Mossack Fonseca, a prominent law firm headquartered in Panama—with offices in 36 other jurisdictions—sprung a leak last year. That leak produced approximately 11.5 million documents revealing over 200,000 entities and 14,000 clients, surfacing relationships that had remained behind a veil of secrecy and attorney-client privilege.
The leaked emails and documents reveal a wide spectrum of clientele—from politicians to celebrities, athletes, the ridiculously wealthy and powerful, and corporations—who have been turning to the firm for decades to create offshore shell companies, corporate vehicles that leave virtually no ownership footprint. The International Consortium of Investigative Journalists, and German newspaper Süddeutsche Zeitung, shared the the massive leak — estimated to be 100 times bigger than Wikileaks — with Fusion and over 100 other media outlets. It’s believed to be the largest global investigation in history. It’s being labelled “The Panama Papers.”
Soccer fans—particularly those who have been following FIFA’s unraveling over the last year—shouldn’t be surprised to learn that multiple anonymous offshore entities that used Mossack Fonseca’s services are linked to soccer personalities, many of whom have recently been in the news over allegations of bribery, corruption, and other illicit misconduct. They include a former FIFA secretary general; a former Union of European Football Associations (UEFA) president and FIFA presidential candidate; two controversial Argentine sports and media marketers; and a connected Uruguayan lawyer who, ironically, advises FIFA on ethical issues.
Offshores are perfectly legal, widely used by businesses large and small for a variety of legitimate purposes… but they also “are useful if you don’t want your name to appear on records as a real, live breathing person,” says Professor Jason Sharman, co-author of Global Shell Games: Experiments in Transnational Relations, Crime, and Terrorism. “These companies can screen you from scrutiny, particularly if you’re paying or receiving bribes.” That’s not a good look for FIFA and its regional and national affiliates who, ever since the world’s game became the subject of international ridicule, have been championing transparency and accountability as solutions to many of the game’s ills.
‘It’s almost like a license to participate in corruption and money laundering.’
FIFA and its affiliated bodies have long been structured in a way that encourages corrupt side-deals. The makeup of international soccer’s governing bodies resembles that of other sports federations: They are overwhelmingly run by pampered favor-seekers—a privileged few who routinely rub elbows with presidents, prime ministers, politicians, and multinational executives. And they determine which nations will host lucrative events like World Cup matches. No forum exists to appeal or contest their decisions.
That’s a system ripe for potential corruption, said Robert Targ, a former assistant U.S. attorney. “These same individuals also get to sell the very lucrative media and advertising rights for ridiculous sums of money to those events. And all of this occurs in an environment that was historically either under-regulated or largely unsupervised,” he told Fusion.
That power, combined with offshore industry structures that can conceal the movement of large sums of money from one anonymous party to another, may help explain why soccer’s map is dotted with pirate’s booty and perverted moral compasses. It could illuminate international soccer’s long history of privileged executives acting with impunity, dictating terms to national federations that desperately want to host—and to anyone else seeking a piece of the world’s most lucrative sporting events. “It’s almost like a license to participate in corruption and money laundering while you’re a member of that group,” says Targ. Give these officials access to anonymous shell accounts, and the opportunity for mischief is staggering. It’s like leaving your dinner in front of your dog.
The soccer marketer’s (formerly) secret yacht
It’s worth saying again: Offshore shell corporations aren’t illegal. Companies and individuals often set them up to take advantage of lighter foreign tax rates, or to operate legitimate ventures in a particular country.
But even if they’re legal, these companies can pose real hazards, because it’s almost impossible to trace where their money is coming from or where it’s going. Often the only names on the paperwork are those of the registered agent and directors—usually staffers for a law firm, like Mossack Fonseca, that sets up the companies. Such firms make secrecy a selling point for these services. The real beneficial owner of a company is generally unknowable to the public, concealed by layers of administration and legal privileges. Hence the anonymity of “anonymous” offshore corporations.
That’s how Umbelina S.A.—a company incorporated in the British Virgin Islands on July 2, 2013, using Mossack Fonseca as its registered agent—could purchase a $3.7 million, 104-foot Italian luxury superyacht named “Jade Mary” without anyone knowing what internal Mossack Fonseca documents show: that Umbelina’s sole shareholder and beneficial owner is actually recently disgraced FIFA executive Jerome Valcke.
Though Valcke appears nowhere in public records of the pricey yacht’s ownership, it has since been renamed “Ornella”—Valcke’s wife’s name.
‘You can publish, it is a non story, but… my lawyers will immediately open legal proceedings against you.’
