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For The Record  

FTR #900 The Panama Papers and the Underground Reich

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This program was recorded in one, 60-minute segment.

Otto Skorzeny

Martin Bormann: He helped concretize the "offshore" mechanisms through his flight caital program.

Introduction: This broadcast revisits the topic of “offshoring” of wealth, something we have discussed in numerous previous broadcasts, notably FTR #’s 458 and 531, interviews with the brilliant Lucy Komisar.

News in recent weeks has had much coverage of “The Panama Papers,” a massive leak of documents culled from the communications of a Panama-based law firm called Mossack Fonseca. Specializing in setting up fronts for the “offshoring” of great wealth in order to avoid taxation and, in some cases, scrutiny by governmental law-enforcement authorities, Mossack Fonseca’s history and operations are suggestive of possible involvement of the Underground Reich in the operations of the organization.

(This program description will be of greater significance than some, due to the limitations of time. The recorded information about Patricia Amunategui was attenuated and will be greatly supplemented by the information in this description.)

The very nature of the organization would make it useful to an intelligence service. The need for clandestine moving of funds, being able to track major manipulations of capital and tracking potential criminal activity are all functions of great utility to a major intelligence service.

Furthermore, we note the SS background of Erhard Mossack (father of Juergen Mossack, co-founder of the firm) and his probable recruitment by Western intelligence (CIA, Gehlen “Org,” and/or BND).

Beginning with analysis of Erhard Mossack, we highlight his apparent work with the Werewolf organization, a guerrilla organization put together in the fall of 1944 under the auspices of the SS.

” . . . . Accord­ing to the Sued­deutsche [Zeitung], Erhard was cap­tured by the Amer­i­cans in Munich after the war with a list of Nazi ‘Were­wolf’ mem­bers upon him. . . . .”

Ostensibly organized with an eye to militarily destabilizing the Allied occupation of Germany, the Werewolves actually played a role in the genesis of the Underground Reich. Elements of the Werewolves were utilized to facilitate a Northern escape route for Third Reich alumni, and were incorporated into Otto Skorzeny’s ODESSA network.

. . . . Another major ratline–“ODESSA North”–stretched through Denmark, Sweden and Norway, where an underground network of SS veterans and Werewolves smuggled Nazi renegades over land and sea until they were picked up by ships heading to Spain and Argentina. . . . . They key legmen on the ground were personnel who had undergone Werewolf training toward the end of World War II. Skorzeny was instrumental in selecting and schooling the Werewolves, some of whom later resurfaced as ODESSA operatives in Scandinavia while Scarface orchestrated the escape of Nazis from detention camps. . . .

Furthermore, the Werewolves were an apparent template for the CIA/Gehen Org formation of “stay behind” units, ostensibly to combat the Soviets in the event of a Soviet invasion of Western Europe or the accession of a Western government deemed not sufficiently opposed to communism. Skorzeny was a key Gehlen operative, at the same time that he was  deeply involved with the machinations of the Underground Reich.

. . . . The Bund Deutscher Jugend (BDJ)–an elite CIA-trained paramilitary cadre composed largely of Hitler Youth, Wehrmacht and SS personnel–also set its sights on Adenauer’s domestic political opponents. . . . . Back in the 1950s, [German neo-Nazi Friedhelm Busse] and his fellow Bundists were supposed to remain underground and engage in acts of sabotage and resistance in the event of a Soviet invasion, much like Skorzeny’s Werewolves. But instead of focusing on foreign enemies, the leaders of Busse’s “stay behind” units proceeded to draw up a death list that included future Chancellor Willi Brandt and several other leading Social Democrats (West Germany’s main opposition party) who were marked for liquidation in the event of an ill-defined national security emergency. . . .

Did Erhard Mossack’s involvement with the Werewolves lead to his incorporation into the Gehlen “org”/CIA?

. . . . The news­pa­per said it applied to the Ger­man Fed­eral Intel­li­gence Ser­vice, the BND, for infor­ma­tion about him. The BND con­firmed doc­u­ments existed on him but said they would not be released because this could endan­ger ‘the well-being of the Fed­eral Repub­lic of Ger­many or one of its members’. . . .

We note that the BND recruited from the families of existing operatives–a practice that has helped perpetuate the SS/Gestapo influence in the agency.

. . . . for many years, the BND delib­er­ately recruited new staff from among the rel­a­tives of exist­ing BND employees. . . .

Next, we highlight the use of Mossack Fonseca creations for the offshoring of monies from the Ferdinand Marcos fortune, derived in large measure from Marcos’s accessing some of the vast wealth stashed by the Japanese during World War II. (For more about Operation Golden Lily, see FTR #’s 427428446451501509688689, among other programs.)

