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The Current Transcript for July 15, 2016

Host: Mike Finnerty

STORIES FROM THIS EPISODE

Listen to the full episode

Prologue

[Music: Theme]

SOUNDCLIP

[Sound: crowds screaming, gunshots]

Terror attack. There’s a terror attack! Down! Down! Really?! Down!

MIKE FINNERTY: Families out to see the 14th of July fireworks on the seafront in Nice, screaming as a truck plows into the crowd, zigzagging for maximum carnage. More than 80 are dead, and so many children struck. French media report 50 currently in hospital. In a moment, a longtime resident of Nice, originally from Toronto. And why has France been targeted three times in the last 18 months? Also today, the massive leak that has the rich and powerful squirming.

SOUNDCLIP

DAVID CAMERON: Samantha and I had a joint account. We owed five thousand units in Blairmore investment trust, but it was subject to all the UK taxes in all the normal way.

MF: Today, the story behind the story of the Panama papers, with one of the journalists who broke the story.

SOUNDCLIP

We found drug lords, we found of members of the Italian mafia, of the Ukrainian mafia, and indicted pedophiles. It's all the shady guys hiding in the offshore world.

Attack in Nice: why is France targeted?

Guests: Nancy Heslip, Loretta Napoleoni

MF: Hello, I'm Mike Finnerty. Welcome to the summer edition of The Current, which begins in Nice and a warning that some of the details in our reporting are disturbing.

SOUNDCLIP

Just after the ending of the fireworks, all the people who were on the beach, I was among them. Suddenly we heard screaming loudly, and I saw a truck coming towards me, and I was just in front of the truck in the main street. And I saw some people under the truck smashed already, so he just stopped in front of me, like one meter one and a half meters. I could see him through the window, and suddenly the police were coming from behind me because I was just facing him. And I saw him taking out his gun and starting to shoot through the window and at that moment, the police pushed me away. I didn't run, I was just frozen. And I filmed everything until he's killed, until the police killed him.

MF: That’s Nadar Al-Shafi’i, one of the many people on holiday on the French Riviera. Describing there the two kilometre path of a truck driving along Nice’s famous Promenade des Anglais. It happened around ten o'clock local time last night. And today in France the police investigation is moving fast. The driver is reportedly a 31-year-old local man, a Tunisian national, and police sources have named him as Mohamed Lahouaiej-Bouhlel. French media are reporting he was not known to the intelligence services, but was known to police: armed robbery, spousal abuse. They're trying to determine whether he acted alone. The French President Francois Hollande and the Prime Minister Manuel Valls are now in Nice, and have headed to area hospitals, and to the scene of the carnage. France's state of emergency still in effect since the November attacks in Paris, will be extended three more months. Three days of official mourning begin tomorrow. Most of the victims are French. There were tourists of course, American and German victims we know. Global Affairs Canada says they are still involved in the process of determining whether any Canadians have been involved. Prime Minister Trudeau, he says he's “heartbroken” at the news, and sends his deepest condolences. Nancy Heslin is the editor-in-chief of Nice's English language news magazine the Riviera Reporter. She's originally from Toronto. She's been living in Nice for 15 years we've reached her in Nice. Nancy, hello.

NANCY HESLIP: Hi there. Good morning.

MF: How did you find out that something had gone badly wrong at the fireworks last night?

NANCY HESLIP: Remarkably, I went to bed as the fireworks were going on. I used to live for nine years right by the Negresco hotel where the fireworks took place, and I moved about six months ago just to get away from the intensity of that sort of tourist area. So last night I went to bed about 10:30, and I heard the fireworks. I woke up at 5:00 to take my dog actually out on the Prom, and I woke up to just chaos. I went down to the Promenade to see what's going on and confirm with my friends and their families that everybody was safe. And they are safe I'm happy to report, but their stories are just horrific.

MF: Can you tell us what they told you?

