Craig Murray is a former British ambassador to Uzbekistan who came out the very first day the Panama Papers documents were released, calling them a coverup and following the next day with another blistering attack.
It seems way too early to be making this sort of call, particularly since some of Murray’s claims in his initial post are demonstrably off base.
But why does Murray have a following? It turns out he does know a thing or two about corruption, but his experience appears to have led him to get out over his skis on the Mossack Fonseca revelations. Mind you, he could prove to be right, or somewhat right. At the end of this post, I describe some things that you’d expect to see in the next month if the journalists are doing a thorough and fair job. And I hate to tell you, but there are also legitimate reasons to expect comparatively few prominent American individuals or companies to have been using Mossack Fonseca.
He is rightly renowned for arrestingly undiplomatic, principled excursion, recorded by Nick Cohen of The Guardian:
In the middle of October, Craig Murray, our man in Uzbekistan, delivered a speech which broke with all the established principles of Foreign Office diplomacy. ‘This country,’ the brave and honest ambassador told an audience in Tashkent, ‘has made very disappointing progress in moving away from the dictatorship of the Soviet period … The major political parties are banned; Parliament is not subject to democratic election and checks and balances on the authority of the electorate are lacking. There is worse: we believe there to be between seven and 10,000 people in detention who we would consider as political and/or religious prisoners. In many cases they have been falsely convicted of crimes with which there appears to be no credible evidence they had any connection.’
The state-censored Uzbek media didn’t report his accurate description of life in the dictatorship. Such news is unfit to use. I would guess that until 11 September few outsiders would have cared about Murray’s denunciation of the near 100 per cent conviction rate of the state’s prosecutors and the gangsterism of its post-communist elite. (I would also guess that until 11 September few outsiders would have been able to find on a map.)
After 9/11, things were different:
The ‘war’ on terrorism changed all that. I was in Washington in January and saw how events in Uzbekistan pushed delighted conservatives to declare themselves masters of an ‘Empire’. Until then, ‘the American Empire’ was an insult. The Right didn’t accept the Republic could have become any such thing. After Osama bin Laden unwittingly turned America from a superpower into a hyper-power, the men around Bush no longer could or wanted to deny that an empire was what they had. It was the opening of US bases in Uzbekistan which forced them to talk plainly. Here were American troops in a former Soviet Republic in the centre of central Asia and no one – not Russia, not China – could do anything about it. The world was their playground.
Uzbekistan represented a new peak for American imperialism but was also a test of what type of empire the American empire would be. On the level of realpolitik, the thugs in charge of Uzbekistan suited the West well. The President, Islam Karimov, was a Soviet apparatchik who found Muslim fundamentalism a useful justification for repression. Since 1997, his government has pursued a campaign against Muslims who worship outside the state-controlled religion. Some were insurgents dedicated to the most frightening versions of theocracy. But not all.
Alerts from Human Rights Watch give a flavour of how the war against terrorism became a war against democracy. Elena Urlaeva didn’t look like a potential suicide bomber. She was a member of the Human Rights Society of Uzbekistan, who protested outside the Ministry of Justice in Tashkent. She was shipped, Brezhnev style, to a mental hospital and stultified with drugs. Meanwhile, independent doctors have put their careers and more at risk by examining the bodies of prisoners who die in custody. One, the corpse of Muzafar Avazov, had no fingernails and ‘bore burns that could only be caused by immersing him in boiling water’. Neither of the above stories is exceptional.
Murray’s speech went down badly with the UK Foreign Office, which went into, well, :
…the personnel department outlined 18 disciplinary charges. Most were not supported by any evidence and others were petty. He was accused of “hiring dolly birds for above the usual rate” to work in the visa department, which had, he insists, an all-male staff. Yet he was also accused of having sex in his office with local girls in exchange for visas to the UK. The FCO said he had a week in which to resign. He was not allowed to discuss the charges with anyone or he would face prosecution – and maybe jail – under the Official Secrets Act.
Murray was exonerated of these wildly flaky looking charges, but he wasn’t backing down and the skids were under him. By October 2004, he was after his claim that MI6 had used information obtained under torture by the Uzbekistan government was leaked to the press. The Foreign Office finally turfed him out in early 2005.
