Panama Papers Leak – Evil or Good?

Posted By Maxim Oliynyk on May 18, 2016 | 1 comment

Information bomb, known as the “Panama Papers Leak,” was planted a year ago, although it was detonated April 3, 2016, when the Panama documents were put on the Internet.

It all started in 2015 when an unknown person proposed the journalists of the German newspaper Süddeutsche Zeitung the official documents of the Panamanian law firm Mossack Fonseca. The source didn’t ask for money, but only for preserving his anonymity. “John Doe” contacted Frederik Obermaier and Bastian Obermayer, the correspondents of the Süddeutsche Zeitung. Having estimated a huge amount of information provided in the Panama papers, they decided to engage the International Consortium of Investigative Journalism (ICIJ) in work. For a year, an international community, which included more than 400 journalists from different countries, had been examining and analyzing the Panama archive.

Every effort was made to keep the investigation confidential. The project participants used a specially created website, which was protected with 2-step verification and other information security means. In real time, the journalists communicated (both with each other and with the informer) only in the encrypted chats and used only free software at all stages of processing and storing the data.

This hard work resulted in relatively large amounts of the materials put on the Consortium (ICIJ) website. It is worth mentioning that the original documents have not been posted – only their interpretation and analysis made by the researchers. The very same archive is stored on the Amazon Cloud Drive and is available only for those who know the URL and the password.

The journalists, who were the first to cover the Mossack Fonseca case – Bastian Obermayer and Frederik Obermaier, – published a book “Panama Papers: The Story of a Worldwide Revelation” describing a scandal with the Panama documents. The book was released in Germany April, 6. It does not duplicate the materials on the ICIJ website but tells how the authors communicated with a stranger who submitted the sensational materials and how the work was organized.

What is the crux of the matter

The law firm Mossack Fonseca holds more than forty offices worldwide, and its main office is located in Panama. The main activity of the company is financial consulting of organizations and individuals especially on issues relating to opening and running the offshore companies. Although offshores are not illegal, they make it possible to hide the names of the real owners of the companies, that in its turn allows them to evade taxes and launder shadow capital. And this is where the law may have certain questions.

It is not the first time Mossack Fonseca has fallen victim to fraud: in 2014, the German government already had a chance to buy some official documents of the company. But that file was not even nearly so big, and the data were older. The current leak of Panama Papers, of course, is one of the largest in the history of similar incidents. Never before such big and valuable data have been put into the public domain:

• The size of the Panamanian file is 2.6 TB, and the number of files in it is more than 11 million.
• The records provide the information on nearly forty years of the company’s activity (since 1977).
• The Papers contains data on more than 214 thousand companies.
• The already processed documents reveal names of 12 leaders of different countries, and even a greater number of ministers and other major government officials, as well as their close relatives and friends.
• According to a rough (so far) appraisal of economists, the offshore accounts hide huge sums of money: from $21 to $32 trillion.

Possible Panama Papers leak versions

The Mossack Fonseca representatives say their database has been compromised by the hackers. Frankly speaking, no one expected the other answer. Of course, the company would not like to admit the possibility of the internal Panama Papers leak. It is much easier to attribute everything to the skills of network attackers and software “holes”. Although some experts also pointed to vulnerabilities in older versions of the content management system WordPress and Drupal used by the company’s websites. But taking into account the huge amounts of money the Mossack Fonseca operates with and an extremely delicate nature of its activities, it is difficult to imagine that the company did not care about data protection and did not update the CMS in time.

There is also a “romantic” version of Panama Papers leak. The publication in Caribbean News Now suggested that a former employee of the Mossack Fonseca has stolen the archive after her affair with one of the managers came to an end.

Taking into account the volume and fullness of the leaked data the version with internal company’s leak seems far more plausible than a story about the offended woman.

Yet, it is unlikely that in the nearest future we will find out how the Panama Papers, which threw the limelight on the offshore companies, have been stolen. As well as the true identity of “John Doe” will remain a mystery.

First results

In May, the International Consortium for Investigative Journalism published a complete list of individuals and companies associated with the Mossack Fonseca. In April, only a part of data has been released – and this led to several scandals: the Prime Minister of Iceland and the Minister of Agriculture of Spain immediately resigned and a few cases of tax evasion have been launched.

10 days after the shocking materials were put on the Internet (12.04), the Panamanian National Police raided the Mossack Fonseca headquarter “to establish whether the company can be used for illegal activities,” as it is said in the statement to law enforcement.

In the long term, after the data provided by the Panama Papers leak is decoded and analyzed in full, there is a reason for opening a large number of criminal cases in different countries. And, most likely, the world will face changes on the political horizon.

Usually, talking about hacks or data leaks, we mean that it is bad. But it seems that the publication of Panama Papers is such a rare leak that cannot be condemned as it has revealed tax frauds and legalization of illegal profits by those in power. Although it is difficult to expect that John Doe’s lesson will make the rich and powerful give up such practices, at least it can dent their confidence in their own impunity that cannot but be considered a positive result of this exciting story.

Pictures by: Süddeutsche Zeitung