NANCY HESLIP: Yeah. So let me just quickly describe the Promenade for you, for people that maybe don't know the area. It is obviously associated with the sea and the sun, but our Promenade sort of starts from our national airport, and it is the second largest in the country. It has 11 million passengers coming through in a very small area. Nice is only about less than 400 thousand people population. Our Promenade starts from the airport, and it continues about seven eight kilometres east. If you walked from the airport to the Negresco hotel where this is the start of where the problems were really, it's about five kilometres. So just to give you that idea, it's a huge open area with not a lot of security. So our friends, like they usually do, they take their kids down for the fireworks at this particular time of year. They close that part of the Promenade off to traffic. So you have the Promenade part, plus you have two lanes of car traffic that's now open to walk. And so my friends from England were there with their two kids, ten and fourteen. Their 14-year-old went to join his friends on the beach elsewhere. They turned because they heard what was going on. They were walking on the Promenade part and saw the truck zigzag, trying to run over as many people as he could. And they could see the driver's eyes, they looked right at him and said he was smiling. There was a look in his eyes, but he was smiling. And unfortunately the carnage that was he was causing was kept in the tires of the truck. There was panic. They went to find their son and when they were walking to try to find the son to get him off the beach. During this they came across a man who had taken his three children to watch the fireworks. Two of them had been run over and were lying openly exposed on the ground. So the saddest part of this is not just that it's an attack, but you're attacking children on a national holiday, in the one of the most glorious free spaces on the planet. And how do you move on from that?

MF: This morning when you went out what did you see?

NANCY HESLIP: So I went out at 5:30 this morning. And the truck started on the Promenade in front of the children's hospital, which is the Lenval hospital close to me. So you can’t actually access the Promenade, you can walk on the parallel street behind it. I found a small side street and I walked down. At 5:36 in the morning at this time of year, this is a populated area. The tourists are out, the locals are swimming, even when it's early. There wasn't a soul. There are two bodies in front of the hospital that were run down, must have been the beginning of the two kilometre trek. They were sanctioned off. And by the time I came back they had forensic experts there looking at those bodies. I walked by the hospital where the children are. There’s a courtyard that's available to the staff and there was a woman in her scrubs openly crying. Her eyes were really big red, not just she was reacting, she's obviously had quite a night. The temperature right now at the Promenade is over 30 degrees, and some of those bodies were still there. So we're hoping they will be moved. But they had police patrolling and boats patrolling the sea around 11:00am our time, telling people to get off the public beaches to get out of the water. Everything is shut down. And I think they're just kind of worried about the sanitation risks with having bodies in the heat at the moment.

MF: And Nancy how are people in Nice processing all of this?

NANCY HESLIP: I don't think we are. I think the Promenade is obviously an iconic place for most people, but for people that live here it's our backyard. It's where we go to socialize, it's where we walk our dogs, and have our runs. It's part of all of our lives. And when you affect us like this, when you watch an attack in London and when you watch an attack in the US, and you're far from it, you think how awful that is and those poor people. But you now have developed a relationship with what the press calls terrorism. And it changes everything for you. People here are on their phones. I walked by the inside of the hospital, the entrance, probably about 11:00-11:30, and they're obviously screening everybody that goes in now. But the people outside have again red eyes. They’re on their phones and friends saying that they still have no news. People are in shock and they don't know how to process this. Because it's the third attack in 18 months in our country.

MF: And you said recently, you moved away from the Promenade des Anglais. Was security one of the reasons behind the move?

NANCY HESLIP: It was the number one reason for me. I had lived there for a long time, I lived 250 metres from the sea, so it's very close and very close to Nebresco. And since I would say 2013, those two years following, I just felt the general sense of degradation of the security in the city for various reasons. But from the Negresco down east to the side of the port, it's a very dense and tourist area, and it's it's completely open. At no time of the year do you really feel that there's any police presence along that eight, nine kilometre stretch of the Promenade. So you can in the summer, people smoke drugs, they drink publicly, openly during the day. People are having sex on the beach fully exposed at 6:00 in the morning. People are now living on the beach. There's just a general sense that things aren't going right. And so for me personally, with all of the attacks that have been happening in Tunisia, where public beaches were being exposed, I just started to feel that there wasn't a lot of security in control in that very tourist area. And so we’ve moved away.

MF: There have been police raids this morning on what's thought--

NANCY HESLIP: Yup.

