How to Pay a Bribe 2016 the Law Firm That Works With Oligarchs Money Launderers And

7/26/2019 How to Pay a Bribe 2016 the Law Firm That Works With Oligarchs Money Launderers And

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ALEXANDRA WRAGE

SEVERIN WIRZ

PAY

BRIBE

HOW

TO A

2016 Edition

Now available for purchase on Amazon at http://bit.ly/1WsadD8.


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How to Pay a Bribe

Tinking Like a Criminal toTwart Bribery Schemes

Table of Contents

About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii

Preface to the 2016 Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . .xii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv

Chapter One: The Law Firm That Works with Oligarchs,

Money Launders, and Dictators

by Ken Silverstein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Chapter Two: Netting Corruption in Southeast Asia

by Robert Appleton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Chapter Three: Toxic Chemical Agents: Evading Third Party

Due Diligence Controls

by Kathleen M Hamann. . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Chapter Four: The Anatomy of a Bribe

by Richard Bistrong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Chapter Five: Defending Your Weakest Link: Is It Inside or

Outside Your Business?

by Amy L. Sommers and Cindy Hong. . . . . . . . . . . . . . .53

Chapter Six: Wanted: Pen Pal with Benefts

by Neylou Tamou. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Chapter Seven: Growing Painsby Jeffrey D. Clark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71



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Chapter Eight: The Gift that Keeps Giving: Corporate Charitable

Contributions and Compliance

by Brian C. Baldrate and Anupama Chettri. . . . . . . . . . 79Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87



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Chapter One

Te Law Firm Tat Works with

Oligarchs, Money Launderers,and DictatorsKen Silverstein

Bribe recipients looking for a place to hide their criminal proceeds often

funnel payments to shell companies set up in offshore jurisdictions wherethey can conceal their identity and evade local taxes. Many times, lawyersare the facilitators for this corporate malfeasance, often because they areexcluded from having to conduct anti-money laundering due diligence ontheir clients and because of their acute understanding of tax and corporateregistration laws. In the below story, we see how one such law frm takesadvantage of lenient corporate registry laws both in the United States andabroad to set up these dubious entities on behalf of un-named clients.

One purpose of a so-called shell company is that the moneyput in it cant be traced to its owner. Say, for example,youre a dictator who wants to nance terrorism, take a bribe,or pilfer your nations treasury. A shell company is a bogusentity that allows you to hold and move cash under a corporatename without international law enforcement or tax authoritiesknowing its yours. Once the money is disguised as the assets

of this enterprisewhich would typically be set up by a trustedlawyer or crony in an offshore secrecy haven to further obscureownershipyou can spend it or use it for new nefariouspurposes. This is the very denition of money laundering



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The Law Firm That Works with Oligarchs, Money Launderers, and Dictators

taking dirty money and making it cleanand shell companiesmake it possible. Theyre getaway vehicles, says former USCustoms investigator Keith Prager, for bank robbers.

Sometimes, however, international investigators are able tofollow the money. Take the case of Rami Makhlouf, the richestand most powerful businessman in Syria. Makhlouf is widelybelieved to be the bagmana person who collects and managesill-gotten lootfor President Bashar al Assad, who during thepast three years has helped cause the deaths of more than 200,000of his citizens in the countrys civil war.

Besides Assad, there are few people more hated in Syria thanMakhlouf. Hes the presidents cousin and the brother of the chief

of Syrian intelligence. Using these connections, Makhlouf built abusiness network that spanned from telecommunications to energyto banking, and by the time he reached 40 he had accumulated afortune estimated to be in the billions. When the uprising againstthe regime began in early 2011, protesters torched a branch of hismobile-phone company and chanted, Makhlouf is a thief!

In 2006 the British magazine the New Statesmen said noforeign company can do business in Syria without Makhloufs

approval and involvement, and a classied 2008 cable from theAmerican embassy in Damascus released by WikiLeaks describedhim as the poster boy of corruption in Syria. In that sameyear, the US Treasury Department banned US companies fromdoing business with Makhlouf, saying that hed amassed hiscommercial empire by exploiting his relationships with Syrianregime members and used Syrian intelligence ofcials tointimidate his business rivals.

When the Syrian civil war kicked off in 2011 and state

security forces began gunning down Assads opponents, the USand the European Union put Makhlouf on Fa list of regime cronieswhose international assets should be traced and seized, because,as the Treasury Department put it, hed grown rich by bribing andaiding the public corruption of Syrian regime ofcials.

