There have been a series of stories fed to the press this week intended to heighten concerns about Trump advisor Paul Manafort’s ties to Russian thugs (but not his numerous ties to other thugs). The NYT had a story about Manafort receiving cash payments from 2007 to 2012 (that is, well before Trump decided to run for President). And the AP has a story headlined, “AP Sources: Manafort tied to undisclosed foreign lobbying” that describes how Manafort’s partner, Rick Gates, funneled funds from a pro-Yanukovych non-profit to two DC lobbying firms.
Paragraph 10 of the story reveals that it relies on sources from the Podesta Group, one of the lobbying firms in question.
Paragraph 15 begins to explain salient information about the Podesta group: that its ties to the Clinton campaign are as close as Gates’ ties to the Trump campaign.
The founder and chairman of the Podesta Group, Tony Podesta, is the brother of longtime Democratic strategist John Podesta, who now is campaign chairman for Democratic nominee Hillary Clinton. The head of Mercury, Vin Weber, is an influential Republican, former congressman and former special policy adviser to Mitt Romney. Weber announced earlier this month that he will not support Trump.
After being introduced to the lobbying firms, the European nonprofit paid the Podesta Group $1.13 million between June 2012 and April 2014 to lobby Congress, the White House National Security Council, the State Department and other federal agencies, according to U.S. lobbying records.
One former Podesta employee, speaking on condition of anonymity because of a non-disclosure agreement, said Gates described the nonprofit’s role in an April, 2012 meeting as supplying a source of money that could not be traced to the Ukrainian politicians who were paying him and Manafort.
In separate interviews, three current and former Podesta employees said disagreements broke out within the firm over the arrangement, which at least one former employee considered obviously illegal. Podesta, who said the project was vetted by his firm’s counsel, said he was unaware of any such disagreements.
In other words, the headline and lead of this story should say something to the effect of, “Trump’s campaign manager’s partner funneled potentially illegal funds to Hillary’s campaign manager’s brother.”
Or more succinctly: “DC is a corrupt, incestuous cesspool.”
But it doesn’t. Instead of telling the story about the broken foreign registry system that permits elites of both parties to take funding from some unsavory characters — some we like, some we hate — the story instead spins this as a uniquely Trump and Manafort problem.
Sure. Vladimir Putin is one scary bastard. But there are a lot of scary bastards, and they’re feeding both sides of the DC pig’s trough.
The WSJ has a story reporting what we long pretty much knew: DOJ decided not to prosecute HSBC for helping drug kingpins (this report, like most others and like DOJ’s settlement itself, forgets to mention HSBC also materially supported terrorism) because doing so might create global financial havoc.
U.S. Justice Department officials overruled their prosecutors’ recommendation to pursue criminal charges against HSBC Holdings PLC over money-laundering failings, according to a House committee report prepared by Republicans that sheds new light on the bank’s 2012 settlement.
The report, which was reviewed by The Wall Street Journal and prepared by the Republican staff of the Financial Services Committee, concluded that former Attorney General Eric Holder overruled the internal recommendation and subsequently misled Congress about the Justice Department’s decision not to prosecute the U.K. bank.
“Rather than lacking adequate evidence to prove HSBC’s criminal conduct, internal Treasury documents show that DOJ leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank ‘could result in a global financial disaster,’ ” the 282-page report stated.
Holder later said those comments were misconstrued and that the Justice Department doesn’t believe any institution is too large to face legal punishment. “If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought,” Mr. Holder said at a 2013 House hearing.
The report, which was expected to be released Monday, concluded those comments were misleading because lower-level prosecutors had recommended the department prosecute HSBC, according to Treasury Department emails subpoenaed by the committee.
The report blames Eric Holder for the decision, not Loretta Lynch, who oversaw the case as US Attorney. Indeed, her name doesn’t appear in the WSJ story at all.
But given the claim that line prosecutors believed they had plenty of evidence to charge HSBC, consider how Lynch answered a question about the topic during her confirmation process.
38. As United States Attorney for the Eastern District of New York, you helped secure nearly $2 billion from HSBC over its failure to establish proper procedures to prevent money laundering by drug cartels and terrorists. You were quoted in a DOJ press release saying, “HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system.”
You stated that the bank’s “willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in [Office of Foreign Assets Control]-prohibited transactions.” Still, no criminal penalties have been assessed for any executive who may have been involved.
a. Did you make any decision or recommendation on charging any individual with a crime?
i. If so, please describe any and all decisions or recommendations you made.
ii. Please explain why such decisions or recommendations were made.
b. If you did not make any decision or recommendation on charging any individual with a crime, who made the decision not to prosecute?
