Transcripts For CSPAN2 Jake Bernstein Secrecy World 20180211

In books books, i hope everybody enjoy the airconditioning outside. First turn off cell phones, no interruptions, that would be wonderful. Dont gergt to go to our website books and books. Com. All the stores around the city and this store well. If you dont want to do that give us your email adder we can send you of what goes on in the store if you dont mind 30 emails every 30 minutes or so. You can pick up, discovering view of how the world really works and raises critical questions about Financial Institution that is we may have trusted. Broke the panama paper stories and won the Pulitzer Prize for reporting, National Reporting or covering to have financial crisis, he has written for the washington post, bloomberg and appeared on bbc, npr, editor of the texas observer, please gave him the most welcome mrs. Jake bernstein. [applause] wow. [laughter] all right. It is great to be here. It is great to see so many old friends i havent seen in a long time. Thank you so much to books and books and mitch kaplan, mitch now makes movies in addition to selling books and the latest is currently in theaters its called the man who invented christmas, my wife and i saw it the other day, our rerue is that it is delightful, its a bomb to torture writers and family members everywhere, i encourage everyone to see it. The secrecy world, what is the secrecy world, its a phrase that encompasses shadow economy, tax heavens like to British Virgin islands and also places that offer secret Bank Accounts like switzerland like singapore and hong kong and lawyers, accountants, trust companies, corporators of Anonymous Shell Companies. Now i wish i had invented the phrase because i love it but i did not. I came upon it while running through the Panama Papers, more than 11, more than 11. 5 million documents from the Panamanian Law Firm and were given to german news paper which then shared it with the International Consortium of investigative journalists. In the documents i found amazing glossary of offshore terms written by junior employee at fonseca and what made it fantastic was that the Senior Lawyer had gone through the document and deleted the place where is the original author had been too candid. A little too truthful. With all their plain in the miracle of track changes. For example, entry for aggressive taxable, removed uncertain legality from the definition, stuff like that. Anyway, toward the end of the document i came upon this term secrecy world and the definition read in part, the secrecy world encompasses the unregulated market and all those who create secrecy jurisdictions and what they offer. Indeed, well, Anonymous Shell Companies can be completely legal and perhaps ashrewd business strategy, one to have greatest values is they offer concealment. Now, that could be hiding your activities for assets from the Business Partners or your wife or in some places kidnappers, they could be hiding activities or assets from government tax collectors or Law Enforcement because youre laundering money, for example. There were companies that go back further. A company from 1930s and the secrecy world is not static, morphs the changes, it reacts and the files tell the story of the evolution of this world, the secret world. For a long time particularly in the 1908s and 90s the secrecy world was the wild west, the three monkeys, see nothing, hear nothing and say nothing. Anonymous Shell Company for someone, you asked no questions, it wasnt necessary to know who actually occupied the company, it was called the beneficial owner. At once the company was created you put information in a file and it was time to send the invoice to renew and sometimes not even then. Theres a story in the secrecy world, my book about a man that was the biggest client of fonseca in geneva and leaves the company in the middle of the night. Before he had joked that he slept with a gun under his pillow. Turn out that had a habit of taking the money to renew the company but never actually renewing the company until the client needed it for something. So the story of fonseca thats in the file in firm that found Business Model in the 1980s and 90s, highvolume and low cost. Think of mcdonalds. Pretty filling sometimes. They were innovators and took an island chain known for tourism and British Virgin islands where nothing was happening and turn intoed a factory of companies. The two men decided to look elsewhere to try to gain a new advantage and im going to read you a little bit about that right now. As they crowd intoed the bbi and bahamas, looked to increase business elsewhere. The United States pointed the way. As a specialist in law, most familiar with liberian ship registry, registered ships under own flag but the public registry was never based in africa rather registry resided in a suite of offices in new york city. Created by a former u. S. Secretary of state in conjunction with corporate interests like shell oil. Liberians in return for the cut of the proceed. Most thought if the americans could have a monopoly by running public registry why couldnt mosan. An american named nancy to the south pacific, her introductions were to find a friendly can youy that would allow to use jurisdiction for companies, she disappeared for a week, literally disappeared, we were really worried, we thought maybe she had been eaten by cannibals or something. Prospecting in offshore prospects and one day she was sitting at hotel bar and struck up a conversation with a neighbor on the stool bide her, he told him she had been sent out by bosses in panama to find a magical land to find new location for offshore companies. Her new friend listened with interest, we can do that he told her, her bar mate, situated in the middle of nowhere, 1500 northeast of new zealand, 103 square miles in size. Europeans first layed on the place in 1774 when the locals repeatedly prevented captain james cook from landing there prompting him to savage island, now zealand approved selfgovernment under Association Agreement in 1974. Received stipend, but when they met louis, the island leaders were investigating convert to go tax heaven to create additional income for approximately 50 inhabitants. Travel today panama and joined a group of lawyers to draft incorporation law. Largely copied the bbi law which itself had been copied from delaware and customized it adding new innovations of their own. The law allowed Company Names in chinese characters and russian alphabet which the bbi did not. The International Business company act