This stain can no longer be washed away

Why the founders of Mossack Fonseca shouldn't be offended by the film Laundry Room

Law firm Mossack Fonseca founders Juergen Mossack and Ramon Fonseca are angry at American entertainment company Netflix over the recently released feature film The Laundry and are suing "for defamation". The film is based on the Panama Files, a global journalistic investigation that showed how Mossack Fonseca registered offshore companies, trusts and foundations - including for politically exposed persons, high-ranking officials and people with a tarnished reputation around the world, helping them to hide inexplicably earned money. The Founding Fathers didn't like being the prototype for the "carefree lawyers" who, in the story, help launder billions.

The Panama Files is a large-scale investigation involving the German newspaper Süddeutsche Zeitung, the International Consortium of Investigative Journalists (ICIJ), the Center for the Study of Corruption and Organized Crime (OCCRP), Novaya Gazeta and many journalists around the world, which was published in 2016 and won the Pulitzer Prize the following year. After publications in dozens of countries, checks and criminal proceedings began, several high-ranking politicians left their posts. The President of Russia was forced on television to comment on data about his old acquaintance, cellist Sergei Roldugin, through whose offshore companies a couple of billion dollars passed.

Mossack Fonseca itself was raided, and as a result, the firm, founded in the seventies, did not survive the scandal, having ceased operations in 2018. And now a feature film has fallen on the reputation of its founders, which can be watched by millions.

But I think Mossack and Fonseca shouldn't be offended by Netflix and insist that they weren't "carefree" and did their due diligence on their customers.

The life of their law office was much richer than any fiction.

It just so happened that banks and law firms should know exactly who they are providing services to. They have a "know your customer" rule, which means they need to verify who brought the money and how it was made. There is a special procedure for this. In fact, at Mossack Fonseca, this check was often weak: sometimes they will write the name of a well-known, politically significant person with a distortion - so that this name cannot be found on the Internet, and the checking employee reports with a clear conscience that he did not find out anything about the client; they will ignore the exorbitant funds in the accounts of a person who has never been in business.

Personally, in the process of working on the Panama Files, I remember, among others, one colorful episode, which was not included in the publication, because it was very small. This episode talks about how they checked the reputation of customers and the origin of their money.

In 2012, Mossack Fonseca forwarded a letter from a Russian businessman, formerly a petty regional police chief (the editorial office has his last name). The businessman was on the verge of despair, needed an urgent evacuation from Russia, urgently looked for real estate in a secluded place abroad, and was very frank in his message:

“My family is located in a remote part of Russia on the border with Mongolia - in the city of Kyakhta. <...> I am now in Kyakhta, because I managed to pay a security officer for my escape from prison. I need your professional help in order to do a confidential financial transaction and help my family to move to Mongolia and then get a property.

All of our accounts in Russia are frozen, but I have saved $18.5 million in a trusted vault in Amsterdam. I would like you to help us come to Amsterdam to collect cash from a trustee. <…> After that, you will receive 3 million dollars for your help <…>”.

The Mossack Fonseca partner law firm that forwarded this letter offered the former police chief a $200,000 move to a penthouse at the luxurious Trump Ocean Club in Panama, to which he happily accepted.

Surprisingly, according to the materials of the Russian courts, at the time of the letter, the former policeman and entrepreneur should still be serving his sentence in one of the Russian colonies, and not hiding on the border with Mongolia, waiting for relocation to one of the development projects of the current US President Donald Trump.

At Mossack Fonseca, this message was not much of a surprise. Employees took it with humor. “You can laugh. Here is Trump's perspective,” said a Mossack Fonseca employee, forwarding a letter to colleagues.