Finding the Panama Papers

Recent revelations, exposing how the global elites hide their money, rocked the world. A huge network of journalists helped in the investigation. But, as he describes here, it began with a single text to the German journalist Bastian Obermayer

The legal firm Mossack Fonseca aggressively maintained the secrets of its many clients (AP)

“Ping.”

My wife, our children and I have been at my parents’ for three days, and for the past two everyone has been ill. Except me. It’s 10 o’clock in the evening and, having tended the last patient, I sit down at the table, open my laptop and put my smartphone next to it.

Then there’s a “ping”. A new message.

Hello. This is John Doe. Interested in data? I’m happy to share.

Investigative journalists are genetically programmed to prick up their ears at this kind of offer. Secret data is always good news. At the Süddeutsche Zeitung we’ve published lots of articles based on leaked data in the past three years – and the mechanism is always the same – a large volume of secret data flows out and ends up in the hands of journalists. If the volume of secrets is large enough, it is, statistically, almost bound to contain some good stories.

Also, journalists often spend weeks, sometimes even months, chasing a specific source. So if a potential source comes to you, you need to react fast. Or at the very least you need to react: there’s almost nothing more annoying than finding a story in another paper that you were offered first.

Me: Hello. We’re very interested, of course.

You can immediately tell the worst sources – bad sources, or at any rate crazy or confused ones – from their emails. Crazy people do sometimes have good stories, but it’s the exception rather than the rule. The advantage with data is that it’s not self-important or verbose. It doesn’t have a mission and it isn’t looking to deceive you. It’s simply there, and you can check it.

Every good dataset can be collated with reality – exactly what journalists must do before they start writing – but at some stage they also have to consider very carefully which part of the data they’re going to exploit. That’s the difference with WikiLeaks. The coordinators of that site simply posted data on the Internet without any journalists filtering it.

Me: How would we get the data?

JD: I would like to assist but there are a couple of conditions. You need to understand how dangerous and sensitive some of this information is. My life is in danger, if my identity is revealed. I’ve spent the past several weeks considering how to handle this. We will only chat over encrypted channels. No meeting, ever. The choice of stories is obviously up to you.

I can live with those conditions. Journalists obviously prefer to get to know their sources, but for the informants it’s often better to remain in the shadows. Whistle-blowers aren’t particularly well protected, even in Germany, and every single person who knows an informant’s identity is a potential risk – even, perhaps especially, if that person is a journalist.

However, the source communicates clearly and concisely, and I can do the same. This someone has obviously got something they want to get rid of, and they want to give it to me.

Me: So how to proceed?

I send contact details for further encrypted communications. In subsequent exchanges we agree how the transfer will take place, and that I can expect to receive a first sample soon. The source doesn’t ask for money, which is a good sign (although the fact is, the paper never pays for information).

“Ping.”

The sample has arrived: a big bunch of documents, most of them PDFs. I open the files on my computer and analyse them, one by one. There are companies’ articles of incorporation, contracts and extracts from databases. It takes me a while to grasp the links between them, but after a quick Internet search I can situate the case.

The location is Argentina. A public prosecutor, José María Campagnoli, suspects shady businesspeople have helped the Kirchners – the then-president Cristina and her late husband Néstor – to smuggle around $65m out of the country. This theft was allegedly conducted via a labyrinthine system of 123 shell companies, all of them set up, predominantly in the US tax haven of Nevada, by a Panamanian law firm called Mossack Fonseca. Nevertheless, none of the accusations has been proved, and Cristina Kirchner disputes their accuracy.

What makes the case topical is that there is pending litigation in the US. Directed by its founder Paul Singer, the investment fund NML had bought millions of dollars’ worth of Argentinian government debt – and then the country went bankrupt. Most creditors agreed to debt relief, but not NML. The fund is filing lawsuits around the world for the seizure of Argentinia state assets. It has even had an Argentinian warship impounded off the coast of Africa.

The goal of the current lawsuit in the US is to force the disclosure of this network of shell companies. NML wants Mossack Fonseca to surrender all documents pertaining to the 123 shell companies. I have some of those files on my screen right now, documents that NML has been chasing in vain for years. One thing jumps out at me: the payments run into millions.

The papers show the transfer of $6m into a Deutsche Bank account in Hamburg. The accompanying contract raises further questions: it’s a commission on a gambling deal. Two other files name the real owners of two of the firms whose documents NML is seeking to obtain and would constitute a huge leap forward in the case.

The interesting thing is that all the documents appear to originate from the same law firm. I’m familiar with Mossack Fonseca, but only as an impenetrable wall. (Whenever our research led us to this law firm, it spelled the end of the investigation.) One of the largest providers of anonymous shell companies, it’s not exactly famed for being fussy about its clientele; quite the opposite, in fact.

