Mossack Fonseca & Co. () was a Panamanian law firm and corporate service provider. At one time it was the world's fourth-largest provider of offshore financial services. From its 1977 foundation until the April 2016 publication of the Panama Papers, it remained mostly obscure, even though it sat at the heart of the global offshore industry and acted for about 300,000 companies. More than half were registered in British tax havens, as well as in the United Kingdom.
The firm received worldwide media attention in April 2016, when the International Consortium of Investigative Journalists published information about the financial dealings of the firm's clients in the Panama Papers articles. These articles were the result of analyzing an enormous cache of documents, dated from 1970 and 2015, which were leaked to the news media, and which "implicated at least 140 politicians from more than 50 countries" in tax evasion schemes.
On 14 March 2018, the firm announced that it was closing due to the damage inflicted to its finances and reputation by the discovery of the multi-billion-dollar money laundering schemes.
History and practice areas
The firm was founded by German lawyer Jürgen Mossack in 1977, and joined by Panamanian novelist and lawyer Ramón Fonseca in 1986. It later added a third director, Swiss lawyer Christoph Zollinger.
The firm specialized in commercial law, trust services, investor advisory, and international business structures. It also offered intellectual property protection and maritime law services. An internal memorandum revealed in the 2016 Panama Papers leak noted that 95% of the company's work consisted of "selling vehicles to avoid taxes".
In 2013, the firm was described as one of seven that collectively represented more than half of the offshore companies incorporated in Panama. The firm also housed several Panama-incorporated companies within its offices. It was one of the largest firms in the corporate services industry. However, the founder claimed that its volume represented only around 5% of the global financial services legal industry. According to The Economist, the firm had 5 to 10% of the global shell company market, and it was described as "tight-lipped".
Offices and international practice
The firm had nine offices in China, several in Latin America, others in the United States and Europe, with two in Switzerland. Lawyers from the firm were sent to foreign countries to promote business in Panama and Panamanian financial products.
Mossack established operations in the British Virgin Islands in 1987, where it incorporated more than 100,000 companies.
The firm was consulted by the country of Niue when it sought to become an offshore financial center, and managed that business exclusively for the country through its Panama headquarters. However, American banks imposed embargoes on bank transfers to Niue in 2001, leading to a shutdown of the business in 2005. Accounts of the firm's clients were moved from Niue to American Samoa.
Controversies
The firm had allegedly helped foreign citizens circumvent their local tax laws and sometimes even international sanctions. The firm's founder argued that it simply helps its clients achieve privacy, and that it complied with "know your customer" regulations. On 20 October 2020, Germany issued international arrest warrants for the two founders of the firm.
Argentine money laundering
In 2014, MF Corporate Services was subpoenaed by a hedge fund seeking to recover money from the Argentinian government. The fund alleged that MF had created shell companies to pass money from the government to Lázaro Báez, an ally of the Kirchner family. Jürgen Mossack testified under oath that M.F. Corporate Services (Nevada) Ltd. had no affiliation with the Panamanian Mossack Fonseca, but the Panama Papers show that it was in fact a wholly owned subsidiary and Mossack Fonseca tried to hide the relationship, ordering emails and other computer footprints deleted. Despite Mossack Fonseca's claim that it did not own MF Corporate Services, a Nevada judge ruled that the subpoena against Mossack Fonseca was valid. The firm was fighting an order that it turn over the details of 123 shell companies created by an associate of a former President of Argentina.
Commerzbank
In February 2015, the firm was implicated in the German government's investigation of money laundering and tax evasion schemes at Commerzbank.