RESPONSE: On December 11, 2012, the Department filed an information charging HSBC Bank USA with violations of the Bank Secrecy Act and HSBC Holdings with violating U.S. economic sanctions (the two entities are collectively referred to as “HSBC”). Pursuant to a deferred prosecution agreement (“DPA”), HSBC admitted its wrongdoing, agreed to forfeit $1.256 billion, and agreed to implement significant remedial measures, including, among other things, to follow the highest global anti-money laundering standards in all jurisdictions in which it operates. As the United States District Judge who approved the deferred prosecution found, “the DPA imposes upon HSBC significant, and in some respect extraordinary, measures” and the “decision to approve the DPA is easy, for it accomplishes a great deal.” Although grand jury secrecy rules prevent me from discussing the facts involving any individual or entity against whom we decided not to bring criminal charges, as I do in all cases in which I am involved, I and the dedicated career prosecutors handling the investigation carefully considered whether there was sufficient admissible evidence to prosecute an individual and whether such a prosecution otherwise would have been consistent with the principles of federal prosecution contained in the United States Attorney’s Manual.
I want to reiterate, particularly in the context of recent media reports regarding the release of HSBC files pertaining to its tax clients, that the Deferred Prosecution Agreement reached with HSBC addresses only the charges filed in the criminal violations of the Bank Secrecy Act for failures to maintain an adequate anti-money laundering program and for sanctions violations. The DPA explicitly does not provide any protection against prosecution for conduct beyond what was described in the Statement of Facts. Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s Tax Division, nor the Fraud Section of the Criminal Division. information, which are limited to violations of the Bank Secrecy Act for failures to maintain an adequate anti-money laundering program and for sanctions violations. The DPA explicitly does not provide any protection against prosecution for conduct beyond what was described in the Statement of Facts. Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s Tax Division, nor the Fraud Section of the Criminal Division. [my emphasis]
To be fair to Lynch, hers was basically a non-answer. She said she and career prosecutors review the evidence. She implied that there was insufficient admissible evidence to prosecute, but did not say it.
But if the WSJ report is correct (and we should find out soon enough) in fact at least her prosecutors recommended prosecuting.
Fresh off being caught lying about rolling her eyes in response to calls for Palestinian rights, Neera Tanden has rolled out something called the National Security Leadership Alliance. Best as I can tell, it exists mainly on paper right now — I couldn’t even find it on CAP’s site yet. But it seems designed to fear-monger about what will happen if Trump becomes Commander-in-Chief.
The project, called the National Security Leadership Alliance, will be funded by C.A.P. Action. It will feature a roster of major members of the foreign policy and national security community, including two retired four-star generals; Leon E. Panetta, the former C.I.A. director; Madeleine K. Albright, the former secretary of state; Eric H. Holder Jr., the former attorney general; and Carl Levin, the former Michigan senator. All have endorsed Mrs. Clinton.
There will be an effort to highlight precisely what, in the military arsenal, Donald J. Trump would have access to as president. Mr. Trump has been criticized for his views on foreign policy, criticisms that have been central to the case that Mrs. Clinton has made against him in an effort to describe the stakes of the 2016 presidential election. The Center for American Progress is led by a top outside adviser to Mrs. Clinton, Neera Tanden, and the new project seeks to put a spotlight on what officials are calling a progressive foreign policy vision.
I’m perfectly okay with fearmongering about Trump. But let’s look at this lineup. It features the woman who said letting half a million Iraqi children die was worth the price of enforcing sanctions against the country. It also includes a guy, Panetta, whose exposure of the identities of Osama bin Laden killers’ to Hollywood producers serves to reinforce what a double standard on classified information Hillary (and Panetta) benefit from.
But I’m most curious by a “national security” team that includes both Eric Holder and Carl Levin, especially given the NYT focus, in announcing the venture, on Brexit.
“I think what brought us together is obviously a lot of concern about some of the division and polarization that we’re seeing in the world,” Mr. Panetta said in an interview. “We know we’re living in a time of great change and uncertainty.”
But he added, “The concern we have is we see these forces of division that are prepared to throw out the fundamental” principles of foreign policy in the United States over many decades.
“What we’re learning from ‘Brexit’ is that there’s a price to be paid in terms of letting out emotion dictate policy instead of responsible leadership,” he said, referring to Britain’s vote to leave the European Union. “We shouldn’t throw the baby out with the bath water.”