If Makhlouf was a bank robber, his getaway car was acompany called Drex Technologies SA. In July 2012, the TreasuryDepartment identied Drexa dummy entity with a British Virgin

Islands addressas the corporate vehicle Makhlouf secretlycontrolled and used to facilitate and manage his internationalnancial holdings. In other words, say Makhlouf had skimmeda few million dollars off the top of a secret business deal with a



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How to Pay a Bribe

crooked Syrian ofcial. He wouldnt put it into a bank accountthat he could be linked to; instead, hed funnel it through Drex sothe money couldnt be connected to him.

In late October, I obtained several documents about Drexfrom the British Virgin Islands business-registration office. Therecords reveal very littleMakhloufs name, for example, isnowhere on them. It was only because the Syrian civil war hadprompted international investigations to try to track down andfreeze the assets of Makhlouf and other Assad regime banditsthat the US Treasury discovered that he controlled the companyand was its owner, officer, and shareholder. But by the time theTreasury Department did it was too late, as Drex had by then

disappeared from the British Virgin Islands corporate registry.In other words, Drex Technologies SA was a vehicle that hidMakhloufs shadowy financial activities, and before that wasdiscovered Makhlouf had plenty of time to move its operationsand assets to another offshore jurisdiction.

Yet who makes these ctitious entities possible? To conductbusiness, shell companies like Drex need a registered agent,sometimes an attorney, who les the required incorporation

papers and whose ofce usually serves as the shells address. Thisprocess creates a layer between the shell and its owner, especially ifthe dummy company is led in a secrecy haven where ownershipinformation is guarded behind an impenetrable wall of laws andregulations. In Makhloufs caseand, I discovered, in the case ofvarious other crooked businessmen and international gangstersthe organization that helped incorporate his shell company andshield it from international scrutiny was a law rm called MossackFonseca, which had served as Drexs registered agent from July 4,

2000, to late 2011.Founded in Panama in 1977 by German-born Jurgen

Mossack and a Panamanian man named Ramn Fonseca, a vicepresident of the countrys current ruling party, it later added athird director, Swiss lawyer Christoph Zollinger. Since the 70s thelaw rm has expanded operations and now works with afliatedofces in 44 countries, including the Bahamas, Cyprus, HongKong, Switzerland, Brazil, Jersey, Luxembourg, the British Virgin

Islands, andperhaps most troublingthe US, specically thestates of Wyoming, Florida, and Nevada.Mossack Fonseca, of course, is not alone in setting up shell

companies used by the worlds crooks and tax evaders. Across



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the globe, there are vast numbers of competing rms, and manyof them register shells that are every bit as shady as Drex. Proof ofthis includes the case of Viktor Bout, who, in the 1990s, peddled

arms to the Taliban through a Delaware-registered shell. Morerecently, in 2010, a man named Khalid Ouazzani pleaded guiltyto using a Kansas City, Missouri, rm called Truman Used AutoParts to move money for Al Qaeda.

Scattered news accounts and international investigationshave pointed to Mossack Fonseca as one of the widest-reachingcreators of shell companies in the world, but it has, until now,used an array of legal and accounting tricks that have allowed itand its clients to mostly y under the radar.

(The company disputes this claim and asserted in an emailthat there is no court or government record that has everidentied Mossack Fonseca as the creator of shell companies.Anything tying our group to criminal activity is unfounded,inasmuch as we have not actually been notied of the existence ofany legal proceeding... thus far.)

But a yearlong investigation reveals that Mossack Fonsecawhich the Economist has described as a remarkably tight-lipped

industry leader in offshore nancehas served as the registeredagent for front companies tied to an array of notorious gangstersand thieves that, in addition to Makhlouf, includes associatesof Muammar Gadda and Robert Mugabe, as well as an Israelibillionaire who has plundered one of Africas poorest countries,and a business oligarch named Lzaro Bez, who, according to UScourt records and reports by a federal prosecutor in Argentina,allegedly laundered tens of millions of dollars through a networkof shell rms, some of which Mossack Fonseca had helped register

in Las Vegas.Documents and interviews Ive conducted also show

that Mossack Fonseca is happy to help clients set up so-calledshelf companieswhich are the vintage wines of the money-laundering business, hated by law enforcement and beloved bycrooks because they are aged for years before being sold, sothat they appear to be established corporations with solid trackrecordsincluding in Las Vegas. One international asset manager

who talked to Mossack Fonseca about doing business with themtold me that the rm offered to sell a 50-year-old shelf companyfor US$100,000.