Noting that the working template for “offshoring” was honed by the Bormann flight capital program and subsequent Bormann organization.

The Thyssen-Bornemisza family are among those who have availed themselves of the Mossack Fonseca group’s services. (The Thyssens are major players in the Bormann network’s operations.)

One of Mossack Fonseca’s functions is the “offshoring” of valuable art, shielding the owners from taxes and scrutiny. The Thyssen-Bornemisza family are heavily involved in the art world. As we have seen in FTR #791, the trafficking of artworks looted by the Nazis figured prominently in the maneuvering that facilitated the growth of the Underground Reich. (FTR #793 further develops the story of the mysterious Hildebrand and Cornelius Gurlitt, deeply involved with the trafficking of postwar Nazi art.)

Much of the conclusion of the broadcast centers on Patricia Amunategui, the key employee of MF Corporate Services, Mossack Fonseca’s important Nevada subsidiary organization. MF Corporate Services and MF Nevada are basically one and the same.

An admirer of  the Dalai Lama, Augusto Pinochet, Sarah Palin and Mitt Romney, as well as the Koch brothers, Amanategui is heavily involved with the so-called “New Age.”  In particular, Amanategui appears deeply enmeshed with the milieu of the Self-Realization Foundation, founded by Swami Yogananda. Yogananda expressed admiration for Hitler and Mussolini during the 1930s. (The so-called “New Age” is deeply connected to fascism, as discussed in–among other programs–FTR #’s 873 and 874.

Program Highlights Include:

  • Pierre Omidyar’s First Look media’s refusal to publish Ken Silverstein’s landmark writing on Mossack Fonseca, and Omidyar’s insistence that a fee should be paid for the story his organization refused to publish.
  • The battle cry of Radio Werewolf: “Better Dead than Red.”
  • The use of bearer bonds by some of the art-offshoring subsidiaries of Mossack Fonseca.
  • Peter Mossack’s service as Panama’s Honorary Consul to Frankfurt, Germany, seat of the European Central Bank.

1a.  The decades of off­shore antics by Mos­sack Fon­seca are no doubt going to keep inves­ti­ga­tors and his­to­ri­ans busy for years to come given the size and nature of the leak. There are just so many ques­tions to ask regard­ing this firm, and plenty of poten­tial answers in the data treasure-trove. And it turns out we can add a new cat­e­gory to the list of intrigu­ing ques­tions related to firm: Of what rel­e­vance is the fact that Jur­gen Mossack’s father was a Waf­fen S.S. “deaths head” unit mem­ber who later offered to spy for the CIA and about whom the BND refuses to release any infor­ma­tion.

Was Erhard part of the Gehlen out­fit? He fits the mold. It’s also worth not­ing that the Inter­a­gency Work­ing Group which was set up in 1999 to find and dis­close infor­ma­tion related to inves­ti­ga­tions of Nazi and Japan­ese WWII war crimes does con­tain a record for Erhard Mos­sack in the sec­tion for FBI files. There isn’t much infor­ma­tion avail­able, but in the “cat­e­gory” sec­tion for Mos­sack it lists “For­eign Coun­ter­in­tel­li­gence (For­merly Inter­nal Secu­rity, For­eign Intel­li­gence)”. That sure sounds like the US took Mos­sack up on his offer.

So, given the Erhard Mossack’s back­ground as a pos­si­ble unre­pen­tant Nazi and the promi­nent role the Mossack’s have played in Pana­man­ian high-society, one big ques­tion regard­ing Mos­sack Fon­seca is what role it may have played in the post-war Nazi under­ground’s Bormann capital network as a vehi­cle for hid­ing and mov­ing the vast sums of money that would have been accrued in the sub­se­quent decades. If Erhard was work­ing for US and/or West Ger­man intel­li­gence in the post-war period, that fact adds to the intrigue. It’s also a reminder that one of the best ways for a Nazi under­ground to stay under­ground is hav­ing a lot of friends in very high places.

Let’s hope all the inves­ti­ga­tors pour­ing over this data ask ques­tions about Mos­sack Fon­seca that go far beyond tax-evasion.

“Panama ‘Tax Scam’ Lawyer Is Son of Nazi SS Offi­cer from Dreaded Death’s Head Divi­sion Who Fled to South Amer­ica then SPIED on Cuba for the CIA, Brother Reveals” by Allan Hall, Isabel Hunter and Imo­gen Calder­wood; The Daily Mail; 4/4/2016.