passed in 1994, later that year the firm took louis to hong kong to sell the jurisdiction to the chinese. They advertised the island as the jewel in the crown of the south sea. With the registry located in offices, the firm can crank out new company in under an hour at whatever price the firm determined. The offices around the world had the blank documents and the official seals presigned by the new deputy registry which happened to be a employee. All they had to do with check with panama to ensure the name was available, get the International Business company number, pull up the correct template and hit print. Quote, we could control the process, control the quality and the speed. All that control, though, did not prevent new companies from being used by criminals. James, the governor of nigeria opened Company Called stand Hope Investments while Still Holding office using it to buy Expensive Properties in london. In 2012 prosecutors in the uk convicted ebori of fraud and corruption sentencing him to 13 years in prison. Gary, gold star to make it appear as if an outside company was buying shares in south African Investment company. Artificially prop up value, in argentina, father and son hugo and mariano operated in network of offshore companies that u. S. Prosecutors alleged were use today pay bribes in exchange for multimillion dollar television contracts to broadcast soccer matches. The files show that one of these Companies Cross trading purchased the rights for ecuadoran socker soccer matches. Never equaled the success of the bbi, though, despite the ease of incorporation the island was always a tough sale to many potential customers, quote, if you think people dont know where the bbi was, try explaining to them where this empty spot in the middle of the Pacific Ocean was. Now, there were all kinds of daughters that came from selling companies but asking no questions about the owners. At first, these were the kinds of problems that just afflicted society but not fonseca personally, it didnt stay that way as the story illustrates. Rafael Caro Quintero, the founder of the Guadalajara Cartel may have been first narcotic billionaire, owned fortune to transporting colombian cocaine and growing marijuana and opioids, in late 1984 enrique kike camarena, infiltrated Caro Quinteros business led to plantation in northern chi hawaii hawaii chihuahua, and destroyed products likely worth billion dollars consumed by fury and paranoia Caro Quintero lashed out, dental student from fort worth were among the first two die. The two friends mistakenly walk intoed the crazy lobster, a restaurant that caro owned in zapopan. They kidnapped students who they may have suspected were dea agents, tortured them in the kitchen with knives and ice picks before burying bodies in a local park. One of them was still alive when they put him in the ground. The following month Caro Quinteros men grabbed camarena after he left consulate in guadalajara, burned with cigarettes and beat him with tire iron for two days in a secret chamber behind Caro Quinteros mansions. Before mexican authorities discovered camarenas mutt body, that month he traveled to costa rica where he did business with local lawyer with crooked clientele. A few years earlier when the u. S. We wanted to serve indictment on robert vesco for alluding hundreds of millions of dollars, the u. S. Embassy to deliver money to paul, one of the attorneys, in the early days provided panamenian companies and other vasco associates. Costa rican authorities arrested Caro Quintero for drug trafficking. During this time he alternated among the four properties he owned, dine agent the best restaurants and traveling in limousine. He appears not to have known the owning. One had a sprawling mansion outside of san jose. In 1989 a mexican judge sentenced Caro Quinteros. And later they said he continued behind bars. And he thanked them for investing in legitimate businesses. With the client in prison and the company fell into limbo. He died on Christmas Eve 2004. A year later there was a letter. The president and secretarygeneral of the costa ricanen Olympic Committee, they will given Caro Quinteros mansion for head quarters. They couldnt acquire legal title because the held it. The Olympic Committee wanted the director of the company to, quote, donate the property to the committee to avoid a complicated judicial process. Giving away property that still technically belonged to one of the feared drug traffickers seemed illadvised. The costa ricaens would have to solve the legal issues on their own. Pablo escobar was a child nursing at his mothers breast compared to quintero referring to the notorious colombian kingpin. I dont want to be one he visits after prison. And the acts of selfpreservation was prescient. He was released on a technicality with 12 years remaining on his sentence. Before the United States could extradite him, he disappeared. As of this writing. His name sits atop the d. E. A. s list of fugitives. The model came at an age easy to streamline. There was incredible wealth in the developing world. Even as countries like russia and china and the u. S. Proved increasingly unwilling to provide welfare for their citizens. Consequence can be seen in one heart rending story i found in the documents involving russia. As putin and his cronies transferred billions to their children, ordinary russians are struggling to survive. In a country rich in Natural Resources russia has a gdp per capita of about 9,000. The Economic Situation has forced Many Russians to seek work abroad, people like vladimir kravoy, a 63yearold machinist. He joined the cargo crew, a six month contract that paid him 3,000 a month, a small fortune for most russians. It was owned by a bbi Company Created in 2004 through an intermediary in the united arab emirates. According to the files, this offShore Company and others im sorry, according to files, through the off Shore Company and others, four russians owned the ross and other ships and added additional layer of secrecy shuffling the registration of their ships among small Pacific Island nations, which required Little Information or regulation for the ships that flew their flags. Instead of economic opportunity, he found himself a prisoner aboard a slave ship. The captain of the ross slipped cravo yichlt and other crew members of their identification documents. There was no air conditioning, it baked through the persian gulf, vermin in the cabin. Food and water were scarce and soap nonexistent. And the captain abused sailors and refused to pay them. And