In plain English: while many of its clients are doing nothing illegal, some of the world’s biggest scumbags have used Mossack Fonseca’s anonymous offshore companies to disguise their business dealings. Search the Internet for Mossack Fonseca’s clients and you will find Gaddafi, Assad and Mugabe, allegedly working hand in glove with the Panamanian law firm. Note I say “allegedly”, as Mossack Fonseca denies any association with these people, and its client list is confidential. So far, at least.

Me: The material seems to be good. Can I see more?

But “John Doe” doesn’t answer. Second thoughts? Or merely considering his or her next move?

Me: Is all about the Argentine case?

When there’s still no reply after 20 minutes, I go to bed. But the next morning – with the sickbay still full – there’s an answer. And a lot more besides.

JD: I am sending a few more documents. Some have to do with Russia. Another part of a PDF is specially intended for you Germans. Look for Hans-Joachim . . . There’s a lot more from where that came from.

I’m desperate to look through the documents straight away, but – and this is very tough – I first have to go to the pharmacy and the store. I’m the only one in a fit state. But by late afternoon every bed has a sleeping patient in it, and I can return to my computer. The new documents also seem to come exclusively from the files of Mossack Fonseca. The company clearly has a serious problem. A leak.

First I study a several hundred pages of bank transfers, but one sticks out: on 19 November 2013 a sum of almost $500m in gold was paid into the account of a man called Hans-Joachim K at Société Générale Bahamas. Half a billion. A vast sum of money.

I’ve never heard of Hans-Joachim K, but a Google search reveals him to be a little-known Siemens manager in Germany who used to be chief executive in Colombia and Mexico. This might be a lead. For many years Siemens ran slush funds in South America to reward people who helped its business to flourish. I find dozens of articles, including some in the international press.

One thing baffles me, though. This jaw-dropping sum was transferred into the Siemens man’s account in autumn 2013, yet the company’s Latin American slush funds had been uncovered way back in 2007/8. There were lawsuits, some of which continue to this day. This is strange, to put it mildly. You don’t just suddenly come by $500m, so where’s this money from? A book-keeping error?

Before I can become absorbed in further details, I hear the kids calling. They want more salted snacks and toast. I give in and snap the laptop shut. Those $500m aren’t going anywhere. I spend the afternoon reading stories, making tea and filling hot water bottles. It’s late in the evening before I get a chance to look at the new material.

At first glance it seems predominantly about shell companies, most of which seem linked to the same secret owner, one Sergei Roldugin. Many of the documents are contracts involving sums running into many millions. $8m here, $30m there; $200m, then $850m; all share deals or loans. Yet the name Roldugin doesn’t ring any bells. So I do a search, and what I find sets my spine tingling. Sergei Roldugin is “Vladimir Putin’s best friend”, according to Newsweek, and godfather to Maria, Putin’s elder daughter.

The godfather’s offshore dealings would be interesting enough, but then I read something completely bemusing. Roldugin, a man who handles zillions of dollars, is neither an investor nor oligarch: he’s an artist, a famous cellist and the former director of the St Petersburg Conservatory. I find an interview he gave, in which he explicitly states that he is not a businessman and doesn’t have millions. So, if the documents are authentic – and I I now have little doubt, either he lied or it isn’t his money. Whose is it then? Is Roldugin a straw man? And if so, for whom? For Putin?

If it’s Putin’s money in these companies, even a fraction of it, the story would make headlines around the world. Whoever leaked these papers to me also spotted Roldugin’s name, and he or she is worried. Probably with good reason.

Me: Who are you?

JD: I’m no one. Just a concerned citizen.

Me: Why are you doing this?

JD: I want you to report on the material and to make these crimes public. This story could rival the [American whistle blower Edward] Snowden documents in importance … We should discuss what is the best way for me to send you a large amount of material. Any ideas?

Honestly? I have no idea. I’ve never had an anonymous source asking to hand over material to me by the gigabyte. I can also hear my son crying upstairs.

Me: I will have to think about it. How much data are we talking about?

JD: More than anything you have ever seen.

It turns out not only to be more than anything I’ve ever seen; it’s bigger than any leak that any journalist has ever seen. It will also mark the beginning of the largest international investigative journalism project of all time. Ultimately, around 400 journalists from over 80 countries will be investigating stories originating from this data. Stories that report on the secret offshore companies of dozens of heads of state and dictators; stories explaining how billions are earned from arms, drug and blood-diamond trafficking and other illegal business; and stories that bring home to readers the scale of tax evasion by the wealthy and super-rich of this world.

And all those stories begin with Mossack Fonseca on that first night.

This is an edited extract from ‘The Panama Papers’ by Bastian Obermayer and Frederik Obermaier (Oneworld, £12.99) published tomorrow