If shell companies are getaway cars for bank robbers, then



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How to Pay a Bribe

Mossack Fonseca may be the worlds shadiest car dealership.Last March, I ew to Panama City, home to Mossack

Fonsecas headquarters. Victor, a local journalist, drove me around

town, past the lush golf courses and mansions in the old US-runCanal Zone, by dingy apartment buildings in the shantytown ofEl Chorrillo, and through the skyscraper-lined central businessdistrict. At the time of my visit Panama was preparing for nationalelections, and campaign posters plastered every telephone poleand whitewashed wall. Victor offered a running commentary aswe drove. That guys an asshole, he said, pointing to a billboardfor a candidate for the national assembly who, he claimed, waslinked to the local drug trade. Well, theyre all assholes. But hes

a realasshole.Panama has been run by assholes for more than a century.

In 1903, the administration of Theodore Roosevelt created thecountry after bullying Colombia to hand over what was thenthe province of Panama. Roosevelt acted at the behest of variousbanking groups, among them J. P. Morgan & Co., which wasappointed as the countrys ofcial scal agent, in charge ofmanaging US$10 million in aid that the US rushed down to the

new nation.American banks helped turn Panama into a nancial center,and the country emerged as a tax and money-laundering havenin the 1970s after the government passed some of the worldsstrictest nancial-secrecy rules. That likely encouraged MossackFonseca to establish itself here in 1977. The nancial-secrecy rulesdidnt just promise foreign investors condentialitythey made ita crime for banks to disclose any information about clients unlessthey were ordered to by a court in a case that involved terrorism,

drug trafcking, or another serious offense (tax evasion wasspecically excluded from that category). These laws attracted along line of dirtbags and dictators who used Panama to hide theirstolen loot, including Ferdinand Marcos, Baby Doc Duvalier,and Augusto Pinochet.

When Manuel Noriega, commander of the Panama DefenseForces, took power in 1983, he essentially nationalized the money-laundering business by partnering with the Medelln drug cartel

and giving it free rein to operate in the country. Noriega reliablysupported American foreign policy in the regionand for yearsthe CIA had him on its payrollbut the US lost patience whenhe opposed American efforts to topple the leftist Sandinista



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government in neighboring Nicaragua. That helped lead to the1989 invasion of Panama that ousted Noriega and returned topower the old banking elites, heirs of the J.P. Morgan legacy.

The new government of President Guillermo Endara, acorporate lawyer who was sworn in on an American militarybase a few hours after the invasion began on December 20, 1989,offered a kinder, gentler face than Noriegas regime. But sincethen he and his democratically elected successors have done littleto address the countrys most obvious problems: corruption andpoverty. A recent US government report said that Panama isplagued by fraud and international tax evasion, all of which aremajor sources of illicit funds.

Today, Panamas nancial laws remain extraordinarily lax.Foreign rms can bring unlimited amounts of money into thecountry without paying taxes, and an International MonetaryFund report earlier this year said that of 40 recommendedsteps countries should take to combat money laundering andterrorism nancing, Panama had fully implemented only one. InSeptember, the New York Timesreported that cronies of Russianpresident Vladimir Putin had funneled money offshore though

shell structures in Panama. When it comes to money laundering,we offer full service: rinse, wash, and dry, said Miguel AntonioBernal, a prominent local lawyer and political analyst. You cango to any law rm in the city, from the smallest to the biggest, andopen up a shell company with no questions asked.

In Panama City, I was comfortably shacked up in a mammoth16th-oor studio suite at the Waldorf Astoria hotel, a glitteringtower with a panoramic view of Panama Bay. Id timed my arrivalto coincide with a two-day conference at the hotel of about 70

international nancial consultants to the ber-richhigh-net-worth individuals, in nancial-industry parlanceand Iddiscovered that one of the featured speakers was Ramses Owens,a lawyer and nancial expert who had worked for MossackFonseca.

On the second morning after I arrived, I awoke and lifted myhead from one of the uffy feather pillows on my king-size bed,climbed out from under the 300-thread-count sheets, dressed,

and took the elevator down to the conference locale: the hotelsDiamond Ballroom.Although the affair was private, I was able to snoop on the

proceedings and get a list of participants and copies of talks and



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presentations. Seated at tables topped with pitchers of ice waterand ower-lled vases, the attendees were overwhelminglymiddle-aged men with graying hair and thickening waistlines,

dressed in dark wool business suits that would have inducedimmediate heat stroke on the sweltering streets of Panama Citybut were just right in the Diamond Ballroom, which was chilledto about 65 degrees.