Leon Panetta, in rolling out a venture including Carl Levin — who as head of the Senate’s Permanent Subcommittee on Investigations worked tirelessly for some kind of accountability on bank crime — and Eric Holder — who ignored multiple criminal referrals from Levin, including one pertaining to Goldman Sachs head Lloyd Blankfein — says the lesson from Brexit is that we can’t let emotion dictate policy but instead should practice “responsible leadership” guarding the “fundamental principles of foreign policy in the United States over many decades.”
Of course, as David Dayen argued convincingly, to the extent Brexit was an emotional vote, the emotions were largely inflamed by elite failures — the failures of people like Eric Holder to demand any responsibility (Dayen doesn’t deal with the equally large failures of hawks like Albright whose destabilizing policies in the Middle East have created the refugee crisis in Europe, which indirectly inflamed Brexit voters).
Again, I’m okay if Hillary wants to spend her time fearmongering about the dangers of Trump.
But to do so credibly, she needs to be a lot more cognizant of the dangers her own team have created.
According to Bloomberg, Treasury has for the first time ever not only revealed that it hides how much US debt the Saudis are holding, but how much debt that is: $117 billion dollars this month.
The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.
It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country’s Treasury purchases stay “strictly secret,” according to a diplomatic cable obtained by Bloomberg from the National Archives database.
With a handful of Treasury and Federal Reserve officials, the secret was kept for more than four decades—until now. In response to a Freedom-of-Information-Act request submitted by Bloomberg News, the Treasury broke out Saudi Arabia’s holdings for the first time this month after “concluding that it was consistent with transparency and the law to disclose the data,” according to spokeswoman Whitney Smith. The $117 billion trove makes the kingdom one of America’s largest foreign creditors.
For the record, I don’t think this is a secret. Some of it has been reported in histories of the JECOR petrol dollar laundering program. And, if I’m not mistaken (my copy is Audible not dead tree), the book The Oil Kings provides much more detail on the negotiations that set this up (and Henry Kissinger’s self-dealing as part of that process).
Also, the number Treasury released “consistent with transparency” is almost certainly bullshit. It’s not just me who thinks this is a bullshit number: so does some anonymous person who knows better.
Yet in many ways, the information has raised more questions than it has answered. A former Treasury official, who specialized in central bank reserves and asked not to be identified, says the official figure vastly understates Saudi Arabia’s investments in U.S. government debt, which may be double or more.
More likely, the vehicle of exchange and secrecy set up in 1974 were renewed when the US and Saudis signed the similar Technical Cooperation Agreement in 2008, which got extended in 2013 until 2023. Which would suggest Treasury has a reason to show us the old-style debt holdings, but not whatever they have going on now.So in the interest of “transparency” (that is, in the interest of avoiding any panic as the Saudis threaten to dump US debt if we start releasing information the Kingdom’s role in sowing terrorism) Treasury has revealed the old-style arrangement, but not whatever is the core of what we’ve got going on now.
In other words, what Treasury’s so-called transparency actually tells us is the larger part of Saudi holdings (they threatened to dump $750 billion in US debt) are stashed somewhere even more secret than the original holdings. And they likely rolled out that even-more-secret stash in 2008, long after we knew they were sponsoring terrorism around the world.
Ben Wittes has started a series of posts on how to tyrant-proof the presidency. His first post argues that Jennifer Granick’s worries about surveillance and Conor Friedersdorf’s worries about drone-killing are misplaced. The real risk, Wittes argues, comes from DOJ.
What would a president need to do to shift the Justice Department to the crimes or civil infractions committed—or suspected—by Trump critics and opponents? He would need to appoint and get confirmed by the Senate the right attorney general. That’s very doable. He’d want to keep his communications with that person limited. An unspoken understanding that the Justice Department’s new priorities include crimes by the right sort of people would be better than the sort of chortling communications Richard Nixon and John Mitchell used to have. Want to go after Jeff Bezos to retaliate for the Washington Post‘s coverage of the campaign? Develop a sudden trust-busting interest in retailers that are “too big”; half the country will be with you. Just make sure you state your non-neutral principles in neutral terms.