it was compact with two large cranes in the middle and three enormous cargo holds on deck. While working on a diesel engine, he took a bad fall. Despite docking at ports, the captain denied his request to seek medical care. Instead he was forced to turns at night watch. Within a month the machinist was dead. Another crew mate, edward, went missing from the ship after complaining to the russian sea farers union about conditions aboard the ross. And he was never found. His wife thought he was thrown overboard. When they managed to escape and sought refuge in kuala lumpur. They simply changed their name. The ship they abandoned in the philippines, 12 russians, eight indians and one ukrainian without paying for work. The owners declared bankruptcy and walked away from the company. In may 2012, russian prosecutors filed charges against two of the owners for, quote, use of slave labor with the threat of violence and slave labor which entailed the death of a person. The men were detained, but to date have avoided trial or prison. So, yes, you will say the secrecy world does allow for criminals to launder ill gotten gains and prey on the innocent, but it services plenty of innocent people and most american multinational corporations. So, why does this matter to us here today . And miami is a great example of why. Foreign nationals bought nearly 6. 1 billion dollars worth of property in south florida in 2015. Just in 2015. Miami cash transactions for property is more than double the national average. Led by south americans, venezuelans, brazilian, argentinians, colombians, much of the buying comes from those who distrust their countries and want to invest in the United States, but when Anonymous Shell Companies are widely used, it also allows corrupt politicians and criminals to spirit their cash out of their countries. If theyre not reporting to their local tax authorities it could deprive already poor resource governors of needed revenue. In 2014 developing countries lost between 620 billion and 970 billion to illicit outflows of capital. At home this behavior contributes to making miami one of the worst places to be a renter in the country. So the United States by one estimate loses 70 billion a year from shifting profits to tax havens. Republicans, perhaps naively, hope some of that money is returning home when they lower tax rates, theres little incentive to do so and those who are avoiding taxes through the secrecy world, those a million more, with the Panama Papers and most recently the paradise paper, a global elite, no longer pound by the nation state the west most of us are. They live in multiple cities, they travel the world in private jets and keep their mon money or shore. 60 of the wealth in tax havens belongs to households with more than 50 million in net worth. Today the top 1 of households own more wealth than the bottom 90 combined. This secrecy world protects an astounding amount and its worse. The world of multimillionaires and billionaires is one that President Donald Trump knows well and is working actively to benefit. Real estate has long been a frequent user of the secrecy world and trump admitted during his campaign that he had 515 companies, including 378 registered in delaware, one of the leading tax havens of the world, in fact, delawares incorporation law was used as a template for panama, the bbi and other tax havens. I found nine of trump foreign Business Partners mentioned in the Panama Papers. Many more were connected to now indicted Campaign Manager Paul Manafort and soninlaw and counsellor, jared kushner. Here is the story of one of them. Another apparent investor oh, sorry. Here we go. Trump joins forces with bay rock in 2005, offering a brand name behind which to seek money could coalesce. The best known project was trump soho, a condominium in one of manhattans neighborhoods. He announced it in 2006 on the apprentice for use of his name and input he received 15 cut in sales and two of his children, ivanka and donald, jr. In 2007 cut a deal with icelands group for 50 million in financing for trump soho and three other trump related projects in return for future profits. Trump signed a document agreeing to the arrangement. It was an Investor Company serving the icelandic, and they spun off shoor Companies Like a pinwheel. A number of them. Fl group would go belly up when the Financial Company exposed the fraud and dealing behind the iz icelandic miracle, substantial loans from icelandic fans, a supermarket change, investors in india and better in luxembourg. And the special prosecutor charged the companys former ceo with embezzlement of about 22 million in corporate funds. But the businessman was acquitted at trial. A civil suit against bay rock speculated that some of the money behind fl group was russian in orbegin. Chris alleged that bay rock operated for years through a pattern of continuous related crimes, including mail, wire and bank fraud. Tax evasion, Money Laundering, conspiracy, bribery, extortion and embezzlement. And further alleged that the investment in the soho project was disguised as a loan to avoid 20 million in taxes. Bay rock denied the allegations and trump insisted he had nothing to do with the financing, lending only his name and he said, i dont know who owns bay rock he said in a deposition in 2011 despite signing a document that fl group was financing the program. I never really understood who owned bay rock. Another apparent investor in soho, was a russian billionaire who was part of a trio of shareholders behind eurasian, Natural Resources corporation. Nrc. From mining to construction. A spokesperson says the billionaire never invested in trump soho or bay rock, despite what the pamphlet said. And the mining mogul was close to others who have their companies. Ap the three principals were accused in belgium of Money Laundering. The charges were subsequently dropped when they agreed to pay a settlement for undisclosed sum without admitting wrongdoing. Enrc had deep ties dating to 2003, having connected to the law firm through a Truck Company in the islandsment some of them were involved in mining in congo. In west africa enrc was involved in an investigation of the israeli gertler. He denies wrongdoing. In 2014 the guerinsy intermediary tried to look at enrc limited, a joint between the tio of investor and the government. All of the people involved with politically exposed people and enrc had been delisted from the London Stock Exchange after a massive share price drop when investors bailed after a controversial mining deal with the