Panama Papers: The Real Scandal Is What's Legal (The Atlantic)
Mossack Fonseca kept its clients largely on the right side of the law. Indeed, thats entirely the point.
In the past few days, hundreds (if not thousands) of media reports have linked the Panamanian wealth management firm Mossack Fonseca to a series of financial crimes. The massive Panama Papers leak documents the firms involvement in facilitating activities that may constitute fraud, money laundering, and theft, including by officials at the highest levels of governments worldwide. But the real scandal is that most of what Mossack Fonseca and the rest of the wealth-management industry do is perfectly legal.
Anyone reading this article can evade taxes, or even dabble in offshore finance, without expert intervention. With just an Internet connection and a few thousand dollars, anybody can create shell corporations and other offshore vehicles in a matter of minutes. Its childs play to dodge taxes, debts, child support, and so on by putting assets in one of those structuresthough there is a risk of getting caught, audited, and possibly prosecuted.
But thats not what many of the worlds richest people are doing: They can afford the privilege of defeating the spirit of the laws without violating them formally. What Mossack Fonseca and its counterparts all over the world really provide is the expertise that allows their clients to stay just on the right side of the lawor far enough into the legal grey zones that the clients have a real chance to prevail if they end up in court. Thats why many of the people who have seemingly been exposed by this leak will likely never face charges of any kind. To the extent that Mossack Fonsecas work facilitated crime, that was a bug rather than a feature.
Understanding this may help resolve the cognitive dissonance that arises from reading about the Panama Papers against the insistence by Mossack Fonseca that their hands are clean. When the firm writes that we have a strong compliance record and we are responsible members of the global financial and business community, they are not lying through their teeth, as some might suspect. Keeping clients out of legal trouble is a core element of their business model: that is how they earn their money. If they, or firms like them, were to lose their reputations for keeping clients on the right side of the law, the clients would take their business elsewhere.
cont'd
http://www.theatlantic.com/business/archive/2016/04/panama-papers-crimes/477156/