So he’s gone feral, Mr Murray, like many another brave, principled whistleblower. Of course, he now has a blog, and right now, he’s on #panamapapers:
Whoever leaked the Mossack Fonseca papers appears motivated by a genuine desire to expose the system that enables the ultra wealthy to hide their massive stashes, often corruptly obtained and all involved in tax avoidance. These Panamanian lawyers hide the wealth of a significant proportion of the 1%, and the massive leak of their documents ought to be a wonderful thing.
So far, so good. But:
Unfortunately the leaker has made the dreadful mistake of turning to the western corporate media to publicise the results. In consequence the story, published today by the Guardian, is all about Vladimir Putin and a cellist on the fiddle. As it happens I believe the story and have no doubt Putin is bent.
No doubt; and leading off with the Putin story certainly looks like axe grinding, of course. Yet, in a crowded field, the story’s talk of $2Bn controlled by Putin proxies is not a particularly effective pop at Putin. Heck, even the tame onshore Russian media can do better than that: here is Kommersant, re-reported in , on a $46Bn money laundering scheme that comes just as close to Putin:
Russian law enforcement agencies have detained the alleged mastermind of a money laundering syndicate of 60 banks and 500 people said to be responsible for channelling some $46bn out of the country, Kommersant daily reported on November 3, citing unnamed sources.
Businessman Alexander Grigoryev, the former vice president of the Moscow Boxing Federation, is a co-owner of several bankrupt banks, including Zapadny, Transportny Doinvest, and Russian Land Bank, which together allegedly owe clients a total of more than RUB75bn ($1.19bn).
Currently Grigoryev is accused of two counts of large scale fraud amounting to RUB105bn ($1.67bn) and has demanded to be released on bail.
The newspaper claims that Grigoryev is accused of channelling prime assets out of banks about to be declared insolvent, as well as closing real estate deals on behalf of bankrupt credit institutions.
However, the biggest scam he is accused of running affected over 60 small banks and about 500 individuals, constituting a money laundering and outflow operation with a record turnover of over RUB1 trillion a year.
For comparison, Kommersant notes that to date, the largest busted laundering scheme in Russia, run by Sergey Magin, had a turnover of RUB169bn.
The scheme could involve Moldovan, Lithuanian, and Estonian banks servicing Russian and offshore shell firms that channelled money out of Russia under the pretence of issuing compensation for fake trade deals with local nationals.
According to the anti-money-laundering services of Moldova, in 2010-2013 alone Moldovan courts withdrew $18.5bn worth of compensation from Russian resident firms, which in reality was a cover-up for illegal capital flight.
The Putin link? That is via Russian Land Bank (RZB), where Putin’s cousin Igor served as a director until 2014.
If you like irony, this giant money laundering scheme was first by the OCCRP, now a big publisher of Panamapapers, in 2014. I hope Putin’s FSB, which led the Grigoriev bust, is grateful for the OCCRP’s $46Bn lead, which ought to compensate Putin a bit for the $2Bn cellist story, too.
Back to Craig Murray, who may not have an irony detector:
But why focus on Russia? Russian wealth is only a tiny minority of the money hidden away with the aid of Mossack Fonseca. In fact, it soon becomes obvious that the selective reporting is going to stink.
Well, the obvious rejoinder to that is that, whatever the merits of putting the Putin story out first, or at all, it’s only the first in an utterly enormous series. So the “focus on Russia” is likely to turn out to be a figment of Mr Murray’s imagination, and rather quickly, too. Selective reporting, anyone?
But that’s not quite Mr Murray’s point. He doesn’t like the funding sources behind the leak publication:
The leak is by the grandly but laughably named “International Consortium of Investigative Journalists”, which is funded and organised entirely by the USA’s Center for Public Integrity. Their
Rockefeller Family Fund
W K Kellogg Foundation
Open Society Foundation (Soros)
among many others. Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished.
… and ventures a prediction:
Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland. A superannuated UK peer or two will be sacrificed – someone already with dementia.
That’s not looking like a great prediction so far. For instance, Poroshenko of Ukraine is very visibly close to the Open Society Foundation and Soros, one of the funders of panamapapers. Here is Poroshenko with Soros, having just given him a nice medal, after Soros on the pace of reforms. Poroshenko is generally considered to be pro-Western, with a particular affinity to Joe Biden. Here they are together, just a couple of weeks ago, the kidnapping to Russia and show trial of Nadiya Savchenko, allegedly a of the Aidar militia, which Amnesty International considers to be .