 * Horst Mos­sack is Ger­man half-brother of Panama lawyer Jür­gen Mos­sack

* Told MailOn­line unmask­ing of his sib­ling is ‘shock­ing news, astound­ing’

* Father was in the S.S. and after is thought to have been a CIA spy in Cuba

* Horst was treated as shame­ful as a child after being born out of wed­lock

* Last saw half-brother Jür­gen 60 years ago and says will never meet again

The man behind a Panama ‘tax scam’ that guards the clan­des­tine wealth of the global elite is the son of a Nazi SS offi­cer from a unit known as the ‘Death’s Head division’.

Jür­gen Mos­sack is at the heart of the biggest finan­cial data leak in his­tory, and has allegedly been help­ing world lead­ers, politi­cians and celebri­ties laun­der money, dodge sanc­tions and evade tax from his base in Panama.

It has now been revealed that his father, Erhard Mos­sack, was a mem­ber of the Nazi fight­ing unit known as the ‘Death’s Head divi­sion’, a dreaded force dur­ing the Sec­ond World War.

Today, his half-brother Horst, has spo­ken of his ‘shock and bewil­der­ment’ at the news of the unmask­ing of his half-brother.

He described the twisted fam­ily his­tory that led to the estrange­ment of the sib­lings, both of whom raised by a man who not only fought with the Nazis but later joined the CIA to carry out espi­onage on Cuba.

The 68-year-old Horst last saw his sib­ling Jür­gen 60 years ago when he left the town of Fürth in Bavaria bear­ing the name of his father Erhard.

Now liv­ing in the Black For­est region of Ger­many, Horst was born out of wed­lock to a woman called Luisa Herzog.

‘This was shame­ful in those days so I was put up for adop­tion,’ he told MailOn­line. ‘My mother later went on to marry Erhard Mos­sack. I took that name later.

‘What has come out of Panama is shock­ing news, astound­ing, bewil­der­ing even, but I can’t say I feel shame because I have no con­nec­tion in real­ity with him.

‘I left all those years ago and we never had con­tact again. He was just a child, so how can I say what I remem­ber of him? All I know is that I heard that he went to Lon­don and lived there for quite some time.

‘He has a brother called Peter and a sis­ter called Mar­ion in Ger­many. Both my mother and their father are now dead.

‘I remem­ber that Erhard Mos­sack, their father, was in the S.S. I believe after the war he became a journalist.’

Ger­man media have reported that Erhard served as a Rot­ten­fuehrer — roughly cor­re­spond­ing to a senior cor­po­ral — in the Waf­fen, or fight­ing arm, of the dreaded S.S.

The Sued­deutsche Zeitung in Munich, one of the pub­li­ca­tions in the global alliance of news­pa­pers which unmasked the activ­i­ties of Jür­gen Mossack’s firm in Panama, said Erhard served in a ‘Death’s Head’ unit of the S.S.

These were the units which ran the con­cen­tra­tion camps. But if he was in the Waf­fen S.S. it prob­a­bly meant he served in the Third Waf­fen S.S. Panzer Divi­sion Totenkopf.

Most of the division’s ini­tial enlisted men were recruited from con­cen­tra­tion camp guards and oth­ers were mem­bers of mili­tias that had com­mit­ted war crimes in Poland.

Due to its insignia, it was some­times referred to as the ‘Death’s Head Divi­sion’. Mem­bers of the divi­sion com­mit­ted war crimes — one of them against British soldiers.

The Le Par­adis mas­sacre was car­ried out by mem­bers of the 14th Com­pany of the division.

It took place on May 27 1940, dur­ing the Bat­tle of France, at a time when the British Expe­di­tionary Force was attempt­ing to retreat through the Pas-de-Calais region dur­ing the Bat­tle of Dunkirk.

Sol­diers of the 2nd Bat­tal­ion, the Royal Nor­folk Reg­i­ment, had become iso­lated from their reg­i­ment. They occu­pied and defended a farm­house against an attack by Waf­fen S.S. forces in the vil­lage of Le Par­adis. After run­ning out of ammu­ni­tion, the defend­ers sur­ren­dered to the Ger­man troops.

But the Ger­mans machine-gunned the men after sur­ren­der­ing, with sur­vivors killed with bay­o­nets. Two men sur­vived with injuries, and were hid­den by locals until they were cap­tured by Ger­man forces sev­eral days later.

Accord­ing to the Sued­deutsche, Erhard was cap­tured by the Amer­i­cans in Munich after the war with a list of Nazi ‘Were­wolf’ mem­bers upon him.

The Were­wolf units were intended to fight on as a guer­rilla force after the sur­ren­der, but this never happened.

The news­pa­per said it applied to the Ger­man Fed­eral Intel­li­gence Ser­vice, the BND, for infor­ma­tion about him. The BND con­firmed doc­u­ments existed on him but said they would not be released because this could endan­ger ‘the well-being of the Fed­eral Repub­lic of Ger­many or one of its members’.

