Mossfon was undoubtedly well acquainted with Aliyev’s corrupt petro-state, as the Azerbaijani leader’s children owned Mossfon companies. Aliyev’s daughters, Leyla and Arzu, controlled large chunks of the country’s economy, including a bank, a phone company monopoly, a gold mine, and a construction firm. Leyla Aliyev was married for nine years to Emin Agalarov, one of Trump’s business partners in Russia. The sisters had also amassed more than $140 million in luxury properties around the world, purchased through two Mossfon companies. After almost a decade, in 2013, Mossfon resigned as registered agent from one company after the British intermediary who set it up refused to provide newly required due diligence documents. For another Mossfon company, the intermediary, the London law firm Child & Child, failed to identify the two women as PEPs.
In the case of Anar Mammadov, Mossfon followed procedures exactly. It knew who and what he was. Nonetheless, the firm decided to sell him several companies, through an intermediary based in Guernsey. They classified Mammadov as a PEP and ordered “Enhanced Due Diligence,” which, in practice, meant little.
Donald Trump also counted Anar Mammadov as a business partner. In 2012, Trump signed a licensing agreement with Mammadov’s company, Garant Holdings, for a luxury condominium-hotel to bear the real estate mogul’s name. The thirty-three-story building was already under construction in an isolated part of Baku, the capital of Azerbaijan. It was renamed the Trump International Hotel & Tower Baku. The project was publicly announced two years later in a company press release weighed down by superlatives:
“Trump International Hotel & Tower Baku represents the unwavering standard of excellence of The Trump Organization and our involvement in only the best global development projects,” said Donald J. Trump, chairman and president of The Trump Organization. “When we open in 2015, visitors and residents will experience a luxurious property unlike anything else in Baku—it will be among the finest in the world.”
Trump’s people redesigned the building. He had the interior gutted and rebuilt to the organization’s specifications. Ivanka Trump led the redesign. Reportedly, she personally approved every element from the wood paneling to the landscaping. Ivanka posted photos of herself on the job site wearing a hard hat, and produced a video extolling the project.
Unlike Mossfon, it is not clear if Trump did any due diligence on his Azerbaijani business partners. His spokesman has told reporters that Trump did a thorough vetting but declined to produce the due diligence documents or even say who undertook the review. Under the Foreign Corrupt Practices Act, Trump had a responsibility to investigate whether Anar Mammadov was getting his money illegally.
Allegations of bribery and corruption have long dogged Mammadov. During construction, contractors were apparently paid in sacks of cash. If Trump’s team had looked closely, it would have found the WikiLeaks cable that details that the family was in bed with former elements of Iran’s Revolutionary Guard. The cable revealed that Kamal Darvishi, a former general in Iran’s Revolutionary Guard, had won at least eight major road construction and rehabilitation contracts in Azerbaijan from Ziya Mammadov. The diplomatic cable concluded, “We assume Mammadov is a silent partner in these contracts.”
Trump and Mossfon were not the only ones to fall under the siren’s sway of Anar Mammadov’s money. Shortly before Mammadov signed his deal with Trump, he founded the Azerbaijan America Alliance, for which Dan Burton, a former Republican congressman from Indiana, acted as the front man. The Alliance spent more than $12 million showering cash on politicians in Washington, lobbying for them to be friendly to Azerbaijan. It held gala dinners attended by Speaker of the House John Boehner and met privately with Senator John McCain and House minority leader Nancy Pelosi. With the avalanche of money came fulsome praise for the corrupt and autocratic regime from both Democrats and Republicans in Congress.
When Azerbaijan’s oil economy crashed in 2015, the party ended. The Azerbaijan America Alliance folded up shop, and Burton never received his final year’s salary. Construction on Trump’s Baku tower ceased. When he ran for president, Trump removed the project from his website. He would disclaim responsibility for anything having to do with the project, insisting that he had only licensed his name to it. The still-unfinished building remained an empty eyesore in Baku, the Trump moniker displayed prominently on its front.