So if Murray’s analysis is correct, Poroshenko is just about the last person you’d expect to find in panamapapers, day 1. Yet he is:
Ukraine’s president, , set up a secret offshore company in the British Virgin Islands at a time when his troops were being wiped out in a bloody battle with Russian troops and pro-Moscow rebels.
Leaked documents from the Panamanian law firm Mossack Fonseca show that Poroshenko registered the company, Prime Asset Partners Ltd, on 21 August 2014.
show that Poroshenko used a Cypriot agent to register his new BVI firm. It is not illegal to open an offshore account. The president supplied a utility bill and a reference from the International Investment Bank (IIB) in Kiev.
The letter, dated October 2014 and marked confidential, says Poroshenko has been a customer of the IIB since 2009 and conducted his accounts “to our satisfaction”. It fails to mention one detail: Poroshenko owns the bank.
The inevitable have started. It’s not a good look for Biden or US policy in Ukraine, and I daresay Soros is frothing at the mouth. But the story did get out there PDQ, didn’t it?
Next, let’s take a look at the pushing these stories out. Mr Murray’s elastic term clearly includes, alongside Le Monde and the BBC and the Guardian: The Daily Monitor of Uganda, the Dépêches du Mali, the Indian Express, Krik (of Serbia), the Korea Center for Investigative Journalism, MalaysiaKini, Novaya Gazeta and Vedemosti of Russia. To be honest, this, and much more besides, looks as much like an approximation to the geographical footprint of Mossack Fonseca’s global client base as a western media stitch-up. Late breaking news: New Zealanders can follow the story at www.stuff.co.nz.
But let’s look at the US media, the paradigm for “Western corporate”. There’s no Washington Post, no New York Times, no WSJ. Instead, we have and , in their own name and via a couple of their titles, (Panamapapers connection: numerous dodgy real estate deals) and the . There’s no Panamapapers coverage from the Charlotte Observer yet, but Charlotte does happen to be the home town of Bank of America, which might have something to do with it; we will have to see.
I haven’t much clue about Univision, but McClatchy, formerly Knight Ridder, are an interesting choice. Here’s :
The Knight Ridder team, and now the McClatchy team, has frequently been cited as one of the few that got it right in the run-up to the invasion. At the time a lot of people said the rest of the media was ignoring you. Is that how you and the team felt at the time?
Well we certainly didn’t see anyone doing the same kinds of stories, with the exception of some stories by Walter Pincus at the Washington Post, and much, much later after the Los Angeles Times got onto Curveball. But during the period when I guess, arguably, it mattered, when it could have and should have been a debate about whether to engage in this war, I think we felt that we were fairly lonely.
What was it about the way the Knight Ridder bureau was approaching the story that made it so you didn’t get lost in the same wave of reporting that overtook the rest of the press corps?
There wasn’t any reporting in the rest of the press corps, there was stenography. The administration would make an assertion, people would make an assertion, people would write it down as if it were true, and put it in the newspaper or on television.
Well, if the same sort of mindset is in place at McClatchy now ( has moved to Bloomberg), their coverage might not be too bad. they don’t look particularly like corporate stooges. We shall see.
There is one last American partner, (jointly owned by Disney and Univision), who have some interesting things to say about the strikingly (and so, suspiciously) small number of American names that turn up in the Mossack Fonseca leak:
So far, the International Consortium of Investigative Journalists (ICIJ) has only been able to identify 211 people with U.S. addresses who own companies in the data (not all of whom we’ve been able to investigate yet). We don’t know if those 211 people are necessarily U.S. citizens. And that figure covers only data from recent years available on a Mossack Fonseca internal database — not all 11.5 million files from the leak.
In other words, that 211 number comes from just a small sliver of the data. “It’s a complete underestimate,” says Mar Cabra, head of the data and research unit at the ICIJ. Finding a precise number of Americans in the data is difficult.
Not surprisingly, though, a lot of people are asking: If this is the biggest data leak in history – and our biggest window ever onto the offshore world – where are all the Americans? After all, an estimated $150 billion in potential U.S. tax revenues disappears into offshore tax schemes each year, according to a 2014 Senate subcommittee report. We asked top experts in offshore finance to break down the American-related aspects of the Panama Papers leak.