In 1948 he left Ger­many with his fam­ily to set­tle in Panama, and later returned to Munich with his wife dur­ing the 70s. He died in the 1990s, his wife fol­lowed five years ago.

Accord­ing to reports, U.S. Army intel­li­gence archives hold a file on him as he allegedly offered his ser­vices to the U.S. gov­ern­ment as an infor­mant, claim­ing ‘he was about to join a clan­des­tine organ­i­sa­tion, either of for­mer Nazis now turned Com­mu­nist… or of uncon­verted Nazis cloak­ing them­selves as Communists.’

An Army intel­li­gence offi­cer wrote that the offer to spy for the U.S. might sim­ply be ‘a shrewd attempt to get out of an awk­ward situation’.

Nev­er­the­less, the old intel­li­gence files indi­cate that Mossack’s father later ended up in Panama, where he offered to spy, this time for the CIA, on Com­mu­nist activ­ity in nearby Cuba.

The chil­dren Peter and Mar­ion returned to Ger­many in the 1970s; brother Peter is the Hon­orary Con­sul for Panama based in Frankfurt.

In 1952 a book by Erhard Mos­sack was pub­lished in Ger­many called The Last Days of Nurem­berg, detail­ing the cap­ture of the city to Amer­i­can forces in 1945.

Horst Mos­sack says he believes the father of Jür­gen was the author.

He added; ‘I don’t expect I will ever see Jür­gen again. If I did I would ask him exactly what went on.’

Mean­while, the sec­ond man behind the Panama firm, a lawyer named Ramon Fon­seca Mora, has been revealed to be an award-winning nov­el­ist famous for his sala­cious plots.

But the 63-year-old Panama native’s sto­ry­lines may cut closer to home than his read­ers realise.

As a young man Fon­seca report­edly wanted to be a priest, before age and mate­ri­al­ism took over. On join­ing forces with part­ner Mos­sack, he told a jour­nal­ist in 2012, ‘Together, we have cre­ated a monster.’

In among accounts he fol­lows on Twit­ter are a fair amount of 18+ accounts — at first glance the naked bot­tom of ‘Horny Cherry’ sits along­side the offi­cial account of the Pres­i­dent of Argentina Mauri­cio Macri. . . .

1b. It’s also worth not­ing that the Inter­a­gency Work­ing Group which was set up in 1999 to find and dis­close infor­ma­tion related to inves­ti­ga­tions of Nazi and Japan­ese WWII war crimes does con­tain a record for Erhard Mos­sack in the sec­tion for FBI files. There isn’t much infor­ma­tion avail­able, but in the “cat­e­gory” sec­tion for Mos­sack it lists “For­eign Coun­ter­in­tel­li­gence (For­merly Inter­nal Secu­rity, For­eign Intel­li­gence)”. That sure sounds like the US took Mos­sack up on his offer.

1c. We note that Erhard Mossback was in possession of lists of the personnel of Werewolf units when captured.

The Daily Mail article dismisses the Werewolf units as not having become operational. This is not true. Most of their combat activities were in Soviet-occupied areas, but there were some attacks in Western Allied zones.

We present an excerpt from AFA #1 (Taken from William Stevenson’s book The Bormann Brotherhood) about the Werewolves motto: “Better Dead than Red.”

1d. A chronicling of the Werewolf activities is contained in a blog about Third Reich military operations.

“The Werewolf Organization” by Russ Folsom; feldgrau.com

The Werewolf Organization’s assassination of the Allied appointed Burgomeister of Aachen, Dr.Franz Oppenhoff in March of 1945, is probably the best known and most widely publicized exploit of this hapless band of politically indoctrinated youngsters who hailed for the most part from the ranks of the Hitlerjugend and the Bund Deutscher Maedel. Charles Whiting (aka Leo Kessler) wrote a book named “Werwolf” (recently re-printed) which details this very same mission, called “Unternehmen Karneval” (Operation Carnival). The leader of the assassination team was a veteran of the German Army’s famous “Brandenburg” infiltration-specialist formation, named Herbert Wenzel, who had transferred to Otto Skorzeny’s “SS-Jagdverband Friedenthal” and who, at the time of the operation, held the rank of SS-Untersturmfuhrer (2nd Lieutenant.)
According to a number of sources, the idea for a Werewolf Organization originated in the fall of 1944 at a meeting attended by Reichsfuhrer-SS Himmler, Artur Axmann (HJ Jugendfuhrer), SS-Obergruppenfuhrer Hans-Adolf Prutzmann, RSHA chief Ernst Kaltenbrunner, and Waffen-SS Obsturmbannfuhrer Otto Skorzeny. At the meeting in Hohenlychen, Himmler appointed Prutzmann as plenipotentary in charge of the recruiting and training of Werewolf agents from skilled specialists in weapons and communications from among the armed forces and HJ, who would then be trained beneath the aegis of Skorzeny’s SS-Jagdverband (Hunting-teams).

