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Reuters/Carlos Jasso
The data dump on Mossack Fonseca marked the beginning of the largest international investigative journalism project of all time.
SOURCES SAY

How two German newspaper reporters broke the story behind the Panama Papers

Bastian Obermayer
By Bastian Obermayer

Investigative Reporter, Süddeutsche Zeitung

“Ping.”

My wife, our children, and I have been at my parents’ for three days, and for the past two days everyone’s been ill. Everyone except me. It’s ten o’clock in the evening, and having stroked the last patient and handed out the last cup of tea, I sit down at the dining table, open my laptop, and put down my smartphone next to it.

Then there’s a “ping.” A new message.

[john doe]: Hello.
This is John doe.
Interested in data? I’m happy to share.*

*In order to protect our sources, parts of the indented exchanges that would endanger our informant have been abbreviated, or else reproduced with minor alterations that do not distort their meaning.

“John Doe” has been in use in Great Britain for centuries and is also common in Canada and the United States. People whose true identity must be protected in court are called John Doe, as are unidentified corpses. John Doe has also long been used as name for bands, TV series, and various products.

So John Doe is a cover, another term for “Joe Bloggs.” But this Joe Bloggs is obviously offering secret data.

Investigative journalists are genetically programmed to prick up their ears at this kind of offer. Secret data are always good news. At the Süddeutsche Zeitung we’re published lots of articles based on leaked data in the past three years. “Offshore Secrets” was about tax secrecy in the Caribbean, “The HSBC Files” tackled secret Swiss bank accounts, and “The Luxembourg Tax Files” revealed Luxembourg’s dodgy tax schemes. The mechanism is always the same—a large volume of secret data flow out and end up in the hands of journalists. If the volume of secrets is large enough, it is, statistically speaking, almost bound to contain some good stories.

Also, journalists often spend weeks, sometimes even months, chasing a specific source. So if a potential source comes to you, you need to react fast. Or at the very least you need to react: There’s nothing more annoying than finding a story in Der Spiegel or Die Zeit that you were offered first.

[Obermayer]: Hello. We’re very interested, of course.

You can immediately tell the worst sources—bad sources, or at any rate crazy or confused ones—from their emails. Crazy people do sometimes have good stories, but it’s the exception rather than the rule.

The advantage with data is that they’re not self-important or verbose. They don’t have a mission and they aren’t looking to deceive you. They’re simply there, and you can check them. Every good dataset can be collated with reality and that’s exactly what you must do as a journalist before you start to write. At some stage you also have to consider very carefully which part of the data you’re going to exploit.

WikiLeaks was different. The coordinators of that whistle-blowing website simply posted data on the internet without any journalists filtering the information. That was the basic idea—and not a bad one at that.

[Obermayer]: How would we get the data?

[john doe]: I would like to assist but there are a couple of
conditions. You need to understand how dangerous and sensitive
some of this information is. My life is in danger, if my
identity is revealed. I’ve spent the past several weeks
considering how to handle this. We will only chat over en-
crypted channels. No meeting, ever. The choice of stories
is obviously up to you.

I can live with those conditions. Journalists obviously prefer to get to know their source to be able to gauge what they’re like and understand their motives, but for the informants it’s often better to remain in the shadows. Whistle-blowers aren’t particularly well protected, even in Germany, and each person who knows an informant’s identity is a potential risk—even, or perhaps especially, if that person is a journalist.

However, the source communicates clearly and concisely, and I can do the same. This someone has obviously got something they want to get rid of, and they want to give it to me.

[Obermayer]: So how to proceed?

I send the person my contact details for further encrypted communications. In the subsequent exchanges we agree on how the transfer will take place, and I’m told that I can expect to receive a first sample soon via an encrypted channel.

The source doesn’t ask for money—a good sign. A few months earlier someone had got in touch with me claiming to have records of secret foreign bank accounts belonging to a German political party and supposedly containing $26 million. Our conversation went back and forth for a week, poor-quality photos of bank documents were sent, absurd telephone calls ensued, and then, over the phone, the person suddenly demanded cash.

The fact is that the Süddeutsche Zeitung never pays for information, not only because we don’t have the money, but primarily on principle. This also reduces people’s temptation to fob us off with fake documents. We just have to be able to stomach reading stories we were forced to pass up in other newspapers. However, the story of the secret party account appeared in neither Der Spiegel nor in Stern: If they ever offered the documents, our colleagues must also have judged them to be fakes.

