Defendants in the controversial “Panama Papers Case,” a scandal that revealed how a number of well-off businesspeople, celebrities, and politicians managed to avoid taxes through the use of shell companies and offshore bank accounts, were cleared of all charges on Friday in a sudden shift in the case.
The Scandal
The trial began in April and focused on 28 individuals, including leaders of a law firm that helped set up shell companies, Jürgen Mossack and Ramón Fonseca. Prosecutors claimed that the pair had used their firm in order to set up shell companies for illicit payments to government officials by Brazilian construction conglomerate Odebrecht in the “car wash” scandal. The revelation of this scandal led to hundreds of convictions ranging from those working within the company to political figures such as the current President of Brazil, Luiz Inácio Lula da Silva. Lula was convicted in 2017 and was later released in 2019 before his sentence was ultimately annulled in 2021 after the Supreme Court ruled that the court that tried the case did not have jurisdiction and the judge presiding over the case was biased against him following leaked chat logs revealing the judge and prosecutor allegedly conspired to prevent him from running in the 2018 presidential election.
The trial itself was the result of a leak of over 11 million confidential documents by the International Consortium of Investigative Journalists. The leaked paperwork connected a number of figures to shell companies used to process payments from Odebrecht.
Prosecutors alleged that the law firm had created 44 shell companies, and 31 of them had opened accounts in Panama to help conceal funds connected to the scandal. The legal team representing Fonseca, who died in May after contracting pneumonia, argued that the firm did not use the shell companies for illicit activities and had only created them at the behest of their customers. Mossack denied the allegations in full, telling the Associated Press that “we categorically reject that we have committed any crime, not Mossack Fonseca nor the subsidiaries … and we hope that can be proved in the trial. If there is in fact justice in our case, they have to absolve us.”
The firm is believed to have created and sold an estimated 240,000 shell companies before closing its operations in 2018.
“The reputational deterioration, the media campaign, the financial siege, and the irregular actions of some Panamanian authorities have caused irreparable damage, whose consequence is the complete cease of operations to the public,” the firm said in a statement amid their cessation of operations.
Charges Dropped
Judge Baloísa Marquínez, the Second Liquidating Judge of Criminal Cases who presided over the case, acquitted the 28 individuals being tried for their alleged roles regarding the firm, citing the lack of ability “to determine the inflow of money from illicit sources from Brazil into the Panamanian financial system with the purpose of hiding, covering up, disguising, or helping to evade the legal consequences of the preceding crime.”
The judge further cited the leaked documents themselves, stating that the evidence, which contained “electronic evidence presented in paper format,” did not “comply with the chain of custody, nor the principles governing digital evidence, primarily due to the lack of “hash” values that would ensure their authenticity and integrity.” This chain of custody requires all evidence to have thorough documentation in regards to every person who handled the evidence, the date and time it was collected, and the purpose of each transfer, secure storage to ensure evidence cannot be tampered with or otherwise damaged, and surveillance of the evidence to prevent tampering.
The judge further terminated criminal action “due to the death of one of the individuals [Fonseca] involved in this process,” before lifting all security measures for the defendants. Furthermore, Judge Baloísa Marquínez ordered ten witnesses who failed to comply with judicial summons to pay 100 balboas ($100 USD) to the court.
The Judicial Body ended its statement announcing the dropping of charges by stating that other forms of evidence were “neither sufficient nor conclusive to establish the criminal responsibility of the accused” regarding funds received from Germany and Argentina.