Once trained in sabotage and varying forms of deadly mischief, teams of these Werewolf Kommandos, comprised mostly of HJ volunteers, but commanded by older, battle-experienced hand-picked cadre from the German Army and Waffen-SS, would operate behind the enemy lines as guerrillas, creating deadly mishap amongs the occupying forces, and relaying useful intelligence to a central Armed Forces entity (Supposedly in un-occupied territory).

Training took place at the Schloss Hulchrath, near the small Rhenish town of Erkelenz. The castle was at the time the HQ of the HSSPF-West, Karl Gutenberger. Here Prutzmann set up his Werwolf Staff HQ. The first 200 trainees from the HJ arrived in late November and began their Werwolf training under the guise of W-SS volunteers. They were instructed in small-arms and demolitions skills, radio-communications, map-reading, and survival skills by instructors from Skorzeny’s Jagdverband, experts from the Army, and agents of the SD and Gestapo. They were taught to sabotage vehicles and communications facilities, to poison wells and food supplies – large quantities of arsenic were issued to some squads. When recruits from the HJ or BDM arrived, most had already had preliminary training with rifles, pistols, and panzerfaust. Prutzmann’s staff set up other training centers in the Berlin suburbs, and in the so-called area of the Alpine Redoubt in Bavaria.

Underground bunkers or dens in the Eifel and Bavaria were reserved for Werewolf squads, where food, munitions and other logistics were to be hidden before Allied units overran them. The Werwolf would operate at night, harassing and sabotaging, and resurface by day and mix with the civil population in their area of operations protected by false passes and papers supplied by the Gestapo. This at least, was the plan. What actually transpired is of course, quite different.

Despite the fanciful-mythological Werewolf name, at the outset of this joint SS-HJ undertaking in late 1944, a real spirit of military organization and discipline permeated the training and operational goals of the Werewolf-organization. The Germans knew well from first hand experience, just how much damage an organized and efficient partisan force could inflict upon an occupying army. The key feature to success in this scenario would of course, have been a solid base of supply and support – (eg. an unoccupied Germany). Fantastic dreams of an Alpine Redoubt re-considered – these Werewolf squads would have been the long-arm of any logistically viable resistance undertaken by a well defended German power-base in a mountain retreat, or Alpenfestung. Of course, as events transpired – there was very little action toward the establishment of an Alpine base of resistance by the Germans at this very late date.

And so, beyond the one efficacious Operation undertaken by a specifically-trained Werewolf hit-team at Aachen in March of 1945, where one might note that the resources of the OKW (A B-17 of KG-200, the Luftwaffe Special Operations), and the SS-Jagdverband were prominently involved; the later sporadic killings and instances of resistance by so-called Werewolf units, were not intended Werewolf operations as instructed by a higher command, but only isolated acts of last-ditch fanatical resisters, and as such cannot really be accredited to Prutzmann’s Werewolf staff.

To explain the difference between actual Werwolf organized activity and those incidents attributed to it by the Allied Military authorities is not always an easy task . When Burgomeister Oppenhof was murdered in late March of 1945, Dr. Goebbels and Reichsleiter Martin Bormann (who were both, it might be noted, denizens of the surreal atmosphere of the Fuhrerbunker), saw it as a great propaganda coup, and took it upon themselves to proclaim a nationwide uprising of German youth against the Allied aggressor. Goebbels christened the Werewolf-sender or Radio Werewolf with a call to all able-bodied Germans in the Reich and it’s occupied areas to “strike the enemy” from behind the lines.

Radio Werwolf promised death to traitors and a direful fate to the Allied invaders. As a propagandistic ploy, it pandered to a fanatical belief in last-ditch resistance – ironically, it also bolstered a belief in the existence of an Alpine Redoubt among the Allied forces. Bormann’s role in this farce was that as NSDAP Chief of the Gauleiterung, he believed that he commanded the activities of all Werewolf units originating in any Gau of the Reich. The truth was, in fact, that both Goebbels and Bormann had nothing at all to do with the training, organization, or employment of the Werewolf. As a crony of Himmler, SS-General Preutzmann had very little interest in taking orders from either Goebbels or Bormann. So, as the Allied Armies advanced, and eventually overran his Schloss Hulcrath HQ, in April of 1945, he seconded himself to Himmler’s Hohenlychen headquarters in Mecklenberg – at this point, the Werewolf Organization, as a secret behind the lines formation, in effect, ceased to exist.

