time's up

figuring out who should buy your business

Oink Oink Oink Oink Oink

Borrowing one of the funnier lines from Hamilton, everything is legal in New Jersey. As a one-time resident of New York’s armpit – for 37 mid-90’s months (but who’s counting?) I dwelled not far off Turnpike Exit 16W – I feel it’s my right to goof on the land of livin’ off one’s hair. You see, roundabout 150 years ago Delaware became the infamous corporation creation tax haven it is as part of a competitive positioning strategy against its anything goes neighbor to the east. What was meant to help tamp down on regional corruption instead led to the formation of “a cabal of lobbyists,” as Pulitzer Prize winning reporter Jake Bernstein writes in The Laundromat. Delaware patterned its laws on New Jersey’s but with lower tax rates, perfecting a model to attract all manner of liability-free evasion, and providing “a business friendly political culture, functioning legal systems, and limited economic competition.” It has ever since practiced outsize control over Congress. So Jersey got pantsed and I’m sure Secaucus still smells like a buzzard’s corpse frying in the summer sun.

The world took notice and from there saw the birth of the global enterprise of off-shoring one’s money. Bernstein’s book reveals all – no, seriously, all – that was captured by fellow intrepid reporters in the Panama Papers and weaves together a miles-long parade of unscrupulous lawyers, dirty bankers, Russian oligarchs, arms dealers, and even a future US president (you. get. one. guess). Central to the story are attorneys Jürgen Mossack and Ramón Fonseca, co-founders of their namesake Panamanian firm that became known as Mossfon. Masters of rationalization, opportunism, and laser focus, they became the go-to lawyers with a nose for islands destined to become “money-laundering sink holes” and an affinity for the wealthy allergic to paying taxes. Mossfon’s behavior is repugnant throughout, helping clients form shell corporations whose true owners of bearer shares could hardly be identified. Through “flexible” banks – both domestic and off-shore – their clients could funnel dirty funds into the global financial system: transfers leaving muddy trails, currency trades criminally backdated, opposing stock market bets that cancelled each other out, phony art sales between corporations with the same owner, on and on. Scrubbing money, shirking tax. Here’s hoping the beneficiaries never bitch about potholes.

Grim as Bernstein’s book is, mercifully it does have characters worth cheering for, namely zealous business reporters. We learn about the International Consortium of Investigative Journalists led by the maniacal, Australian-stationed Irishman Gerard Ryle. Capitalizing on leaks out of Singapore and the British Virgin Isles, Ryle managed to quarterback a complex global effort of untangling a mind-blowing amount of encrypted data that would eventually expose countless dirtbags. Published as Offshore Leaks in the spring of 2013, it revealed “an underground financial system that everyone knew existed but had never seen.” Called the biggest cross-border investigative collaboration in journalism history, the ICIJ project may have carried no legal weight, but even as “a moral document, a symbolic code of conduct” its impact was immense, ultimately resulting in the Panama Papers and winning the organization a 2017 Pulitzer for Explanatory Journalism. It also spelled the end of Mossfon, casting deep shame upon its two co-founders. Lockdown in Secaucus seems an appropriate sentence. 

Leave a Reply

Your email address will not be published.