There are other reasons to expect a politically abusive president to focus on the Justice Department and other domestic, civilian regulatory and law enforcement agencies: one is that the points of contact between these agencies and the American people are many, whereas the population’s points of contact with the intelligence community are few. The delusions of many civil libertarians aside, the intelligence community really does focus its activities overseas. To reorient it towards domestic oppression would take a lot of doing. It also has no legal authority to do things like arresting people, threatening them with long prison terms, fining them, or issuing subpoenas to everyone they have ever met. By contrast, the Justice Department has outposts all over the country. Its focus is primarily domestic. It issues authortitative legal guidance within the executive branch to every other agency that operates within the country. And it has the ability to order people to produce material and testify about whatever it wants to investigate.
What’s more, when it receives such material, it is subject to dramatically laxer rules as to its use than is the intelligence community. Unlike, say, when NSA collects material under Section 702, when the Justice Department gets material under a grand jury subpoena, there aren’t a lot of use restrictions (other than Rule 6(e)’s prohibition against leaking it); and there is no mandatory period after which DOJ has to destroy it. It has countless opportunities, in other words, to engage in oppressive activities, and it is largely not law but norms and human and institutional decency that constrain it.
I don’t necessarily disagree with the premise. Indeed, I’ve argued it for years — noting, for example, that a targeted killing in the US would look a lot more like the killing of Imam Luqman Abdullah in 2009 (or the killing of Fred Hampton in 1969) than drone killing of Anwar al-Awlaki in 2011 (given that Abdullah’s selling of stolen items got treated as terrorism in part because of his positive statements about Awlaki, it is not inconceivable FBI started infiltrating his mosque because of SIGINT).
My gripe (I have to have gripes because it is Wittes) is on two points. First, Wittes far overestimates how well the protections against abuse currently work. He seems to believe the Levi Guidelines remain in place unchanged, that the 2008 and 2011 and serial secret changes to the Domestic Investigations and Operations Guide since then have not watered down limits on investigations for protected activities. He suggests it was a good thing to use prosecutorial discretion to chase drugs in the 1990s and terrorism in the 2000s, and doesn’t consider why the rich donors who’ve done as much damage as terrorists to the country — the banksters, even those that materially supported terrorists — have gotten away with wrist-slap fines. It was not a good thing to remain obsessed with terrorists while the banksters destroyed our economy through serial global fraud (a point made even by former FBI agents).
We already have a dramatically unequal treatment of homegrown extremists in this country based on religion (compare the treatment of the Malheur occupiers with that of any young Muslim guy tweeting about ISIS who then gets caught in an FBI sting). We already treat Muslims (and African Americans and — because we’re still chasing drugs more than we should — Latinos) differently in this country, even though the guy running for President on doing so as a campaign plank isn’t even in office yet!
The other critical point Wittes missed in his claim that “delusional” civil libertarians don’t know that “the intelligence community really does focus its activities overseas” is that DOJ, in the form of FBI and DEA, is the Intelligence Community, and their intelligence focus is not exclusively overseas (nor is the intelligence focus of other IC members DHS — which has already surveilled Black Lives Matter activists — and Treasury). The first dragnet was not NSA’s, but the DEA one set up under Bill Clinton. One big point of Stellar Wind (which is what Wittes mocked Granick for focusing on) was to feed FBI tips of people the Bureau should investigate, based solely on their associations. And while Wittes is correct that “when the Justice Department gets material under a grand jury subpoena, there aren’t a lot of use restrictions (other than Rule 6(e)’s prohibition against leaking it); and there is no mandatory period after which DOJ has to destroy it,” it is equally true of when FBI gets raw 702 data collected without grand jury scrutiny.
FBI can conduct an assessment to ID the racial profile of a community with raw 702 data, it can use it to find and coerce potential informants, and it can use it for non-national security crimes. That’s the surveillance Wittes says civil libertarians are delusional to be concerned about, being used with inadequate oversight in the agency Wittes himself says we need to worry about.
Four different times in his post, Wittes contrasts DOJ with the intelligence community, without ever considering what it means that DOJ’s components FBI and DEA are actually part of it, that part of it that takes data obtained from NSA’s surveillance and uses it (laundered through parallel construction) against Americans. You can’t contrast the FBI’s potential impact with that of the IC as Wittes does, because the FBI is (one of) the means by which IC activities impact Americans directly.
Yes, DOJ is where President Trump (and President Hillary) might abuse their power most directly. But in arguing that, Wittes is arguing that the President can use the intelligence community abusively.
Reuters reports that, in the wake of criminals hacking the global financial messaging system SWIFT both via the Bangladesh central and an as-yet unnamed second central bank, SEC Commissioner Mary Jo White identified vulnerability to hackers as the top threat to the global financial system.
