"The Cat Is Out Of The Bag" - In Interview Mossack Fonseca Founders Admit It's Over... To Rothschild's Delight

Tyler Durden's picture

Days before the ICIJ released this weekend's trove of "Panama Papers" international tax haven data involving Panamaian law firm Mossack Fonseca, Bloomberg conducted an interview on March 29 with the two founding lawyers. In it, it found that even before the full leak was about to be made semi-public (any of the at least 441 US clients are still to be disclosed), the Panama law firm knew that the game was already largely over.

As Bloomberg reports, "during a four-hour interview last week, Mossack and Fonseca sounded like two men in retreat: the go-go days of cranking out shell companies en masse for clients was over; the firm’s been considering scaling back its international franchising; and Mossack was expressing frustration about how Fonseca’s political ambitions were earning them unwelcome scrutiny from regulators and the media. Just days earlier, Fonseca had stepped down as a special adviser to President Juan Carlos Varela, saying he wanted to focus his attention instead on the business."

“We are going to make ourselves the right size -- smaller,” Fonseca said. For the co-head of a firm that over the past few decades has helped revolutionize the way companies and wealthy individuals structure their investments across the globe -- and popularized the British Virgin Islands as a hub -- the statement marks a big drop in ambition.


We previously profiled one of the two founders of the infamous law firm. This is what Bloomberg had to add:

Of the two men, it is Mossack, a 68-year-old with German roots, who displays a keen mastery of the nuts and bolts of the business. He did most of the talking during the interview in their Panama City headquarters. The building is sleek, with a distinctive glass-facade, but looks diminutive amid the skyscrapers that dominate the financial district. Across the street is the iconic F&F Tower, a helix-shaped building that helped give the booming city its nickname “Dubai of the Americas.” As the two men spoke that morning, they were flanked by their legal director and two consultants. In all, the firm employs some 500 people in Panama and across the globe.


If Mossack is the nitty-gritty guy, Fonseca, 63, is the self-proclaimed dreamer. He boasts that his friends have labeled him “a da Vinci man” for his interests in politics, law, business, letters and philanthropy. He’s penned a half-dozen novels over the years, and for a while as a young man had considered becoming a priest.


It was during his time as a bureaucrat at the United Nations in Geneva, where he was surrounded by international lawyers, that Fonseca said he was lured by the mysterious world of offshore businesses. “One day it occurred to me that I could do it too,” he said. “I created my little office and left the UN and started with one secretary to create and sell companies.” He’d join up with Mossack soon thereafter.

"It's like selling cars"

Setting up offshore vehicles has become routine for corporations, investment funds, family offices and billionaires. Low- or no-tax jurisdictions offer places to base a company or to send and park cash, company shares, art and other assets. Establishing a structure for them typically costs just a few thousand dollars. Once those fees are handed over to shops like Mossack Fonseca, the organizational and operational framework for the entity is drafted and registered in the local jurisdiction. Annual fees are then charged to maintain the company.


While offshore holdings are usually legal, they can also be used to hide wealth. Since the 2008 financial crisis, Western governments have sought to shed greater light on offshore banking centers, arguing they can be used to avoid taxes or hide illicit funds.


In addressing the legality question, Mossack is fond of drawing an analogy to the auto industry. When you create hundreds of thousands of offshore companies, he says, some are bound to end up in the hands of rotten characters: It’s just the nature of the business and isn’t the fault of the manufacturer. He makes a reference to Volkswagen AG recalling some of its cars before one of the firm’s consultants suggests that isn’t the most appropriate parallel. The scrutiny that the partners are under, Mossack says, stems in part from all the success they’ve had over the years.

However, unlike selling cars, the world is now increasingly focusing on tax evasion as the primary motive behind setting up offshore havens. This is something the Panamanians were clearly aware of with all the heat they had been drawing from independent media inquiries.