“Ping.”

If the volume of secrets is large enough, it is, statistically speaking, almost bound to contain some good stories.

The sample has arrived: a big bunch of documents, most of them PDFs. I open the files on my computer and analyze them, one by one. There are companies’ articles of incorporation, contracts, and extracts from databases. It takes me a while to grasp the links between them, but after a quick internet search I understand the context. The location is Argentina. A public prosecutor, José María Campagnoli, suspects that shady business people have helped the Kirchners—i.e., the then-president Cristina Kirchner and her late husband, Néstor—to smuggle around $65 million out of the country. This theft was allegedly conducted via a labyrinthine system of 123 shell companies, all of them set up, predominantly in the US tax haven of Nevada, by a Panamanian law firm called Mossack Fonseca. Nevertheless, none of the accusation have as yet been proved and Cristina Kirchner disputes the accuracy of the allegations.

What makes the case topical is that there is a litigation case pending in the United States. Directed by its founder, Paul Singer, the investment fund NML had bought millions of dollars’ worth of Argentinian government debt—and then the country went bankrupt. Most creditors agreed to debt relief, but not NML. The fund is filing suits around the world for the seizure of Argentinian state assets. It has even had an Argentinian warship impounded off the coast of Africa. Warships are valuable and can be sold off.

The goal of the current lawsuit in Nevada is to force the disclosure of this network of shell companies. NML wants Mossack Fonseca to surrender all documents pertaining to the 123 shell companies. I have some of those files in front of me on my screen right now, documents that NML has been chasing in vain for years. One thing jumps out at me: the payments run into millions of dollars.

The papers show the transfer for $6 million into a Deutsche Bank account in Hamburg. The accompanying contract raises further questions: it’s a commission on a gambling deal.

Two other files name the real owners of two of the firms whose documents NML is seeking to obtain. Access to these two files would constitute a huge leap forward in their case.

The interesting thing is that all the documents appear to originate from the same law firm. I’m familiar with Mossack Fonseca, but only ever as an impenetrable wall, a black hole. Every time our research has led us to this law firm, it has spelled the end of our investigation. Mossack Fonseca is one of the largest providers of anonymous shell companies and is not exactly famed for being fussy about its clientele; quite the opposite, in fact.

In plain English: While many of its clients are doing nothing illegal, some of the world’s biggest scumbags have used Mossack Fonseca’s anonymous offshore companies to disguise their business dealings. During the “Offshore Secrets” and “HSBC Files” investigations we came across convicted drug kingpins and suspected traders of blood diamonds who had used companies established by Mossack Fonseca for camouflage purposes. Search the internet for Mossack Fonseca’s clients and you will also find accomplices of Gaddafi, Assad, and Mugabe alegedly working hand-in-glove with the Panamanian law firm.

Please note that I say allegedly, as Mossack Fonseca denies any association with these people and its client list if confidential. So far, at least.

[Obermayer]: The material seems good.
Can I see more?

But John Doe doesn’t answer. Has he or she had second thoughts? Or are they merely considering their next move?

[Obermayer]: Is all about the argentine case?

When I still haven’t received an answer 20 minutes later, I close my laptop, put my smartphone away and go to bed.

The next morning (with the sickbay still as full as ever) there’s an answer. And a lot more besides.

[john doe]: I am sending a few more documents. Some have to do with
Russia. Another part of a PDF is specially intended for you Germans.
Look for Hans Joachim… There’s a lot more from where that came
from.

I’m desperate to look through the documents straight away, but—and this is very tough—I first have to go to the pharmacy and shop for bread, fruit, and tea. I’m the only one in a fit state to leave the house. The positive effect of this epidemic is that no one wants me to take them to the woods, play football, or go for a walk. By late afternoon every bed in the house has a sleeping patient in it and I can return to my computer.

The new documents also seem to come exclusively from the files of the Panamanian law firm Mossack Fonseca. The company clearly has a serious problem.

A leak.

First I study a document many hundreds of pages long that whoever-it-is named “Records.” Several hundred pages of bank transfers, but on sticks out: On Nov. 19, 2013, a sum of almost $500 million in gold was paid into the account of a man called Hans-Joachim K. at Société Générale Bahamas.