Cyber security is the biggest risk facing the financial system, the chair of the U.S. Securities and Exchange Commission (SEC) said on Tuesday, in one of the frankest assessments yet of the threat to Wall Street from digital attacks.
Banks around the world have been rattled by a $81 million cyber theft from the Bangladesh central bank that was funneled through SWIFT, a member-owned industry cooperative that handles the bulk of cross-border payment instructions between banks.
The SEC, which regulates securities markets, has found some major exchanges, dark pools and clearing houses did not have cyber policies in place that matched the sort of risks they faced, SEC Chair Mary Jo White told the Reuters Financial Regulation Summit in Washington D.C.
“What we found, as a general matter so far, is a lot of preparedness, a lot of awareness but also their policies and procedures are not tailored to their particular risks,” she said.
“As we go out there now, we are pointing that out.”
Of course, the criminals in Bangladesh were not the first known hackers of SWIFT. The documents leaked by Snowden revealed NSA’s elite hacking group, TAO, had targeted SWIFT as well. Given the timing, it appears they did so to prove to the Europeans and SWIFT that the fairly moderate limitations being demanded by the Europeans should not limit their “front door” access.
Targeting SWIFT (and credit card companies) is probably not the only financial hacking NSA has done. One of the most curious recommendations in the President’s Review Group, after all, was that “governments” (including the one its report addressed, the US?) might hack financial institutions to change the balances in financial accounts.
(2) Governments should not use their offensive cyber capabilities to change the amounts held in financial accounts or otherwise manipulate the financial systems;
Second, governments should abstain from penetrating the systems of financial institutions and changing the amounts held in accounts there. The policy of avoiding tampering with account balances in financial institutions is part of a broader US policy of abstaining from manipulation of the financial system. These policies support economic growth by allowing all actors to rely on the accuracy of financial statements without the need for costly re-verification of account balances. This sort of attack could cause damaging uncertainty in financial markets, as well as create a risk of escalating counter-attacks against a nation that began such an effort. The US Government should affirm this policy as an international norm, and incorporate the policy into free trade or other international agreements.
After which point, James Clapper started pointing to similar attacks as a major global threat.
I don’t mean to diminish the seriousness of the threat (though I still believe banksters’ own recklessness is a bigger threat to the world financial system). But the NSA should have thought about the norms they were setting and the impact similar attacks done by other actors would have, before they pioneered such hacks in the first place.
The other day Hillary promised she would appoint Attorneys General like Eric Holder and Loretta Lynch. “I will appoint an Attorney General who will continue the courageous work of Eric Holder and Loretta Lynch.” Given that the comments came at an Al Sharpton event, I assumed the comment meant to invoke Holder and Lynch’s efforts to reform criminal justice and, presumably, their even more laudable support for civil rights.
Nevertheless, it was a disturbing comment, given that Holder and Lynch have also both coddled the bankers who crashed our economy. Indeed, when Hillary tries to defend her huge donations from bankers, she always points to Obama’s even huger ones, and insists that there’s no evidence he was influenced by them. But the Obama DOJ record on bank crime is itself the counter to Hillary’s claim those donations didn’t influence the President.
But then, last night, Hillary said something even more outrageous, which I take to be a solid promise to her funders they’ll continue to get special treatment before the law. Amid a comment shifting from Too Big to Fail into the serial settlements the banks have signed for their crimes, Hillary took the bold step of calling for financial penalties for the people directing that crime.
CLINTON: Dana, let me add here that there are two ways to at this under Dodd-Frank, which is after all the law we passed under President Obama, and I’m proud that Barney Frank, one of the authors, has endorsed me because what I have said continuously is, yes, sometimes the government may have to order certain actions. Sometime the government can permit the institution themselves to take those actions. That has to be the judgement of the regulators.
But, there’s another element to this. I believe strongly that executives of any of these organizations should be financially penalized if there is a settlement.
CLINTON: They should have to pay up through compensation or bonuses because we have to go after not just the big giant institution, we have got to go after the people who are making the decisions in the institutions.
Granted, under Holder and Lynch, those courageous Attorneys General Hillary would model her own pick on, the banksters haven’t even been asked to do this much.
But the fact that Hillary thought a great punishment for those harming the country with their serial crime wave is to fine them is a testament that she doesn’t even see the underlying crimes.
