Panama Papers: Have people been caught for simply hiding their piggy banks at Johnny’s house in Panama?


Abhishek G Bhaya

Imagine this: There’s been a data breach in your bank. Confidential details of your hard-earned deposits, savings, insurance policies and other investments, loans and even your communications with the bank manager regarding waiver of penalty on a bounced cheque is made public.

How would you react?

That’s not the end. It so happens that your bank’s clients’ list includes a few notorious elements. Even worse, your name figures in media reports alongside these individuals – some of them known crooks, others with dubious reputations. The reports suggest the possibility, not certainty, but possibility of alleged misuse of the bank’s services by some of its clients in committing illegal financial transactions and investments to evade or avoid taxes.

Now, you have never indulged in any such illegal acts, but your name is tagged along with all the other names available in public. You are a client of the bank, therefore you are a suspect.


Hold your breath. Much worse, the government has now announced a probe into all the available data from the bank. You could very well be at mercy of the tax sleuths for next several years before you come clean. In the interim, you would end up spending a substantial amount of your time, energy, resources and of course money into an affair that was not really of your own making.

In case you are wondering, where I am leading you to? This sums up the agony of thousands of high net worth clients of Mossack Fonseca, who may have employed the services of the Panamanian law firm for legitimate investments, but who now find themselves in a global crossfire post the Panama Papers leak.

Global storm

On Sunday, the Washington-based International Consortium of Investigative Journalists (ICIJ) published a massive leak of documents, dubbed the Panama Papers. The leak was described by Edward Snowden, the source of the 2013 leak of NSA’s global surveillance programme, as the “biggest leak in the history of data journalism” in a Twitter message.

The 2.6 terabyte data includes 11.5 million confidential documents with references of about a dozen current or former world leaders and their associates and more than hundred other politicians and public officials and their relatives from nearly 50 countries. These documents also include details of prominent businessmen, sportstars, celebrities and actors.

Those named include Russian President Vladimir Putin’s associates, Chinese President Xi Jinping’s relatives, British Prime Minister David Cameron’s late father and stars such as Argentine footballing great Lionel Messi, Bollywood legend Amitabh Bachchan and his actor daughter-in-law Aishwarya Rai Bachchan and Hong Kong filmstar Jackie Chan.

The Panama Paper leaks have created quite a storm globally. Governments and the media world over have reacted in frenzy.

On Tuesday, Iceland’s Prime Minister Sigmundur David Gunnlaugsson resigned, becoming the first casualty of the global scandal. Several countries including India have ordered probe into the revelations.

Celebrities – easy targets?

While there are valid reasons for concern over illegal money laundering through offshore investments, I question the way media, not just in India but globally, have painted everyone with the same brush.

Strictly sticking to the Indian context, sample these two headlines and intros from the Indian Express (which was the Indian partner organisation with ICIJ for The Panama Papers Project):

HEADLINE: Indians in #PanamaPapers list: Aishwarya Rai, Amitabh Bachchan, KP Singh, Iqbal Mirchi, Adani elder brother
INTRO: Biggest leak of over 11 million documents of Panama law firm features over 500 Indians linked to offshore firms, finds 8-month investigation by a team of The Indian Express led by Ritu Sarin, Executive Editor (News & Investigations).

Note the inclusion of the late Mumbai ganglord Iqbal Mirchi in the headline. Add to that the reference of an elaborate investigation in the intro, and the premise is set for presumption of guilt, that is increasingly becoming the trademark of reporting these days. (We witnessed that in the vitriolic media campaign against Kanhaiya and JNU on the basis of fake videos).

So what if their names appear in Panama Papers? Is that enough to cast aspersions on their financial integrity? What is the crime committed?

Then there was another report, with the following headline and intro:
HEADLINE: From From director to shareholder: ‘Shorten name from Aishwarya Rai to A Rai for confidentiality’
INTRO: The Indian Express accessed MF documents which show that Rai, her father Kotedadi Ramana Rai Krishna Rai, mother Vrinda Krishna Raj Rai and brother Aditya Rai were appointed on May 14, 2005, as directors of Amic Partners Limited – with an initial authorised capital of $50,000.

The point I am trying to make here is that nothing that is mentioned in the reports in itself a proof of any crime or illegality. Private individuals may choose to be discreet in their financial dealings, and if the law provides for shortening of name to that purpose, it’s not shady, as is made to appear in the headline.

Also I see no reason why a celebrity’s family members’ appointments as directors in a private firm should raise an eyebrow.

Isn’t it true that, barring Iqbal Mirchi, the names were chosen merely because they were celebrities or prominent businessmen and therefore high-value target for the media, always in the hunt for sensational headlines? Was there any effort made on part of the ‘investigative’ journalists to find out if their dealings were genuine or fraudulent?

Just because documents from a legal firm got leaked and you have easy access to the financial details of public figures and celebrities, is it wise and ethical to publish the information without verifying the legitimacy of those investments?