congolese president. And in kazakhstan and africa, there were too many red flags. Too many adverse results found in the course of our investigation, the decision is do not accept these companies under our administration, wrote one of the firms compliance officers. These were not qualms that apparently bay rock or trump has. When the Panama Papers broke, it was everywhere. Im sure everyone here saw it in one way or another, whether it was a doonesbury cartoon or in the miami herald. The Prime Minister of iceland resigned. He had a secret company. Later the Prime Minister of fabbi pakistan was forced from office and you can read their stories in the the secrecy world. He did not realize what happened to his company during the publication until he turned on the television station and saw his lifes work on every channel. Some worked in dangerous places like russia or egypt. Personally i never thought of malta in the European Union as one of those pages until the assassination of a blogger, death by car bombing in broad daylight was a warning every w let me close with an excerpt how some countries in south america dealt with the publication of the Panama Papers. Here we go. In venezuela the Communications Ministry sent a lengthy communique to the countrys media advising them not to publish stories about the panama paper. Quote, it should be noted that these documents are being selectively for certain policy areas on a national scale, the memo warned, hinting darkly, as the kremlin had, that the release came from the cia. The note sketched out an oddly selfincriminating conspiracy theory. The first round of stories might be a decoy, the ministry postulated. Once the Panama Papers received validation from the worlds media, new information will be published on senior officials of the National Government to justify the current attempt to increase interference and sanctions from the Obama Administration, leaving us without room to maneuver before public opinion. Chillingly the memo sangled out by name venezuelan reports working for independent media organizations that participated in the project. Throughout the world, the publication of the data fed into an attacks on journalists and social dramas in various countries. Reporters and editors wrestled with which part of the data was in the public interest. In europe and the United States, the dominant concern was taxes and people evading them. In latin america, there was second place to concerns about corruption and political repression. In ecuador, president Raphael Correia denounced the projects participants on twitter and rallied a troll army to send them a message and looked at the social media counts, but were deluged with nasty comments. A toz or so government supporters demonstrated at the two newspapers involved in the project. As panamas la princea had done, they ran stories without bylines and after everyone had published. They revealed that the countrys attorney general, the president s cousin, a former governor of the central bank and the secretary of inat the tell against were in the data. And the owner himself alerted the bureau chief leading the investigation for the newspaper about the firm. It had been the company had been created after president correia had won a civil judgment against the paper that threatened to shut it down. As part of the efforts to rein in the media, correia had the orwellion named citizen participation and social control council a few years earlier. The council sent a letter to the newspapers demanding that the reporters appear before it on monday, april 18th. The release was april 3rd. The handover he wanted them to hand over the data and respond to questions. The reporter sent a letter the friday before the meeting declining to appear and explaining that they did not have the data. Icij did. A showdown appeared imminent. But on the intervening saturday, a 7. 8 magnitude earthquake devastated ecuador. As the focus of the media and the government turned to the victims and the dani damage, th monday meeting was forgotten and they were saved from having to report to the committee. So, thank you very much. Thats all i had prepared for the reading, but i would love to take some of you alls questions. I suspect that we have knowledgeable people in this audience, so does anyone have any questions please. How does the Apple Company fall into this . I mean, is this considered the same kind of they are absolutely theyre absolutely users of the secrecy world. Where apple shows up is in the Paradise Papers which comes after the Panama Papers. Paradise papers came from a company at appleby. They didnt have the same model, it was high end, higher truly uber wealthy, if you will, and a lot of corporations. Whereas, fonseca tried to stay away, apple worked with a lot of americans, there were more than 30,000 in the leak. So apple is in the appleby leak and whats interesting about apple, they have come under quite a bit of attack by the European Union because theyve used ireland to avoid billions of dollars in taxes. And basically sort of funneling their profits into ireland instead of where they were made in europe and other places because ireland has a very low tax rate, but because the European Union has started to clamp down on that, appleby, the contact i mean, apple contacted appleby and asked them to find us another tax haven, where we can continue to do this kind of thing. This was obviously not what they were saying publicly at all. In fact, tim cook, the coo of apple has said and testified before congress were not going to do this kind of stuff, but what the Paradise Papers shows, it was, in fact, still ongoing. Any other questions . I have a question. When you have a country, for example, that is not corrupt and then you find people who are trying to evade actions and so forth, you feel that they are really in the wrong, right . Were a society where taxes are used for streets, schools and so forth, but at the same time then you have other countries that are corrupt in themselves, within the government and there are private citizens trying to protect their wealth in many different ways. With your experience what is the big lesson that you got from all of this and where are we going to go . Thats such a great question and observation, really. To say youre in ecuador and you have managed to make some money, and your neighbors are all offshoring their money and investing outside of the country and using these Anonymous Companies and not paying their taxes, i think you would probably feel like a chump, if you were the only