* * *
WHEN TRUMP SPOKE with Turkish president Erdoğan on Election Night, he put in a plug for Ivanka. She was a big fan and supporter of Erdoğan, Trump told the Turkish president. On the call, he credited his daughter with the success of Trump’s Turkey project, for which he had licensed his name.
Ivanka had been by her father’s side when Trump Towers in Istanbul was dedicated in April 2012. The day before, Erdoğan had cut a ceremonial ribbon officially opening the building. The conjoined forty-story office and residential towers featured apartments, upscale shops, fitness areas, swimming pools, and a movie theater. “I was very excited when I met Mehmet Ali Yalçındağ and began to discuss this project four years ago,” Ivanka Trump told Turkish media at the time. Donald Trump described the Doğan family, into which Yalçındağ had married, as “beyond partners … they’ve become very good friends.”
During the U.S. election campaign, Erdoğan said he regretted coming to the building’s opening ceremony and called for removing Trump’s name from the towers because the U.S. presidential candidate had “no tolerance for Muslims in America.” It appeared to be yet another example of the fraught relationship between the Turkish leader and the Doğan family.
The family patriarch, Aydın Doğan, had thrived for years by playing political forces in Turkey off each other, primarily through his media holdings, particularly its daily newspaper Hürriyet and television channels CNN Türk and Kanal D. The conglomerate owned more than a dozen media properties in addition to real estate, financial services, and energy interests. He tried the same tactic against Erdoğan’s AKP political party. Some of Doğan’s media properties had attacked the AKP prior to the 2007 presidential elections, which the party won. Once Erdoğan consolidated single-party rule in Turkey, the strategy that had served Doğan so well in the past became a major liability.
In 2009, Doğan Holding was hit with a $2.5 billion fine for unpaid taxes, almost the company’s entire value. Doğan publications also came under attack and intimidation, including calls for boycotts and physical assaults on journalists. In March 2016, the Turkish state prosecutor indicted Doğan and forty-six associates for criminal tax evasion that allegedly occurred between 2001 and 2007, when they were owners of Petrol Ofisi, a fuel distribution company.
Petrol Ofisi International Oil Trading Limited had been incorporated in the Bahamas in 2000 by a Jersey trust company. It was originally called Lysa Invest. Within a few years, the company moved to Mossfon. A report from Mossfon’s London office on a meeting with Omer Iskefyeli, a director for the company who would later be indicted alongside Doğan, described the Petrol Ofisi Group as “the largest oil distribution company in Turkey with an annual turnover of £4 billion.” One of the shareholders of the company, Mevlut Tufan Darbaz, was CEO of Doğan Holding.
The Bahamas company was one of several Mossfon companies connected to Doğan Holding. Three of Aydın Doğan’s daughters had companies with the Panamanians, most of which went inactive in 2013, around the time that Erdoğan ratcheted up pressure on the family. One company that remained active, Glendoon Limited, was based in the Akara Building in the BVI. On a Source of Funds declaration, its principal beneficiary was listed as Imre Barmanbek, the deputy chairman of Doğan Holding. According to the form, its purpose was financial investments in capital markets.
In the face of Erdoğan’s pressure, Aydın Doğan stepped down from running the family business. His daughter Arzuhan Doğan took his place as chairman. Her husband, Mehmet Ali Yalçındağ, was named CEO. Hacked emails released by WikiLeaks show how Yalçındağ worked hard to ingratiate himself with Erdoğan. He did this primarily through a back channel leadin
g to Berat Albayrak, Erdoğan’s son-in-law and the minister of energy, who many in Turkey believe is being groomed to succeed the president. The emails show that Yalçındağ tried to censor stories critical of Erdoğan in the Doğan media. In one of the emails, Yalçındağ described an anchor of his television station, CNN Turk, as “an enemy.” Another email revealed that someone from a Turkish media organization forwarded to the energy minister a complete list of Turks and their companies found in the Panama Papers database that ICIJ has posted online.