This is behavior that has continued over years, often after previous settlements. If anyone can be called a super-predator, it’s the bankers who toy with millions of people’s livelihoods and savings to make a buck. If there were a Three Strikes law for bankers most of these guys would be looking at life imprisonment.
And yet Hillary’s bold plan is not to incarcerate them, but instead to take a little bit of their money.
Very thin reporting, according to the results. Canada, come on — Bill Cosby is bigger news than global corruption?
Ditto for India, which covered the HSBC money laundering scandal exhaustively last year. Very little coverage in that country’s English language outlets.
Don’t get all peeved off about the U.S. media, which hasn’t done a particularly good job over the last 24 hours. It’s not just us; the lack of coverage may say something about media ownership around the world.
One possible example on shore here: the acquisition of the Las Vegas-Review Journal last year. Nevada happens to be the eighth most popular tax haven in the world, and Las Vegas is its heart. Was this paper acquired in order to influence reporting in and about this topic?
Mossack Fonseca has a subsidiary in Las Vegas, by the way.
Let’s take a look at science and technology news…
To date, The Register hasn’t seen a strong presence from the tech sector in the staged release of the documents, perhaps because the “Double Irish Dutch Sandwich” tactic favoured in this business works without hiding companies’ links to their international associates.
The comments at that link are rather interesting, offering both a perspective from our overseas “cousins” as well as technical assessment about the leak.
That’s enough for your coffee break or lunch hour. Catch you here tomorrow morning!
Over the weekend, a bunch of media outlets let loose shock and awe in bulk leak documents, PanamaPapers, with project leaders ICIJ and Sueddeutsche Zeitung — as well as enthusiastic partner, Guardian — rolling out bring spreads on a massive trove of data from the shell company law firm Mossack Fonseca.
If all goes well, the leak showing what MF has been doing for the last four decades will lead us to have a better understanding of how money gets stripped from average people and then hidden in places where it will be safe from prying eyes.
Before I raise some questions about the project, I wanted to point to one of the best pieces of journalism I’ve seen from the project so far: this Miami Herald piece showing how its high end real estate boom has been facilitated by the money laundering facilitated by MF.
At the end of 2011, a company called Isaias 21 Property paid nearly $3 million — in cash — for an oceanfront Bal Harbour condo.
But it wasn’t clear who really owned the three-bedroom unit at the newly built St. Regis, an ultra-luxury high-rise that pampers residents with 24-hour room service and a private butler.
In public records, Isaias 21 listed its headquarters as a Miami Beach law office and its manager as Mateus 5 International Holding, an offshore company registered in the British Virgins Islands, where company owners don’t have to reveal their names.
Buried in the 11.5 million documents? A registry revealing Mateus 5’s true owner: Paulo Octávio Alves Pereira, a Brazilian developer and politician now under indictment for corruption in his home country.
A Miami Herald analysis of the never-before-seen records found 19 foreign nationals creating offshore companies and buying Miami real estate. Of them, eight have been linked to bribery, corruption, embezzlement, tax evasion or other misdeeds in their home countries.
That’s a drop in the ocean of Miami’s luxury market. But Mossack Fonseca is one of many firms that set up offshore companies. And experts say a lack of controls on cash real-estate deals has made Miami a magnet for questionable currency.
The story is deeply contextualized with localized reporting that goes beyond the leaked documents. And it can lead to policy changes — restrictions on cash real estate transactions — that can help to stem (or at least redirect) the flow of this corrupt money. You could tell similar stories from big cities around North America (this has been a particular focus in NYC and Vancouver). And with effort, cities could crack down on such cash transactions, with all the negative effects they bring to localities.
But much of the other reporting so far remains at the level of shock and awe. Biggest leak ever! Putin Putin Putin! And much of the reporting reflects not just editorial bias, but some apparent innumeracy (though no one has yet released the real numbers) to claim that people from evil countries are proportionally more corrupt than people from good countries like the UK.
Here’s how SZ describes how they got these documents.
Over a year ago, an anonymous source contacted the Süddeutsche Zeitung (SZ) and submitted encrypted internal documents from Mossack Fonseca, a Panamanian law firm that sells anonymous offshore companies around the world. These shell companies enable their owners to cover up their business dealings, no matter how shady.
In the months that followed, the number of documents continued to grow far beyond the original leak. Ultimately, SZ acquired about 2.6 terabytes of data, making the leak the biggest that journalists had ever worked with. The source wanted neither financial compensation nor anything else in return, apart from a few security measures.
