The data revealed the secret holdings of Denise Rich, whose billionaire ex-husband had been at the center of one of the worst scandals of the Clinton administration. Marc Rich’s commodity trading business, called Glencore today, profited from selling embargoed oil. He hid out in Switzerland after Rudolph Giuliani, then a federal prosecutor in New York, indicted Rich for tax evasion and racketeering.Millions of dollars in donations to Democratic politicians and the intercession of his wife won him a pardon from Bill Clinton on the president’s last day in office. The files showed that Denise Rich had a trust in the Cook Islands that held $144 million and a yacht called the Lady Joy.
The secret assets and privacy concerns of Tony Merchant, Canada’s “class action king,” were also in the data. Merchant, a colorful plaintiff’s attorney in Saskatchewan, had waged a bitter battle with the Canada Revenue Agency over back taxes. Apparently unbeknownst to the Canadian government, he, too, had a trust in the Cook Islands, where he kept at least $1.1 million. Merchant insisted on paying for his trust by mailing untraceable cash to the other side of the world. His offshore service provider joked that if they sent him a fax with his name on it, he would have a stroke. Merchant was one of more than four hundred Canadians found in the material.
As Roman Shleynov had suspected at the initial meeting in January, there were plenty of Russians, including politicians and business leaders. He decided to contrast the findings with Putin’s repeated calls for Russians to forsake the offshore system. The hypocrisy made it newsworthy.
Among its stories, ICIJ staffers highlighted ties to the so-called Magnitsky affair. The BVI-based firm Commonwealth Trust Limited had created at least twenty-three companies that were used in the theft of Russian businesses owned by an American hedge fund, Hermitage Capital Management Limited. The hedge fund’s Russian lawyer, Sergei Magnitsky, protested and was imprisoned. Magnitsky died from mistreatment while in custody. Commonwealth appeared not to have known about the activities of its companies until it was contacted by Hermitage.
Good news arrived from Germany, when Ryle’s second choice, the Munich-based newspaper Süddeutsche Zeitung, accepted his invitation to join the effort. The paper assigned a young reporter, Bastian Obermayer, to the project. Obermayer had originally been a feature writer. It was a sign of how little his bosses thought of the project that they picked a reporter with scant investigative experience to work on it.
Since so much of the offshore data ran through Switzerland, Ryle and Walker also looked for a Swiss partner. It was a difficult proposition. Switzerland was built on a bedrock of bank secrecy; it acted as a launching pad into the offshore world. A French colleague at Le Monde suggested Tamedia, a media company with newspapers in both the French and German parts of Switzerland. Tamedia had recently formed an investigative unit and put Oliver Zihlmann, a former Berlin correspondent and news editor, in charge. Little did ICIJ know that the owner of Tamedia, Pietro Supino, was an offshore lawyer himself. To his credit, Supino was also a zealous advocate for journalists. He declined to interfere with the project despite the fact that it implicated his own colleagues.
Zihlmann paired one of his top reporters, Titus Plattner, with Obermayer to investigate Gunter Sachs, a flamboyant millionaire German-Swiss photographer who had once been married to Brigitte Bardot. It was a difficult story. For starters, Sachs was dead. The reporters struggled to determine if he had broken the law. When they mapped out the welter of trusts, companies, and foundations connected to the Swiss law firm that serviced Sachs, the dozens of crisscrossing lines looked like a schooner’s rigging.
It was the Guardian in Britain that was furthest along in writing and reporting. The paper planned a package of nine stories detailing everything from nominee directors to who was using anonymous companies to buy property in London. David Leigh even had a story about a controversial plastic surgeon in London who appeared to be using offshore structures to avoid liability.
By the summer, Ryle had conceded the obvious. They were way behind schedule. Collaboration only functions if everyone is working, but the effort from partners was not there. The topic was new. The data was confusing and still largely inaccessible. The media organizations participating had not bought into the project. Ryle pushed the publication date back to early March 2013.