The Central American country was already becoming the flag of choice for ship-owners looking to avoid stricter labor and fiscal rules back home when Panamanian officials based their requirements for company incorporation on the laws of Delaware, a U.S. state that protects information on ownership. Panama doesn’t charge foreigners taxes on income earned abroad.


While the Financial Action Task Force recently commended efforts to clamp down on money laundering, the Organization of Economic Cooperation and Development calls Panama the "last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities." Panama’s presidential office said in a statement that it has zero tolerance for any legal or financial operations that aren’t managed with the highest levels of transparency.


Whether the new regulations are up to the OECD’s standards or not, the industry is feeling the squeeze, according to Mossack and Fonseca. A law implemented in 2011 required Panama-registered agents to provide client information when requested on all new incorporations, and the British Virgin Islands has adopted restrictions on due diligence.

At this point, the duo admit Panama's prominent reputation as an offshoring center is fast coming to an end. As Mossack admits, "the cat is out of the bag"

It’s a far cry from the boom years, a period when Mossack said he and Fonseca used to keep a vast inventory of “shelf companies” on hand because banks would request as many as a hundred at a time. This weekend’s document leak will only add to the firm’s woes, he said.


"The cat’s out of the bag,” Mossack said. “So now we have to deal with the aftermath.”

Perhaps it is for Panama. But one place is delighted to take its place: the US, and specifically states like Nevada and Wyoming, which as we showed before, are the new global tax havens.

Recall that according to a recent investigation by Bloomberg, "The World’s Favorite New Tax Haven Is the United States" ...

... and specifically several US states such as Nevada, Wyoming and South Dakota.

After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.


How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” wrote Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”

That money is rushing for one simple reason: dirty foreign - and local - money is welcome in the U.S., no questions asked, to be shielded by the most impenetrable tax secrecy available anywhere on the planet.

One may even say that nowadays, US-based tax havens are the new Switzerland, or Bahamas or, for that matter, Panama. Indeed, for most Americans, offshore tax haven are now meaningless with the passage of the FATCA law, which makes the parking of dirty US money abroad practically impossible. So where does that money go instead - it stays in the US:

Others are also jumping in: Geneva-based Cisa Trust Co. SA, which advises wealthy Latin Americans, is applying to open in Pierre, S.D., to “serve the needs of our foreign clients,” said John J. Ryan Jr., Cisa’s president.


Trident Trust Co., one of the world’s biggest providers of offshore trusts, moved dozens of accounts out of Switzerland, Grand Cayman, and other locales and into Sioux Falls, S.D., in December, ahead of a Jan. 1 disclosure deadline.


Cayman was slammed in December, closing things that people were withdrawing,” said Alice Rokahr, the president of Trident in South Dakota, one of several states promoting low taxes and confidentiality in their trust laws. “I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland.”

And, to top it off, there is one specific firm which is spearheading the conversion of the U.S. into Panama: Rothschild.

Rothschild, the centuries-old European financial institution, has opened a trust company in Reno, Nev., a few blocks from the Harrah’s and Eldorado casinos. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.


* * *


For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”

Yes, Mossack Fonseca may now be history, and its countless uberwealthy clients exposed, but none other than Rothschild is now delighted to be able to fill its rather large shoes.

In fact, someone with a conspiratorial bent may decide that the dramatic takedown of the Panama "tax offshoring" industry was nothing more than a hit designed to crush the competition of US-based "tax haven" providers... such as Rothschild.

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stant's picture

Now they will have to buy up small two bit firms to stash cash

Cognitive Dissonance's picture

Trust me on this one. They already have their exit plan, along with several backups, fully deployed.

And fully funded.

Haus-Targaryen's picture

This.  The firms that build these structures don't put just one or two in place, there are backups.  You don't start sending this kind of cash around the world if you haven't thought through a thing or two before hand.  

The idiot politicians though, instead of attempting to become a tax-haven, are going to try the "bigger stick" approach, which will simply drive more people to tax-havens, rinse, repeat.  

Great for the accountants and lawyers, bad for everyone else.  