Despite the lack of direction from a higher headquarters, examples of spurious Werewolf activity continued well after the cessation of hostilities:

The former HJ-Gebeitsfuhrer of Mansfeld, now an SS-Sturmbannfuhrer barely recovered from wounds received in the battle of Kharkov, organized 600 HJ boys into Battle-Group Harz (Kampfgruppe Harz). They collected W-SS veterans from a military hospital, students from a NAPOLA, remaining members of the Luftwaffe-HJ, and boys from a nearby anti-tank-destruction unit. When the Werewolf Radio proclaimed defiance on April 1, they went into action against American troops. Within twenty days, seventy combatants were left, reduced to fifty shortly thereafter. A desperate attempt to ambush an American supplies convoy was unsuccessful. Most of these starving boys were wiped out by air-raids, when American patrols could not find them. Heinz Petry, sixteen, and Josef Schomer, seventeen, survived until 5 June, when they were tried as spies by American troops and executed.

North of Hamburg, toward the end of April, an entrenched group of Werewolves and their SS commanders refused to surrender to two battalions of the British Eleventh Armored Division. When Admiral Karl Donitz ordered them to lay down their arms on 1 May, they still persisted. A unit of the German 8.Fallshirmjager Division was finally brought in to subdue them. The German Paras found mainly dead bodies scattered around their fortified forest den. On the eastern side of the Elbe, isolated groups of youngsters from the Werewolf center at Berlin-Gatow offered feeble resistance to a swarm of Russian tanks. A few survivors remained hidden in bunkers and were later turned in by angry and hungry civilians, whom the Russian troops rewarded by allowing them to plunder the Werewolf food dumps.

Donitz finally made a proclamation on 5 May over Radios Copenhagen, Flensburg, and Prague: “The fact that at present an armistice reigns means that I must ask every German man and woman to stop any illegal activity in the Werewolf or other such organizations in those territories occupied by the Western Allies because this can only injure our people.”

SS-General Hans-Adolf Prutzmann, who had previously been HSSPF of Riechskommisariat-Ukraine, and could expect no quarter from the victorious Allies, committed suicide in May of 1945.

 1e. Erhard’s possession of Werewolf unit rosters yield a suggestive take on his probable work for CIA/Gehlen “org”/BND. The Werewolves, far from being something that “never materialized,” played a role in the postwar ODESSA networks and a northern version of the Ratlines that provided escape routes for Third Reich alumni.

The Beast Reawakens by Martin A. Lee; Google Books; p. 42.

 . . . . Another major ratline–“ODESSA North”–stretched through Denmark, Sweden and Norway, where an underground network of SS veterans and Werewolves smuggled Nazi renegades over land and sea until they were picked up by ships heading to Spain and Argentina. According to Danish journalist Henrik Kruger, Scandinavian police officials and Argentine diplomats were instrumental in facilitating traffic along this route. They key legmen on the ground were personnel who had undergone Werewolf training toward the end of World War II. Skorzeny was instrumental in selecting and schooling the Werewolves, some of whom later resurfaced as ODESSA operatives in Scandinavia while Scarface orchestrated the escape of Nazis from detention camps. . . .

1f. The German/CIA “stay behind” units that morphed in to the Operation Gladio milieu were essentially an adaptation of the Werewolf strategem. It is highly probable that Werewolf veterans were an actual part of the BDJ/”stay behind” networks.

The Beast Reawakens by Martin A. Lee; Google Books; pp. 55-56.

. . . . The Bund Deutscher Jugend (BDJ)–an elite CIA-trained paramilitary cadre composed largely of Hitler Youth, Wehrmacht and SS personnel–also set its sights on Adenauer’s domestic political opponents. . . . . Back in the 1950s, [German neo-Nazi Friedhelm Busse] and his fellow Bundists were supposed to remain underground and engage in acts of sabotage and resistance in the event of a Soviet invasion, much like Skorzeny’s Werewolves. But instead of focusing on foreign enemies, the leaders of Busse’s “stay behind” units proceeded to draw up a death list that included future Chancellor Willi Brandt and several other leading Social Democrats (West Germany’s main opposition party) who were marked for liquidation in the event of an ill-defined national security emergency. . . .

The BDJ’s cover was blown in October of 1952 when the West German press got wind of the fact that the United States was backing a neo-Nazi death squad. . . . After a brief media storm, West German “stay behind” forces regrouped with help from the Gehlen “Org,” which organized several Werewolf-type “sleeper” nets throughout the Federal Republic on the CIA’s behalf . . . .