The Guardian balked. It refused to wait until March. Leigh told Ryle the paper planned to publish in November.
There was nothing Ryle could do. The Guardian was the biggest media player in the project. It was coming off a string of high-profile investigations including the WikiLeaks cables and a newspaper phone-hacking scandal. Most important, it physically had the data. Ryle had no leverage. The Guardian didn’t need ICIJ. It was of small consequence to the paper that the other partners in the collaboration had all convinced their bosses to support the project with the promise that no one would scoop the others.
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THERE WERE DAYS during the project so full of disaster and discord that Ryle and Walker would look at each other and say, “This will surely kill us.” They dubbed them “cancer days.”
The Guardian’s decision to break the embargo was a cancer day. Nonetheless, Ryle deftly managed to downgrade its seriousness from life threatening to temporarily debilitating. He negotiated with the Guardian’s editors not to mention the names of the two offshore companies involved or the fact that the information was the result of a leak. And in the end, the newspaper’s muddy coverage failed to attract broad public attention.
Ryle and Walker worked overtime to mollify the other collaborators. Ironically, the Guardian’s publication of the stories provided tangible proof that the data was legitimate and the stories worthwhile. Skeptical European partners, which held the Guardian in high esteem, suddenly embraced the project enthusiastically.
“The Guardian says, ‘Shit tastes great’ and then editors say, ‘Great, let’s try some shit,’” Mar Cabra, ICIJ’s research editor at the time, recalls with a laugh.
Cabra, a vivacious and diminutive Spaniard who had trained as an actor before turning to journalism, was another holdover from the pre-Ryle days of ICIJ. After burning out as a news reader on Spanish television, she talked her way into Sheila Coronel’s journalism program at Columbia University. As a student journalist, Cabra collaborated on a documentary program on the overmedication of foster children that was aired nationwide on PBS. After a stint at the Miami Herald, she returned to Spain, where she worked on ICIJ’s fishing project.
Cabra’s job was to make the project’s research hubs work. She quickly realized it would be impossible to provide all the documents needed. The reporters in each country had to be able to explore the material themselves. Unfortunately, the information processing was still ongoing. Data journalism was in its infancy. Cabra was one of the only practitioners in Spain. ICIJ was depending on freelance data journalists over whom it had little control.
Cabra suggested bringing in Giannina Segnini, a data journalism pioneer employed by La Nación in Costa Rica. Segnini had started working with large data sets in the early 1990s, before the Internet. She investigated a Costa Rican government program to provide subsidies for the homeless, which was allegedly helping around two hundred thousand people. She had never seen that many homeless people in Costa Rica and went to court to get access to the database. Segnini discovered “homeless people” receiving subsidies who had cars, salaries, and beach houses. She was hooked, rejecting a promotion so that she could create and oversee a data team to do similar stories.
One of her early hires was Rigoberto Carvajal, a soft-spoken genius-level twenty-four-year-old software engineer who had grown up in humble circumstances in the remote Costa Rican province of Guanacaste. Together Carvajal and Segnini scraped every major government database in the country to create a single searchable master. It took them about two years.
A hard drive with the data, still unencrypted, was shipped to the Costa Ricans. Segnini waited for the files to arrive, eager to get started. When the hard drive did not
appear, she grew worried. Segnini did not want to be the person to tell Ryle that the precious files had vanished. Finally, she checked with Costa Rican customs. They had the package. It was being held up because the proper import duties had not been paid.
Duncan Campbell and the Costa Ricans had conflicts over the data wrangling. The experience was a lesson in the pitfalls of collaboration, and the importance of having data journalists on staff.
Meanwhile, it fell to ICIJ’s editor Michael Hudson to coax articles from the foreign freelancers with whom ICIJ had contracted for the stories it published on its own Web page. Hudson was a veteran of the Wall Street Journal who had been one of the few journalists to report on problems in the subprime mortgage industry prior to the 2008 financial crisis. He had started at CPI but suffered under Solomon. Hudson was about to be laid off when Solomon departed and a position opened with ICIJ.