MF: To be the residence of and other places too, but the residence of the truck driver, the attacker, a housing estate north of the city. Can you describe what you know?

NANCY HESLIP: Yeah, I just wanted to clarify too he's actually a Tunisian born Nice resident. The original reports were saying that he was Franco-Tunisian, but he actually is only Tunisian nationality, and he's been living here with a French residence card. The area of Nice north, I don't have the specifics about his neighborhood.

MF: But it was one of these housing estates, right? It’s public housing.

NANCY HESLIP: Yeah, that area is very much known in the rest of the city of the place to avoid. There’s specific areas within Nice north that even the police consider a no-go zone. So I don't know exactly where he was structured within the housing zone, but usually it's associated with a negative connotation in society. People that aren’t working, etcetera.

MF: And how segregated race wise, Nancy, is this city with the HLM (the public housing estates) in the north, and the area around the Promenade des Anglais for instance?

NANCY HESLIP: I think you could even dissect it further. I think every neighborhood between the Promenade and the sort of wealthier areas that go back to the public assisted areas, I think they don't integrate. France is a very difficult country to integrate in. I’ve lived here 15 years, I became a French citizen in 2010 so I could vote. So I am known as a French citizen, but I will never be French. They will never allow you to be that. And I think this is part of the problem. It's not all about immigration, and it's not all about Muslim religion versus sectarianism. There's a problem here of integration, there's a problem of unemployment. Nobody's working. These are fundamental parts of our society that need to be looked at. And a country that has had three terrorist attacks in 18 months, the Commander-in-Chief, the President needs to step down now. Because if he doesn't take the right course now, when the elections come up next year, we're looking at a very strong swing to the extreme right and that's not the solution either.

MF: Nancy, thanks for speaking to us, appreciate it.

NANCY HESLIP: Thank you very much for thinking of us.

MF: Nancy Heslin, editor-in-chief of Nice's English language news magazine the Riviera Reporter. She's originally from Toronto and we reached her in Nice. And as she was saying this is the third attack on France in 18 months. There were the Charlie Hebdo attacks, the attack on the kosher supermarket a year ago last January. The attacks on bars, the Stade de France, on the concert hall the Bataclan, Paris in November, and now Nice. To understand more about this latest attack and how it fits in, I'm joined by Loretta Napoleoni, she's author of The Islamist and Terror Incorporated, and we're reaching her and San Cassiano this morning, that's in the south of Italy. Loretta Napoleoni, hello.

LORETTA NAPOLEONI: Hello.

MF: Can we start with your reaction to this attack and what you make of it?

LORETTA NAPOLEONI: I must say that unfortunately I was not surprised that something like this happened. We know that there is a European network, which is now activated. We saw it in Brussels just a few months ago, and it was just a matter of time until we had another attack. I think there is a lot of symbolism in what has happened. Of course it's the 14th of July, it’s Bastille Day, it’s a really really fundamentally important day for Western democracy. It’s the beginning to a certain extent of the popular democracy. So they hit France in that day just to prove that it’s not true that we’re not democratic. On the contrary the message, it is very much a sort of anti-imperialist message directed to the west. And the other element that I think we should consider is Nice. Nice is a stronghold of the French far right. It's a city with a very big tension between the immigrant population and of course the French population, as the previous journalist said before. So I would say that the fact that they picked Nice, and the Promenade des Anglais, which is very much a symbol of what is the holiday mood to a certain set of the South of France is very very significant. So they wanted to hit the political symbols, but also the economic aspect, because as we know now a lot of people are leaving the South of France, which is going to become a one of the yet another place where the [Unintelligible] will not go on holiday anymore.

MF: And what about the attacker, were told from the French media that the intelligence services were not familiar with him but the police, yes. Because of things like armed robbery and spousal abuse. They are trying to determine whether he attacked alone, what do you make of the profile?

LORETTA NAPOLEONI: I think that’s a very very important question. The anti-terrorist and the police are not working together, because they are two different organizations. Yes of course you know there are contacts, but to a certain extent it is easy to pretend to be a petty criminal, or even to recruit. This is not a possibility we will see in the next few weeks how he was actually recruited. To a certain extent it is actually a good idea to recruit among petty criminals, because these are people that are considered criminals. They're not considered terrorists or potential terrorists. So, it's a very interesting profile, it is a new profile, because we haven’t seen anybody in France in the previous attacks that fits perfectly this kind of classification, this distinction.

