Bastian Obermayer

This book should change our lives. The expose of offshore finance and the 'grey economy' is appalling in its breadth and depth. An anonymous source leaked documents to two journalists from the SudDeutsche Zeitung newspaper, who in turn, raced to bring this shocking tale to print. As a consequence the narrative lacks a little finesse and can appear repetitive and mechanical, but considering the risks they took to their own personal security in bringing these crimes to the surface, it's almost show more pedantic to criticize a few lapses in structure. The complicity of ordinary banks in facilitating the theft of billions is meticulously documented. As our society becomes more extremely polarized between rich and poor, The Panama Papers should be a wake-up call for us all; these are our billions, and they have been stolen from us by those whose greed is difficult to comprehend. Unless, and until, we start to demand that the wealth of our nations is more equitably shared, these crimes become normalized, and we accept them as the natural order of things. How much is enough? This thought-provoking book sets out in detail how these crimes are committed, and what we can do to stop it. I salute the author, other journalists and our anonymous source for persevering and casting a harsh light on the rich and powerful. Highly recommended
I received an advance copy of The Panama Papers as a part of LT's Early Reviewers program in exchange for an impartial review. show less

This book exposes a murky world where the supposed pillars of our societies (world-wide) are avoiding paying their fair share of tax whilst free riding on the working classes. What I found especially alarming were the estimates of the total value of wealth salted away in these tax havens. Variously estimated at 8% of total world wealth where the richest 1% now control more wealth than the rest of the world combined. And tax is not being collected on 6% of world wealth. As the authors say, show more this has resulted in a parallel world where the ultra-wealthy have the option of whether they pay tax at all. It means that much of this money is not being invested in productive activities where it could generate greater wealth, and it is leading to increasing inequality in countries world-wide. Increasing inequality is closely linked with unstable governments, crime and a lack of social cohesion. I find myself thinking that although much of this seems to be legal it is not moral. And systems need to be changed so that those actually evading their taxes and all those assisting them in the enterprise should be “called out” as pariahs in society. A spotlight should be continually shone on their activities and there should be penalties such as sanctions against their movement, purchase of assets, and participation in society. Clearly the tax laws of countries need to be upgraded and withholding taxes or “apparent wealth” taxes applied. And we should not lose sight of the immorality of tax lawyers and accountants and their firms such as Mossack Fonseca in this role. Without them, none of this concealment could take place.
And the nations of the world maybe need to start taking a harder line with the various tax havens, like Panama, which make these sorts of activities possible. They are equally culpable. Though I guess they would argue that they have limited economic options open to them and they are not the people moving funds around etc.....though I find this rather ingenuous.
What I did find especially alarming is that although the Panama papers exposed a lot of what was going on in Panama with one firm. This is just the tip of the iceberg and there are many firms like this. Moreover, Putin’s money hiding activities were highlighted but it has not made one iota of difference to his activity. And the same seems to be the case for all the other ultra-wealthy individuals.
I’ve recently read “Taxtopia” which is pretty much about the same sort of activity ......though not necessarily with the ultra-wealthy. Many of these people were simply "extremely" wealthy! The book does point out that there are some hefty charges associated with hiding all this wealth and one has to wonder how much better off the world might be if these funds could be gainfully invested? What seems to be missing in this particular book is some remedy for redressing the situation. It seems to be a case of “Shock! Horror” ....”look what’s going on!” But no recommendations to fix it.
Still, A fascinating read. I was transfixed as well as appalled. And this is just from reading it in the Blinkist summary version and my review is just based on this summary. I’ve included some extracts from the book below which capture some of the essence from my perspective.
“A Berlin Journalist was contacted anonymously and supplied with a huge trove of papers. Threading through these disparate documents was a single name: Mossack Fonseca, a Panamanian law firm few had heard of, but whose fingerprints seemed to be everywhere.
Obermayer quickly realized he was holding what would become the largest data breach in journalistic history–11.5 million documents and a staggering 2.6 terabytes of data.
revealing an intricate web of hidden wealth and financial secrecy on an unprecedented scale.
What followed was extraordinary: a secret year-long collaboration among 400 journalists across 80 countries, working to untangle a web of 214,000 offshore companies. The investigation was dubbed the Panama Papers
The documents laid bare how the global elite moved billions through hidden accounts, evading taxes and scrutiny.....It was a watershed moment in the fight for financial transparency....[Though, my impression is that it’s still pretty much business as usual for the ultra wealthy].
Layers of deception
At the heart of this system sits Panama. In 1903, it gained independence from Colombia largely thanks to American bankers and industrialists who persuaded President Theodore Roosevelt to back Panamanian separatists....For nearly a century afterward, the American flag flew over the Canal Zone, until its return to Panama in 1999......But the real key to Panama's offshore empire came in 1927 with the passage of Law 32. [Presumably, whilst still under US Administration]. This legislation, still largely intact today, guaranteed absolute secrecy for estates, money transfers, and company ownership.
Enter Mossack Fonseca....Their specialty is a three-layer protection system that would make a Cold War spy envious.