Nowhere I’ve seen explains where this source got the documents.
For almost three years, we have openly debated what I consider a fair question: what was Edward Snowden’s motivation for stealing the NSA’s crown jewels and was any foreign country involved? People have also asked questions about how he accessed so much: Did he steal colleagues’ passwords? Did he join Booz Allen solely to be able to steal documents? I think the evidence supports an understanding that his motives were good and his current domicile an unfortunate outcome. And we know some details about how he managed to get what he did — but the key detail is that he was a Sysadmin in a location where insider detection systems were not yet implemented and credentials to have unaudited access to many of the documents he obtained. Those details are a key part of understanding some of the story behind his leaks (and how NSA and GCHQ are organized).
Somehow, journalists aren’t asking such questions when it comes to this leak, the Unaoil leak that broke last week, or the leak of files on British Virgin Isles have activity a few years back (which, like this project, ICIJ also had a central role in). I’m sympathetic to the argument that IDing who stole these documents would put her or him in terrible danger (depending on who it is). But I also think this level of description the Intercept gave — in the first paragraph of a story about stolen recordings of jailhouse phone calls that revealed improper retention of attorney client conversations — would be useful.
The materials — leaked via SecureDrop by an anonymous hacker who believes that Securus is violating the constitutional rights of inmates — comprise over 70 million records of phone calls, placed by prisoners to at least 37 states, in addition to links to downloadable recordings of the calls. [my emphasis]
The Intercept’s source, knowing of the problem, hacked recordings from an inadequately protected server.
As the Guardian’s own graphic makes clear, this leak dwarfs the leaks by Chelsea Manning and Hervé Falciani (the security engineer behind the HSBC leak). It probably dwarfs the Snowden leak (though oddly the Guardian, which had fingers in both, doesn’t include Snowden in its graphic). That ought to raise real questions about how someone could access so much more information than tech experts with key credentials working at the core of security in the targeted organizations could. And those questions are worth asking because if these files come from an external hacker — a definite possibility — than it ought to raise questions about how they were able to get so much undetected and even — as everyone felt appropriate to ask with Snowden — whether an intelligence agency was involved.
As with the BVI leak before it, thus far this leak has included no details on any Americans. Some have suggested that’s because the Panama trade deal already brought transparency on US persons’ activities through the haven of Panama, except these files go back four decades and. Americans not only used Panama as a haven before that, but the CIA used it as a key laundering vehicle for decades, as Manuel Noriega would be all too happy to explain if western countries would let him out of prison long enough to do so. Moreover, the files are in no way restricted to Panama (indeed, some of the stories already released describe the establishment of shell companies within the US).
Not only haven’t we heard about any Americans, but even for the close American friends identified so far — starting with Saudi Crown Prince and close CIA buddy Mohammed bin Nayef — the details provided to date are scanty, simply the name of the shell he was using.
Craig Murray has already been asking similar questions.
Russian wealth is only a tiny minority of the money hidden away with the aid of Mossack Fonseca. In fact, it soon becomes obvious that the selective reporting is going to stink.
The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”
What do you expect? The leak is being managed by the grandly but laughably named “International Consortium of Investigative Journalists”, which is funded and organised entirely by the USA’s Center for Public Integrity. Their funders include
Rockefeller Family Fund
W K Kellogg Foundation
Open Society Foundation (Soros)
among many others. Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished.
Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland. A superannuated UK peer or two will be sacrificed – someone already with dementia.
Now, in response to people like me and Murray and Moon of Alabama asking those questions, the SZ editor in charge of their side of the project promises dirt on Americans will be coming. Let’s hope so, because this is a worthwhile leak of data, and it would be unfortunate for Americans and Brits to be deprived of learning more about the corruption among their elite.
Back in December 2014, Ken Silverstein did a fairly thorough review of MF at Vice (though he worked at the Intercept at the time).
[A] yearlong investigation reveals that Mossack Fonseca—which theEconomist 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.
Documents and interviews I’ve conducted also show that Mossack Fonseca is happy to help clients set up so-called shelf companies—which are the vintage wines of the money-laundering business, hated by law enforcement and beloved by crooks because they are “aged” for years before being sold, so that they appear to be established corporations with solid track records—including in Las Vegas. One international asset manager who talked to Mossack Fonseca about doing business with them told me that the firm offered to sell a 50-year-old shelf company for $100,000.
If shell companies are getaway cars for bank robbers, then Mossack Fonseca may be the world’s shadiest car dealership.