Hudson’s unenviable task was to turn journalism from countries with different standards and practices into articles that met ICIJ’s exacting requirements. Several of ICIJ’s foreign freelancers for the project spoke English as a second language. Their writing styles often leaned heavily on conditionals, opinion, and passive voice. Nonetheless, Hudson recognized the danger of coming across as an overbearing American. He wrote a five-page memo that explained to the writers that editing would be a back-and-forth process and encouraged them to footnote their stories and attribute their facts.
“None of this reflects our trust in your work—it’s a reflection of our need to protect everyone involved as we operate under various legal systems, to deal with the complexity of a tsunami of stories and information coming from a variety of places, and to reassure our funders and publishing partners that we’re putting out the most rigorously accurate investigative reporting we can,” the memo read.
Ryle had finally signed on an American partner—the Washington Post. The partnership began on a discordant note when Ryle had to admit that he had already unsuccessfully approached the New York Times. Editorial skepticism and a lackadaisical effort at the Post hobbled the collaboration. ICIJ and the paper collaborated on a short animated video that described how the secrecy world worked. The animation almost derailed their collaboration shortly before publication when the Post’s lawyers and editors objected to the script for the video.
On February 11, outside events intervened: Pope Benedict XVI announced he would be stepping down at the end of the month. Ryle and Walker feared the project would be overshadowed by the pope’s dramatic decision. They postponed the project’s release yet again, this time to the beginning of April.
Less than a week before publication, ICIJ’s luck finally turned. Months earlier they had discovered in the data the name of the deputy speaker of Mongolia’s parliament, Bayartsogt Sangajav. Attempts to contact Sangajav in Mongolia were unsuccessful. In a last-ditch effort, Ryle reached out to the Mongolian embassy in Washington. It turned out that the deputy speaker was in DC for a conference. Apprised of the situation, Sangajav hurried over to the ICIJ office.
Ryle and Walker met with him in a conference room. Sangajav was distraught. If ICIJ published information about his secret offshore company, it would destroy his reputation and bring shame on his family, he said. Sangajav promised to return to Mongolia and resign if they kept the matter quiet. The company only had $1 million in its bank account, he told them as he started to cry. This was news to ICIJ. Ryle tried to be sympathetic with the distraught Mongolian. Walker, thinking of the long list of tasks that still remained, was brusquer. Eventually, they convinced him to leave, without making any promises. ICIJ ultimately published his story, along with how much money the company had, adding a welcome human element to their data-intensive project.
A few days before publication, there was one final cancer scare. ICIJ had sent out an embargoed press release to the members of the network who had not participated in the collaboration so they could write stories once the leak investigation broke. A Brazilian member mistook the press release for the story itself. Excitedly, he tweeted news of the project. ICIJ caught the tweet before it went viral. Following an urgent call to Brazil, it was deleted.
* * *
THE PROJECT, which quickly became known as “Offshore Leaks,” reverberated throughout the world when it was published on Wednesday, April 3, 2013. The website received more than six hundred thousand page views in a single day, a record for CPI. At ICIJ, the phones rang nonstop as media organizations begged for more details and the data itself. Ryle, Walker, Cabra, and Hudson fielded an endless stream of interview requests. The team had exposed an underground financial system that everyone knew existed but had never seen. In an age of austerity, it was now incontrovertible that many of the world’s richest citizens were not paying their fair share. But it wasn’t only the unprecedented look into the secrecy world that captivated attention. The collaboration itself became a story. It was the biggest cross-border investigative collaboration in journalism history, involving eighty-six investigative reporters from forty-six countries.