VinceFostersGhost's picture




"The Cat Is Out Of The Bag"


Well.....clearly it's time to....shoot the moon!


Haus-Targaryen's picture

I would be really interested to see how many of these companys that were leaked, were in fact held by other HoldCos, setup by lawfirms without "whistleblowers" and which haven't been hacked yet. 

I would imagine a lot of people breathed a sign of relief they have a multi-tiered approach with Auzzie anon. HoldCos, LuxCos, and Russian HoldCos are becoming ever more popular combined with an Austrian GmbH & Co. KG acting as the GP.  

But I digress.  Looks like the people who went with a 1 or 2 tied system, and who employed just one firm to build it are getting burned.  

Always be paranoid re; this kind of work.  Always.  

fleur de lis's picture

Agree that this is much deeper. There is some kind of central banker gang war or coup at the top so we only see the expendable pawns. Interesting how easily they trash financial information when it suits them. The money that is publicly exposed is probably nothing compared to what financial info they have chosen to protect.

This was not some spur of the moment decision, so the question is whose information have they held back or transferred? There is method in their madness, like all their psychopathic friends in power.

El Oregonian's picture

I wonder what Manuel Noriega knows?

HopefulCynical's picture

The House of Rothschild stands out, even amongst the rest of the parasitic financier scum, as a blight on the face of humanity.

HectorCamachoTrump's picture
HectorCamachoTrump (not verified) HopefulCynical Apr 5, 2016 8:46 AM

"The House of Rothschild stands out, even amongst the rest of the parasitic financier scum, as a blight on the face of humanity."

The lone honest comment on this entire thread.

GRDguy's picture

"Rothschild Trust"  Don't you love it.

Anyone that uses the word "Trust" in their name deserves to be avoided.

XuscitizenSweden's picture

"....To conceal their scheme, the Rothschilds and their co-conspirators attached to said central bank the “FEDERAL” moniker, a clear misnomer intended to hoodwink gullible Americans. Quite the obvious pattern, isn’t it? As a result, money creation in the US went from the People’s Representatives to a group of wealthy men who all strangely happened to be Ashkenazi Jews (except for their token non-Jewish partners):

1. Rothschild Banks of London and Berlin.
2. Lazard Brothers Banks of Paris.
3. Israel Moses Seif Banks of Italy.
4. Warburg Bank of Hamburg and Amsterdam.
5. Lehman Brothers of NY.
6. Kuhn, Loeb Bank of NY (Now Shearson American Express).
7. Goldman Sachs of NY
8. National Bank of Commerce NY/Morgan Guaranty Trust (J. P. Morgan Bank – Equitable Life – Levi P. Morton are principal shareholders).
9. Hanover Trust of NY (William and David Rockefeller & Chase National Bank NY are principal shareholders).

Dean Henderson, in his article The Federal Reserve Cartel, clearly explained and confirmed the private ownership of the Federal Reserve:

“J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank – by far the most powerful Fed branch – by just eight families, four of which reside in the US. They are,
• the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York
• the Rothschilds of Paris and London
• the Warburgs of Hamburg
• the Lazards of Paris
• the Israel Moses Seifs of Rome

“CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches. He names,
• N.M. Rothschild of London
• Rothschild Bank of Berlin
• Warburg Bank of Hamburg
• Warburg Bank of Amsterdam
• Lehman Brothers of New York
• Lazard Brothers of Paris
• Kuhn Loeb Bank of New York
• Israel Moses Seif Bank of Italy
• Goldman Sachs of New York
• JP Morgan Chase Bank of New York


Ghordius's picture

nice list, but a bit outdated, I fear. today, there is a new list that explains the current setup way better. that of the Primary Dealers

btw, China is for all purposes one of the main PDs of the FED

Herd Redirection Committee's picture

So Ghordius are you saying the Chinese are the Jews of Asia???

fleur de lis's picture

Noriega was mixed up in the narcotics trade. He even looked like a street thug. But he was our street thug. He probably fell out of favor by saying "no" to something, making too many requests, or maybe asking for a bigger cut. Whatever. They're all the same trash.


