Was the Panama Papers “Leak” a Russian Intelligence Operation?

As I wrote on Monday, ever since I started reading about the Panama Papers “leak” something kept rubbing me the wrong way. From the absence of any well known, politically powerful Americans on the list, to the anonymous nature of “John Doe” as whistleblower and the clownish reporting from Soros and USAID affiliated organizations, the whole thing stunk from the start.

The first plausible theory I came across attempting to explain the strangeness of it all was proposed by Craig Murray, and it basically went something like this. The leaker is a real whistleblower, but he placed the information in the wrong hands, therefore the organizations and journalists reporting on the story were not giving us the whole truth. Here’s some of that theory from the post, Are Corporate Gatekeepers Protecting Western Elites from the Leaked Panama Papers?

Whoever leaked the Mossack Fonseca papers appears motivated by a genuine desire to expose the system that enables the ultra wealthy to hide their massive stashes, often corruptly obtained and all involved in tax avoidance. These Panamanian lawyers hide the wealth of a significant proportion of the 1%, and the massive leak of their documents ought to be a wonderful thing.

The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

The corporate media – the Guardian and BBC in the UK – have exclusive access to the database which you and I cannot see. They are protecting themselves from even seeing western corporations’ sensitive information by only looking at those documents which are brought up by specific searches such as UN sanctions busters. Never forget the Guardian smashed its copies of the Snowden files on the instruction of MI6. 

Initially, this seemed to be a theory worth exploring, but in the following days I’ve come to a far different conclusion. The primary divergence between what I currently believe and what Mr. Murray proposed is that I do not think the leaker was a genuine whistleblower motived by the public interest. I think the leaker was working on behalf of a sophisticated intelligence agency.

The fact that we seem to know nothing about “John Doe” concerns me. Say what you will about Edward Snowden, but he came out publicly shortly after his whistleblowing and offered himself up for the world to judge. His life, career and personality have been put on full display, and each and every one of us has had the opportunity to decide for ourselves whether his motivations were noble and pure or not.

With the Panama Papers’ “John Doe” we are given no such opportunity, and in fact, the whole thing reads very much like a script concocted by some big budget intelligence agency. Once I started coming around to this conclusion, the obvious choice was U.S. intelligence; given the lack of implications to powerful Americans, the clownishly desperate attempts to smear Putin, and the appearance of Soros, USAID, Ford Foundation, etc, linked organizations to the reporting.

So for someone who already thinks the whole Panama Papers story stinks to high heaven, a CIA link to the release seems obvious; but is it too obvious? Perhaps.

Earlier this morning, I read an absolutely fascinating theory put forth by Clifford G. Gaddy at the Brookings Institution. Here’s what he wrote in the piece, Are the Russians actually behind the Panama Papers?

The “Panama Papers”—does this strike anyone else as a very fishy story? It’s like something out of a cheap spy movie.

Yes, yes it does.

In early 2015, “John Doe” sends (out of the blue) an email to the German newspaper Süddeutsche Zeitung (SZ), offering 11.5 million documents from a Panamanian law firm relating to offshore shell companies. SZ accepts. Under the International Consortium of Investigative Journalists (ICIJ), some 400 journalists from 80 countries spend a year sifting through the documents. Then, in a coordinated launch, they present their first findings: With nearly identical language in all media (down to the local TV station in Washington that I happened to watch this week), they talk about the grand new revelations of corruption, money laundering, and financial secrecy by over 140 world leaders. 

Most reports, no matter where, feature Russian President Vladimir Putin as the headliner. But that might obscure a much bigger and more twisted story.

The dog that didn’t bark

Despite the headlines, there is no evidence of Putin’s direct involvement—not in any company involved in the leak, much less in criminal activity, theft, tax evasion, or money laundering. There are documents showing that some of his “friends” have moved “up to two billion dollars” through these Panama-based shell companies. 

But nothing in the Panama Papers reveals anything new about Putin. It is in fact far less of a story than has been alleged for a long time. For over 10 years, there have been suspicions that Putin has a vast personal fortune, claimed at first to be $20 billion, then $40, $70, even $100… And now all they find is “maybe” a couple of billion belonging to a friend?

This is the dog that didn’t bark.

I completely agree with this conclusion. Putin probably does have a huge fortune stashed away somewhere, but this “leak” doesn’t reveal anything about it. In fact, the Panama Papers will have absolutely zero impact on Putin’s political power at home, while making Western efforts to trash him look manufactured and clownish. Net-net Putin wins from the release of the Panama Papers.

