We’ve been leaked the Panama Papers. Here’s how to bring down Putin’s cronies | Frederik Obermaier and Bastian Obermayer
Seven years ago, an anonymous source who went by the name of “John Doe” provided us with the data that became the Panama Papers – 2.6 terabytes of leaked documents from the Panamanian law firm Mossack Fonseca. The leak turned out to have a pretty impressive Russian component. We found front companies linked to Vladimir Putin’s judo friends Boris and Arkady Rotenberg, oligarch Alisher Usmanov and the wife of Kremlin spokesman Dmitry Peskov. But, more importantly, we came across Sergej Roldugin, a professional cellist and godfather to Putin’s eldest daughter, who played a central role in a web of secret offshore deals and vast loans worth $2 billion. dollars, described at the time as the key to tracing Putin’s story. hidden wealth.
All of this hidden wealth mattered when we published the Panama Papers in 2016, two years after Russia annexed the Crimean peninsula. Now, after the full-scale invasion of Ukraine, it matters more than ever. Lawmakers in the UK, EU, US and Canada have sanctioned Russian banks, Russian companies and individuals close to Putin. This includes Russian oligarchs, as well as Putin’s friends, supporters, and admirers who helped facilitate his kleptocracy by hiding his wealth in accounts under their own name or simply defending his kleptocracy for their own illicit enrichment. Individuals like cellist Sergej Roldugin, the Rotenberg brothers and Usmanov.
Now the Western world has decided that it wants Putin’s friends punished for the kleptocracy and damage they facilitated and benefited from. Prosecutors and investigators as well as special police units are now on the hunt for the wealth of Putin’s friends. They seize yachts, ground planes and confiscate sumptuous villas. Yet what they will find is probably just the tip of the iceberg. To really hit Putin and his friends where it hurts, you have to go to Switzerland, Panama, Cyprus and the British Virgin Islands. Unfortunately, investigators probably won’t get much help there – because the secret is what these countries are selling.
Economists like to call them tax havens or secret jurisdictions. But “black holes” would be more appropriate for those places where lawyers, tax advisers, consultants and other greedy crooks help the rich and powerful hide or, as they say, “fence” their assets. These voluntary aids help the oligarchs to make their fortunes disappear in the eyes of the forces of order.
When we received the leak that became the Panama Papers, we found – apart from Roldugin – dozens of very wealthy Russians. When we received the Paradise Papers, another offshore data leak, the names of oligarchs Roman Abramovich, Alisher Usmanov and Oleg Deripaska appeared in the data, as did Olga Shuvalova, the wife of Russia’s First Deputy Prime Minister. Over a year ago, we got our hands on the Swiss Secrets, yet another leak, and there was Alisher Usmanov’s sister and a fortune of around 2 billion Swiss francs.
Sanctions are a powerful foreign policy tool. Some even call them a “tool of modern warfare”. We understand the idea of putting pressure on Putin’s inner circle and on the Russian economy. But why stop there? Let’s address the problem and not just its symptoms. Let’s change the system so that governments don’t have to rely on sanctions to prevent Putin and other kleptocracies from gaining more power.
Above all, the secret jurisdictions themselves must be targeted. It is not enough to attack the profiteers of these countries, but the jurisdictions themselves. If necessary, the black holes themselves must be sanctioned – to bring change not only to the war in Ukraine, but to the whole world.
Russian oligarchs aren’t the only ones enjoying a luxurious lifestyle funded with stolen money. Kleptocracy and corruption are far from being a uniquely Russian phenomenon.
Think Venezuela. Think of China. Think Angola.
Tackling the systemic causes of kleptocracy and corruption will inevitably involve targeting both the Western legal structures and professionals who facilitate kleptocracy: law firms, consultants and asset managers in Zurich, London and New York. who regularly lend a hand to kleptocrats. They take advantage of jurisdictions like the Cayman Islands and Switzerland — and yes, the United States — that still offer secrecy on a massive scale. They take advantage of jurisdictions without public registries of real estate and business owners.
Secrecy advocates say their privacy rights are most important. But let’s face it: financial secrecy is the engine of global corruption and kleptocracy. It allows corrupt elites to plunder entire continents too easily, drug dealers and people to launder their money, and it helps fund brutal wars. It helps Putin and his friends.
Fortunately, at the end of 2020, the United States government finally passed legislation requiring a beneficial ownership registry for US companies. Similar registries exist in dozens of countries, because requiring companies to reveal who ultimately benefits makes it much harder for kleptocrats and their cronies to hide their illicit money. But US legislation, the Corporate Transparency Act, does not go far enough. It obliges the ultimate beneficial owners to be revealed only to the authorities and only in certain circumstances.
But not to the public. And that’s a huge mistake.
As long as we rely solely on authorities and law enforcement, kleptocrats, autocrats and Putin cronies will have an easier time evading sanctions and continuing to hide their ill-gotten gains. Mutual legal assistance between national law enforcement agencies takes years and does not penetrate the many layers of secrecy used by criminals around the world. Journalists and civil society groups have proven to be much more effective. They can collaborate quickly and efficiently across borders, they can work with leaked data (something law enforcement has yet to learn) and connect it with publicly available data. The new government task forces set up at the end of the day to chase money from Putin’s cronies will be insufficient. Governments should open registers: company registers, ship registers, aircraft registers, real estate registers. Give the power of inquiry to the people – and we bet you won’t be disappointed.
Above all, let’s finally get rid of these black holes.
Frederik Obermaier and Bastian Obermayer are investigative journalists at the German newspaper Süddeutsche Zeitung. They initiated the 2016 Panama Papers as well as the 2017 Paradise Papers revelations and the 2022 Swiss Secrets. Forbidden Stories (https://forbiddenstories.org).