Five-hundred million. Half a billion. A vast sum of money.

“This story could rival the Snowden documents in importance.”

I’ve never heard of Hans-Joachim K., but a Google search reveals him to be a little-known Siemens manager in Germany who used to be CEO in Colombia and Mexico. This might be a lead. For many years Siemens ran slush funds in South America to reward people who helps its business to flourish. I find dozens of articles, including some in in the international press.

One thing baffles me, though. This jaw-dropping sum was transferred into the Siemens man’s account in autumn 2013, yet the company’s Latin American slush funds had been uncovered way back in 2007 and 2008. There were lawsuits, some of which continue to this day.

This is strange, to put it mildly. You don’t just suddenly come by $500 million, so where’s this money from? A bookkeeping error?

Before I can become further absorbed in further details, I head the kids calling me. They want more salted snacks and toast. I give in and snap the laptop shut. That $500 million isn’t going anywhere.

I spend the afternoon reading stories, making tea, and filling hot water bottles. It’s late in the evening before I get a chance to look at the new material. At first glance it seems to be predominantly about shell companies, most of which appear to be linked to the same secret owner, a certain Sergei Roldugin. Many of the documents are contracts involving sums running into many millions. Eight million here, $30 million there; $200 million, then $850 million; all share deals or loans. Yet the name Roldugin doesn’t ring any bells.

So I do a search, and what I find sets my spine tingling. Sergei Roldugin is “Vladimir Putin’s best friend,” or at least that’s how Newsweek describes him. There is a good evidence for this: Roldugin is father to Maria, the Russian president’s eldest daughter.

“I’m no one. Just a concerned citizen.”

The godfather’s offshore dealings would be interesting enough on their own, but then I read something that completely bemuses me. Sergei Roldugin, a man who handles zillions of US dollars according to the documents, is neither an investor nor an oligarch: he’s an artist, a famous cellist, and the former director of the St. Petersburg Conservatory. I find an interview Roldugin gave to The New York Times in Sep. 2014, in which he explicitly states that he is not a businessman and doesn’t have millions.

If the documents are authentic, about which I now have little doubt, either he lied—or it isn’t his money. Whose is it then? Is Roldugin merely a straw man? And if so, for whom?

For Vladimir Putin?

If it is Putin’s money lying in these companies, even a fraction of it, the story would make headlines around the world.

Whoever leaked these papers to me also spotted Roldugin’s name, and he or she is worried. Probably with good reason.

[Obermayer]: Who are you?

[john doe]: I’m no one. Just a concerned citizen.

This is a clear reference to the whistle-blower Edward Snowden, who called himself “Citizen Four” when he made contact with the journalist and filmmaker Laura Poitras. Snowden has been trapped in Moscow after fleeing from Hong Kong.

[Obermayer]: Why are you doing this?

[john doe]: I want you to report on the material and to make these crimes public.
This story could rival the Snowden documents in importance but you’re publish-
ing in German. You need to partner with the New York Times or a similar caliber
English newspaper.

The Süddeutsche Zeitung isn’t want you’d call a natural partner for The New York Times, but we have already worked with The Guardian, The Washington Post, and the BBC on investigations such as “Offshore Secrets” and “The Luxembourg Tax Files.” I explain this to John Doe and he or she seems satisfied.

[john doe]: We should discuss what is the best way for me to send you a large amount
of material. Any ideas?

Honestly? I have no idea. I’ve never had an anonymous source asking to hand over material to me by the gigabyte. I can also hear my son crying upstairs.

[Obermayer]: I will have to think about it. How much data are we talking about?

[john doe]: More than anything you have ever seen.

It turns out not only to be more than anything I’ve ever seen; it’s bigger than any leak that any journalist has ever seen. It will also mark the beginning of the largest international investigative journalism project of all time. ultimately, around 400 journalists from over 80 countries will be investigating stories originating from these data. Stories that report on the secret offshore companies of dozens of heads of state and dictators; stories explaining how billions are earned from arms, drug and blood-diamond trafficking, and other illegal businesses; and stories that bring home to readers the scale of tax evasion by the wealthy and super-rich of this world.

And all of those tostires begin with Mossack Fonseca on that first night.