The Washington Post chose to publish its big story in the paper on Sunday, April 7, and online on Saturday, three days after everyone else, largely robbing it of the shared impact. In Switzerland, Oliver Zihlmann made a terrible miscalculation. He sent out a press release that Friday detailing plans to unveil the team’s findings in Tamedia’s Sunday edition. Instead, the dailies in the chain took stories from Germany’s Süddeutsche Zeitung, among other outlets, and ran with them. Zihlmann had been scooped by his own newspaper chain. That weekend his team frantically produced a new story on Swiss banks found in the data.
Early in the project, the ICIJ team discussed publishing the material online. It eventually morphed into the idea of a searchable database of the company names, shareholders, and directors from the leak. However, some on CPI’s board resisted. They worried that a release of the raw data would unleash a flood of lawsuits. ICIJ’s indefatigable libel lawyer, Michael Rothberg, calmed the fears. The biggest danger was a nuisance lawsuit from someone with a grudge and deep pockets. The information was clearly in the public interest. Fears of a frivolous lawsuit seemed a poor reason not to publish. To ensure that the material was not misunderstood, ICIJ added a disclaimer that stated that owning an offshore company was not illegal and that inclusion in the database was not evidence of a crime. They also agreed to withhold any information that clearly violated privacy, such as bank account details, passport information, or Social Security numbers.
A few days after publication, the IRS visited CPI. Bill Buzenberg remembers three beefy IRS agents in dark suits arriving at the office and threatening to issue a subpoena if the organization did not turn over the data. Ryle told CPI’s lawyer that the IRS already possessed the material—they had it all along but had been slow to decipher it or apparently share it widely within the agency. A month later the IRS put out a face-saving press release announcing that it, along with Australia and the United Kingdom, had acquired a substantial amount of data.
In Panama, Mossfon received panicked emails from customers. “Our client is very concerned due to an offshore scandal around the BVI that there was some leak of information,” one wrote in May. “Could you please advise if our client needs to be concerned as to the possibility of any leak of information that could link the company to our client since such information should be highly confidential.”
Mossfon developed a standard response.
“Please rest assured that the Mossack Fonseca Group is consistently monitoring the situation regarding the alleged offshore leaks,” it read. “Your confidential information is stored in our state-of-the-art data center, and any communication within our global network is handled through an encryption algorithm that complies with the highest world-class standards.”
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PROFITABLE PRINCELINGS
Mar Cabra, ICIJ’s project research manager, gazed at the expectant faces gathered around the square table in the small conference room at the University of Hong Kong. It was July
2013, and she was about to deliver a crash course in digital security. Energetic and precocious, Cabra had learned the ins and outs of protecting data and emails only recently herself. ICIJ’s days of sending unencrypted hard drives through the mail were coming to an end. Precautions had to be taken. Those at the table understood that what they were about to do was both historic and potentially dangerous.
The biggest chunk of the Offshore Leaks data consisted of nearly twenty-two thousand offshore clients with addresses in Hong Kong and mainland China. Ryle and Walker decided early in the project that they would husband the Greater China information for later. It was one of the best decisions the team made. They recognized that a worldwide collaboration would be challenging enough. Adding China to the mix would increase the level of difficulty by several orders of magnitude. Not only was it difficult to report inside China, but the country’s offshore data was shrouded in layers of additional secrecy.
What was never in doubt was the need to focus on the Middle Kingdom. China played a central role in the secrecy world, not only for the companies found in the Offshore Leaks data but for Mossfon and other major providers as well. It is no accident that the biggest offshore provider in the world today, Offshore Incorporations, began in Hong Kong.
The Chinese government was neither prepared nor flexible enough to keep pace with the economic activity that Deng Xiaoping, China’s paramount leader, had unleashed in the late 1980s. The sleeping giant’s financial awakening was a boon to the offshore system. China needed a window to the world. If tax havens and anonymous companies hadn’t already existed, the country’s particular fusion of Communism and entrepreneurial capitalism would have created them. The government recognized the benefit of offshore companies and encouraged them.
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