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Panama Papers

Law firm at heart of Panama Papers a shadow of its former self

PUBLISHED : Saturday, 01 April, 2017, 9:01am
UPDATED : Saturday, 01 April, 2017, 9:01am

Panama has a new tourist attraction: the building hosting the offices of the Mossack Fonseca law firm at the heart of the Panama Papers scandal.

That is why, workers there say, the sign announcing the firm has been taken down from where it used to be outside the dark-tinted edifice in Panama City’s modern banking district. Too many tourists were stopping to take selfies in front of it.

There was no money laundering. Only establishing companies within the limits of the law
Marlene Guerra, lawyer

Despite the fallout and sudden notoriety from the Panama Papers revelations, and the detention of its two partners on money-laundering charges linked to a vast Brazilian bribery case, Mossack Fonseca is continuing its four-decade-old business.

The firm’s staff has been decimated, however. Before the scandal, the firm employed 600 people across the world. A year later, that has been cut by two-thirds.

These papers linked some of the world’s most powerful leaders, including Russian President Vladimir Putin, former British prime minister David Cameron and others to unreported offshore companies.

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Panamanian prosecutors are investigating the Panama Papers, although no one has been convicted yet.

“There was no money laundering. Only establishing companies within the limits of the law,” the lawyer representing Mossack Fonseca, Marlene Guerra, said.

“While we are talking about what happened, the rest of the companies in Panama and in the world are continuing as before. We consider this to be selective justice,” she said.

Panama Papers didn’t tell us anything we didn’t already know
Panamanian Finance Minister Ricardo Zubieta

According to Guerra, 70 per cent of Mossack Fonseca’s wealthy clients have left for the United States.

With the lucrative Panama Canal, Latin America’s highest growth of over 5 per cent in 2015, and a dollarised economy based on services that accounts for 83 per cent of gross domestic product, the country is keen to minimise the reputational damage from Panama Papers.

“Panama Papers didn’t tell us anything we didn’t already know,” the finance minister, Ricardo Zubieta, said recently.

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“Not a single dollar” invested in the offshore companies “are in Panama – they are in banks in Britain, Miami, New York,” he said.

Many in Panama are indignant that the scandal was branded with their country’s name.

Some see a plot to damage the image of Panama for the benefit of US or European jurisdictions.

“We are seeing a new world order emerging, in which Panama remains conveniently overshadowed,” said Francisco Bustamante, an economist who worked at the Inter-American Development Bank.

“Aside from whether there is an international plot or not, what is pertinent is how the country will tackle these scandals,” he said.

After Panama Papers exploded on the scene, France was one of the first to react by putting Panama on its blacklist of tax havens. The European Union has now also provisionally designated the country for its own list and is gathering information about whether to make that definitive.

The Panamanian government has responded by trying to show its financial sector has become more transparent. Late last year it signed a commitment to uphold OECD standards on automatically sharing tax information from 2018.

“Panama is meeting the highest international standards in terms of fiscal transparency,” Vice-President Isabel de Saint Malo recently said.

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“We hope that that will be acknowledged by our partners and friendly countries.”

Nevertheless, the revelations of a year ago continue to undermine Panama’s reputation, as analysts such as noted by Carlos Guevara Mann of Florida State University.

“In the country they don’t take themselves seriously on the international scene, especially the inability of its judicial bodies to properly investigate and judge these and other cases of similar gravity,” Guevara Mann said.

For all that, in a restaurant near the now unadorned law firm, a waiter lamented the fall of Mossack Fonseca.

“They used to fill this place up. Now we’re empty,” he said, indicating the forlorn inside of the eatery.