As Mr. Gaddy explains.

Some (geo)political context is important here. In recent years, the media has become a key battleground in which Russia and the West have attempted to discredit each other. Early last year, circles in the West sought to use the media to respond to what they described as Russia’s “hybrid warfare,” especially information war, in the wake of the Russian annexation of Crimea and related activities. They identified corruption as an issue where Putin was quite vulnerable. It’s worth looking at the Panama Papers in that context: Journalists are targeting Putin far out of proportion to the evidence they present. 

As soon as one delves below the headlines, it’s a non-story. A “friend of Putin” is linked to companies that channel a couple of billion dollars through the offshore companies. Why? To evade Russian taxes? Really? To conceal ownership? From whom? You don’t need an offshore registration to do that. To evade sanctions? That’s a credible reason, but it makes sense only if the companies were registered after mid-2014. Were they?

This information will not harm Putin at all—instead, it gives Putin cover, so he can shrug and say: “Look, everybody does it.” A more serious possibility is that the leaked data will lead to scandals throughout the West, where corruption does matter—a point I’ll discuss. On net, the Russians win. 

The cui bono principle connects profits with motives, asking who stands to gain from a certain action. If it’s the Russians who win, isn’t it possible that they are somehow behind at least part of this story? 

Who is “John Doe”? 

The ICIJ is the self-described elite of investigative journalists—but what have they discovered about the source of all these documents? The only information we have about John Doe is from SZ, which begins its story: “Over a year ago, an anonymous source contacted the Süddeutsche Zeitung (SZ) and submitted encrypted internal documents from the law firm Mossack Fonseca.” When the staff at SZ asked John Doe about his motive, he reportedly replied in an email: “I want to make these crimes public.” 

But how can the journalists—and the public—be sure he’s trustworthy, and that the documents are real, complete, and unmanipulated? It’s not clear that John Doe is a single individual, for one, nor why he would have been confident that he could reveal the documents without revealing himself. He’d also have access to a pretty impressive documents cache, which suggests that an intelligence agency could have been involved. 

The above seems clear to me as well, which is why I feel pretty strongly that this was some sort intelligence operation.

Moreover, the revelation brings collateral damage upon legal business and innocent individuals—was that not a worry? In my view, no responsible person with a real concern for rule of law would advocate this sort of sweeping document release. There might be many unintended consequences; it could topple regimes, with unforeseen consequences. It’s pure and naïve anarchism, if the thinking was (as it seems from the outside) to create maximum chaos and hope it will all purge the system of its evils. In any event, the potential for using such a leak for political purposes is immense. 

If “we” (in the United States or the West) released these documents, the motive would apparently be to embarrass Putin. This is part of the fantasy that we can defeat Putin in an information war. If that was the motive, the result is pathetic: No real damage is being done to Putin, but there is collateral damage to U.S. allies.

If the Russians did it, a good motive might be to deflect the West’s campaign against Putin’s corruption. But as I’ve explained, any actual reputational damage to Putin or Russia caused by the Panama Papers is in fact pretty trivial. For that cheap price, the Russians would have 1) exposed corrupt politicians everywhere, including in “model” Western democracies, and 2) fomented genuine destabilization in some Western countries. What I wonder, then: Is it a set-up? The Russians threw out the bait, and the United States gobbled it down. The Panama Paper stories run off Putin like water off a duck’s back. But they have a negative impact on Western stability.

Personally, I’m not convinced they will have any impact on Western stability whatsoever. Rather, here’s what they do achieve: 1) they make the Western press look ridiculous in its obsession with Putin 2) the absence of any notable Americans makes it look like a CIA operation.

So let’s say that the “who” is the Russians, and the “why” is to deflect attention and show that “everybody does it.” But how? Given Russia’s vaunted hacking capabilities, a special cyber unit in the Kremlin may have been able to obtain the documents. (Monssack Fonseca is maintaining that the leak was not an inside job.) But it is most likely that such an operation would be run out of an agency called the Russian Financial Monitoring Service (RFM). RFM is Putin’s personal financial intelligence unit—he created it and it answers only to him. It is completely legitimate and is widely recognized as the most powerful such agency in the world, with a monopoly on information about money laundering, offshore centers, and related issues involving Russia or Russian nationals. An operation like the Panama Papers, which is only about financial intelligence, would have to be run out of RFM. Not the FSB, not some ad hoc gang in the Kremlin. While it might not (legally) have access to secrets kept by a firm like Mossack Fonseca, it’s privy to lots of international financial information through the international body of which it is a leading member, the Financial Action Task Force. In short, Russians are better equipped than anyone—more capable and less constrained—to hack into secret files.

