The weekend’s biggest story by far: the leak of a massive trove of documents, over 2.6 terabytes of data, from the Panamanian law firm Mossack Fonseca, which specializes in creating offshore companies. The documents were handed over to the German paper Süddeutsche Zeitung under mysterious circumstances. The paper shared the documents with an NGO called the International Consortium of Investigative Journalists, which in turn unleashed 107 media organizations in 78 countries onto the find.It’s unclear how the documents saw the light of day—disgruntled employee? black hat hackers? state-sponsored espionage?—but the haul, which was officially announced yesterday, is impressive.About $2 billion appears to have been squirreled away by Russian President Vladimir Putin in various offshore vehicles. The broad outlines of the scheme and some of the players involved are already known. Western countries have already targeted sanctions against Putin’s buddy Yuri Kovalchuk and the shady Bank Rossiya, for example, in response to Russia’s annexation of Crimea. But the documents reveal in impressive detail how Putin’s childhood friend, professional cellist Sergei Roldugin, sits as proxy for the Russian President in various schemes. They also reveal how a Russian bank in Cyprus funneled large unsecured loans to the offshore vehicle linked to Putin for vague “consultancy” services, and for apparently fake share deals. Other Putin associates who appear in the papers but are not necessarily directly linked to schemes involving the Russian President include the Rotenberg brothers (Arkadiy and Boris) and Gennady Timchenko, all of whom are billionaire oligarchs.Other world leaders shown to have offshore assets include former Prime Minister of Iraq Iyad Allawi, the King of Saudi Arabia, current President of Argentina Mauricio Macri, President of Ukraine Petro Poroshenko, and Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson. There is nothing inherently illegal in setting up offshore companies, and there are legitimate uses for them. Spokesmen for several of the leaders singled out have strongly denied any wrongdoing. Macri’s people, for example, said that, though he was listed as director of an offshore vehicle, he had no capital participation in the venture when he was forced to declare assets as Mayor of Buenos Aires.But at least one memo in the Mossack Fonseca trove boasted that “ninety-five percent of our work coincidentally consists in selling vehicles to avoid taxes.” And so while Poroshenko’s people said that the vehicles were set up as part of a restructuring in an attempt to sell off Roshen, the chocolate empire that Ukraine’s President swore he would liquidate upon taking office in 2014, reports have begun to emerge that Poroshenko’s scheme may have saved him millions of dollars in taxes. Iceland’s Prime Minister Gunnlaugsson finds himself in an even tighter bind: just last month he denied ever having any stake in offshore vehicles. He is now facing calls for a snap election.Expect more stories to come as journalists pore over the files. We will be watching closely as well. As our own Walter Russell Mead noted in connection to a corruption scandal that roiled Deutsche Bank in December of last year, the real story is less about the specifics than it is about what the specifics tell us about how our world is set up. That so many of our elites are aiding and abetting such murky schemes of the world’s most powerful points to a serious moral rot at the core of our societies. Shining a light on what is going on is a necessary and important first step. But will we do anything about it, beyond wagging our fingers?
The Panama PapersBig Leak, Big Corruption, Deep Rot