1. The first layer consists of nominee directors......These individuals, often Mossack Fonseca employees, serve as the public face of thousands of companies, blindly signing whatever documents are placed before them.
2. Then there's a second layer: nominee shareholders. These can be either individuals or other shell companies who hold shares in trust, creating yet another screen between the company and its true owners.
3. The final touch is what are called bearer shares-physical paper certificates that convey ownership of the company to whoever holds them. No records, no traces, just old-fashioned pieces of paper that can change hands as easily as cash. The sheer power of bearer shares is illustrated by one German billionaire's predicament in the late 1990s. When he misplaced his bearer share certificate for his Bahamas-based company-he effectively lost ownership of a yacht, real estate holdings, and a complex web of international assets. [One can only think that Karma was at work].
The Panamanian government, far from being troubled by this industry, has embraced it.
Financing a dictatorship:.......An intricate web of shell companies was functioning to service Syria's ruling class. At the center was Rami Makhlouf, President Bashar al-Assad's cousin and primary financier. As the richest man in Syria, Makhlouf controlled everything.....But Makhlouf's wealth wasn't built on mere business acumen.....According to U.S. authorities, he used intimidation and his regime connections to build his empire.....His brother Hafez, who ran a notorious Damascus torture facility, maintained his own shell companies through Mossack Fonseca until at least 2013. Another brother, Ihab, used the firm to manage his Syriatel interests. Through shell companies like Maxima Middle East Trading Co., the regime arranged oil deliveries and aviation fuel transfers, circumventing international embargoes.
Perhaps most striking was Mossack Fonseca's response when confronted. "We DID NOT KNOW.......Yet internal emails told a different story......Its founder, Jürgen Mossack, was the son of a former Nazi Waffen-SS member who later became a CIA informant before settling in Panama.....Like father, like son-both demonstrated a remarkable flexibility when it came to choosing business partners.
The Syria revelations highlighted a truth about the modern world: dictatorships don't survive on force alone. They require a sophisticated financial infrastructure
The story of Sergei Roldugin, a Russian cellist and Putin's friend and confidant. The Panama Papers revealed Roldugin was linked to a vast financial web......He orchestrated the movement of approximately two billion dollars.....Behind these transactions stood Rossiya Bank, established in the early 1990s. Known informally as "Putin's bank," it served as the operational center for the network. Its employees had signing authority over Roldugin's companies, despite the official paperwork showing Swiss law firms in control.....When the United States sanctioned Rossiya Bank in 2014 during Russia's intervention in Ukraine, Putin himself ordered state support to protect it......The investigation exposed Roldugin's network as central to Putin's financial operations. Through it flowed profits from strategic state assets, including shares in KAMAZ (which supplied military vehicles for operations in Ukraine and Syria) and automobile manufacturer Lada........all controlled by a cellist who claimed he had no millions to his name....All evidence pointed to a sophisticated system for moving billions in state resources into private hands.
For most people, paying taxes is inevitable. But by the late 20th century, the world's ultra-wealthy had built something remarkable: a parallel financial universe where even that certainty could be optional.........Economist Gabriel Zucman estimates that 5.9 trillion Euros, or roughly 8% of global wealth, now resides in tax havens. On three-quarters of these assets, not a cent of tax is paid.
The annual costs alone-combining service fees, legal expenses, Swiss banking charges, and complex transfer mechanisms-make offshore structures practical only for those with significant assets.........More than 50 billionaires from Forbes' list of the 500 wealthiest people used Mossack Fonseca's services-and the company represented just one firm in a crowded marketplace. Old European nobility appears alongside tech money, with members of the Habsburg, Stauffenberg, and Bismarck families using the same structures as Silicon Valley billionaires and Middle Eastern sheiks.
According to Oxfam, the result is stark: the richest 1% now control more wealth than the rest of the world combined......This parallel financial system has effectively created two different sets of rules: one for ordinary citizens who must comply with standard tax obligations, and another for the ultra-wealthy who can choose when, where, and whether to pay.
It isn't just about money, the authors argue, it's about the fundamental principle of equal treatment under law that democracies depend on.......Offshore tax havens represent a systematic transfer of wealth and power from poor to rich.
Final summary.....The impact was far-reaching. The raid and arrest of Mossack Fonseca's founders in 2017, followed by the firm's closure in 2018, showed that journalism can still hold power to account. But the broader system of offshore finance continues to facilitate tax evasion and inequality on a massive scale”.
What’s my overall take on the book? Both fascinated and appalled! That, plus really annoyed that this activity is going on world wide and robbing the bulk of honest tax-paying individuals by dumping all the costs of societal infrastructure etc. on them. I give the book five stars. show less

Despite the very real continuing abuses born of anti-Semitism, born of racism and sexism and homophobia, there are MPs and leaders who are female, Jewish, black or gay. There are none who are poor. There never have been, and there never will be.
—Alan Moore, Jerusalem

Bastian Obermayer and Frederik Obermaier (not related) must have thought all their Christmases had come at once when the Panama Papers data landed in their lap. At some 2.6 terabytes of information, it dwarfed previous data show more breaches – it's about 100 times the size of all documents ever released by Wikileaks, for example. How do you even start with that mountain of information?