As for how to leak the documents, it would actually be pretty ingenious to “incriminate” Russia in a seemingly serious (and headline-grabbing) way without actually revealing incriminating information. That’s exactly what we have. The Panama Papers revealed no Russian secrets. They added nothing to the rumors already circulating about Putin’s alleged private fortune. And the story-that-isn’t-a-story was advanced by none other than the ICIJ. So, done right, the last thing anyone would suspect is that the Panama Papers are a Russian operation.

A more serious Russian motive?

Granted, this would be a complicated operation just to defuse the West’s campaign to point to “Putin the kleptocrat.” But maybe there’s another motive. 

As many have already pointed out, it’s curious that the Panama Papers mention no Americans. But it’s possible that they do and that the ICIJ hasn’t revealed that information. Perhaps, since the ICIJ is funded by Americans, they’re not going to bite the hand that feeds them. But suppose the ICIJ actually doesn’t have information on Americans—that calls into question the original data, which if actually real and uncensored would most probably include something on Americans. There are undoubtedly many American individuals and companies that have done business with the Mossack Fonseco crew, and it wouldn’t make sense for a collection of 11.5 million documents involving offshore finances to omit Americans entirely. Perhaps, then, someone purged those references before the documents were handed over to the German newspaper. The “someone” would, following my hypothesis, be the Russians—and the absence of incriminating information about Americans is an important hint of what I think to be the real purpose of this leak. 

Some have argued that the reason no powerful Americans are named is because Americans use other jurisdictions for such behavior. Considering the size of this data leak and the fact that it supposedly contains information going back to the 1970s, I find this explanation unconvincing.

Now back to Brookings.

The Panama Papers contain secret corporate financial information, some of which—by far not all—reveals criminal activity. In the hands of law enforcement, such information can be used to prosecute companies and individuals; in the hands of a third party, it is a weapon for blackmail. For information to be effective as a blackmail weapon, it must be kept secret. Once revealed, as in the Panama Papers case, it is useless for blackmail. Its value is destroyed.

Therefore, I suggest that the purpose of the Panama Papers operation may be this: It is a message directed at the Americans and other Western political leaders who could be mentioned but are not. The message is: “We have information on your financial misdeeds, too. You know we do. We can keep them secret if you work with us.” In other words, the individuals mentioned in the documents are not the targets. The ones who are not mentioned are the targets.

Kontrol, the special Russian variety of control

In sum, my thinking is that this could have been a Russian intelligence operation, which orchestrated a high-profile leak and established total credibility by “implicating” (not really implicating) Russia and keeping the source hidden. Some documents would be used for anti-corruption campaigns in a few countries—topple some minor regimes, destroy a few careers and fortunes. By then blackmailing the real targets in the United States and elsewhere (individuals not in the current leak), the Russian puppet masters get “kontrol” and influence. 

If the Russians are behind the Panama Papers, we know two things and both come back to Putin personally: First, it is an operation run by RFM, which means it’s run by Putin; second, it’s ultimately about blackmail. That means the real story lies in the information being concealed, not revealed. You reveal secrets in order to destroy; conceal in order to control. Putin is not a destroyer. He’s a controller.

At this point, I want to make something perfectly clear. I do not profess to know the “real story” behind the Panama Papers. The truth is, nobody knows, except for John Doe and the people he was working for (or with). The only thing I feel fairly confident about is that the story we are being fed is not the real story. The more I read and reflect upon the very minor consequences of the leak thus far, the more I become convinced this was a geopolitical play by a powerful intelligence agency. At first, I assumed it was U.S. intelligence, but Mr. Gaddy puts forth a compelling theory. If this was the work of the CIA, it was an extremely sloppy and obvious hit job. On the other hand, if this was the work of Putin for the purposes of blackmail, it’s one of the most ingenious chess moves I’ve ever seen played on the global stage.

I want to conclude with a very important observation. If Clifford Gaddy’s theory is correct, it’s the worse case scenario for American citizens. It means that Putin essentially has the goods on the U.S. elite and he can now blackmail them for his purposes. Indeed, perhaps Iceland was put forward as an example of what can happen if truly damaging information makes it to the public.

So if Putin is behind this, and does have the goods on the U.S. elite, not only do we not get rid of the these corrupt oligarchs, we now have to live with them in an even more compromised state than they were before. For all of our sakes, I hope Mr. Gaddy is wrong.

In Liberty,
Michael Krieger

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