MF: Because the other attackers were known to the intelligence service, they were “fichier ests”, as they call them.

LORETTA NAPOLEONI: Yes, exactly exactly. I mean of course all of them they had contact with the criminality, because I mean where do you buy the weapons for example. But in this specific case, this individual was clearly somebody that only had a profile of petty criminal. So, does this mean that they're now recruiting among this new group of individuals, or does it mean that they are using these kinds of coverups, in order to confuse the anti-terrorists? I mean that's a question that of course we will have to address in the next few weeks.

MF: Loretta, ISIS has not taken responsibility, and yet ISIS supporters online are celebrating the attack. What do we know about who ultimately either is responsible or inspired the attack?

LORETTA NAPOLEONI: Well, I think ISIS is inspiring all of these attacks. Absolutely. This is a European network, this is a network that’s been activated almost naturally through osmosis, I would say, over the last two years. So ISIS is a sort of ideological umbrella. There is not a central intelligence in Rakka that decide oh we do the attack today in Nice, and in two months we will do it in Barcelona or something like that. Absolutely not. But of course, the ideological umbrella is the one of ISIS. So we are online now, we have on social media, the supporters of ISIS rejoicing for what has happened. And I’m sure that the attack was inspired by what is happening in the Middle East, what also is happening in France because we are talking about a European network. This is not an individual that wanted to go to Syria in order to fight and build the new nation, the Caliphate. On the contrary, this was an individual that wanted to bring distraction inside France.

MF: In that attack about a year ago in January, there were around 20 people killed, 130 were killed in November, and now at least 80. Why is France being hit repeatedly like this?

LORETTA NAPOLEONI: Well, France is hit repeatedly for a series of reasons. But I would say number one, the security as we have heard before, is not very good. I mean, France is a very large country. It has a very large population of immigrants, of first generation, even second generation. They have very strong ties with North Africa. In fact, it was possible for the terrorists to reside in Nice even on a Tunisian passport. So there are certain kinds of cultural and even existential, I would say, relationship between North Africa and France that go back to the time of colonization. So this is why it’s particularly at risk. But that doesn’t mean that Belgium, for example, is not at risk because we are in a similar situation also, in Belgium. I mean, these are the countries that are mostly at risk. But again, it is possible that in a few weeks, there will be an attack in Spain because Spain also has a very large Muslim community of immigrants. [unintelligible] In other words, Europe is not safe any longer.

MF: And yet France was able to keep itself safe from attack during the entire period of the Euro 2016 Cup.

LORETTA NAPOLEONI: Because there was no intention to hit the Euro 2016 Cup at all. I think an attack… an attack that was expected, that was anticipated, was not going to have such a big impact as an attack that was absolutely not anticipated. This is something we have to think about, the psychology of the people in the world. Now these are attacks that also have a very strong propaganda element. Attacking on the 14^th of July on the Promenade des Anglais had an impact, much much bigger than an attack during the Euro—

MF: Last point, Loretta, and that is France has been the source of a lot of recruitment for ISIS, hasn’t it?

LORETTA NAPOLEONI: Yes. But is this not true that the largest number of foreign fighters go into Islamic State has come from France. Actually, the Scandinavian country in particular, in terms of per capita, Denmark had the highest number. So you have to look at the per capita proportion.

MF: Okay and we’ll leave it there and thank you very much for speaking to us.

LORETTA NAPOLEONI: Thank you.

MF: Loretta Napoleoni, author of The Islamist and Terror Incorporated. She was in San Cassiano in the south of Italy.

[Music: Sting]

MF: The news is next, including the latest on the attacks in Nice and then the story behind the Panama Papers which began with a message from an anonymous source and snowballed into the largest data leak in the history of journalism.I'm Mike Finnerty. You're listening to the summer edition of The Current on CBC Radio One.