Leopold B. Scotch's picture

You never want to be a small ally of the United States.  You will be thrown under the Bus as soon as it's politically convenient realizing you were dispensable all along.

fleur de lis's picture

That's the whole problem -- these nothing nobody thugs don't suspect anything when all the big important honchos start inviting them to dinner, receptions, and give them big, fat bankbooks. Their stupid egos get them and they fall for it every time.

Idiots like Noriega think that just because some public figure plays golf with them that they have been accepted into the fancy circles. Then when they step out of line they get smacked down and locked up --or worse -- and they still don't get it. There's always another egomaniac thug to take his place for a little recognition and fancy digs.

Billy the Poet's picture

There was a sea change after 1979. The US took care of the Shah after he was ousted and paid the price of the hostage crisis. A few years later when Marcos went down the US did not shield him. When it was Noriega's turn the US went after him aggressively as they did later with Saddam and the Assads.

Almost Solvent's picture

Jimmy Carter was too nice. You don't pay 'em for the sex, you pay 'em to leave . . .

firstdivision's picture

That is impossible as if one needs a complex network to hide/move cash, it would be in a database on a network computered so it can be accessed from anywhere at anytime.  I think hackers are now learning where to look for this data and expect more leaks soon.

Urban Redneck's picture

Back in the figurative dark ages we went by "1 Man, 2 Ledgers" Even after Bill Gates sold everyone on MicroShitty, this didn't change. If you are hiding a monetary path, none of individual links must be able visualize the entire chain. There is no single networked database to hack, except perhaps the NSAs.

Paveway IV's picture

There were different leaks of offshore data published by the ICIJ as a searchable database in 2013 and 2014 (apparently not Mossack Fonseca data). They were pretty clear that many of these entities didn't have complete data or ultimate beneficiary names because they were created by other offshore holding companies through other firms.

The only twist in the current MF leak is that this wasn't a database, but (reportedly) folders of original contracts, documents and files. There may be more of a paper trail for some of these companies back to the real owners, but this doesn't mean that a substantial number were still set up by or are now owned by other holding companies created at other firms. The ICIJ said they will not make the Panama documents public like the 2013 leaks, so we're left to guess how many of the 1000's of companies are just shells owned by layers of other entities. That may account for the relatively few number of individuals named compared to the claimed count of corporations.

For the individuals that went with the 1- or 2-tiered system, you can probably assume either stupidity/laziness or the possibility that the corp was actually created for some legitimate purpose other than tax evasion, money laundering or secrecy. That's why I don't think there will be anything too sensational in the data itself. Anything really interesting will be from investigative journalists following the trail well beyond MF, which takes time. Probably why the ICIJ director said there is much more interesting stuff yet to come out. 

Herd Redirection Committee's picture

The ICIJ director said "More on the way" because they are busy blackmailing the remaining participants, at this moment.  Those who pay up/sign up won't be revealed, those who refuse to pay the blackmail rate will be exposed.

So you see, he couldn't promise too much, he himself is very hopeful they DON'T release any more info, i.e. that everyone succombs to the blackmail!

Paveway IV's picture

He probably has an offshore shell company set up to launder the blackmail profits. That's how they get away with it!

Paveway IV's picture

You know, if the ICIJ crew used e-Volusoft for their project... well, that would be pretty incriminating.

But it sounds exactly like what they would have needed. I wonder if it's any good? Maybe the leak was intentional by Mossack Fonseca to get someone else to design a document management system for them for free. Maybe they were desperate since the partner/IT guy Zollinger left in 2010 and they were too cheap to buy one themselves. They did want to get out of the overseas tax-shelter shell business. All they would have needed was a mole in the ICIJ to steal the code after it was done. Fucking GENIUS!

"Psssst... Hey buddy: Interested in 3TB of images of unindexed, uncatalogued documents? There's probably some dirt on Putin in there somewhere..."