Silverstein clearly had some documents, though there’s no indication he had the trove that started getting leaked to SZ and ICIJ in early 2015, just weeks after Silverstein’s story.
On Twitter, Silverstein suggested his story never got published because this was the period when the Intercept wasn’t publishing (I had something similar happen to me while there).
But given the close continuity between Silverstein’s story and SZ receipt of the first documents, are they part of the same effort?
These aren’t papers showing the corruption that flows through Panama (for that matter, neither did the BVI leaks show all the corruption that flows through BVI, and there’s a significant BVI aspect to this leak). Rather, they show the corruption flowing through a Panamian-based but global firm, Mossack Fonseca. Reporting on this tells us MF is only the fourth largest of these laundering specialists.
So, aside from the fact that few people have heard of MF, why are we calling this the Panama Papers and not “Here’s what the fourth largest of these companies is involved with”?
All of which is to say as huge as this leak is — which is good! — it’s still just a tiny fraction of what’s out there.
None of this is meant to undermine the importance of this leak or the reporting the team of journalists covering it. Indeed, the story already threatens to take down the Prime Minister of Iceland whose conflict of interest the files revealed. We should have more of these leaks, covering all the havens and shell-creators.
Just remember, as you’re watching the coverage, that we’re getting selective coverage of one particular corner of that industry (ICIJ has said something about releasing files in several months). By all means let’s go after the crooks this story exposes, but let’s remember the crooks who, for whatever reason, aren’t included in this one.
Update: Fusion, which is part of the data sharing, admits there are only 211 Americans identified in the stash, though thus far this is just from recent years (that is, the years that might be affected by the trade agreement).
International Consortium of Investigative Journalists (ICIJ) has only been able to identify 211 people with U.S. addresses who own companies in the data (not all of whom we’ve been able to investigate yet). We don’t know if those 211 people are necessarily U.S. citizens.
All that said, the very good experts (including Jack Blum, who’s as good on these issues as anyone) don’t have very compelling explanations why there aren’t Americans in the stash.
Update: McClatchy describes some of the 200-some Americans whose passports show up in the files. All the ones it describes have been prosecuted (though several got light punishments).
Aw, shucks. Spring Break is over just as I find another warm place to visit. The British Virgin Islands expect a balmy daytime high of 84F/29C degrees today with partly cloudy skies.
And a 100% chance of tax havens galore.
Blood’s in the water, though, stay ashore. You may hear a lot in the media today about the Panama Papers leak dump in which the BVI feature prominently. What you won’t hear much about: this is the second leak about tax havens in exactly three years.
Jack-doodly-squat happened after the first one in April 2013.
The UK’s PM David Cameron was pressed in 2013 to do something about BVI’s tax laws. He said he would work with the G8 to tackle tax evasion. Of course, we now know why he sat on his hands; he had highly-rewarding and substantial familial interest in doing nothing but continue his family’s tax avoidance scheme. And yet he still managed to get reelected last year, the corrupt pig fucker.
If governments had felt any pressure at all to do something corrective, there wouldn’t be a second wave of leaks, right? But the 1% have continued to milk profits from businesses, transfer the money offshore, and buy themselves enough politicians and corporate media to ensure things remained nice and cozy.
Color me skeptical that anything will come of investigations into tax shelters which are for the most part legal, thanks to pwned and compromised governance. But the unfolding story sheds new light on older ones.
Like the decade-plus work on tax havens and abusive tax schemes by the U.S. of Permanent Senate Committee on Investigations, which did not slow or stop the offshoring of capital. B-schools continue to teach offshore tax shelters as ‘A Good Thing’, right alongside ‘Taxes Are Bad’ — because the 1% have amassed enough money to make sure legislators and B-schools’ leadership stay bought.
How much do the Panama Papers leak materials overlap with the Swiss Leaks scandal, including India’s investigation into HSBC, money laundering and influence peddling, reaching into the UK and beyond?
Or a more recent story about hacked elections, including Argentina’s. Has laundered money acquired the services necessary to manipulate elections in order to ensure nothing would change in tax laws?
Perhaps the Panama Papers will offer a more cohesive picture of just how badly the 99% are being screwed, if nothing else.
Nothing else, that is, besides the No Confidence vote Iceland’s Prime Minister Sigmundur David Gunnlaugsson now faces after the Panama Papers revealed his financial interests in BVI.
It’s actually rather quiet on the technology front as I write this. I’ll add a few snippets later after caffeination.