Here’s the that needs explaining. Say the experts:
Jack Blum: Every news entity that works on it has to go through the material and figure out what’s in it, and this is such an enormous database, it will take some time.
That’s dull but, with 11.5 million documents in the leak, clearly plausible. Next, they give a clear view of the US’s way with shell companies:
Shima Baradaran Baughman: Americans can form shell companies right in Wyoming, Delaware or Nevada. They have no need to go to Panama to form a shell company to use for illicit activities.
Jason Sharman: One of the forms of companies that’s even more secret than, say, a British Virgin Islands company is a company incorporated in almost any U.S. state. If you form a British Virgin Islands company you have to declare who you are to the person forming the company for you; if you form in Nevada, for example, you don’t… So Nevada is great because it’s much more secret than the British Virgin Islands.
Jack Blum: What should be one of the more shocking aspects of the documents is that Mossack Fonseca had a subsidiary to create American offshore corporations in Nevada, and it is a fact that the U.S. government has been talking about on and off over the years, about forcing U.S. corporations to disclose their beneficial ownership. It is a depressing fact that several administrations now have refused to make that a requirement… What’s happened is, some of the sleaziest offshore lawyers are now using American corporate shells to hide foreign corrupt activity. You’d think – you’d hope — that the U.S. government would crack down on this and do the right thing to force people to make public the beneficial ownership of corporation.
…Mossack Fonseca do indeed like Nevada companies: here’s their connection with a money laundering scheme .
And now the big picture for the US:
Shima Baradaran Baughman: The extent of money laundering and tax evasion demonstrated by the Panama papers is alarming for the entire world, including citizens and policy makers in the U.S. It is also relevant because it should make Americans look internally to see what kinds of corporate illegalities we are allowing within our own borders.
James Henry: The big thing we should be concerned about is, there is onshore haven behavior in the United States, and it is undermining our own tax compliance and tax citizenship. I mean, if ordinary people are the only ones paying taxes, then you’ll have a tax revolt on your hands…We depend for our tax system and for our democracy on ordinary people paying their taxes. If they go on strike, it’s going to be a serious problem. It’s nothing less than our democratic process at stake.
My own observation is that Panama is best-liked as an offshore by a very specific type of American: people who want to buy gold, survivalists, bit coin fetishists, Tea Party libertarians. They tend not to be big-time. I am not sure they relish would Mossack Fonseca’s upmarket fees. Occasionally the IRS gets after these types, for instance, , via another dubious Panamanian agent, and via a renowned bank that also shows up in the Panamapapers, HSBC.
Lastly, we have a paranoid-looking expert guess about the level of deception that goes on over at Mossack Fonseca:
Don Semensky: Americans may have figured out a way to add another soft party who has a different nationality or identity. Let’s say [Mossack Fonseca] had a lot of American account holders or clients. It took [the ] over five years to get into place, which gave everyone plenty of time to close accounts and move their money—open up new corporations that didn’t look like they were held by Americans.
The identity paranoia gets an immediate confirming sighting over at the who spot a spectacular abuse that in fact predates the implementation of the Foreign Account Tax Compliance Act:
Eight years ago, business guru Marianna Olszewski had a problem.
The author of Live it, Love it, Earn it (A Woman’s Guide to Financial Freedom) offers financial advice directed at American women. Some of her personal fortune had been invested using a secret offshore company.
But in 2008, at the height of the financial crisis, she decided she wanted to get her $1.8m back.
The problem was that the bank that held the funds wouldn’t release the cash without knowing who was behind the offshore company – and Ms Olszewski was desperate to keep her identity secret.
Mossack Fonseca was willing to help. It offered to provide somebody who would pretend to be the real – or beneficial – owner of the cash.
An email from a Mossack executive to Ms Olszewski in January 2009 explained how she could deceive the bank: “We may use a natural person who will act as the beneficial owner… and therefore his name will be disclosed to the bank. Since this is a very sensitive matter, fees are quite high.”
She replied: “I do think we should go ahead with the natural person however I want to have your promise that you… will handle this in the most sensitive manner.”