Journalist central to breaking Panama Papers reveals story behind the massive leak

Guests: Frederik Obermaier

MIKE FINNERTY: Hello, I'm Mike Finnerty. You're listening to the summer edition of The Current.

[Music: Theme]

MF: Coming right up, on the complex trail of the Panama Papers.

SOUNDCLIP

Mr. Prime Minister, what can you tell me about a company called Wintris?

Well. It’s a company—if I recall correctly—which is associated with one of the companies that I was on the board of. And… it was… [unintelligible] account, which as I mentioned, has been with the tax… on the tax account since it was established.

MF: That’s Sigmunder Gunnlaugsson, then the prime minister of Iceland, in an interview with Swedish broadcaster SVT from early April of this year. Mr. Gunnlaugsson walked off the set of that interview and he would soon resign as prime minister because of the revelations. Wintris was in fact an offshore company which the prime minister had co-owned together with his wife. It was set up by most Mossack Fonseca, the law firm in Panama whose internal data was released in a massive leak known as the Panama Papers. And the Icelandic prime minister was just one of dozens of world leaders revealed to have had either direct or indirect links to offshore companies in tax havens. The Panama papers revealed complex networks of thousands of shell companies and bank accounts parked in offshore tax havens around the world. 214,000 shell companies to be exact, and out of more than 11.5 million documents, it's by far the largest data leak in the history of investigative journalism. Sifting through it involved the collaboration of more than 400 journalists around the world, but it started at the German daily newspaper Süddeutsche Zeitung. Frederik Obermaier is an investigative journalist there and he was one of the first people to learn about the Panama Papers leak. He's co-authored the new book, The Panama Papers: Breaking the Story of How the Rich and Powerful Hide their Money, and Frederik Obermaier joins us from Munich. Hello.

FREDERIK OBERMAIER: Hello. Thanks to be on your program.

MF: It's a pleasure to talk to you. Can you tell us, take us back to that first, I guess moment, when you were contacted by the source John Doe?

FREDERIK OBERMAIER: Well, the source. The first real contact with John Doe was through my colleague Bastian Obermaier. But I remember the day when he called me, I was on parental leave for that time and he called me. Frederick, there's something going on. I have to speak with you in person, I can’t tell you on the phone. So we met in a Greek restaurant here in Munich. We drank some ouzo and beer and he told me this amazing story of a source calling itself John Doe contacting him and telling that he or she would have internal documents from the law firm Mossack Fonseca in Panama.

MF: Did he just pop out of nowhere? I mean, what how did he know to get in touch with the Obermaiers?

FREDERIK OBERMAIER: Well, we don't really know to be honest, but it's a question we do ask ourselves quite regularly and have asked it to ourselves in the last year. But I think we can only speculate, but we have learned from the manifest of John Doe that he contacted other media as well and they didn't really react. Then seeing that Mossack Fonseca, one of their owners is a German, I think it's quite logical if you do not have the interest of other journalists that you go to a country where you think that there might be interest because one of the owners is a German. And in Germany, our newspaper is, I would say the one that is leading on tax issues, so that might be an answer to that but we don't know. I'm quite lucky that it turned out to be us. [chuckling]

MF: [chuckling] Absolutely. Although at the beginning, were you suspicious about who they were really?

FREDERIK OBERMAIER: Yes. And this took months to build up a trust that we really can trust the documents because if you have an anonymous source—I mean we do not even know if it's a he or she or if it's a group—but in the end, we learned to trust the documents because we did hundreds of cross checks on the documents and they all turned to be out to be true. And in the end, even now, after weeks of publication, there was nobody really questioning the authenticity of these documents.

MF: But your source, John Doe, is a wanted person?

FREDERIK OBERMAIER: Well, we do know that it's not only the Mossack Fonseca guys, in my opinion, looking out for him. There may be other people out there. I mean, the Panama Papers revealed stuff on drug dealers, on weapon stealers, on the best friends of Vladimir Putin, Mafiosi, so this is not people you want to mess with. But knowing that, I think it was a pretty good decision of this person to stay anonymous and not only stay anonymous to the public, but also to us as journalists, because you could now put a pistol on my head and I would not be able to reveal the name of that entity because I don’t know it.