What in fact they did was form a kind of global working group, pulling in journalists from 107 different media companies in eighty countries – and even then they spent more than a year going through the data before publishing.

The data was leaked from a Panamanian company called Mossack Fonseca, which specialises in setting up anonymous shell companies. These shell companies aren't illegal in themselves, but they're easily used to hide money from the authorities, which means they can be a way of evading taxes or – even more dangerously – of bypassing international sanctions. Mossack Fonseca's client list included heads of state, CEOs, African warlords, child rapists and everything in between, and the company was virtually indiscriminate in who they would happily do business with.

The mechanics of how this money is kept hidden and kept anonymous are interesting, but the real takeaways are fairly simple. People who have a very great deal of wealth often simply don't bother paying taxes on most of it; they live in a world which has completely different rules, and governments who try to pursue them will soon find themselves under pressure from banks, multinationals, and the super-rich – what the Swiss campaigner Jean Ziegler calls ‘the world dictatorship of globalized financial capital’.

The offshore system is therefore doubly detrimental. On the one hand, it is used to directly finance some of the most dangerous and destructive people in the world: it poses, as the Brothers Obermay/ier put it, ‘an existential threat to millions of people’. And on the other hand, it is the driver for a kind of neofeudal redistribution of money – in Nicholas Shaxson's words, the ‘biggest force for shifting wealth and power from the poor to the rich in history’.

What struck me most forcefully was something that was not even really spelled out, it's so obvious: that so many of the people in power are so very rich. The problem is not just that some of our leaders are bad or immoral – it's that all of them have great wealth combined with a stream of opportunities to cheat the system.

It is tempting to nod cynically over these revelations, but this is, I think, just another form of complaisancy. Anger is better. Cynics would also do well to note how, despite fears over ‘mainstream media’, there are still hundreds of newspapers and broadcasters that will devote enormous time and resources to investigations like this, even when they contain damaging information about their own proprietors (which was sometimes the case here). But they depend on a public response.

And in this case, there was a response – the Icelandic premier was forced out, Spanish ministers resigned, and a string of scandals and new legislation was generated across Europe, Asia, and the Americas. (Mossack Fonseca themselves very sadly had to close down earlier this year, after suffering the ‘economic and reputational damage’ they so richly deserved.)

Of course, Mossack Fonseca was only one of many similar firms. But the tone is welcome: there are possible solutions, there are angles of attack, and The Panama Papers spells them out. This book manages to give you an unprecedented insight into what we're up against, but it doesn't neglect to show that there are still a few ways, at least, to envisage making a real change. show less

I really wanted to like this book. Unfortunately, for me it simply raised many more questions than it answered. Ostensibly, the book is an attempt to let readers know how the authors, journalists at Süddeutsche Zeitung, a major newspaper based in Munich, Germany came to be in the possession of 2.6 terabytes of data from a Panamanian law firm Mossack and Fonseca. This law firm is accused of setting up shell companies for well known politicians, wealthy individuals and, in some cases, known show more criminals. While the author points out that it is not illegal to own a shell company, the case made in this book is that Mossack and Fonseca did not follow established practices of due diligence in order to weed out risky clients. It appears from the data presented in the book that Mossack and Fonseca cared very little about the process of due diligence and they were not concerned whether their clients were high risk individuals or what their motives were for creating shell companies.

One of the first things that disturbed me about this book is the fact that the journalists were associated with an organization entitled International Consortium for Investigative Journalists, based in Washington, D.C.. One of the main financial contributors to this organization is the billionaire George Soros, himself no stranger to controversy. But nowhere in this book are we assured that Mr. Soros is not also a beneficiary of such legal constructs. Something which I would have expected. The source of the data leak is simply referred to as John Doe. The fact that I have no idea who the source is or was, makes me very weary about receiving all this information and taking it at face value. Throughout the book, I was wondering who this person could be and what his motives were.

Finally, at the end of the book John Doe provides some answers to these questions. He tells the reader that he is not working for any government or intelligence service or as a contractor for either. Yet, I wonder throughout the book why there are so few American individuals and corporations mentioned. John Doe further informs the reader that although he feels something should be done to stop people using shell companies to evade taxes and to stop law firms like Mossack and Fonseca from providing cover for these people, he is too afraid to reveal his identity, for fear that it might ruin his life. Somehow the fact that he wanted to have his cake and eat it too, just annoyed me. It seems alright for him to pass judgment on all the people he exposes but neither they nor the reader of this book can do so regarding him and his use of, what is after all, stolen data.

Also, I have a problem with the fact that both John Doe and the authors who interpret the data condemn the actions of wealthy individuals and politicians for using the services like those provided by Mossack Fonseca but they themselves have no problem stealing the data and then using it to create a book that can be published and sold to the public, thereby generating revenue for themselves and others.

On a more mundane level, I found the book somewhat repetitious as it kept coming back to the same individuals and companies over and over. For those who follow international news regularly there seems little of note to be found in this book.

Thanks to Library Thing and One World Publications for allowing me to read this book in exchange for an honest review.
More reviews at: www.susannesbooklist.blogspot.com show less