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Home » The Dark Side of Offshore Corporations and Their Unscrupulous Architects

The Dark Side of Offshore Corporations and Their Unscrupulous Architects

Ken Silverstein, a prominent investigative reporter in the US, has sharpened his skills and remarkable memory on the offshore anonymous corporation scene, particularly focusing on the law firm Mossack Fonseca & Co. from Panama. This piece of reporting is a must-read, found here.

So, who facilitates these fictitious entities? To operate, shell companies like Drex require a registered agent, often a lawyer, who submits the necessary incorporation documents and typically provides the shell’s address. This arrangement creates a barrier between the shell and its owner, notably when the front company is established in a tax haven where ownership data is shielded by a robust framework of laws and regulations. In Makhlouf’s situation—and as I uncovered, in several other dubious businessman cases—the organization that assisted in setting up his shell company and obscuring it from global scrutiny was Mossack Fonseca…

Since the 1970s, this law firm has grown significantly, now operating through affiliated offices in 44 countries, including the Bahamas, Cyprus, Hong Kong, Switzerland, Brazil, Jersey, Luxembourg, the British Virgin Islands, and, worrisomely, the US—specifically in Wyoming, Florida, and Nevada.

Mossack Fonseca is not the only firm facilitating shell companies for the world’s criminals and tax dodgers. Worldwide, numerous competing firms exist, many of which register entities as questionable as Drex. For example, Viktor Bout sold arms to the Taliban in the 1990s via a shell company registered in Delaware. More recently, in 2010, Khalid Ouazzani admitted guilt for utilizing a Kansas City, Missouri, company called Truman Used Auto Parts to launder money for Al Qaeda.

Various news reports and international probes have identified Mossack Fonseca as one of the most prolific creators of shell companies globally, but it has, until now, employed a range of legal and accounting strategies that have permitted it and its clients to remain largely off the radar.

(The firm contests this assertion, claiming in an email that “there is no court or government record that ever pinpointed Mossack Fonseca as being behind ‘shell’ companies. Any suggestions linking our group to ‘criminal activity’ are without basis, as we have not been officially informed of any legal action… so far.”)

This merely touches the surface, be sure to read it; it’s the kind of insight you’ll want if you’re keen to understand how power and wealth function in today’s world.

After perusing the article, I rummaged through my own files to check if I had any dealings with Mossack Fonseca. Among the documents I found, I noticed that the law firm has visited this blog occasionally. Hello, thanks for stopping by. I also found it listed as a consultant for the World Bank Doing Business report.

Silverstein is the genuine article. Mossack Fonseca also seems to fit the bill. Enjoy the read.