Mossack Milking Varela Connection for own Benefit

The Panamanian government seems unable to sever its relationship with the principal partners of law firm Mossack Fonseca, which has been implicated in the creation of offshore companies allegedly linked with tax evasion and money laundering worldwide. The latest proof of this is an email address that lumps together the name of the law firm’s founding partner, Jürgen Mossack, with that of Panama itself.

In an image that flooded social networks yesterday, it transpired that the Panamanian Consulate in Frankfurt, Germany, used the following as their institutional email address: Panama@mossack.com. This seemed to bear a relationship with Mr. Mossack’s own brother, Peter Mossack, who happens to be Honorary Consult for Panama in the German city.

Multiple sources consulted by this newspaper unanimously agreed that this was no coincidence. International relations expert, Euclides Tapia, went on record as saying that this is yet another example of the close links that exist between the senior partners of the scandal-hit law firm and the current government. “They [Mossack Fonseca] are running the show in this country: they have consuls, ministers, and it is hardly surprising that they are leveraging their relationship with people in government to promote their private business. This email is just one of many examples. It is unfortunate for the country as a whole that the name of Panama appears to be used to promote the very law firm that has been implicated in the global offshore company scandal”, he claimed.

Political veteran Jorge Gamboa Arosemena echoes this view. According to the former panameñista party executive, “this email was a convenient funnel to collect business for the firm, via Mr. Mossack’s own brother”. Arguing that the Foreign Ministry should act immediately to remove him from his consular position, Mr. Gamboa Arosemena accused “the founding partners of the firm of exploiting their links with the Varela’s government shamelessly to line their own pockets”.

For her part, Maribel Cuervo de Paredes, a local lawyer and journalists, demanded that President Juan Carlos Varela explain “how does a private firm end up managing our Consulate in Frankfurt?”

Judicial Bias

This latest piece of evidence of the close link that appears to exist between law firm Mossack Fonseca and the government of Juan Carlos Varela has surfaced just as the spotlight is being shone on the Public Ministry’s handling of the Panama Papers affair. The PM has been heavily criticized from all corners of the country for blatantly failing to formulate a single charge against, let alone apprehend, anyone implicated in this case.

According to lawyers with knowledge of the case, the PM is faced with the arduous task of finding evidence of the damaging claims made by the International Consortium of Investigative Journalists (ICIJ) in relation to the creation of offshore companies allegedly employed in tax evasion and money laundering schemes. Experts agree that the Attorney General’s office has as so far failed in their task of gathering evidence, in spite of all clues of illicit activities provided by the barrage accusations published against Mossack Fonseca.

In the opinion of Angel Calderon, former prosecutor as well as former director of the Panamanian Penitentiary System, the PM’s manner of investigating the law firm belonging to former ministerial advisor and personal friend of President Juan Carlos Varela, Ramon Fonseca Mora, has evidently shown the selective use and application of justice in Panama. Mr Calderon points to the preventive detention of former government officials, who have seen their assets confiscated, in relation to much lower-profile cases. In the current case, the PM has moved in a manner as to find a convenient scapegoat, should it fail to produce the results that the international community expects: “the time it took for the PM to launch an investigation was uncommonly long – long enough for incriminating evidence to be removed from sight”.

Victor Orobio, a local penal lawyer, echoes the same view: “people in Panama are upset at the length of time it took the PM to launch an investigation. A week went by before they got the investigation into the law firm started – this should have happened much faster, without so much beating around the bush”. In his view, the prosecutor in charge of this case, Javier Caraballo, faces an “uphill struggle in finding proof that the law firm was complicit in incorporating offshore companies used in money laundering schemes”. He went on to add: “they [Mossack Fonseca] know that the PM will likely fall short in their efforts to incriminate them, and that it will be difficult to establish punishable deeds”.

As part of the initial inspections of the office of Mossack Fonseca in Panama, it emerged that the firm stored its information in over 100 virtual servers, as well as physical ones. Attorney General Kenia Porcell has defended the actions of the PM, stating that “the claims of illicit use of offshores are being investigated”, while adding that “in Panama, tax evasion is not a criminal act”.

Exchange of information

Panamanian Foreign Minister Isabel de Saint Malo de Alvarado, who is also the Vice-President of the country, confirmed that Panama had already committed to cooperating immediately with an OECD scheme that envisages the implementation of a bilateral, automatic exchange of information mechanism, in an effort to fight tax evasion globally.

OECD Secretary General, Angel Gurria, announced the measure on Thursday in Washington, DC, during a press conference convened by the G5. The supra national body is working on a plan to uncover the identity of final beneficiaries of offshore companies allegedly employed to shelter wealth from the reach of the taxman.