one paying your taxes and particularly because theres a lot of corruption and, you know, the money sort of disappears and you dont really see the results of that. So, its something that, its run of those short of collective action problems, right . Where you need a ground swell of citizens who say, this is not going to work anymore. We all need to stop doing this together. Whats so interesting about the Panama Papers and the Paradise Papers, is that, as i sort of mentioned, theres been this global elite, the uber wealthy who no longer feel attached to any particular nation. You know . They live outside of the National Rules that govern most of us. And i dont know how you change that. I think its going to have to happen from, you know, from below, from individual citizens gathering together and saying, no, if youre going to do business in this country, you need to pay your taxes here. And it will force some people out. I mean, there are people who live in these tax havens, precisely because they want to avoid paying taxes and i assume that will continue. Its a very difficult thing to attack and whats interesting is, you know, what fonseca was doing, because they had this high volume, low cost model, they were explaining these companies out to the world in a way of sort of democratizing this behavior. It was acceptable or accessible to the merely rich and not just to the uber wealthy and thats changed a little bit. I think the bar entry is a little higher. You have to be much more wealthy to do this and to for it to have value. The other thing is that it has moved a little bit. So theres been so much pressure on the bbi and traditional tax havens that people are moving to singapore, theyre moving to dubai. Theyre moving to other places that are the sort of new frontier for this kind of behavior. So, its very difficult to stamp out. I mean, you can see it in the data, in wonderful ways. One of the things that is sort of fascinating and i talk about in the book are bear shares. Bear shares are things where you own the company whoever owns the bear share is a certificate, right . Its a share of the company and say the company has two shares, and if you own these two certificates, you own the company. And if i give the two shares to you, you know, the two certificates, the pieces of paper, then you own the company. And Law Enforcement hates this because its very easy to move assets around without any identifiable traces. Its sort of used by criminals in Money Laundering and theyve tamped down on it and it has to be in a safe and a lawyer has to have control of it. The only two places left, actually, that offer bear shares are the Marshall Islands and liberia which both run out of the United States, actually offices in new york and in virginia. But you would see in the data where one jurisdiction say the bbi would tamp down on bear shares and then there would be a spike of incorporations in pan la where they still offered them. So, its sort of this thing that evolves and mutates to continue to be the, you know, do the same kind of behavior. Sure. I was wondering, have you been to the island northeast of new zealand . And how did you feel when jenkins lieutenant committed suicide in argentina, i think it was last month . I had not been to new zealand and i would love to go. Fonseca said to me, he obviously went and beautiful, and the most stars in the sky that hed seen in his entire life. There was a funny story, and i talk about this later in the book, eventually new zealand just got really frustrated with the bad trust with newy. And well up the stipend if you agree to quit this business. Well give you the 3 million, whatever fonseca is paying you and get out. They did get out, but they kept one business, it wasnt minuting Anonymous Companies, it was selling 900 sex phone numbers and so continues to do that. I hadnt heard about the suicide, but this secret world, you know, people enter into it believing its going to stay secret and when these things come out, they have all kinds of unintended consequences. I mean, the u. S. Intelligence services have conjectured or postulated that part of the reason why Vladimir Putin attacked the dnc and the u. S. Electoral system was he was so upset about the revelations in the Panama Papers and he blamed the Obama Administration and thats one of the reasons he decided to go after the u. S. Election. So there are all kinds of unintended consequences from making the secret world public, but thats what happens. Youve answered one of my questions, but i wanted to probe you a little further. Regarding solutions, like as we sit here there are attorneys going around the planet trying to create a network to hunt down Hidden Assets and im wondering if a possible solution, were talking about unintended consequences, are unhappy spouses, right, trying to track down their Hidden Assets. And is this where the solution may come from, some lots of hidden asset attorneys networking around the planet, which is happening right now . Yeah, thats been going on for a while, it depends on the attorney and the place on how successful they are. I just dont think you can really expect a real change in that sort of peace meal way, but there are some Great Stories along those lines. And this russian oligarch, he got involved in a multibillion dollar divorce and his wife accused him of hiding his assets in fonseca companies. They went to war with solicitors and multiple jurisdictions and eventually she managed to get a couple billion dollars out of him. Can i have one more question . Sure. Did i just hear you say that the secret world is responsible for our high rent in miami . And youre blaming them directly . Can you elaborate on that, please. Basically you have all of these foreign nationals buying up property, often times in cash, through Anonymous Companies, and often times of of questionable prove provenance where its coming from and has its own set of issues and that kind of crowds out people who are more modest means, who want to also buy properties, but theyre just not available or the prices skyrocketed. We were neighbors, and we were former partners of one of his exwifes. My question is and we also know a few lawyers involved in this. My question is since the americans that were implemented in the Panama Papers, have any criminal charges been started against them . Thats a great question. And i think the analysis there, theyre like 100, more than several hundred investigations underway. In panama itself. There are at least six different criminal proceedings involving fonseca. They