1g. Note that BND makes a practice of recruiting from the families of existing members. This is worth contemplating in terms of Juergen Mossack’s activities in Panama.

“Obscur­ing the Past: Intel­li­gence Agency Destroyed Files on For­mer SS Members” by Klaus WiegrefeDer Spiegel; 11/30/2013.

His­to­ri­ans con­duct­ing an inter­nal study of ties between employ­ees of the Ger­man for­eign intel­li­gence agency and the Third Reich have made a shock­ing dis­cov­ery. In 2007, the BND destroyed per­son­nel files of employ­ees who had once been mem­bers of the SS and the Gestapo. . . .

. . . . Now, only one week before Uhrlau’s retire­ment, the com­mis­sion has uncov­ered what is a true his­tor­i­cal scan­dal. The researchers have found that the BND destroyed the per­son­nel files of around 250 BND offi­cials in 2007. The agency has con­firmed that this happened.

The com­mis­sion claims that the destroyed doc­u­ments include papers on peo­ple who were “in sig­nif­i­cant intel­li­gence posi­tions in the SS, the SD (the intel­li­gence agency of the SS and the Nazi Party) or the Gestapo.” They added that some of the indi­vid­u­als had even been inves­ti­gated after 1945 for pos­si­ble war crimes. His­to­rian Klaus-Dietmar Henke, spokesman for the com­mis­sion, told SPIEGEL ONLINE he was “some­what stunned” by the occurrence.

Did Agency Employ­ees Seek to Sab­o­tage Investigation? . . .

. . . . It is no secret that some peo­ple within the BND are unhappy about Uhrlau’s project. Some employ­ees are fun­da­men­tally opposed to the agency shed­ding light on its own past. Oth­ers are wor­ried about the rep­u­ta­tions of their own fam­i­lies — for many years, the BND delib­er­ately recruited new staff from among the rel­a­tives of exist­ing BND employees. . . .

2a. Although the media have focused–predictably–on associates of Vladimir Putin and Chinese president Xi, other clients of Mossack Fonseca include Imee Marcos, daughter of the late dictator Ferdinand Marcos and Carmen Thyssen-Bornemisza, daughter of Heinrich Thyssen-Bornemisza, a major associate of the remarkable and deadly Bormann capital network.

The Marcos fortune has been “offshored” by Imee through Mossack Fonseca. As we have seen in so many of our discussions with Sterling and Peggy Seagrave (authors of Gold Warriors) the Marcos fortune derived largely from the Golden Lily loot.

“Offshore Leaks: Vast Web of Tax Evasion Exposed” by Marc Pitzke; Der Spiegel; 4/04/2016.

…The list also includes Imee Marcos, the governor of the Philippines’ Ilocos Norte province and the eldest daughter of former dictator Ferdinand Marcos. She is believed to hold secret trusts on the British Virgin Islands. ICIJ reports that Filipino authorities now want to investigate whether some of the billions in assets Marcos is believed to have taken out of the country are parked in the tax haven . . . .

….The list of names from Spain includes baroness and art collector Carmen Thyssen-Bornemisza, who is identified in the documents as using a company based in the Cook Islands to buy artwork through auction houses like Sotheby’s and Christie’s. According to ICIJ, her attorneys acknowledged that she gains tax benefits by holding ownership of her art offshore, “but stressed that she uses tax havens primarily because they give her ‘maximum flexibility’ when she moves art from country to country . . . .

2b. Still more about the role of Mossack Fonseca in “offshoring” art–particularly stolen art. Note the case of “The Seated Man with a Cane.” Note, also, the use of bearer bonds (or “bearer shares”) that were used for one of the shell companies created by Mossack Fonseca. Bearer bonds were used liberally by the Bormann network.

“How the Panama Papers Exposed Secrecy in the Art Market” by Jake Bernstein; Vice News; 4/7/2016.

After a chance discovery, the grandson of a Jewish art dealer learned that a valuable painting he believed the Nazis had looted from his grandfather might now be in the hands of one of the art world’s most influential families. The discovery launched a court case that leads back to the Panama Papers and illustrates the connection between the international trade in art and offshore tax havens.

The trove of more than 11 million documents from the internal files of Mossack Fonseca, a Panamanian law firm that specializes in building corporate structures that can be used to conceal assets, may be the biggest leak in history.

Dating from 1977 through 2015 and implicating people close to many political and business leaders worldwide, the files also include the largest known cache of inside information on the links between the art market and the shady world of offshore corporations.

The Panama records paint a picture of a thinly regulated industry where anonymity is regularly used to shield all kinds of questionable behavior.

