The name “John Doe” often appears in legal thrillers, assigned to an unknown corpse or a surprise witness whose identity cannot be revealed in a sensitive trial. In early 2015, it was used when an electronic message was sent to a German journalist: “Hello. This is John Doe. Interested in data? I am happy to share.” Nobody knows the identity of this John Doe. Nevertheless, his communication launched one of the most important journalistic investigations so far of this century. He went on to send almost unimaginable quantities of data to Bastian Obermayer, a journalist at the German newspaper Süddeutsche Zeitung.
The information concerned an obscure Panama-based law firm. Hitherto, attempts to find out much about Mossack Fonseca had run into a brick wall. Now the company’s internal workings were exposed. It emerged that its services had benefited criminals, dictators, prime ministers, sportsmen and aristocrats. The leak eventually amounted to no fewer than 11.5 million documents and included the records of 214,000 offshore companies, as well as the names of their real owners. No comparable breach of financial secrecy had ever occurred before.
The volume of data was so vast that Süddeutsche Zeitung contacted the International Consortium of Investigative Journalists (ICIJ). At the height of a year-long investigation, more than 400 journalists from about a hundred media organisations (including the Guardian and the BBC) were processing the Mossack Fonseca material. Their collective, painstaking work has given us a glimpse of a world that we knew existed but was kept hidden. Bastian Obermayer and Frederik Obermaier, the authors of this powerful, lucid book, show us how the very rich hide their money. Some break the law. Many are financially successful but morally worthless: ready to take from society but not to pay their dues. This is a world of profound selfishness, riddled with criminality.
Jürgen Mossack, the firm’s co-founder, is the son of a Nazi who, godfathered by the CIA, emigrated to Panama not long after the Second World War. The younger Mossack formed an alliance with a politically well-connected Panamanian lawyer (and award-winning novelist), Ramón Fonseca Mora. Together, they built up a business providing financial and legal services to overseas clients. It specialised in setting up shell companies that guaranteed impenetrable secrecy. The book shows how Mossack Fonseca fabricated dummy owners for offshore shell companies, presumably to make concealment still more thorough. One scheme reportedly involved a 90-year-old Briton masquerading as the owner of a company belonging to a US businesswoman.
Mossack Fonseca’s clients included serving heads of government and their numerous relatives and hangers-on. The Panama Papers contain the names of President Khalifa bin Zayed al-Nahyan of the United Arab Emirates, King Salman of Saudi Arabia, President Petro Poroshenko of Ukraine and Sigmundur Davíð Gunnlaugsson, the hapless prime minister of Iceland who at least had the decency to resign immediately after the papers became public.
Mark Thatcher, Margaret Thatcher’s appalling son, is on the list. Sadly, so is Kojo Annan, son of Kofi Annan, as are the children of Azerbaijan’s president, members of the Spanish royal family, and relatives of the prime ministers of Pakistan and Malaysia. David Cameron’s late father, Ian, was another client of Mossack Fonseca, which is why the Prime Minister was dragged into the controversy. Whatever the rights and wrongs of Ian Cameron’s dealings with the firm, I feel sympathy for the Prime Minister for turning up in such company. His involvement was trivial and there is no evidence that he was involved in tax evasion.
There is nothing illegal about having an offshore account in Panama or anywhere else and Mossack Fonseca insists that it is scrupulous about whom it does business with. However, the authors claim: “we have numerous examples of how exception after exception is approved, for example whenever a valued client doesn’t wish to disclose the name of the true owner.”
They also note that “Mossack Fonseca has a tailor-made solution for virtually anyone with something to hide” and quote Nicholas Shaxson, the author of Treasure Islands, the essential guide to British tax havens:
Offshore is not only a place, an idea, a way of doing things, and a weapon of the financial industry. It is also a process:
a race to the bottom to where the rules, laws and outward signs of democracy are worn away little by little.
Obermayer and Obermaier point out that multinationals such as Amazon, Starbucks and Apple are only able to minimise their tax bills thanks to offshore companies. They add that organised crime “makes use of the offshore industry just as much as fraudsters and criminals acting individually, using it to erase its tracks and conceal its crimes”.
Crucially, they offer a solution, claiming that it would be relatively easy to deal with the problem with two measures: global exchange of information about bank accounts, and a transparent register listing the real owners of shell companies (and making it a criminal act to publish false information). These developments would put an end to organisations such as Mossack Fonseca. Doubtless those who run tax havens (and the very rich people who use them) would strongly object, but the authors assert that they would give in at once if threatened by a trade boycott or punitive sanctions.
It makes perfect sense but, unfortunately, the political will to take these measures does not yet exist. David Cameron, who claims to be concerned about international corruption, has shown no serious determination to confront the problem. This may reflect the fact that many British overseas territories and dependencies – for instance, the Channel Islands, Virgin Islands and Cayman Islands – are up to their necks in offshore trusts and shell companies. The book reports that Mossack Fonseca has incorporated more than 100,000 companies in the British Virgin Islands alone.
Reading Martin Williams’s Parliament Ltd alongside The Panama Papers may feel like straining at a gnat after swallowing an especially ugly camel. Williams does not expose the secret bank accounts in which dictators stash their ill-gotten gains. Instead, he examines the relatively limited and trivial corruption of the British political system. Yet this does not imply that his work is lacking in importance. Williams, who reports for Private Eye and the Guardian, has made a diligent investigation into how politicians have turned British democracy into a small-scale racket.
The strongest section of his book demonstrates the confusion between the public role of MPs and their private interests. Williams reveals that 99 British politicians have links to a tax haven, including two out of the six Tory MPs who sit on the powerful back-bench Treasury committee. No wonder Britain has been so feeble at combatting tax avoidance. He discloses that 30 per cent of MPs are landlords, against a national average of 2 per cent. So it comes as no surprise to learn that in January this year, 72 MPs, each of whom earned at least £10,000 a year from tenants, ganged up to block a new law that would legally require homes to be “fit for human habitation”.
Again and again he catches out MPs and peers who fail to be transparent about their personal dealings. In one example, Baroness Susan Greenfield made a speech on the benefits of commercialising universities. He discovered that she had not declared her financial involvement in Tekcapital, one of whose slogans is “Helping clients profit from university intellectual property”. Williams asks the baroness why the interest wasn’t declared. She blames a “misunderstanding on my part”. And that is the end of the matter. There is a troubling lack of concern inside parliament about such infractions (and he documents many). This part of his book appears immaculately researched. I know from long experience that the only way to expose such behaviour is through hard work and scrupulous care.
It has become fashionable in recent years to mourn “the death of journalism”. There are fewer newspapers, less resources, less money available and many fewer actual journalists. These two books, in different ways, show that the craft still flourishes. They are a powerful reminder that reporters can serve the public good. There has been a surge of sympathy in favour of MPs since the murder of Jo Cox. She was indeed exemplary but her memory should not be abused to protect British parliamentarians who do not share her very high standards. Many countries (not excluding Britain) are wholly or partly governed by a self-serving political class that is intent on enrichment. In many places, opposition and governing parties mirror each other’s corruption. Consequently, there is no reliable political mechanism to expose bad conduct.
Too much of politics has become a short wait on the platform for the gravy train: and so, all politicians can have an interest in protecting a bent system. In such circumstances, only clear-sighted, courageous reporting can hold them to account. These books perform that honourable function. They should make journalists proud – and may even help to make the world a better place.
Peter Oborne is the author of “The Rise of Political Lying” (Simon & Schuster) and “Not the Chilcot Report” (Head of Zeus)