There were corporate tax attorneys, accountants, bankers, andtrust administrators, and they faced a small stage with a podiumfor speakers and a screen to show PowerPoint presentations.About half the attendees were Panamanians; a quarter had ownin from the United States, Europe, and South America; and another

quarter had come from traditional offshore havens like the Turksand Caicos Islands, the Bahamas, St. Lucia, and Belize. These arereally bad people, Jack Blum, a former US Senate investigatorand Washington lawyer specializing in money laundering, hadtold me before my trip. And they want to learn how to becomeeven worse people.

I see youre playing the Lone Ranger, ruddy-faced EdwardBrendan Lynch, a Bahamas-based nancial adviser, said to me

during a break in the proceedings. I sat at the bar spying onattendees, and he waited for a Scotch on the rocks. Where areyou from?

When I told him I hailed from Washington, DC, Lynch, wholooked like Thurston Howell III from Gilligans Island, said hedvisited the city many years ago. Saw the cherry blossoms, hereminisced. Lunched at the Jockey Club. Lovely place.

Back in the Diamond Ballroom, Ramses Owens took to thepodium. Immaculately dressed and groomed with hair that was

perfectly trimmed and parted, he embodied the banality of modernnancial evil. Owens, who was billed in the conference programas a master of tax planning, joked with the audience that hepreferred to describe his work for clients as asset optimization.

When he worked at Mossack Fonseca, Owens drew on hisexpertise about the competitive advantages of incorporatingcompanies on the South Pacic island of Niue. In 1996 the rmwon exclusive rights to set up shell rms on the island, and within

four years, 6,000 shell rms were registered there, some reportedlycontrolled by Eastern European crime syndicates and internationaldrug cartels, according to international investigations and newsaccounts. The ndings led to the imposition of international



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sanctions in 2001 that forced the island to shut down its corporate-registration business ve years later. Mossack Fonseca turnedlemons into lemonade for its clients by moving their accounts out

of Niue and into other secrecy havens, including Samoa and, asrevealed in court records that Mossack Fonseca was ordered toturn over, Nevada. (There is no proof that the rms they movedwere engaged in criminal activity, though the identities of theowners of those companies remain unknown.)

The crackdown on Niue was part of a broader internationaleffort led by the US, Britain, and other Western nations. Originallyprompted by concerns about terrorism and organized crime,the initiative has intensied recently due to hemorrhaging

budget decits, which have swelled in no small part because ofwidespread tax evasion. Americans are believed to hold morethan US$1 trillion secreted in offshore havens, with annual lossesto the IRS alone coming to some US$100 billion. In 2010, the USgovernment passed the Foreign Account Tax Compliance Act afterhitting Swiss giant UBS with a US$780 million ne for helpingthousands of American account holders hide their assets (in onecase, a UBS banker smuggled a clients diamonds across borders

in a toothpaste tube). FATCA, which is being rolled out in stagesand whose full implementation has been delayed due to erceopposition from the nancial industry, already requires foreignbanks to notify the IRS about accounts held by US taxpayers.

Naturally, FATCA was worrying to those seated in theDiamond Ballroomamong them Marie Fucci, an adviser toAmerican and European clients who righteously denouncedthe act as a form of nancial apartheidbut Owens sought tocalm their fears. As he clicked through PowerPoint slides with

images of bank vaults, piles of hundred-dollar bills, and othernancial-porn shots, Owens outlined ways to evade onerousand annoying international regulations. FATCA, he condentlyaverred, wouldnt bring down the offshore system, and itcertainly wouldnt do so in Panama, where lawyers, accountants,and other shell-rm enablers have powerful political allies (likethe countrys then nance minister, who also spoke at the event).Owens estimated that nine out of every ten business entities

registered in the country were foreign-owned and said thatPanamanian private foundationsa local creation that in theoffshore world is as beloved as traditional favorites like the Swissbank accountwould still be able to hold money anonymously,



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even when FATCA is fully implemented. Audience memberswagged their heads in approval.