Using a British Virgin Island offshore to purchase a yacht isn’t uncommon. Yet the these vehicles do “confuse the trail,” says Sharman. “The reason you use an offshore company, arguably, is that there’s very little public information about the ownership.” Europeans, who face significant luxury and value-added taxes on yachts at home—up to 20 percent—often use offshores in a variety of (mostly) legal maneuvers to purchase and maintain boats, avoiding those liabilities back home.
If you can deflect information about ownership, you can also deflect information about funds used in the purchase. It’s not clear where the money to buy “Jade Mary”/”Ornella” came from; Valcke did not answer questions about the purchase in an email conversation with Fusion. But two and a half years after Umbelina was incorporated, FIFA banned Valcke for misconduct related to World Cup ticket sales, abuse of the FIFA travel-expense rules, attempts to sell TV rights to a third party for below market value, and destruction of evidence. Swiss authorities have since opened criminal proceedings against the former FIFA secretary-general for “various acts of criminal mismanagement.”
Asked about his boat and Umbelina, his shell company, Valcke told Fusion in an email: “It is a joke. I have already answered questions about Umbelina SA. It is a company registered in the BVI. No bank account, no activity only used for the registration of my boat which is a second hand boat who was already under a BVI flag.
“Half of the boat around the world are either registered in the carribeans or Jersey,” he wrote. “It is common pratice. [sic]”
Valcke added that Umbelina had shuttered, his boat was now “under a european flag,” and he was paying Swiss taxes on it. “So you can publish, it is a non story, but with these informations otherwise my lawyers will immediately open legal proceedings against you. [sic]”
The French football hero’s mysterious Panamanian business
Former player, coach and soccer executive Michel Platini also surfaces in the Mossack Fonseca files. Widely considered one of the best footballers to ever play the game, Platini—whose nickname was “Le Roi,” the king—retired and ran UEFA, the European FIFA affiliate that puts on the Champions League competition, for the better part of a decade. Last December, FIFA’s independent ethics committee banned him from the game for eight years (later reduced to six) in connection with a $2 million payment he received in 2011 from scandal-embroiled FIFA president Sepp Blatter.
On November 30, 2007, leaked documents show that Mossack Fonseca incorporated Balney Enterprises Corp., an anonymous offshore company, in Panama. On paper, the business’s purpose was broad and vague. Balney’s sole shareholder is unidentified, but the leaked documents show that Platini has power of attorney for the company, allowing him to conduct business on its behalf—including the right to “open and close bank accounts [and] to deposit funds and securities in [Balney’s] accounts.”
No one else with a substantive role is included on the company’s formation or corporate documents. Balney’s named directors are all current or former Mossack Fonseca employees; they appear as directors on a laundry list of thousands of other companies formed by the firm. It’s not clear the company exists for anyone’s benefit but Platini’s.
‘The Swiss authorities have a full knowledge including the mentioned account.’
Considering Platini’s long tenure negotiating and brokering deals in the European game, his control of an anonymous offshore account raises serious transparency questions. “If you’re an operating company like a mining firm, and you’re working in Africa, for example, it doesn’t seem suspicious that you use offshore companies,” notes Sharman. “But if your actual job is to go into an office and do white collar stuff for a professional sports association, and you have an offshore personal holding corporation for assets, that does seem suspicious.”
Asked to clarify Platini’s relationship to Balney, his publicist told Fusion in an email that “as a Swiss resident since 2007, the Swiss Authorities have a full knowledge of Michel Platini’s personal and tax situation including all his assets and bank accounts.” Platini’s publicist subsequently declined to answer whether the former soccer star was Balney’s sole shareholder, telling Fusion in an email: “The Swiss authorities have a full knowledge including the mentioned account.”
When asked what Balney and its related accounts could have been used for, Platini’s publicist declined further comment, responding that those questions were “related to private matters.”
A fox in the henhouse
Connections between secretive offshore companies and soccer power-brokers are only part of the story. Someone has to fund their activities.
Enter Argentine businessmen Hugo Jinkis and his son Mariano Jinkis, directors of Cross Trading, S.A., an anonymous offshore incorporated by Mossack Fonseca in Seychelles on June 27, 2006. Soccer fans may recognize the father and son as defendants in the U.S. Department of Justice’s ongoing FIFA corruption case. The DOJ indictment accuses multiple Jinkis companies of agreeing to pay $110 million in bribes to FIFA affiliates for “a suite of valuable rights” to the 2013 Copa America tournament. Cross Trading, in particular, was singled out as a company that distributed millions in bribes for TV and sponsorship rights. (The Jinkises and Cross Trading did not respond to multiple requests for comment from Fusion.)
Mossack didn’t just search the globe for “secrecy jurisdictions” with business laws favorable to its trade; it helped create them where they didn’t exist.