So Mossack Fonseca hired an impostor to pretend to be the beneficiary of the account holding Ms Olszewski’s money:
The “natural person” Mossack Fonseca offered turned out to be a 90-year-old British citizen.
Mossack Fonseca told Ms Olszewski that the service would be expensive because it was so sensitive. Fees were normally $30,000 (about £20,000 at the time) for the first year and $15,000 for every subsequent year. But she was offered a discount – just $10,000 for year one and $7,500 for every year after.
One reason for the high cost is likely to have been the degree of deception. Another email from Mossack details what would be involved:
“We need to hire the Natural Person Nominee, pay him, make him sign lots of documents to cover us, make him sign resignations, make him get some proofs evidencing that he has the economic capacity to place such amount of moneys, letters of reference, proof of domicile, etc, etc.”
It’s a blatant breach of anti-money laundering rules, but Ms Olszewski signed up anyway.
Now then: if Mossack Fonseca have been doing that in any scale, for at least the last 8 years, tracing American nationals in the leak, or any other nationality, for that matter, is going to be quite tough.
There is a bigger implication of this single incident: banks simply can’t trust offshore company agents, key players in the offshore financial system, to tell the truth about the beneficiaries of the accounts they are opening. If that’s the case, how on earth can you plausibly claim to run a money-laundering-proof offshore financial system at all? Mr Murray has also seen this story, in its TV version, but overlooks this simple observation.
Instead, he , by not dwelling for long enough on a company registration form briefly displayed in the course of the exposition:
Richard Bilton of the BBC today exposed himself as the most corrupt and bankrupt of state media shills – while pretending to be fronting an expose of corruption. There could not be a more perfect example of the western state and corporate media pretending to reveal the Panama leak data while actually engaging in pure misdirection.
Richard Bilton deliberately suppressed the information that all the companies involved were in fact not Panamanian but in the corrupt British colony of the British Virgin Islands. At no stage did Bilton even mention the British Virgin Islands.
Well, that’s how TV works: lots of fast moving visuals. If the fleeting BVI shot is a misdirection, it’s kind of inept of the BBC to display the form at all. They could easily have put up another Panama cityscape instead, a form of visual blether abundant in that particular show.
By today, with a thundering away at the UK’s lax supervision of the BVI, Mr Murray’s “BBC propaganda”, whether it is a figment of his imagination or not, looks a bit forlorn:
The UK is institutionally complicit in tax evasion, moneylaundering and corporate cover-ups. Many of the secretive tax havens, including the Cayman Islands and the British Virgin Islands, are British overseas territories that are self governing but remain under the jusrisdiction and sovereignty of the United Kingdom.
Sounds great. Let’s see some action.
Here is my own list of stories that should come out but haven’t yet.
Big banks: when will the banks that get so many name checks in the Panamapapers, for instance, HSBC, Coutts (a subsidiary of RBS) and UBS get some serious scrutiny? Rona Fairhead, chairman of the BBC Trust, whose job is to protect the BBC’s independence, last year after a row over her handling of a tax evasion scandal at HSBC Switzerland. It would of course be great to see the BBC take a deep dive into HSBC’s links with Mossack Fonseca, this year, after another tax evasion scandal. Once again, we shall see.
Big oil: as an instance, Vitol is a large oil trader whose Panamanian subsidiary was created by Mossack Fonseca. Vitol has interests in Azerbaijan, whose ruler Aliyev is too. Where is big oil in the Panamapapers?
Big oil and big banks: Special friends of Vitol seem to be special friends of HSBC too, as I noticed in this blog post last year. One would like to understand why.
Publication: one can certainly concede one point to Mr Murray:
The corporate media – the Guardian and BBC in the UK – have exclusive access to the database which you and I cannot see.
I agree with him that that’s not at all desirable. The original went online and the sky did not fall in – where were the privacy issue then? Are the ICIJ really sure they should be the gatekeepers of Panamapapers, forever? It’s different data, much bulkier and seemingly, less structured. But I think I’d like to add my voice to the choir requesting wider access. The choir already includes and there will be more.
Meanwhile, I think Mr Murray, whose courage I esteem, should consider reading more Panamapapers, watching less TV, thinking harder, and writing less, until the picture’s a bit clearer, which may take a while. If he is half the man I think he is, Mr Murray will ignore me.