MF: John Doe does fear for his life or her life.

FREDERIK OBERMAIER: What we heard during our communications is that yes. This person really is aware of what the Panama Papers revealed, and thus really fears for his life, yes.

MF: Let’s talk a little bit about, I mean, what Mossack Fonseca is up to, and what are the reasons someone would want to set up an offshore company?

FREDERIK OBERMAIER: The main reason is you want to hide something. We see people that want—in the Panama papers—that obviously want to hide their wealth from the tax authorities, some from their wives. And then we see the people that do want to hide their wrongdoings from investigators and from the public. This is, I mean, people like the cousin of Bashar al-Assad, guy called Rami Makhlouf, who is sanctioned by the US and the EU, and who used offshore companies obviously to hide what he's doing because he couldn't do business anymore because nobody would have done business with him. But through his offshore companies, he was still able to do business even after he was sanctioned. We see different kinds of using these companies. There may be reasons to use it legally but what we also see is hundreds and thousands of cases that to me seem quite illegal because it's hiding. It's obviously people hiding their money really from the tax. I mean, we have communications going on in there where bankers actually tell Mossack Fonseca, Well, we have customers who want an offshore company because they want to hide their money from the tax authorities. And it’s not only saying it’s customers that want to minimize their tax, no, it’s hiding their wealth.

MF: And this is a determination you’re able to make because… I mean, you had access to, have access to more than 11 million documents.

FREDERIK OBERMAIER: Yes. I mean, for me, I still remember that moment when I read one e-mail conversation going on between some partners of Mossack Fonseca, so the owners, and their due diligence department. They spoke about this mentioned Rami Makhlouf, the guy who was at that time already sanctioned and who was—

MF: —And related to Bashar al-Assad.

FREDERIK OBERMAIER: Yeah, he is his cousin. And at that time, it was already known that he's to be thought of the financier of the Syrian regime, and thus, the financier or one of the financiers of the war. And we then saw these guys at Mossack Fonseca asking themselves well, should this rise a red flag to us? And I think having a person who is said to be the financier of the regime and who is sanctioned, the clear answer must be yes, that's a red flag. But what we saw is them saying well, it seems that HSBC doesn't have a problem with this guy, so we should keep him also. And I think knowing that the Syrian war cost hundreds of thousands of lives and caused the current refugee crisis, this really shows me how cold-blooded these people acted.

MF: It's interesting you bring up the whole topic of due diligence. I mean, we did try to have some sort of an interview with Mossack Fonseca, and they have been pretty limited with their comments. However, there was an interview in April with the co-founder of Mossack Fonseca, Jürgen Mossack, who spoke to CNBC and addressed the issue of diligence. Have a listen.

SOUNDCLIP

REPORTER: Did you know that Vladimir Putin's aides and associates were using the services of Mossack Fonseca?

JÜRGEN MOSSACK: No. When we find out names like Putin or like other heads of state, it is always through the media. It means that—

REPORTER: Did you know that eight members of the Chinese Politburo were using your services?

JÜRGEN MOSSACK: No, of course not.

REPORTER: Did you know that David Cameron’s family had used your services?

JÜRGEN MOSSACK: No.

REPORTER: And why not, sir? I mean, your name is on the front door here. Wouldn’t that be something that you would want to know as the business owner?

JÜRGEN MOSSACK: Whenever we find out, then we start investigating. We have a protocol of due diligence and normally in a case like that, we would resign. We would stop dealing with that client and with that company and with the intermediary.

MF: So they have a protocol of due diligence, he says.

FREDERIK OBERMAIER: Well, I really think that they have a protocol but they don't stick to it. What we see in the data is that of course there are cases where they really resign when they realize stuff like that. But there are heaps of cases where they didn't, where they do see who is behind it and they do see that it’s a political spokesperson or a person involved in criminal activities, and they kept these people as customers. And I mean they even lied to people. They told us, for example, when we asked about the cousin of Bashar al-Assad, if they knew that he's a customer. They wrote us a letter back and in both letters we didn't know. And then we found in our Panama Papers documents that they knew it since the nineties.

MF: They did eventually drop Rami Makhlouf, didn’t they?