The concerns raised by Cross Trading go beyond alleged bribery; they reveal deeper problems in soccer’s governance, as well as the lengths to which firms like Mossack Fonseca will go to attract and protect clients. Mossack didn’t just search the globe for “secrecy jurisdictions” with business laws favorable to its trade; it helped create them where they didn’t exist.
The leaked documents show that Cross Trading actually existed before its 2006 Seychelles incorporation; it was first created for the Jinkises in 1998 on Niue, an island in the South Pacific with a population of approximately 1,200. In Global Shell Games, Sharman and his co-authors write that the island nation, looking to create new revenue streams, drafted Mossack Fonseca to develop a trade in Niuean shell companies. “Mossack Fonseca wrote the legislation for the Niuean parliament, and then marketed the new product and ran the business out of Panama City, remitting a share of the proceeds to the government of Niue,” until international pressure forced Niue to shut down its new shell-driven revenue stream in 2005.
Cross Trading, like many such shell companies, moved large amounts of money in and out via Swiss bank accounts. Countries like Switzerland make prosecution of financial wrongdoing more difficult, in part because they “have secrecy laws that make it difficult to identify account holders and proceeds of illicit funds and who they belong to; they also shield people,” said Morris Fodeman, former chief of the public corruption unit in the U.S. Attorney’s Office for the Eastern District of New York. “It’s much more burdensome to find evidence, and it’s much more difficult to get cooperation of the government or financial institutions for the records and the money.”
One of FIFA’s key ethical watchdogs has been instrumental in setting up secret corporate vehicles for clients that could facilitate bribery, favors, money-laundering, and pay for play.
According to leaked documents obtained by Fusion, a Uruguayan attorney named Juan Pedro Damiani—also president of Atlético Peñarol, one of Uruguay’s most successful soccer teams—helped the Jinkises set up their anonymous offshore in Niue. Damiani and his law firm have had a long, seemingly fruitful relationship with Mossack Fonseca. Over the years, he regularly corresponded with a longtime Mossack attorney on behalf of clients trying to set up or move anonymous offshore companies. As of 2015, Damiani’s firm was still active in referring clients to Mossack Fonseca to set up anonymous offshores. (Damiani did not respond Fusion’s requests for comment.
Damiani has another claim to fame. Since 2006, he has served as a member of FIFA’s independent ethics committee. He was part of the committee that judged Valcke, Platini, and a host of others guilty of corruption and voted to ban them from international soccer. One of FIFA’s key ethical watchdogs has been instrumental in setting up secret corporate vehicles for clients that could facilitate bribery, favors, money-laundering, and pay for play.
Cross Trading’s alleged bribes for broadcasting rights to major tournaments occurred while Damiani, who helped facilitate Cross Trading’s creation, was on FIFA’s ethics committee. “Any time someone has an apparent conflict of interest, it’s certainly concerning particularly when that person is supposed to be in charge of ethics and compliance,” Fodeman said.
While Damiani did not return Fusion’s calls, he did respond to a detailed set of questions from ICIJ and Fusion’s other reporting partners via spokesman, stating that his law firm “does NOT keep any professional relationship with all the indicted in the USA.”
However, a spokesman for FIFA’s ethics committee spokesman confirmed that on March 18, Damiani had informed the committee that he’s had business ties to at least one other FIFA official who is also a named defendant in the U.S. government’s indictment. FIFA vowed to investigate those links.
‘The getaway car for all crimes that generate money’
While there are certainly examples of more nefarious behavior in the leak—as Fusion details in other parts of its shell-corporation investigation, Dirty Little Secrets—it is noteworthy that names of some prominent figures in the soccer world show up in the documents. The only real common link between banal companies doing regular business, arms traders, sex traffickers, politicians, and notables in sports is the identity-protecting corporate structure that they all used, courtesy of Mossack Fonseca.
Although the firm says it complies with all legal investigations, its own service agreements promise clients include a possible caveat. It’s in the section on “Cooperation with Law Enforcement Authorities” (emphasis added):
“The Client and [MF] undertake to fully co-operate with judicial and/or police authorities, whether legally required so to do or not, in connection with any matter involving any clients, where there is prima facie evidence of criminal acts or gross professional misconduct having been committed by such clients, with the exception of alleged fiscal offenses.”
Mossack Fonseca did not answer Fusion’s questions about that exception by press time. In response to questions from ICIJ and its media partners about its incorporation activities, Mossack Fonseca declined to comment any specific case, saying in a statement that “our company does not foster or promote unlawful acts.”
That’s not good enough for some critics of the offshore industry. “Anonymous shell companies are essentially the getaway car for all crimes that generate money,” said Stefanie Ostfeld of the financial transparency nonprofit Global Witness. “It’s time that we take away the keys by requiring that people who set up these companies to disclose who’s ultimately behind them.”