1996 the firm won exclusive rights to set up shell firms on the island, and within four years, 6,000 shell firms were registered there, some reportedly controlled by Eastern European crime syndicates and international drug cartels, according to international investigations and news accounts. The findings led to the imposition of international sanctions in 2001 that forced the island to shut down its corporate-registration business five years later. Mossack Fonseca turned lemons into lemonade for its clients by moving their accounts out of Niue and into other secrecy havens, including Samoa and, as revealed in court records that Mossack Fonseca was ordered to turn over, Nevada. (There is no proof that the firms they moved were engaged in criminal activity, though the identities of the owners of those companies remain unknown.) The crackdown on Niue was part of a broader international effort led by the US, Britain, and other Western nations. Originally prompted by concerns about terrorism and organized crime, the initiative has intensified recently due to hemorrhaging budget deficits, which have swelled in no small part because of widespread tax evasion. . .

"We have a global banking network," he said, and pointed to a page listing a few dozen financial institutions his firm worked with. The network included small banks in Panama, the Cayman Islands, Monaco, and Andorra, and brand-name players like HSBC and the diamond smugglers at UBS. A US Senate committee report described the former as a major conduit for "drug kingpins and rogue nations," and last year the bank signed a $1.92 billion settlement with the Justice Department after admitting to helping launder millions of dollars through shell firms for Colombian and Mexican cartels. There was even a US component to Owens & Watson's network: Helm Bank in Miami. In 2012, US regulators hit Helm with a consent order for multiple violations of the Bank Secrecy Act and anti-money-laundering rules. . .

Since Mossack Fonseca began offering services in the state more than a decade ago, it has used a closely linked local firm called MF Corporate Services to register more than 1,000 Nevada companies, most of them managed from offshore destinations like Geneva, Bangkok, and the British Virgin Islands, according to records on file with the secretary of state. Under Nevada law the only names that must appear on a shell firm's public records are those of a resident agent and a "manager," and neither has to be a human being. . .While there's no way to know precisely who's behind the vast majority of dummy companies the firm has been helping to create there, an ongoing criminal investigation in Argentina and a related case before the United States District Court of Nevada involving the oligarch Lázaro Báez offer an idea. The investigation and court records allege that Báez is the secret owner of more than 100 shell firms that Mossack Fonseca has helped establish in Nevada. All of them were managed by Aldyne Ltd., an anonymous company that Mossack Fonseca registered in the Seychelles Islands, according to prosecutors. (Mossack Fonseca has not been charged to date in either Argentina or Nevada, but one of its operatives in Las Vegas has been deposed in the legal case, and the district court has told the firm to turn over records related to the Báez shell companies, an order with which it has refused to fully comply.) A former bank teller, Báez built a vast business empire through contracts awarded by his close friends Cristina and Néstor Kirchner, the current and previous presidents of Argentina, respectively, and their political allies in his home province, according to news reports and investigators. Báez was so bereft when his patron Néstor died, in 2010, that he erected a three-story mausoleum to house his remains. Prosecutors allege that the Nevada shells were part of a network that Báez used to move offshore more than $65 million in funds diverted from public infrastructure projects. . .

Montoya has quite a checkered career, having previously registered or served as a nominee director for at least six anonymous companies that were involved in major international corruption scandals. Among those is a Panamanian shell firm called Nicstate, whose beneficial owners turned out to include former Nicaraguan president Arnoldo "Fat Man" Alemán. He used Nicstate and other offshore vehicles to divert nearly $100 million of state funds into his own pockets. Montoya also helped set up Mirror Development Inc., which Siemens of Germany employed to funnel bribes to Argentine government officials who helped it win a $1 billion contract to produce national identity cards. This was just one component of a global scheme by Siemens, which also used corporate cutouts to pay off government officials in Bangladesh, Venezuela, and Iraq, where the recipients included Saddam Hussein. . .

I wanted to ask her about specific people who'd been linked to Mossack Fonseca–incorporated shell firms by the US government, court records, international investigators, and my year of research: Billy Rautenbach, an alleged bagman for Robert Mugabe, the longtime ruler of Zimbabwe; Yulia Tymoshenko, a former Ukrainian prime minister and oligarch nicknamed the "gas princess"; Beny Steinmetz, an Israeli billionaire who'd reportedly used a Mossack Fonseca–incorporated shell firm in the British Virgin Islands to pay a bribe to a wife of the homicidal dictator of Guinea, where Steinmetz was seeking (and subsequently got) a huge mining concession.

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