KnuckleDragger-X's picture

Money laundering has been around as long as tax's have existed, and this particular pair of whores got caught, but the bordello has plenty of choices left.....

StateofFraud's picture

U.S. as new best tax haven?


Caution advised.

tunetopper's picture

Zero interest rates has been a strategic part of the comprehensive strategy to flush out the Russian , Cypriot, Saudi,UAE, Qatari, tax havens- and the UK havens are just in the way. The end game is afoot, as these chess-pools are divulged. The central bankers are the technocrats who will do the bidding for the ultimate winners. When those who own long bonds at negative-like rates get hit with rising rates, it will be checkmate!

tunetopper's picture

Excellent post! The more convoluted the back-up strategy you can bet the dirtier the money

Urban Roman's picture

So, we have seen a few of the highlights ...

When do ZH readers get to see the rest of that 2.6 TB treasure trove? There must be lots of good dirt in there..

HowdyDoody's picture

That data isn't for our unworthy eyes. It is for perusal by respected journalists and entities funded by USAID, Open Society and the like.


wildbad's picture

so..soros was behind ripping this dirty sheet away...what a surprise.  and puti was mentioned and is guilty by association.

where is obama hiding his millions? Merkel hers?  c'mon whistleblowers..we're waiting

SomethingSomethingDarkSide's picture

Basking in the calls for "Privacy" from dozens of Communist Tyrants, Iron Fist/Limp Wrist Socialists/Fascists, and Patriot Act Founders.


Now, if only there were some Blood to bathe in..

___________'s picture
___________ (not verified) Apr 5, 2016 7:33 AM

"Fonseca [...] while as a young man had considered becoming a priest."



Brazen Heist's picture

Somebody wanted to destroy Mossack Fonseca and they succeeded. Probably a competitor? A larger shark. Let the sharks start eating each other I say. I'm dying to hear where Clinton stashes her holdings, and other American corporate/political/military elites that are strangely not even mentioned. They must be using a competing service. 

45North1's picture

The old joke, two guys in the woods and along comes a wolf.

Guy one to Guy two,  " I don't need to out run the wolf..... just you"

Have one group of elites been rolled over by a more powerful group of elites to buy time?

Hoping there will be a feeding frenzy, but remain skeptical.

francis_the_wonder_hamster's picture

"I'm dying to hear where Clinton stashes her holdings"



Lorca's Novena's picture

you never will, officially. If they expose her/it, they expose themselves.

AGuy's picture

"you never will, officially. If they expose her/it, they expose themselves."

No, The Clinton stash there cash in the Clinton foundation, which is a "non-profit" and tax exempt. Of course there is nothing that is "non-Profit" about the Clinton Foundation. Its just a tax shelter.



Antifaschistische's picture

bingo....South Dakota?  Nevada?  BS.  Foundations are the most accepted scam out there masking as some philanthropically purposed .org.    It's all BS.  Sure, they throw crumbs to the hungry...build a dolphin habit or save a harp seal bs stuff.  But it's all a facade.  Just like most of the mega-churches in America...just a financial shell for some slick car salesman ego maniac.  

samsara's picture

"Somebody wanted to destroy Mossack Fonseca and they succeeded Probably a competitor?"

Ah,  the family name was in the title.   Maybe you missed it.


Sandmann's picture

Global corporations need these services as do the British islands with no other means of financing themselves. the UK deliberately created Treasure Islands when decolonising but now the USA wants TOTAL CONTROL of all Offshore Funds and Energy Supplies and Shipping Lanes as part of its ONE GLOBAL EMPIRE

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 5, 2016 7:39 AM

US is making sure they are the only game in town for illegally parking funds.  When you have the largest army in the world, you make the rules.  Get in line, bitchez

Son of Loki's picture

Perhaps, The NAR conspiring with Wall Street bankers and the Fed to force all the "secret" money to USA real estate and bankers pockets.


Why am I not surprised.