The morning after Owenss speech, I headed out of the

Waldorf to the ofces of Mossack Fonseca. I had no expectation ofmeeting with anyone at the rm, as Id made numerous requestsfor an audience and had been politely but rmly rebuffed. Wehave decided not to participate in this interview, spokeswomanLexa de Wittgreen wrote me in a brush-off email, which at leastdemonstrated that Mossack Fonseca is capable of performing duediligence, on journalists if not clients.

I was using a hotel map and soon got lost in Panama Cityscrowded business district, which resembles a miniature Hong

Kong in tropical tones. As I looked around to orient myself, I sawa young man dressed in dark slacks and a green pinstripe shirtstride out of an ofce buildingEdicio Omegaand open thedrivers door of a black Mitsubishi Sportero pickup.

Its not that close, he said in awless English when I askedhim if he knew how I could get to Mossack Fonsecas building.Do you have an appointment with them? Because I do similarwork and might be able to help you. He pulled out a business

card and handed it to me with an ear-to-ear smile.By coincidence, he turned out to be Alejandro Watson Jr. ofOwens & Watson, where Ramses Owens is a name partner. I workright over there, he said, pointing toward the rms second-oorofce. Im late for a meeting, but I can see you later today, or Ican take you in now and introduce you to one of my colleagues.

Before my trip, Id wondered if I should contact a local lawrm to test how easy it would be to set up a shell company. Thiswas too good an opportunity to pass up.

Im down from the States for a few days looking at realestate, I ad-libbed as trafc whizzed by and car horns blared. Ineed to set up a company here to make the purchase. What sort ofinformation would you need?

All I need to have is your passport, a drivers license,something that shows your home address, and a letter of referencefrom any bank, Watson said. We dont push you for informationabout your business. We just want to help you do business so you

continue to work with us.Will my name appear anywhere in the paperwork? I asked.I thought my bluntness might trigger at least mild concern

on his partafter all, it was the very same promise of anonymity



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that had attracted all those dodgy clients to Niue when Watsonscurrent boss was employed by Mossack Fonseca. But he remainedas cheery and eager as a Mister Softee driver dispensing soft-serve

cones. You have a FATCA problem, Watson said with a smileand a knowing look. We can work that out. I might recommendyou set up a trust, because that can be legally owned by someoneelse entirely.

I asked whether Id be able to open a bank account for myshell rm so I could access my money. After all, theres no pointin hiding cash offshore if you cant spend it.

Absolutely, Watson said, enthusiastically. He reached intothe Sportero and pulled out a brochure from a small stack jammed

between the two front seats. We have a global banking network,he said, and pointed to a page listing a few dozen nancialinstitutions his rm worked with.

The network included small banks in Panama, the CaymanIslands, Monaco, and Andorra, and brand-name players like HSBCand the diamond smugglers at UBS. A US Senate committee reportdescribed the former as a major conduit for drug kingpins androgue nations, and last year the bank signed a US$1.92 billion

settlement with the Justice Department after admitting to helpinglaunder millions of dollars through shell rms for Colombian andMexican cartels. There was even a US component to Owens &Watsons network: Helm Bank in Miami. In 2012, US regulatorshit Helm with a consent order for multiple violations of the BankSecrecy Act and anti-money-laundering rules.

This was a list that would certainly inspire condence, atleast if I were a crook looking to hide my money from the IRS orlaw enforcement.

The whole process would take only a few days, Watson said,and my costs would be negligible: About US$1,200 to incorporatemy shell, US$300 to cover government fees, and a few hundreddollars more for Owens & Watson to provide nominee directors, ifnecessary. If I wanted to buy a shelf companythe aged varietyit would cost me a little extra.

And my name wont appear anywhere, right? I asked,deciding I might as well push as far as possible.

No, no, no, Watson exclaimed. Thats not a problem.Soon after my conversation with Watson I found the ofcesof Mossack Fonseca, which occupies the top three oors of afour-story glass building that has a dental clinic at ground level.



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Though Id hoped to get inside, I abandoned the idea when Ispotted a guard at the entrance, vetting all the buildings visitors.

At least, I thought, Id take a picture of the ofce, whose

glass exterior reected the citys landmark Revolution Tower, ahideous corkscrew-shaped ofce building. But Mossack Fonsecaapparently guards its headquarters as zealously as it protects itsclients identities. Hes taking a picture! a woman, who wasreturning to the building with a restaurant takeout bag, shoutedwhen she spotted me snapping a photo with my iPhone. Shescreamed again and pointed at me. Hes taking a picture!