FREDERIK OBERMAIER: Well, they eventually, after several months after this conversation, they dropped him but it took months and this was months. I mean Rami Makhlouf could go on financing the war and the regime with the help of these offshore companies.

MF: It's an extraordinary moment in Vladimir Putin's annual news conference where he takes questions from Russians, where he's asked about the role that he plays in the Panama Papers and he says the information that has come out of your work is factually correct, right?

FREDERIK OBERMAIER: Yeah. And I mean in the same conference, he told the world that our newspaper would be owned by Goldman Sachs. What is not is the truth.

[Crosstalk]

MF: Which it isn’t, yeah.

FREDERIK OBERMAIER: And he had then to say sorry and that was a great page one for us because we never have—in our history of our newspaper—we never had the Kremlin saying sorry to our newspaper.

MF: So what is the connection?

FREDERIK OBERMAIER: Between Vladimir Putin and the Panama Papers?

MF: Yes.

FREDERIK OBERMAIER: Well we saw… Pretty early in our investigation, we stumbled across a guy in the Panama Papers in regards to some companies, some offshore companies who do deals in the heart of millions of dollars. And we then looked who is the guy and this guy was called Sergei Roldugin. Well he’s supposed to be the best friend of Vladimir Putin. And we also found an interview of The New York Times with him where he claimed I'm only a musician. I sometimes play—

MF: He’s a cellist, right?

FREDERIK OBERMAIER: A cellist, yes. And he plays sometimes for Putin. But he told The New York Times, I do not own millions. I’m not a businessman. But at the same time, we saw him in relation to dealings about 800 million dollars and stuff like that. So either he lied to The New York Times or well, he lied.

MF: How direct a connection is there between that money, those millions of dollars and Vladimir Putin?

FREDERIK OBERMAIER: Well we found that this guy, Sergei Roldugin, is in the middle of our network of offshore companies where some other friends, close friends of Vladimir Putin are involved. And we found that out of this network, some millions have been used for financing, essentially, the place where one of Vladimir Putin’s daughters married and we found links from this network to the biggest tax fraud in Russia, the Magnitsky case. And we saw that within this network, there was money funneled to the height of about 2 billion dollars. And another question is who is it? Is it really this cellist and some friends? And knowing that in Russia, you couldn't move such big amounts of money without the Kremlin knowing, without the authorities knowing, we think that this guy must at least have the go from a very big person and it could be Putin.

MF: There are a number of people in organized crime who are using Mossack Fonseca’s services, drug lords as well. Can you tell us a bit about that and how you discovered them?

FREDERIK OBERMAIER: Well, we found drug lords, we found members of the Italian mafia, the Ukrainian mafia and we found indicted pedophiles. So it's, I mean, it's all the shady guys hiding in the offshore world and I mean, we stumble across them really like, it was by accident sometimes. When we found a new name, Googled it and then was like whoa. At the beginning, we made lists of different fields where we found people in the data and this was like leads to heads of state, leads to heads of government, leads to criminals, but in the end, we also had to write on our walls in our offices because it was so many names and interesting names coming up in the data.

MF: So what are the drug lords—for instance, take an essential American drug lord, why would that person go to Mossack Fonseca? What are they doing? What are they trying to accomplish?

FREDERIK OBERMAIER: Well, if you are a drug lord and if you want to move a big amount of money, if you do it with your own name as you're known as a drug lord, that may be very very difficult because the authorities will closely watch what you're doing because you could wash your money, essentially. But if you then set up a company and call it, well, for example, Toronto. Inc., nobody will know that you're behind it if you take certain measures of secrecy. So you can essentially do what you in your own name would not be able to. You can buy houses, you can buy yachts, you can buy even other companies, and nobody will know out there.

MF: One of the ways Mossack Fonseca defends itself in, I guess cases like these, is to say look, this is something like a wholesaler. We sell a product and the product is the establishment of shell companies. That is a legal service. And then you know, what customers do with those shell companies... Well, not their business. How accurate, I guess, is that a description of what it is they're doing?

FREDERIK OBERMAIER: That's purely PR talk to distract from the fact that they do know in many many cases what the companies are used for because we see it in the Panama Papers.

