The so-called Panama Papers have made a big splash in the news this week. The New York Times backgrounder on the Papers is here. Yesterday the Panama Papers led to the resignation of Iceland’s prime minister.
A knowledgable reader writes to explain that the Papers revolve around shell companies, which are a Panama specialty, and predicts that there will be disclosures with serious consequences for the people who are exposed in the leaks. This post is adapted from our reader’s message.
The impact of the Panama Papers is probably going to be biggest on people like Iceland’s prime minister — those who are denominated “Politically Exposed Persons” in the money laundering world. PEPs, our reader adds, are a category of individuals — foreign heads of state, their family members, and other ranking officeholders occupying significant positions in government placing them at risk for bribery or corruption.
Financial institutions are generally required to report suspicious transactions involving PEPs. To make sure that suspicious transaction reports get filed, services compile the names of the world’s PEPs and sell this information to the financial institutions, but shell companies can prevent or complicate the filing of reports by obfuscating the identity or interest of the PEP.
Hillary Clinton was a PEP as Secretary of State, and so were Bill Clinton and Chelsea Clinton. When Bill Clinton set up his shell in Sweden to accept $26 million plus his speaking fee, our reader explains, a report should probably have been filed. The transaction wasn’t reported to the State Department. According to the Washington Times, the Clinton Foundation has concealed the names of the specific donors:
Mr. Clinton’s Swedish fundraising shell escaped public notice, both because its incorporation papers were filed in Stockholm — some 4,200 miles from America’s shores — and the identities of its donors were lumped by Mr. Clinton’s team into the disclosure reports of his U.S.-based charity, blurring the lines between what were two separate organizations incorporated under two different countries’ laws.
The foundation told The Times through a spokesman that the Swedish entity was set up primarily to collect donations from popular lotteries in that country, that the money went to charitable causes like fighting climate change, AIDS in Africa and cholera in Haiti, and that all of the Swedish donors were accounted for on the rolls publicly released by the U.S. charity.
The foundation, however, declined repeated requests to identify the names of the specific donors that passed through the Swedish arm.
A spokesman for Mrs. Clinton’s 2016 presidential campaign declined comment.
That’s what shell companies do.
The Washington Times originally reported the underlying facts in the excellent 2015 story by John Solomon and Kelly Riddell, “Bill Clinton’s foundation cashed in as Sweden lobbied Hillary on sanctions.” It warrants another look in light of the Panama Papers and the imminent return of the Clintons, who combine evil and corruption in Third World proportions.