Next, I decided to try my luck in Las Vegas. Mossack Fonsecadescribes Nevada as one of the best jurisdictions in the United

States to set up a company because of the states versatility, lowcosts, and fast service. America is a great place for MossackFonseca to do business since its the second-easiest country toregister a dummy companybehind Kenyaaccording to aDC group called Global Financial Integrity. And crooks loveregistering companies here, too, because owning a US companyprovides them with a phony gloss of respectability that can helpdivert attention from their criminal deeds, Heather Lowe, the

groups director of government affairs, told me.Since Mossack Fonseca began offering services in the statemore than a decade ago, it has used a closely linked local rmcalled MF Corporate Services to register more than 1,000 Nevadacompanies, most of them managed from offshore destinationslike Geneva, Bangkok, and the British Virgin Islands, accordingto records on le with the secretary of state. Under Nevada lawthe only names that must appear on a shell rms public recordsare those of a resident agent and a manager, and neither has to

be a human being. The resident agent is typically the companythat registers the shell rm, and the manager can be yet anotheranonymous company. That makes it virtually impossible todiscover who actually controls a Nevada shell unless lawenforcement or the courts compel disclosure.

Technically, MF Corporate Services is independent ofMossack Fonseca. But in practice, court papers, incorporationrecords, and other condential documents show it functions as

Mossack Fonsecas local branch ofce, with its main employeereporting directly to Panama City. This sort of bogus separation isa tactic employed by many big shell-rm incorporators, because itallows the parent company to disavow any connection to its local



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ofces if the shit hits the fan from a legal standpoint. Its sort of likehow Walmart might operate in Bangladesh, distancing itself fromsweatshops by long and complex supply chains. (Like Walmart,

Mossack Fonseca has never been directly prosecuted for theactions of its afliates.) These are seamless, vertically integratedtop-down organizations until the minute that a cop or investigatorcomes along, says Jack Blum, the money-laundering expert.Then they disintegrate into a series of unconnected entities, andeveryone swears they dont know anything about anyone else inthe system. Its like a jigsaw puzzle thats assembled but suddenlyfalls apart when someone starts investigating.

Indeed, this is exactly how Mossack Fonseca has replied

when questioned about shady activities its been connected to inLas Vegas. While theres no way to know precisely whos behindthe vast majority of dummy companies the rm has been helpingto create there, an ongoing criminal investigation in Argentinaand a related case before the United States District Court ofNevada involving the oligarch Lzaro Bez offer an idea. Theinvestigation and court records allege that Bez is the secret ownerof more than 100 shell rms that Mossack Fonseca has helped

establish in Nevada. All of them were managed by Aldyne Ltd.,an anonymous company that Mossack Fonseca registered in theSeychelles Islands, according to prosecutors. (Mossack Fonsecahas not been charged to date in either Argentina or Nevada, butone of its operatives in Las Vegas has been deposed in the legalcase, and the district court has told the rm to turn over recordsrelated to the Bez shell companies, an order with which it hasrefused to fully comply.)

A former bank teller, Bez built a vast business empire

through contracts awarded by his close friends Cristina andNstor Kirchner, the current and previous presidents ofArgentina, respectively, and their political allies in his homeprovince, according to news reports and investigators. Bez wasso bereft when his patron Nstor died, in 2010, that he erected athree-story mausoleum to house his remains. Prosecutors allegethat the Nevada shells were part of a network that Bez used tomove offshore more than US$65 million in funds diverted from

public infrastructure projects.The Bez-linked rms in Nevada were registered byMF Corporate Services, whose assistant manager, PatriciaAmunategui, was asked by Mossack Fonseca headquarters to



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also serve as secretary of Aldyne Ltd., according to a sourceclose to the issue. When questioned about the illegal activities ofpast client rms, Mossack Fonsecas reply was to remind me in

an email that registered agents are not liable in any way for thebusiness transactions or any other dealings of the companies theyincorporate. For her part, Amunateguia native Chilean whopreviously worked as a casino cocktail waitress and, based on herFacebook page, enjoys yoga, spiritualism, and hiking and admiresthe Dalai Lama, the Tea Party, and former Chilean dictatorAugusto Pinochethas claimed that MF Corporate Servicesdoes not have, nor have we ever had, any kind of relationshipwith Lzaro Bez. She also claims she has no employment

relationship with Mossack Fonseca, even though a few yearsago she provided a testimonial used in a University of Nevada,Las Vegas, catalogue that said right after she graduated from itsparalegal program she landed a great job as the vice president ofMossack Fonseca, an international law rm. (She claims she wasmisquoted.) Amunategui was the person I most hoped to meetwhen I ew to Las Vegas in early November.