MF: Why keep doing business with such high risk clients? Even after figuring out who they are?

FREDERIK OBERMAIER: Because of the money. Because every offshore company brings you some thousands of dollars a year and summing that up, and seeing that Mossack Fonseca had registered over two hundred thousand companies, I mean in the end, it’s quite a sum.

MF: Although sometimes they do decide to end the relationship, no?

FREDERIK OBERMAIER: Yes, sometimes. But it's not the regular case.

MF: When is too far too far with Mossack Fonseca in what you’ve looked at?

FREDERIK OBERMAIER: My impression is that too far too far is for them when they realize that authorities have certain knowledge about what is going on and are digging into the cases but if there is not, I have not seen that much case where they said well, let's get it rid of that customer.

MF: You didn't—to be clear—you didn't turn over the Panama Papers to the police?

FREDERIK OBERMAIER: No. Süddeutsche Zeitung, as well as ICIJ, we’ve not handed over the data to the authorities because we do not see us as the helpers of the police or other investigators. And for me, another big reason is that we could not be sure that in the data there may not be some hint leading, for example, to John Doe. And I mean, it was a little bit a bad moment for us realizing that some politicians called for all the newspapers to hand over the data but at the same time we spoke with some investigators here in Germany and they told us well, we wouldn't have enough personnel to deal with the data. We could raid houses, we already know from the reporting you and your colleagues have done so many hints where we could go after, but that's not enough personnel. So that really shows me if politicians want to act, then they should hire more investigators, not asking us for handing over the data.

MF: I wonder what your opinion is when the rich and the powerful, and in some cases, high profile criminals, when they hide their money in tax havens. What is the effect on average people?

FREDERIK OBERMAIER: The fact is that average people may get the impression that there's a parallel world for the richest, and that impression is right because we do not see the average person in the Panama Papers. It's the richest hiding their money offshore and it's not only hiding their money offshore, it's also them choosing what laws they want to stick to. Average people realizing that the richest essentially can say well, I don't I don't like that law that was passed by the German parliament, so I go to Panama. That's a real problem for democracy.

MF: What's the most important result from all the revelations?

FREDERIK OBERMAIER: Well, my personal opinion is that the most important result is the discussion and the debate we already do see now internationally, that people like Putin, like Obama speaking about it, . He was in Munich. We did send multiple interview requests to Mossack Fonseca. We did not get a reply. A statement on its website however, reads in part, “Recent media reports have portrayed an inaccurate view of the services that we provide, and despite our efforts to correct the record, misrepresented the nature of our work and its role in global financial markets. These reports rely on supposition and stereotypes and play on the public’s lack of familiarity with the work of firms like ours. It is legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons.” The CBC’s Zack Dubinsky has been part of our team investigating Canadian connections to the Panama Papers for several months.

SOUNDCLIP

ZACK DUBINSKY: In the Panama Papers, there's a note saying do not send any account statements or invoices to Fred Sharp in Vancouver. This is one of like the classic things that you see in the offshore world. People don't want to have their bank account statements, their invoices mailed to them or emailed to them or faxed to them because they don't want there to be a paper trail.

MF: Find out more, we’ll post that interview with CBC journalist Zack Dubinsky and all about the findings that so far we have from the CBC. We're still working on the papers, there’s a lot of them. It's over on our website www.cbc.ca/thecurrent. That's also the place to go to send us a comment on the show. Just click on the contact link. That's our program for today. Stay tuned to CBC Radio One for a new episode of The Current’s summer series, Ripple Effect with Anna Maria Tremonti. She's exploring ripple effects in medicine and scientific research by looking at how young blood could repel the effects of old age, how the gender gap in mice is causing troubling implications in scientific research and how a new era is upon us, the dawn of a post-antibiotic age.

[Music: Ending theme]

MF: I'm Mike Finnerty. That's the summer edition of The Current and that's my stint in this chair. I’ll be back to Montreal next week. Laura Lynch is here on Monday. Canada in the summer, enjoy it everybody. We’ll talk to you soon.

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July 15, 2016 full episode transcript

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