Despite denying that he had written the emails, the WikiLeaks release forced Yalçındağ to resign from his position in the Doğan company. Erdoğan’s relentless campaign against journalists in Turkey continued. As of August 2017, the Turkish government had arrested more than two hundred journalists and media workers. In the United States, Yalçındağ’s business partner–turned–U.S. president, Donald Trump, also declared war on journalists and the media, castigating them as purveyors of “fake news.”
EPILOGUE
Ramón Fonseca sat in his corner office in the Mossfon building in Panama City. It was early December 2016, eight months after the publication of the Panama Papers. Evidence of the firm’s demise was all around him—in the empty offices throughout the building’s warren-like interior, the packing boxes that cluttered his work space. The Mossack Fonseca sign by the building’s entrance, which graced hundreds of television news reports, had been removed. After decades of existence, Mossfon was going out of business.
In the wake of the leak, the partners’ original idea was to sell the firm to their employees. But by year’s end there wasn’t enough left to make a sale viable. The firm shuttered its asset management business, MAMSA. Government investigations and a decline in revenue forced the firm to close offices around the world, starting with Jersey, Gibraltar, and Wyoming. The firm was also forced to lay off more than a hundred employees.
Another cruel blow came in November, when the British Virgin Islands fined the firm $440,000 for lax internal controls, by far the largest sanction the country had ever levied. The Panama Papers had hit the BVI hard. Company incorporations in the jurisdiction dropped 30 percent during the first six months of 2016, compared to the previous year. The Financial Services Commission temporarily installed a monitor over Mossfon’s BVI operations. The firm’s focus switched from incorporating companies to performing due diligence on existing ones. In the sky blue Akara Building, the jewelry store the Flax family ran on the ground floor saw more customers than the suite of Mossfon offices upstairs.
Fonseca reminisced about the backwater he encountered in 1986, and how the arrival of Mossfon changed the BVI’s fortunes. “They should build a statue to me instead of fining us,” he said indignantly.
In Geneva, UBS sent a letter to Adrian Simon notifying him that it was closing Mossfon’s bank account. The Geneva office had been a customer of UBS since the days of Antoni Guerrero in the 1990s. After some effort, Simon scheduled a meeting with his bankers. He was told that this was now a reputational issue for UBS; the bank had no choice but to terminate the relationship. The hypocrisy astounded Simon. He pointed out that UBS still had offshore companies registered with Mossfon. It didn’t matter.
Paul Singer and his lawyers were not through with Mossfon in Nevada. What began with the theory of an Argentinean prosecutor in 2013 about Nevada companies laundering money for Lázaro Báez had spurred Elliott Management to file suit in Las Vegas and target Mossfon. In the end, no connection between Mossfon’s Nevada companies and Báez was found, nor was any link discovered between the companies and Argentinean president Cristina Fernández de Kirchner. After Mauricio Macri’s election, the new Argentinean government settled the sovereign debt case with Elliott Management for $2.4 billion.
However, the Panama Papers revealed the lengths to which Mossfon had gone to thwart the hedge fund’s inquiry. In May, Elliott Management sued the Panamanians in federal court in Las Vegas for obstruction of justice. It demanded to be reimbursed for the costs incurred while trying to wrest information from the firm. Mossfon’s motion to dismiss was denied. The two sides entered settlement talks, but Mossfon appeared to have little money left to make a settlement worthwhile.
Toward the end of 2016, Panama’s attorney general, Kenia Porcell, removed Javier Caraballo, the prosecutor investigating the firm. With a history of prosecuting drug traffickers rather than financial crime, Caraballo was ill equipped to understand the data he had confiscated from the Mossfon offices. In his stead, Porcell tapped Rómulo Bethancourt, one of the leaders of the organized crime division, who had a background investigating money laundering. Prosecutors quickly focused on the firm’s connections to a massive corruption scandal emanating from Brazil known as Lava Jato, Portuguese for Operation Car Wash.
At its center was Brazilian construction company Odebrecht, which had literally institutionalized the practice of bribery. Odebrecht created a special department called “the Structured Operations Sector” to funnel cash to local officials at home and abroad in order to win giant public works contracts. It paid for the bribes through cost overruns on its other projects. The money transited offshore companies—held by bearer shares to maintain anonymity—and secret Swiss bank accounts. During almost a decade ending in 2014, the firm paid about $3.3 billion in bribes to secure more than one hundred contracts in a dozen countries.