Your car is in space B-15, the twentysomething woman at

Avis told me after Id landed at McCarran International Airport.Blike in brothel.Her face was expressionless, so I wasnt sure whether to be

insulted or merely amused. But Id been traveling all day fromWashington, on two long ights in economy class, so at that pointI didnt really care. It was good to have landed in Vegas, even ifthe airport is named for Pat McCarran, the casino-loving, Jew-hating, racist politician whom the corrupt Nevada senator in TheGodfather: Part IIwas allegedly modeled on.

In 2001, the Nevada legislature considered a bill that wouldencourage companies to incorporate in the state by shieldingthem from disclosure and liability laws. We are holding up asign that says, Sleaze balls and rip-off artists welcome here,then state senator Dina Titus said during debate on the bill, whosesupporters argued that it would gin up badly needed revenues.

Titus, who now serves in the US House of Representatives,rather bizarrely proceeded to vote Yes on the bill, and her

prophecy duly unfolded. Within a few years Nevada had becomethe headquarters for a variety of Ponzi schemers, corporate crooks,pump-and-dump penny-stock promoters, internet swindlers, andtax evaders. Among them were Donald McGhan, who in 2009



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received a ten-year sentence for bilking investors of almost US$100million through a scam real estate venture called SouthwestExchange, and defense contractor Mitchell Wade, who used a

Nevada-registered shell to funnel a bribe to then congressmanRandy Cunningham. (The pair were doomed during a lunch whenCunningham diagrammed on his own congressional stationery afatal list of bribes hed received from Wade and the correspondingfederal contracts hed steered his way in exchange.)

The secretary of states website offers a host of reasons forcompanies to incorporate in Nevada, trumpeting the lack ofcorporate income tax and the near impossibility of piercing thecorporate veil. Those sorts of rules have helped draw some

300,000 active companies to the state, one for every nine residents,and netted revenues of US$133 million in 2012 alone. So muchof that activity is potentially criminal that Deputy Secretary ofState Scott Anderson says his ofce has taken a number of stepsto clamp down on abuses, including a rule that strictly prohibitsanyone from creating a Nevada corporation to commit a crime.Granted, if someone is going to do something illegal, Andersonconceded, they probably wouldnt disclose it.

One day during my trip I interviewed Cort Christie, head ofNevada Corporate Headquarters, one of the states most prolicshell-rm incorporators. His company is located in an oversize,sterile ofce building in an area called Spring Valley. Christie isa former board member of the powerful, politically connectedNevada Registered Agent Association (MF Corporate Servicesis a member), which is working to ensure the states future asAmericas incorporation center, according to the groups website.It warns that if Nevadas current tax-advantaged, pro-business

environment is lost, the states reputation... will be lost as well.Once that public trust is damaged, it cannot be easily replaced.

Last year, the NRAA lobbied against a proposal by thesecretary of state that would have tightened up rules discouragingcorporate secrecy. The bill, which Christie told me wouldvecurbed the appearance that people can come out here and hideout, was overwhelmingly rejected.

On the morning of November 4, I cruised down S. Casino

Center Boulevard through the heart of downtown Las Vegas, pastthe Golden Nugget and El Cortez (the original mob-owned casino)and the heaviest concentration in America of restaurants offeringUS$9.99 prime-rib dinners. Then I got on Interstate 15 and headed



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How to Pay a Bribe

south to Henderson, a suburb where gigantic malls give way to aseamless blur of stucco and adobe-style tract houses.

MF Corporate Services is situated in the Parc Place

Professional Complex, home to several identical, single-storybuildings with red-tile roofs. There were only a few cars in theparking lot, and I didnt see anyone outside. A red-and-whitemetal MF Corporate Services sign, planted into a patch of rocksand cactuses, blew forlornly in the warm breeze.

As far as I could tell from public records and court documents,MF Corporate Services doesnt do any drop-in workits onlypurpose seems to be setting up Nevada shells for MossackFonseca clientsand the remote setting did nothing to dispel

that impression. Amunategui runs day-to-day operations, thoughinternal company documents I found in court records show sheworks closely with Mossack Fonseca employees in Panama, suchas Leticia Montoya, the custodian of record for dozens of shellrms linked to Lzaro Bez.

