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Acquittals in Panama Papers-linked case

Author: Niall Hearty  9 July 2024
2 min read

Niall Hearty of Rahman Ravelli explains how defendants were cleared of money laundering in a prosecution based on evidence from the huge leak of financial records.

A total of 28 people accused of money laundering in a case linked to the Panama Papers scandal have been acquitted.

Jurgen Mossack, the co-founder of the law firm Mossack & Fonseca with former associate Ramon Fonseca, was among those cleared by a Panamanian judge. 

The now-defunct Mossack & Fonseca found itself in the spotlight in 2016 when 11 million financial documents linked to the firm were leaked – known as the Panama Papers -  leading to accusations of massive financial irregularities and embarrassment for political figures around the world. The prime minister of Iceland resigned and now former leaders of Argentina and Ukraine came under intense scrutiny, as did Chinese politicians, Russian President Vladimir Putin and others.

Prosecutors in this latest case had accused Mossack, Fonseca (who died in May) and others of creating offshore companies and using complex transactions to hide money from illegal activities related to the so-called Operation Car Wash corruption scandal (aka the Lava Jato scandal) involving Brazilian construction company Odebrecht. But the judge in Panama, Balaoisa Marquinez, said that evidence in the Panama Papers case "was not sufficient and conclusive to determine the criminal responsibility of the accused."

After the verdict, Guillermina McDonald, who had represented Mossack, Fonseca and most of the other defendants, said: "We feel satisfied in the midst of mixed emotions, because many lives were affected along the way." 

Judge Marquinez had decided to combine the Panama Papers case with the Operation Car Wash investigation that began in Brazil. But she ruled that "it was not possible to determine the entry of money from illicit sources, coming from Brazil, into the Panamanian financial system with the purpose of hiding, concealing, disguising or helping to evade the legal consequences of the preceding crime."

Her ruling is just the latest chapter in both the Panama Papers and Operation Car Wash sagas. In June 2022, Mossack, Fonseca and 37 other people were acquitted in a separate money laundering case.

Given that the case rested on a treasure trove of 11.5 million files leaked by a whistleblower, the criminal prosecution was always going to be an uphill struggle. As well as not finding sufficient evidence to hold defendants criminally accountable, it was confirmed that the electronic evidence did not meet the necessary chain of custody protocols and had suffered from authentication issues. 

Despite the outcome, the Panama Papers investigation remains one of the largest cross-border journalistic collaborations in history. The reputational damage it caused Panama led to attempts to strengthen its efforts against money laundering. These included introducing a requirement for firms to know the final beneficiaries of the shell companies they create and keep a central register of those beneficiaries. One possible positive to be taken from the Panama Papers is that it was followed by other journalistic collaborations involving huge data leaks, including the Paradise Papers and the Pandora Papers disclosures of offshore tax havens.

Niall Hearty C 07998

Niall Hearty

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Niall has a wealth of corporate crime expertise and an ability to coordinate global bribery and corruption cases. His achievements in such investigations have made him a logical choice for corporate clients.

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