Mossack Fonseca’s wimpy response to the Panama Papers

Carlos Sousa is the PR Director for Mossack Fonseca & Co. This has to be the most thrilling week of his career, since someone leaked 11 million of his firm’s documents — the “Panama Papers” — implicating prominent world figures in corruption. But when you parse Sousa’s statements, you realize that his main message to clients is “don’t get caught.”

PR people try to preserve reputations; law firms hide behind legalisms. The combination is mind-numbing, as you can see from the 9-page statement that Sousa just released. I’m here to help. Let’s look at a few of Sousa’s evasions and what they really mean — which is you’d better not get caught. Weasel words highlighted, my comments in brackets:

We cannot provide responses to questions that pertain to specific matters, as doing so would be a breach of our policies and legal obligation to maintain client confidentiality. . . .  However, we can confirm that the parties in many of the circumstances you cite are not and have never been clients of Mossack Fonseca.

Translation: We’re a law firm, we can’t talk about clients. And we only represented some of the sleazeballs you mentioned, not all of them.

We encourage you to verify your sources, comprehend the essence of the industry dedicated to company formation, and understand how this business has functioned historically versus the changes that have taken place recently to ensure transparency into the identity of ultimate beneficial owners and to improve safeguards within the international financial system in which Mossack Fonseca operates. [Amazing: a 57-word sentence that says nothing at all.]

Translation: People hire us because we can use the incomprehensible international laws to allow them to legally do sneaky stuff.

[I]t is legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons, including conducting cross‐border mergers and acquisitions, bankruptcies, estate planning, personal safety, and restructurings and pooling of investment capital from investors residing in different jurisdictions who want a neutral legal and tax regime that does not benefit or disadvantage any one investor.

Translation: What we do is legal: exploit international law. Everybody who is rich does it.

We conduct thorough due diligence on all new and prospective clients that often exceeds in stringency the existing rules and standards to which we and others are bound. Many of our clients come through established and reputable law firms and financial institutions across the world, . . . . If a new client/entity is not willing and/or able to provide to us the appropriate documentation indicating who they are, and (when applicable) from where their funds are derived, we will not work with that client/entity.

Translation: We won’t work with you if you’ve already been caught.

Our firm has never been accused or charged in connection with criminal wrongdoing.    However, we are legally and practically limited in our ability to regulate the use of companies we incorporate or to which we provide other services. We are not involved in managing our clients’ companies. Excluding the professional fees we earn, we do not take possession or custody of clients’ money, or have anything to do with any of the direct financial aspects related to operating their businesses.

Translation: We don’t handle or hide money, we just make it easier for others to do so. That’s safer, and generates plenty of money.

We regret any misuse of companies that we incorporate or the services we provide and take steps wherever possible to uncover and stop such use. If we detect suspicious activity or misconduct, we are quick to report it to the authorities. Similarly, when authorities approach us with evidence of possible misconduct, we always cooperate fully with them.

Translation: If you get caught, don’t expect us to help you.

We strongly disagree with any statement implying that the primary function of the services we provide is to facilitate tax avoidance and/or evasion. Our company does not advise clients on the structuring of corporate vehicles and the use they may make of same; and we likewise do not offer solutions whose purpose is to hide unlawful acts such as tax evasion.

Translation: Hire somebody else to figure out how to avoid taxes; we just do the legal work. (Is this statement more important? It’s only one they “strongly” disagree with – -the others they only deny at regular strength.)

Our company does not foster or promote unlawful acts. . . . once these types of situations are identified, we routinely discontinue the provision of our services. The Service Provision Agreements signed with our clients impose on them the obligation to notify us as soon as they have knowledge of a client of theirs having been either convicted or listed by a sanctioning body. Likewise, we have our own procedures in place to identify such individuals, to the extent it is reasonably possible.

Translation: Like I said, once you get caught, we’re not helping you.

By all accounts this corruption is outrageous. But if Sousa is telling the truth — and I think he is — Mossack Fonseca has found the ideal niche. They just do the paperwork — and as soon as clients get caught, they’ll cooperate. Of course, there is the troubling matter of someone leaking all their client information. But now, I think this law firm is going to make a boatload of money on time spent complying with investigators. Your tax dollars at work.