Montoya has quite a checkered career, having previouslyregistered or served as a nominee director for at least sixanonymous companies that were involved in major international

corruption scandals. Among those is a Panamanian shell rmcalled Nicstate, whose benecial owners turned out to includeformer Nicaraguan president Arnoldo Fat Man Alemn. Heused Nicstate and other offshore vehicles to divert nearly US$100million of state funds into his own pockets. Montoya also helpedset up Mirror Development Inc., which Siemens of Germanyemployed to funnel bribes to Argentine government ofcials whohelped it win a US$1 billion contract to produce national identitycards. This was just one component of a global scheme by Siemens,

which also used corporate cutouts to pay off government ofcialsin Bangladesh, Venezuela, and Iraq, where the recipients includedSaddam Hussein.

I gured that my best chance to speak to Amunategui wouldbe if I dropped in unexpectedly, so I hadnt called ahead. When Iknocked on the glass door of MF Corporate Services, a man holdinga clipboard, sitting in a randomly placed blue chair in the ofceslobby, waved me in. A white plastic trash bag lled with shredded

documents sat just inside the door, and a framed map of the worldhung on a wall. There were four clocks above it, showing the timein Las Vegas, Hong Kong, Switzerland, and Panama.

The man on the chaira locksmith, it turned outcalled to



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Amunategui when I asked to speak with her, and she emergedfrom a back room. Her face was splashed with freckles, andshe wore her long brown hair in a bun. She frowned softly and

declined to talk when I told her I was a journalist interested in MFCorporate Services work for Bez. Give me your name, and Illsee if our attorney can talk to you, she said while shaking a ngerin the negative.

The attorney for Mossack Fonseca? I asked.No, my companys attorney, she replied, referring to MF

Corporate Services. Theyre separate.I stood there for a moment beneath the bright glow of the

ceiling lights, desperately trying to gure out a way to keep the

conversation going. There was so much I still wanted to know,and Amunategui was the closest Id come to being able to speakdirectly with someone actually afliated with Mossack Fonseca.

I wanted to ask her about specic people whod beenlinked to Mossack Fonsecaincorporated shell rms by the USgovernment, court records, international investigators, and myyear of research: Billy Rautenbach, an alleged bagman for RobertMugabe, the longtime ruler of Zimbabwe; Yulia Tymoshenko, a

former Ukrainian prime minister and oligarch nicknamed the gasprincess; Beny Steinmetz, an Israeli billionaire whod reportedlyused a Mossack Fonsecaincorporated shell rm in the BritishVirgin Islands to pay a bribe to a wife of the homicidal dictatorof Guinea, where Steinmetz was seeking (and subsequently got) ahuge mining concession. I even wanted to ask her about MossackFonsecas feel-good Facebook page and Twitter feed, whichfeature pictures of smiling recipients of the rms charitablecontributions and platitudes from the likes of Thomas Edison and

Dr. Seuss (Today you are you! That is truer than true!).But Amunategui wouldnt say a word after taking down my

contact information. She promised shed pass it on to her lawyer.She didnt even bother to escort me out the door but ducked intoher personal ofce, sat at a desk sprinkled with a few foldersand FedEx packages, and picked up the phone. I could hear hertalking from the hallway, and though I couldnt make out whatshe was saying, she was clearly speaking in an agitated manner,

presumably with the companys aforementioned lawyer (whom Inever heard from).Amunateguis refusal to answer questions was frustrating,



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How to Pay a Bribe

but unsurprising. When you work with Mossack Fonseca thereare a lot of dirty secrets to keep, so being tight-lipped is perhapsthe most essential part of doing your job.

Copyright 2014 First Look Media, Inc. First published in VICE.

Discussion Questions

1. When registering a corporate entity, should lawyers have aresponsibility to inquire as to the purpose behind the venture?Should they be held accountable for wrongdoing if they had

reason to know that their client was using their services tolaunder the proceeds of a crime?

2. Generally, do you think that corruption and moneylaundering are issues that are sufciently addressed in thelegal profession? Are most lawyers equipped to identifypotential red ags in these areas?

3. Some have advocated that corporate secrecy laws shouldbe eliminated. Indeed, Britain recently passed regulations

mandating that companies disclose the identity of theirbenecial owners. Do you agree with these efforts? Why orwhy not?

Ken Silverstein is a contributing editor to VICE and writesWashington Babylon, a column for the New York Observer.