The Panama Papers have not been able to establish the crime of the individuals it has named, it has only made everyone suspect even without being sure if any crime indeed has been committed.

It is worth noting that even ICIJ while releasing the Panama Papers maintains that “offshore financial dealings are not illegal in themselves, though they may be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.”

Even the crime is hypothetical in this case.

Anonymous source

Moreover, the vast stash of records from Panama’s Mossack Fonseca law firm was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with more than 100 media groups by ICIJ.

“The anonymous source claimed to be concerned about what he or she saw in the documents. Of course, the documents started as a trickle but turned into a flood, a torrent in the end,” said ICIJ director Gerard Ryle. “The person claimed that their life was in danger if they ever became known as the source of this material because of course there are so many powerful people that are being revealed here.”

“There are a couple of conditions. My life is in danger, we will only chat over encrypted [lines]. No meeting ever,” the anonymous source apparently told Süddeutsche Zeitung journalist Bastian Obermayer.
Obermayer said the source decided to do it because they thought Mossack Fonseca was behaving unethically. “The source thinks that this law firm in Panama is doing real harm to the world, and the source wants to end that. That’s one of the motivations,” he said.

Hundreds of media organisations around the world have chosen to publish the data offered by this anonymous source. They must have applied their judiciousness, however the ethics could still be debated.
Could you take an anonymous source at face value? What could have been the real motive? Are Russia and China right in seeing a Western propaganda in Panama Papers? These questions are needed to be asked and eventually answered.

‘A crime, a felony’

One of the Panama law firm’s founders, Ramon Fonseca, contended that the leaks themselves were “a crime, a felony” and “an attack on Panama”.

In a statement issued on Monday, Mossack Fonseca said:

“Our industry is not particularly well understood by the public, and unfortunately this series of articles will only serve to deepen that confusion. The facts are these: while we may have been the victim of a data breach, nothing we’ve seen in this illegally obtained cache of documents suggests we’ve done anything illegal, and that’s very much in keeping with the global reputation we’ve built over the past 40 years of doing business the right way, right here in Panama. Obviously, no one likes to have their property stolen, and we intend to do whatever we can to ensure the guilty parties are brought to justice. But in the meantime, our plan is to continue to serve our clients, stand behind our people, and support the local communities in which we have the privilege to work all over the world, just as we’ve done for nearly four decades.”

Also, Firm co-founder Ramon Fonseca Mora told CNN that the information published is false and full of inaccuracies and that parties ‘in many of the circumstances’ cited by the ICIJ ‘are not and have never been clients of Mossack Fonseca’.

Witch-hunt must stop

Tax havens are called so due to valid reasons. They offer benefits on investments that other nations do not. Most of these businesses are conducted legally and under international scrutiny. Dealings which may appear illegal in other countries aren’t illegal in tax havens such as Panama, British Virgin Islands or closer home, Mauritius.

No doubt some underhand dealings are carried out illegally. Only such illegal acts shall be exposed by the media.

However, one must realise that foreign investments can be perfectly legitimate if all the applicable domestic and international laws are followed. Same with deposits in foreign banks. Media must keep that distinction in mind before painting everyone with the same brush.
At a time of heightened sensationalism, media needs to be more circumspect in what they publish so that the reputations of people who may have been going about doing their businesses legally aren’t tarnished. If you name an individual, you must be able to identify the illegality s/he may have conducted.

What is the rationale behind hunting down individual financial investments and confidential communications in that regard and making them public? Unless a larger public good is served, media has no business scrutinising private investments and making them public just because the individuals happen to be celebrities. This witch-hunting must stop.
Being rich and famous after all is not a crime.

The piggy-bank analogy

I came across this very unique analogy by Reddit user DanGliesack which explains how tax havens such as Panama operate:

When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.
Now one day, you might decide “I don’t want mom to look at my money.” So you go over to Johnny’s house with an extra piggy bank that you’re going to keep in his room. You write your name on it and put it in his closet. Johnny’s mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.
Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny’s house with extra piggy banks. Now Johnny’s closet is full of piggy banks from everyone in the neighborhood.
One day, Johnny’s mom comes home and sees all the piggy banks. She gets very mad and calls everyone’s parents to let them know.

Now not everyone did this for a bad reason. Eric’s older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people’s lunch money and didn’t want his parents to figure it out. Michael was stealing money from his mom’s purse. Fat Bobby’s parents put him on a diet, and didn’t want them to figure out when he was buying candy.

Now in real life, many very important people were just caught hiding their piggy banks at Johnny’s house in Panama. Today their moms all found out. Pretty soon, we’ll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble regardless, because it’s against the rules to keep secrets no matter what.

Let the dust settle on Panama Papers!

(The author is a Gulf-based Indian journalist. The views expressed here are his own and do not necessarily represent those of JantaKaReporter)