Mossfon had created dozens of shell companies in places like the BVI and Nevada that were implicated in the Lava Jato corruption probe, which in addition to Odebrecht also included the Brazilian state oil company, Petrobras. Mossfon insisted that it had done little more than sell the companies to intermediaries, but Panamanian attorney general Porcell claimed the firm had been more actively involved. Prosecutors developed a theory that the law firm had worked with a local bank to launder money as part of the scheme, an accusation Mossfon strongly denied. This information had not been part of the Panama Papers revelations.
On the morning of February 9, 2017, officials of the public ministry searched the homes of Jürgen Mossack and Ramón Fonseca. The two partners were then called in for questioning. Outside the public ministry, Fonseca, unshaven, his face contorted in anger, gave an impromptu press conference.
“We have kept quiet but this Oldebrecht case is the limit,” he declared.
Fonseca defended the firm, arguing that the bankers and lawyers to whom it sold companies were to blame. Much of the business Mossfon did was with international banks like HSBC, Fonseca continued, before adding that HSBC had gotten the firm into a lot of trouble. He observed that there are more than ten thousand offshore companies involved with Lava Jato—why are they singling us out? he asked.
When a reporter interrupted, Fonseca told her to wait, he was getting to the good part.
He then related how as a member of President Juan Carlos Varela’s government, he had heard things that made him believe that the administration was corrupt. Varela himself had accepted campaign contributions from Odebrecht—all legally, the president would later counter. Odebrecht had a strong bribery operation in Panama. Why were Panamanian prosecutors targeting Mossfon and not the lawyers who worked directly with Odebrecht?
“May I be struck down by lightning if I’m lying,” said Fonseca theatrically. “They are looking for a scapegoat.”
He accused Varela of failing to defend the financial system in Panama. “We have dropped our pants before the international institutions,” he said contemptuously.
Fonseca claimed to have proof about government malfeasance that he would release at a later date. His forehead pinched in a frown, Fonseca shouted repeatedly, “I love my country!” as he and the pack of reporters moved toward the door of the public ministry.
If Fonseca was hoping for a reaction, it came swiftly. He and Mossack as well as another lawyer from the firm were denied bail and tossed in jail. Deemed flight risks, they remained incarcerated for more than two months while prosecutors gathered evidence. The partners were released on April 24 on bail of half
a million dollars each. Fonseca is convinced the length of their jail stay was due to his outburst.
For Mossack, who marked his sixty-ninth birthday behind bars, the experience was traumatic. Apart from a few traffic tickets, he had never had a brush with the law, he said. Now he was being treated like public enemy number one for something that he felt many other companies routinely did. “We were one of a couple of thousand outfits that were doing the same thing,” he insisted a few months after his release.
Fonseca, by contrast, became more circumspect, trying to keep a low profile. He claimed to be coming to terms with what happened. “I am slowly recovering my spirituality and inspiration,” he said in July. His law firm, however, which had employed about six hundred people at its height, was down to a staff of eighty as it wound down its business.
But he also knew the storm had yet to break. Journalists continued to pick over the material. The New York Times, after facing withering questions over why it had not been part of the collaboration, had talked its way into the project in May 2016, a month after the initial stories were published. Everyone could now see the utility and benefits of collaboration. The Times also recognized it could use the database in the same way it approached the WikiLeaks cables, as a resource to flesh out and develop future stories.
Panama’s Porcell met with her counterparts from Europe and elsewhere to discuss investigations into Mossfon’s activities. Prosecutors launched cases against individuals located in the material ICIJ released. In Pakistan, the ownership of Prime Minister Muhammad Nawaz Sharif’s family of pricey London real estate through offshore companies triggered a judicial investigation that in the summer of 2017 resulted in a Supreme Court decision to remove him from office. ICIJ’s online database enabled Europol, the EU’s version of Interpol, to identify nearly thirty-five hundred individuals and companies with probable matches to suspected criminals.
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