Mossack Fonseca

Mossack Fonseca & Co.
Headquarters Panama City, Panama
No. of employees 500+[1]
Key people Rubén Hernández, CEO[2]
Date founded 1977 (1977)
Founder Jürgen Mossack and Ramón Fonseca
Website
mossfon.com
Mossack Fonseca headquarters

Mossack Fonseca & Co. is a Panamanian law firm and corporate service provider founded in 1986 and has grown to have more than 40 offices worldwide.[1][3] The firm received worldwide media attention in April 2016, when information on off-shore tax havens and client information was published in the Panama Papers after an enormous cache of its documents between 1970 and 2015 had been leaked to the news media.[4]

History and practice areas

The firm was founded by German lawyer Jürgen Mossack in 1977 and joined by Panamanian novelist/lawyer Ramón Fonseca in 1986[5] and later added a third director, Swiss lawyer Christoph Zollinger.[6]

It specializes in commercial law, trust services, investor advisory, and international business structures.[7] It also offers intellectual property protection and maritime law services.[1][8] An internal memorandum revealed in the 2016 Panama papers leak noted that 95% of the company's work consists of "selling vehicles to avoid taxes".[9]

In 2013, the firm was described as one of seven that collectively represented more than half of the companies incorporated in Panama.[10] The firm also houses several Panama-incorporated companies within its offices.[11] It is one of the largest firms in the corporate services industry.[3] However, the founder claims that it is only around 5% of the global financial services legal industry.[12] According to The Economist, the firm has 5 to 10% of the global shell company market,[13] and it has been described as "tight-lipped".[3]

Offices and international practice

The firm has nine offices in China,[3] several in Latin America,[14] others in the United States[7] and Europe, with two in Switzerland.[15] Lawyers from the firm have been sent to foreign countries to promote business in Panama and Panamanian financial products.[16]

Mossack established operations in the British Virgin Islands in 1987, where it incorporated more than 100,000 companies in the Islands.[17]

The firm was consulted by the country of Niue when Niue sought to become an offshore financial center, and managed that business exclusively for the country through their Panama headquarters.[18][19] However, American banks imposed embargoes on bank transfers to Niue in 2001, leading to a shutdown of the business in 2005.[17] Accounts of the firm's clients were moved from Niue to American Samoa.[6]

Controversies

The firm has allegedly helped foreign citizens circumvent their local tax laws[6][20][21] and international sanctions.[6][22] The firm's founder has argued that it is simply helping those clients achieve privacy, and that it now complies with "know your customer" regulations.[12]

Argentine money laundering

In 2014, MF Corporate Services was subpoenaed by a hedge fund seeking to recover money from the Argentinian government. The fund alleged that MF had created shell companies to pass money from the government to Lázaro Báez, an ally of the Kirchner family.[6][17] Mossack Fonseca claimed that it was not the owner of MF Corporate Services, but a Nevada judge ruled that the subpoena against Mossack Fonseca was valid.[17][23][24]

Commerzbank

In February 2015, the firm was implicated in the German government's investigation of money laundering and tax evasion schemes at Commerzbank.[21][25]

Petrobras

Main article: Operation Car Wash

In January 2016, employees of the firm's Brazilian office were charged in relation to the ongoing Petrobras corruption scandal. In that case, a judge alleged that "Mossack Fonseca provided services for the opening of offshore societies, and at least four agents were involved in a scheme to launder money."[26] The firm has responded that the Brazilian office is a "franchise" and not controlled by the main office in Panama.[17] The firm's founder resigned from his advisory position to the Panamanian government to focus on the Brazilian allegations, and says the firm has been cleared.[12]

"Panama Papers" leak

Main article: Panama Papers

On 3 April 2016, the German newspaper Süddeutsche Zeitung announced that 11.5 million confidential documents had been leaked from the firm to journalists. These documents, dubbed the "Panama Papers", revealed how clients hid billions of dollars in tax havens.[27] Comprising documents dating to the 1970s, the 2.6-terabyte set was given to Süddeutsche Zeitung in 2015 by an anonymous source, and subsequently turned over to the Washington-based International Consortium of Investigative Journalists (ICIJ).[28][29][30]

The firm says that this coverage has "misrepresented" their work.[31] In its full statement[32] the company asserts that it conducts due diligence on potential clients, "routinely denying services" to those who are "compromised" and "routinely resigns from client engagements when ongoing due diligence and/or updates to sanctions lists reveal" problems, but that in addition, responsibility for potential legal violations may lie with failures or lapses by other institutions given that:

approximately 90% of our clientele is comprised of professional clients, such as international financial institutions as well as trust companies and prominent law and accounting firms, who act as intermediaries and are regulated in the jurisdiction of their business. These clients are obliged to perform due diligence on their clients in accordance with the KYC and AML regulations to which they are subject.

The company informed clients on 3 April 2016, that the files were obtained through a hack of the company's email server.[33] Forbes has suggested that the firm's information security was poor, running old versions of key tools,[34] and other vulnerabilities have since been discovered.[35]

Shortly after the leak, Panamanian, Peruvian, and El Salvadorian police raided the local offices of Mossack Fonseca.[36]