were briefly detained. They were briefly detained, more than two months. Its quite funny, actually, they were involved in or detained or prosecuted for their role in a brazilian scandal, operation car wash, petrobras the oil company, and so they went to their houses were searched and they were going to go present themselves before the Public Ministry and Ramon Fonseca who can be a hothead at times gave this impromptu press conference on the steps of the Public Ministry where he basically accused the president and other people in the government of being involved in the same kind of corruption that he and gergen were accused of and ramon believes thats why they were in jail for two months. And several criminal proceedings, theyre keeping a low profile in panama, and they have got their own proceedings to find out who hacked them or whether it was a hack or a leak, which obviously has different consequences depending which it is. Obviously you uncovered a lot of sensitive information. Have you ever threatened . No, personally i was not threatened. I was lucky, i was working out of new york, so, it was not really a problem, but it certainly was an issue for, you know, our egyptian colleagues and our russian colleagues and others who really had to, you know, be very careful. We had a panamanian partner and towards the end of it had to have a bodyguard. When gergen and ramon found out and we sent them questions towards the end of the project, they visited la princea and singled out here even though she wasnt in the meeting and intimated that they knew who she was and so they decided it was prudent to get her a bodyguard. And they were attacked on twitter and other places. So, personally, no, i mean in america were fairly safe from those things for the moment. When you get a like that, i think it was a beta and the heavy lifting comes in the processing. Now, is that going to be the face of the new sort of Investigative Journalism, a leaker that gives you a Christmas Present every so often . I mean, i think its a big part of it. Obviously, Investigative Journalism will be one thing, but the data dumps are a big part of it. Theres so much data now and its accessible and its hard to keep under wraps so were going to see more of that and i talk about it. And the book is really good now at making this sort of data accessible to lots of different journalists through sort of their own secret platforms, Password Protected and making them searchable. Tt fonseca data came in different forms. Audio files and jpegs, and made it searchable by hundreds of journalists who did so in secret. This was not an easy task to be pulled off. Well see more even though its got challenges. From listening to you, if you were to stick a pin in all of these instances worldwide, its so huge, is there any coordination or endgame among all of these players or you think its all disparate activity worldwide . No, no, i mean the biggest player in the offshore world meet, they know each other, they attend conferences, and theyre very agile at lobbying for their business. You know, the tax havens were in washington recently, trying to influence the tax bill that the republicans are discussing. They were very they had a concerted effort to try to beat back their efforts to reform the industry in the 2000s and i talk about that in the book. So theyre this is actually remarkably coordinated, theres just too much money involved. So, yeah, its theyre formidable. Mr. Powell. I have a question on the rent thing. You talked about how these Shell Companies and Money Laundering that facilitate, raise the rents in miami. And i wonder if miami is a winner for Money Laundering. Th that ive seen a cartoon and thinking on the main is this good for miami . Are we one of the winners in this economy . It really depends, right . It does put money in the economy, but if you live in the service industry, you cant afford to live here and a lot of this money is flighty, right . How much of it is actually being preserved for taxes. If you look around, the infrastructure in this county is falling apart. And you know, part of that is just, you know, as you know, as well as anybody, robert, the inability and the unique corruption for one of the better word of the politicians in miami county, but part of it is the fact that the tax revenue is not really here, even though you have money coming in for the service stuff. And there are taxes on hotels and all of that stuff and theyre quite high. I think net, i mean, there is a benefit for sure and but its not equal across the board. So there are losers and there are winners and probably more losers, i would guess. What are the dangers to the overall worldwide stock markets, et cetera, banks, to this outside activity . Was there something that they could do thats going to affect the markets unknown to the rest of us . I mean, Global Capital moves around and i mean, theres all kinds of ways it can affect things. Ive been talking a lot today about bitcoin and bitcoin is sort of in a huge bubble right now. Its become a favor tool of money launderers, i think because there has been more attention on the tax havens and vetting of clients and Due Diligence increasing to some degree, but bitcoin is, in fact, a bubble. In fact, partly a bubble because a lot of the money that maybe went to banks or went through Anonymous Companies is no longer going there because there are more rigorous Due Diligence. If it pops, that will have economic consequences for the entire world, probably. And it all starts in part because of the pay the system works and efforts to control. Next question. One question i have, as i see it, maybe you can clarify. This crosses all kind of political ideologies. Its very dangerous, its not something that you can say that this group or that group opposes, but. No, i think thats an absolutely good observation both in the appleby, Paradise Papers, and the Panama Papers, there are plenty of democratic donors, to the clintons and to others. This is you know, they in the Paradise Papers they found one of the beggest democratic donors who had completely gotten wrong. Four or five rungs because he had a trust in bermuda nobody had heard about. It was a secret trust and his plan was to use it as a charity and give the money away, he says. [laughter] it was completely unknown and a huge democratic donor. So, yeah, its a class thing more than a political thing. How about africa, how is the development . Thats a great question. I mean, africa is sort of a poster child for the problems of this system. I mean, people