Wednesday, November 21, 2018
Book Review: 'Secrecy World' by Jake Bernstein
The world of secret offshore companies is outrageous. The rich and corrupt, seeking to hide assets and income from taxes, set up shell companies, foundations and trusts – by the hundreds of thousands – every year. Despite the harm it does to local government and the likely illegality of it, the industry holds public trade shows and conferences where shady lawyers, accountants, financial planners and consultants flaunt their services. The numbers are mind-numbing: over $100 trillion hidden from view, costing middle class taxpayers trillions to make up the difference. The treasure trove of the Panama Papers has imposed a little sunshine here, in Secrecy World.
Jake Bernstein has followed the leads backwards and forwards. He fills in the details of who the players are and how they got there. He also takes some minor side trips to corrupt practices like drug dealing, a slave ship, abandoned construction and a fraudulent reinsurer, to show how these players are actively ruining the lives of others with their fake firms. There is even a side trip to the Swiss tax-free art warehouses, where a good hundred billion dollars in precious art is hidden from view and taxation.
The book is structured like a tree. Each of the roots gets an airing, and they all lead up to the visible trunk – Mossack Fonseca, the Panamanian law firm from which all the documents were leaked. The roots consist of Mossfon bureaus around the world, dealing with various corrupt governments, corrupt banks and eager clients. The crown is the billowing scandals the journalists perpetrated, going off in many directions, covering the sky with corruption on a truly global scale.
Bernstein has an interesting style. He does with paragraphs what good writers do with chapters – entice. His paragraphs become cliffhangers for the next paragraph, keeping the reader hooked over a long, incredibly diverse and involved exposé. He gives the Panama Papers worldwide relevance.
The roll call of leaders using hidden offshore accounts is a who’s who. The perps include Vladimir Putin and his cabinet, Xi Jinping, Hosni Mubarak, Hafez Al Assad, both Kirchners, the king of Saudi Arabia, Nawaz Sharif, the ruling Aliyev family of Azerbaijan, David Cameron, Dick Cheney, the prime minister of Iceland, the world football regulator FIFA, and Odebrecht. It seems like there is not a single financial corruption case in the news today that does not pass through the offices of Mossack Fonseca. And there is an entire chapter on Donald Trump’s connections and dealings with Mossfon clients and their offshore firms. They are his partners and friends.
The real hero of the story is the unique collaboration among journalists around the world, called the International Consortium of Investigative Journalists, where Bernstein works. They spent a year trying to make sense of the documents and data. Their familiarity with their own country and region allowed them to identify players and plug them into deals. There was so much data it took 33 8-processor Amazon servers to execute a search in parallel. 12 million documents worth 2.6 terabytes had been sent to the group over many months. No one knew when it would stop or what the final size might be or what it all meant. More than 300 journalists in 65 countries researched the hoard, on a deadline so they could all publish on the same day. And the whistleblower/leaker/hacker has wisely remained unidentified, seeing what has happened to the likes of Manning, Snowden and Assange.
Finally, with the decline of the huge offshoring operations in Panama, Luxembourg and the BVI, the global leaders of this nefarious industry of corruption are the US states of Delaware and Nevada.
Editor's note: This review has been published with the permission of David Wineberg. Like what you read? Subscribe to the SFRB's free daily email notice so you can be up-to-date on our latest articles. Scroll up this page to the sign-up field on your right.