On Discovering Niue, And Mssrs Mossack and Fonseca of Panama Papers Fame

Here's how far we haven't come.

Twenty-two years ago, during the filming of "The Laundrymen" for the French/German television production company Arte, I learned about the Pacific Island of Niue. My research into what would be, surely, one of the world's oddest money laundering sinks, led me directly to the two Panamanian lawyers who created the sink, Jurgen Mossack and Ramon Fonseca.

I was the first to out them.

Although not named in the original op-ed, I continued writing about them for the next several years and did name them. I named them on television and I named them in books and articles. I named them because I believed then - and believe now, more than ever - that much of the ills and the evil of the offshore world can be traced directly back to these two sleazebags. The 2016 release of the Panama Papers has proven me right.

Niue has since been cleaned up. But jurisdictions all over the rest of the world remain filthy. While the firm Mossack-Fonseca has been shut down, both men remain free. I fail to understand why some country - how about the United States, where there are still open investiogations on them? Or Great Britain? How about anywhere? - should indict them and call for their extradition.

No, Panama won't extradite. But that's not the point. It's doing something more than just saying that something should be done, that will send a message to other firms who are fabricating the same kinds of financial duckblinds to launder money, evade taxes and reward political corruptiuon.

In Panama, for instance, Mossack-Fonseca was only the fourth largest of its ilk. Put another way, there are three law firms selling access to the offshore world that are even bigger!

Fonseca continues to defend himself and his partner by likening their firm to a kitchen knife maker. He argues, as such, they cannot be held responsible if some woman uses their knife to kill her husband.

Really? How about the people who built the gas chambers and sold them to the Nazis? Do they have a right to claim, but we weren’t the ones who shut the doors and turned out the lights on six million people?

Back in 1998, four years after the original Laundrymen, money laundering was fast becoming the flavor of the month, attracting much lip service but little else. That's when the United Nations jumped on the band wagon. This Op-Ed was written for my old newspaper, The International Herald Tribune and appeared in the New York Times.

It was 22 years ago.

Please tell me what progress has been made.

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Don’t Expect Real UN Action Against Drug Traffic

By Jeffrey Robinson

Published: June 8, 1998

LONDON— A two-day Special Session of the General Assembly opens this Monday at the United Nations in New York, intended as a major assault on the global drug problem. By the time dessert and coffee are served Tuesday night, everything will return to business as usual, including the inability of the United Nations to have any effect on the global drug problem.

They have gone this route before. In 1988 the General Assembly adopted the Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Ten years later, a quarter of the member states had still not signed on, and among the rest fewer than 30 bothered passing legislation that even came close to resembling the model in the convention.

The United Nations’ impotence stems directly from individual members’ interests. Too many countries flourish in the narco-economy.

Worldwide, more money is spent on illicit drugs than on food, making illicit drugs the planet’s largest and most lucrative cash crop.

The devastation wreaked by drugs on everything from families to democracies is too often shrouded by glass skyscrapers — witness Miami, now the economic capital of South America. Or by the dividends of international banking groups — bad loans to Latin America in the 1970s were repaid thanks to drug money. Or by the huge invisible earnings of global financial centers — witness Britain selling its sovereignty in the murky world of offshore banking.

Ultimately, rhetoric is easier than turning the war on drugs into a war on the business of drugs.

As in any multinational industry, drug trafficking thrives on cash flow and reinvestment. Cash from the streets gets put into the world’s banking system, moved in and out of shell companies and through secret banking jurisdictions, then repatriated, disguised as legitimate profit.

The United Nations has conceded that as much as $300 billion worth of drug money is currently immersed in this money laundering cycle. Yet more than 50 UN member states openly sell phony shell companies.

It is not just the Caribbean — the Cayman Islands, for example, with one bank for every 57 citizens. It is also Western Europe (Switzerland, Liechtenstein, Luxembourg, the Channel Islands), the Middle East, Latin America, Eastern Europe, Africa (Nigeria in particular) and the Pacific.

Two months ago, preparing a French television film based on my book “The Laundrymen,” I phoned a company-formation agent in London to wonder, blatantly, where I could hide money. The person suggested Niue. Where is that? The person didn’t know.

It turns out to be a British Commonwealth sandbar in the middle of the Pacific, population 2,321. It has been put on the map by Panamanian lawyers acting for Colombian drug barons.

For $135, white-collar professionals operating legally in UN member states will hook anyone into the network of countries, companies and banks used for hiding dirty money.

Company-formation agents are backseat passengers on this bandwagon. Sitting up front are otherwise legitimate bankers, lawyers and accountants who have mined colossal fortunes out of brokering dirty money.

The United States has the world’s strictest regulations against money laundering — perhaps not surprisingly, as it is the largest consumer of illicit drugs. Yet there are no laws in the United States or in any other member state which hold white-collar professionals criminally responsible for not knowing that way down the line the ultimate beneficial owner of the money turns out to be a drug baron.

Relying on “plausible deniability,” these professionals need only look to their immediate client to claim: “I’m not dealing with a trafficker, I’m doing business with a lawyer.”

Requiring them to identify everyone involved at every level back to the ultimate beneficial owner of the money would effectively thwart the traffickers’ ability to launder his profits.

And the community of nations should ruthlessly ostracize governments which countenance trafficking and money laundering. Shutting down businesses in member states, that rely on secret banking and phony shell companies in rogue states would send the correct zero-tolerance message. You beat the traffickers by bankrupting them.

But that means taking on globally influential bankers, lawyers and accountants, and at least a quarter of the member states. Where are the politicians with the stomach for this fight?

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? Jeffrey Robinson 2020

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