U.S. launches ‘criminal investigation’ involving Panama Papers

A federal prosecutor in New York has opened a criminal investigation involving the Panama Papers — a trove of materials from a Panamanian law firm that show a massive, secretive world of offshore industry.

In a letter to the International Consortium of Investigative Journalists (ICIJ), U.S. Attorney Preet Bharara wrote that his office had “opened a criminal investigation regarding matters to which the Panama Papers are relevant,” and he asked to speak with someone who had worked on the project. The Guardian newspaper, which was among those to analyze the materials, posted a copy of the letter on its website.

While virtually all of the details of the investigation remain unclear, the letter suggests that the Justice Department has stepped up its efforts to look into possible wrongdoing the Panama Papers might show. Earlier this month, Assistant Attorney General Leslie Caldwell, who heads the department’s criminal division, would say only that U.S. officials were “reviewing the reports that we saw.”

A spokeswoman for Bharara’s office declined to comment for this story.

The leak of materials from Mossack Fonseca & Co., and the reporting from the ICIJ and cooperating outlets, has already had major effects globally. The prime minister of Iceland, faced with protests over his offshore holdings, offered to resign, and British Prime Minister David Cameron was forced to acknowledge that he had profited from shares in an offshore trust set up by his father. Russian President Vladimir Putin acknowledged recently that one of his oldest friends was among the prominent Russians mentioned in the materials, but he suggested the leak was part of a campaign to smear his reputation.

By comparison, reaction in the United States has been muted. One of the founders of Mossack Fonseca said he focused mostly on European and Latin American markets, and according to experts, Americans generally prefer more stable places than Panama to put their money, including the Isle of Man, the Cayman Islands and Switzerland. Mossack Fonseca, which has previously denied wrongdoing, did not return an email requesting comment for this article.

The U.S. government has made efforts to stop its citizens from using offshore holdings to avoid taxes. Congress passed legislation to encourage whistleblowers to disclose tax-haven holdings by U.S. citizens in exchange for a reward, and the Internal Revenue Service has offered amnesty to U.S. citizens who come forward on their own. President Obama has noted, too, that those who want to find loopholes in U.S. tax laws generally have not had a problem doing so.

“It’s not that they’re breaking the laws, it’s that the laws are so poorly designed that they allow people, if they’ve got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by,” Obama said.

Whether Bharara’s office is interested in a particular case, or whether it simply wants to assess the Panama Papers broadly, is unclear. It is also unclear whether the ICIJ will help him. It has not posted all of the documents it obtained, and it said its policy was “not to turn over such material” to governments that wanted it.