References

  1. 1 2 3 The Legal 500 > Mossack Fonseca The Legal 500
  2. ↑ Mossack Fonseca se une al Programa “Mi Escuela Primero”, SumaRSE, 15 December 2015.
  3. 1 2 3 4 "Shells and shelves". The Economist. April 7, 2012. Retrieved March 8, 2013.
  4. ↑ "Panama Papers: Why should we care? The Panama Papers leak shows that it is not just the global tax system that is broken, but global governance itself.". Al Jazeera. 6 April 2016. Retrieved 11 April 2016.
  5. ↑ Graham, David A. (4 April 2015). "What is Mossack Fonesca, the Law Firm in the Panama Papers?". The Atlantic. Atlantic Media. Retrieved 5 April 2016.
  6. 1 2 3 4 5 Silverstein, Ken (3 December 2014). "The Law Firm That Works with Oligarchs, Money Launderers, and Dictators". Vice. Vice Media. Retrieved 16 December 2014.
  7. 1 2 "Mossack Fonseca:About the Group". MossFon.com. Mossack Fonseca & Co. Retrieved 2016-04-04. Our ... professionals specialize in trust services, wealth management, international business structures, and commercial law, among other areas.
  8. ↑ Raquel Arauz (November 26, 2014). "The Importance of Registering Your Brand". Mossack Fonseca. Retrieved March 8, 2013.
  9. ↑ Juliette Garside; Holly Watt; David Pegg (3 April 2016). "The Panama Papers: how the world’s rich and famous hide their money offshore". The Guardian. Retrieved 14 April 2016.
  10. ↑ Alma Solís (March 8, 2013). "Acciones al portador provocan divisiones" (in Spanish). La Estrella de Panamá. Archived from the original on 2013-03-08. Retrieved March 8, 2013.
  11. ↑ José María Olmo (February 15, 2013). "González pasa al ataque contra el SUP por las acusaciones sobre su ático". El Confidencial. Retrieved March 8, 2013.
  12. 1 2 3 Webber, Jude (2016-04-05). "Mossack Fonseca founder dismisses Panama Papers as ‘witch hunt’". Financial Times. ISSN 0307-1766. Retrieved 2016-04-05.
  13. ↑ "The Panama papers: A torrential leak". The Economist. 9 April 2016. Retrieved 9 April 2016.
  14. ↑ "Panama Papers: Secret offshores trace back to Brickell condo featured on ‘Miami Vice’". miamiherald. Retrieved 2016-04-05.
  15. ↑ Samuel Gerber (February 24, 2010). "O wie schön ist Panama – für Steuerflüchtlinge". Handelszeitung. Retrieved March 8, 2013.
  16. ↑ "Panama's the Place to be". Isle of Man Examiner. November 1, 2001. Retrieved March 8, 2013.
  17. 1 2 3 4 5 Hamilton, Martha (2016-04-03). "Panamanian Law Firm Is Gatekeeper To Vast Flow of Murky Offshore Secrets". International Consortium of Investigative Journalists. Retrieved 2016-04-04.
  18. ↑ Findley, Michael G.; Nielson, Daniel L.; Sharman, J. C. (2014-01-23). Global Shell Games: Experiments in Transnational Relations, Crime, and Terrorism. Cambridge University Press. ISBN 9781107729681.
  19. ↑ Fossen, Anthony Van (2012-01-01). Tax Havens. Univ. of Queensland Press. ISBN 9781921902239.
  20. ↑ Trevor Cole (January 27, 2011). "How I learned to avoid the taxman in the British Virgin Islands". Globe & Mail. Retrieved March 8, 2013.
  21. 1 2 Leyendecker, Hans. "Steueraffäre erschüttert Commerzbank" (in German). Retrieved 26 February 2015.
  22. ↑ Cox, Simon (4 April 2016). "Panama Papers: Mossack Fonseca 'helped firms subject to sanctions'". BBC News. Retrieved 5 April 2016.
  23. ↑ Heuer, Mike (2015-03-18). "Judge OKs hunt for Argentine millions". Courthouse News Service. Retrieved 2016-04-04.
  24. ↑ Pearson, Sophia (2014-08-13). "Singer Gets OK to Chase Argentina Money Trail to Nevada". Bloomberg.com. Retrieved 2016-04-05.
  25. ↑ Braecher, Michael (2015-03-09). "In Panama, a German King of Shell Companies". Handelsblatt Global Edition. Retrieved 2016-04-04.
  26. ↑ "Mossack Fonseca employees face charges in Brazil". La Prensa. 2016-01-28. Retrieved 2016-04-04.
  27. ↑ Harding, Luke (3 April 2016). "Revealed: the $2bn offshore trail that leads to Vladimir Putin". The Guardian. Retrieved 3 April 2016.
  28. ↑ "Data trove offers glimpse of how the rich hide their money". Associated Press. April 4, 2016. Retrieved April 4, 2016.
  29. ↑ Bilton, Richard (April 4, 2016). "Panama Papers: Mossack Fonseca leak reveals elite's tax havens". BBC News.
  30. ↑ "The Panama Papers". International Consortium of Investigative Journalists.
  31. ↑ "Statement Regarding Recent Media Coverage". Mossack Fonseca. 2016-04-04. Retrieved 2016-04-05.
  32. ↑ "Statement Regarding Recent Media Coverage" (PDF). Mossack Fonseca. Retrieved 2016-04-08.
  33. ↑ Urreiztieta, Esteban (2016-04-03). "Los papeles de Panamá: Pilar de Borbón, Messi y Almodóvar, entre los investigados". El Español. Retrieved 2016-04-05.
  34. ↑ Fox-Brewster, Thomas (2016-04-05). "From Encrypted Drives To Amazon's Cloud – The Amazing Flight Of The Panama Papers". Forbes. Retrieved 2016-04-05.
  35. ↑ "SQL injection vuln found at Panama Papers firm Mossack Fonseca". The Register. 2016-04-11. Retrieved 2016-04-15.
  36. ↑ Goodman, Leah McGrath (2016-04-14). "Panama Papers: Is the U.S. Giving Mossack Fonseca a Pass?". Newsweek. Retrieved 2016-04-15.
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