like dan and others using Anonymous Companies to pull out the resources from africa without actually putting any money back into africa or certainly not anything commensurate to what theyre taking out. And theres a i think its a former head of nigeria, he put hundreds of millions of dollars in swiss Bank Accounts that he pulled from that country and they discovered that 20 years ago. And only now, the swiss are around to giving the last bit of it back to nigeria. So, its a huge problem in africa, and its fascinating. I mean, if you talk to the african journalists or people who know about this in africa, they can talk at length about stuff like transfer pricing, and all kinds of complicated tax issues because theyre increasingly aware that this system is the great to them. Have you got any answers new the money people all flock to one place or another . How does word get around . And how do all of them go to one place . And whats the informational pipeline . Its amazing. I mean, its just exactly what you would expect. Theres conferences, and theres pamphlets and theres a great anecdote in the book about a conference in, i think its in bermuda, if i remember, or someplace like that where theres a big debate because theyve got these leaflets and pamphlets they want to hand out which tells you exactly how to avoid paying taxes in the United States, but they have to fly through the United States and so what do you do . Because if customs finds the pamphlets, thats going to be a problem at the very least confiscate the pamphlets. Theyve talked to one lawyer well versed, the key is send it to the motel where the conference is by mail and you go through the United States and you dont have to worry about pamphlets telling u. S. Citizens how to avoid paying taxes. Theres all kinds of conferences and different ways, you know, this system is really run by lawyers, by accountants, by bankers and theyre the ones who let clients know, you know, how to use it. Banks were big players in this. At a certain point it got too hot for them and they kind of pushed it out the door a little bit, but kept going. There would be Relationship Managers of the banks urging their clients to set up Anonymous Companies. What they would do, they would make it so the Relationship Manager was no longer officially an employee of the bank. But he would have, you know, but he would continue to have the same relationship, you know, both with the bank and with the client. So, whats interesting, theres a sort of hot potato game here where nobody wants to claim responsibility for these companies. Even though the banks are the ones accountants and lawyers are the ones who set them up on behalf the clients theyd say oh, no, its the intermediary who is at fault or you need to go to. Or its the client and nobody will take responsible for it and thats one way to insulate yourself from the legal consequences. Have you seen evidence of a subpoena for a complaint for pure bill of discovery being successful with the grand cayman bank . I know that grand cayman has some banks that are multinational, in order theyre not just limited to grand cayman. I cant remember which ones in particular, but isnt there sorting to be some inroads where a subpoena or an order from a u. S. District judge will invade the information barrier . You know, i dont know about the grand caymans in particular, but there is a story that i tell in this book about a lawsuit that was pursued by a billionaire named paul singer against fonseca in nevada. And whats interesting they had a franchise, an office in las vegas, nevada and they claimed to singer that the office was, in fact, not really part of the firm, that it was a separate entity and that they had just a, you know, a clientuser relationship. And what we found through the documents was, in fact, it was absolutely part of that. In fact, they operated the phones and controlled everything. But what singer managed to do in court was to prove that this subsidiary was, in fact, part of fonseca and that the court had a right to depose and to get information directly. I think if you were able to show that a bank was, in fact, operating in the United States and not operating independently, but actually part of a larger sort of institution in another place, you might be able to use the same, you know, legal logic to get at the bank in the pros where its actually based. Sure. And does all this moving and hiding of resources and money seem one of the greatest threats against the free press because of theyre wanting to hide all of this information . I think the greatest threat against the free press is the authoritarian bent of certain leaders who are calling journalism fake news or attacking journalists by name or the press in general, more than the offshore system in general. I mean, thats just for my personal opinion. Sure. So part of one of the effects of, i mean, these kind of publications is kind of the diminishment of the attorneyclient privilege and also, when you see the cia documents being disclosed, thats National Security being diminished. Do you see that as a problem and how big is it. Its an interesting question, i talk about this in secrecy world, the irs has been reluctant to go after the law firms with these structures because theyre worried about attorneyclient privilege. Theres a widespread belief at least in Law Enforcement that, you know, setting up an anan must Shell Company or trust is not legal activity. So it would not be protected by the attorneyclient privilege. The irs and Justice Department often are gunshy. They dont like to lose. They dont like to invest in resources where its not guaranteed its a win. They have been reluctant to push the point. I mean, a lot of people think this is just simply not covered by that privilege. Okay. Thank you. On how theyre putting money through the art world . Oh, yeah. The whole chapter on the art world and its its great fun. There are lots of reasons why you would have an offShore Company to buy a painting, you might be buying it and moving it another place. Its particularly i go into great detail about the freeport. You know, art has become to some degree because of the high value, another commodity and investment, not necessarily something that you hang on the wall as much as you stick in a vault and wait for it to appreciate. So, as part of that, it is sort of dovetails with the secrecy world and the companies. Its used across the art world. There are some interesting stories in here about a group of collectors who bought a painting that might have been stolen