Wednesday, November 22, 2017

Bernstein, Secrecy World

Jake Bernstein’s Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite (Henry Holt, 2017) is both riveting and dispiriting. Bernstein, a Pulitzer Prize-winning journalist, knows whereof he writes because he was a senior reporter on the International Consortium of Investigative Journalists team that broke the Panama Papers story.

Data siphoned off from the law firm of Mossack Fonseca in Panama “afforded an unprecedented look into the operations of an underground economy through which trillions of dollars flow annually. This river of cash exists in a largely unregulated place known as the secrecy world. It’s an alternate reality available only to those who can afford the trip. In the secrecy world, wealth is largely untouchable by government tax authorities and hidden from the view of criminal investigators. Through the secrecy world, family dynasties are nurtured, their fortunes—often acquired illicitly—laundered and passed on to heirs. It’s a place where capital always triumphs over labor and the well-to-do are free to ignore the laws that govern their fellow citizens.” That’s dispiriting.

But Bernstein’s account of who hid money and how they did it is fascinating. From Vladimir Putin, whose name of course never appeared in the files, only the names of his oldest and most loyal friends, to Donald Trump’s partners and customers, to brashly overconfident Icelanders—people created thousands of shell companies with Mossfon. Some were trying to keep their wealth secret from their spouses, others trying to avoid the tax man, still others were buying and selling art, often to move it to freeports.

Secrecy World is a must-read book for anyone with an interest in, and perhaps a sense of outrage over, how the rich protect their wealth. And, I should note, it’s not just through secret offshore accounts. Delaware and Nevada allow incorporations with virtually no due diligence.

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