by the nazis and use an Anonymous Company to hide the pro pro provenance of the company. And theres an art auction which kind of changed the art market. The paintings, people thought belonged to this very wellknown collector family, but they had already actually been bought by the largest shareholder of christies who was doing the auction and nobody knew about it, it was through an annuity company. The art world has sort of changed in the same way with the uber wealthy and the off shore system. Is there any indication that Robert Muellers investigation is looking into the areas youve been looking into as part of their exploration of the russian involvement in the election . Thats a great question and i think i mean, with the manafort indictment, hes looking at Cypress Companies that manafort set up and Bank Accounts and clearly the allegation is that there was Money Laundering going through that. Cypress has long been a bad actor in this world. And someone told me in cypress when you bought an anonymous Shell Company you got a bank account that came along with it. You didnt even have to open up the bank company. It ka i came to the company. Manafort is being accused of using that system for Money Laundering. Muellers got a crack team of investigators and prosecutors and i suspect they know this world really well and most of the tricks and so, i think they will be looking more at that. I mean, kushner, jared kushner, as i say, has got a lot of connections into this world, you know, he does business with a lot of different people and theyre involved in all kinds of things, including ties back to the death in russia, which was a big part of this whole scandal as russia was trying to get rid of the sanctions that that triggered. [inaudible] well, wilbur ross was in the Paradise Papers, the latest leak and its interesting, wilbur had some bad days recently and thats only part of it. It turns out that he, you know, he said that he divested himself from most of the companies and he wasnt clear in his testimony and filings, that it was a piece of the company that does shipping business with russia, including, i think the soninlaw of Vladimir Putin is married to his daughter. And this was a bit of a scandal for wilbur ross, including also the fact, oh, this was not broke in the Paradise Papers, that he had lied about his net worth. Again, its the ability of these offshore companies to sort of allow one to hide your activities and to conspiracy becomes a particular problem if youre going to become a public official. Have you gotten any feedback from anybody who says youve got it right or youve got this wrong . Oh, yeah, i mean, thankfully not so much youve got this wrong, but certainly the youve got it right. This is a very complex world and its important to sort of note that its not you know, its not black and white all the time. There are legitimate reasons to, you know, where one could have an offShore Company or not necessarily breaking the law to have an anonymous Shell Company. Although as one of the lawyers said in an email, 95 of our business was to help people avoid taxes. But again, avoiding taxes is not necessarily illegal. Its evading taxes thats we can talk about the distinction between the two. But so, yeah, i mean, people feel ive even gotten some comments from people in panama who appreciate the fact that i really make a point of explaining and saying in the book that the biggest players and inflew influencers in this world are the United States and u. K. Because the u. K. Has all of those affiliated countries, jersey and the shell islands and all of that thats the biggest players in that. And delaware is a monster when it comes to Anonymous Companies. Theyre pulling in a billion dollars a year just from fees associated with selling these companies and theyre selling them to all kinds of people, including, according to the Justice Department, you know, Eastern European and russian criminal siyndicatesyndicates. I think the panamaions felt bruised that it was called the Panama Papers. Panamas own incorporation law comes from delaware. So, you know, i make that clear and can try to assign responsibility appropriately and i think that was appreciated by some of the folks involved. Well, thank you so much. [applaus [applause] and i will be signing books, so, please, buy one and come and i will sign it. For nearly 20 years in depth on book tv has featured the best known nonfiction writers. For live conversations about their books. Well, this year as a special project were featuring best selling fiction writers for our monthly program, in depth fiction edition. And in march well be live with historicalal novelist, gods and generals. And the frozen hours on the korean war. Visit book tv. Org for more information. So, here is data point number one, in 1952, made the first computer controlled manufacturing machine. It was based on an off shoot of the whirlwind the first realtime computer. Theres room here. And jet aircraft were emerging and parts were too hard to make by hand, and the computer was hooked up to the machine. Thats the first. And where we look at digital data physical and physical data digital. The first kwquantum computers ad first things in the organisms and putting the internet into the data devices. Thats the research we do. To teach students to do that, i created a class for ten or so Research Students and hundreds begging to get in. One student made a web browser to let them. And there was a sculptor and here is their project. Hi, do you ever find yourself in a situation where you really have to scream, but you cant because youre at work or in a classroom or youre watching your children or youre in any number of situations where its not permitted . Well, this is a portable space for screams. When you scream into scream body, its recorded for later release, where, when and how the user chooses. [inaudible]. [laughter] so what that has to do with with were here for today. The whirl wind was transisterized. And the pdp created the mini computer industry. And one said that nobody needs a computer at home and failed when pcs came. I was asked to turn data into this and not why. The killer app of fabrication, and products not for mass marketing, but for a market of one person. She didnt do this to start a business because she wanted a device for screaming. And you can watch this and other programs online at book tv. Org. Coming up next on book tvs after words. Former white house speech writer and atlantic columnist argues that the Trump Presidency is damaging american democracy