Related: The VICE News Guide to the Panama Papers

The work at the center of the controversy, by Italian artist Amedeo Modigliani, is known as “Seated Man with a Cane.” Modigliani, a young, impoverished alcoholic, died of tuberculosis almost a century ago; his paintings today sell for as much as $170 million. The portrait of a dapper man with a mustache perched on a chair, hands resting upon his walking stick, may be worth $25 million.

Investigators traced the painting to a clan of billionaires that bought the work at auction in 1996. Lawyers working for the grandson, Philippe Maestracci, sent a letter to the Nahmad Gallery in New York, stating that the painting belonged to the grandson, who was entitled to its return. They requested a meeting to discuss the matter. The gallery failed to respond, according to court documents. The grandson sued. Four years later, the two sides’ lawyers are still fighting it out.

The Nahmads have insisted in federal and state court in New York that the family does not possess the Modigliani. An offshore company called International Art Center, registered by a little-known Panamanian law firm, does.

But the Panama Papers — secret records obtained by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and other media partners — suggest that the statement is a legal sleight of hand designed to obscure the true owners of the painting.

The Nahmad family has controlled the Panama-based company, International Art Center, for more than 20 years, the records show. It is an important part of the family’s art business. David Nahmad, the family leader, has been the company’s sole owner since January 2014.

When confronted with documentatation that showed the Nahmads owned International Art Center, David Nahmad’s lawyer, Richard Golub, said “whoever owns IAC is irrelevant. The main thing is what are the issues in the case, and can the plaintiff prove them?”

The central question, Golub said, was whether the grandson can demonstrate this specific painting was stolen from his grandfather. Despite years of battling in court, it’s an issue that has received scant attention from a judge, since both sides have been fighting over who currently owns the painting.

Mossack Fonseca not only helped the Nahmads establish International Art Center in 1995, it provided many of its other clients with the tools to secretly carry out high-end art transactions worldwide for works by artists such as Van Gogh, Rembrandt, Chagall, Matisse, Basquiat and Warhol.

Other well-known art collectors with companies registered through Mossack Fonseca include Spain’s Thyssen-Bornemisza clan, Chinese entertainment magnate Wang Zhongjun and Picasso’s granddaughter, Marina Ruiz-Picasso.

Zhongjun did not respond to a request for comment. Ruiz-Picasso declined to comment. Brojia Thyssen, through a lawyer, acknowledged having an offshore company but said it was fully declared with Spanish tax authorities.

The firm’s records mention enough art to fill a small museum. Along with crucial new evidence in the legal battle over the Modigliani, there are clues in Mossack Fonseca’s files to the mystery of the missing masterpieces of a Greek shipping magnate and previously unknown details behind one of the 20th century’s most famous modern art auctions.

The documents reveal sellers and buyers of art using the same dark corners of the global financial system as dictators, politicians, fraudsters and others who benefit from the anonymity these secrecy zones offer.

In recent years, as art prices have grown dramatically, transactions are often obscured by the use of offshore companies, front men, free trade zones, manipulated auctions and private sales. While secrecy may be exploited legally to avoid publicity, limit legal exposure or ease operations across borders, it can also be employed for nefarious purposes, such as evading taxes and hiding shady ownership histories. Since art is easily transportable, expensive, and poorly regulated, authorities fear that it is often used for money laundering.

Boom times
The current art market boom — and its connection to the secrecy zones within the global financial system — offers more evidence of the spectacular rise of the super rich. Art has become a valuable asset for a global elite eager to stash their money in safe and secluded harbors. In 2015, sales of art exceeded $63.8 billion, according to the trade publication Art Market Report, with top-dollar art experiencing the greatest growth.

The total wealth allocated to art by billionaires worldwide was estimated to be $32.6 billion in 2013, according to data from research firm Wealth-X

“The single best driver of the art market is accumulated wealth,” says Michael Moses of Beautiful Asset Advisors, which tracks art sales. “If high-end wealth is increasing at a faster rate than any other kind of wealth — which it is — these people have excess money to spend on art.”

Roughly half of art transactions are private, strictly between sellers and buyers, Art Market Report estimates. There is little public information about these sales. The rest are done through public auctions, which provide some transparency in regards to price but usually still allow buyers and sellers to remain a mystery, Moses says.

When high-dollar art changes hands, it often lands in a free trade zone known as a freeport. As long as art is housed in the freeport, owners pay no import taxes or duties. Critics worry the freeport system can be used to dodge taxation or launder money, since precise inventories and transactions are not tracked. According to the international professional services firm Deloitte, 42 percent of art collectors it surveyed said they would likely use a freeport. The oldest freeport, with the most art stored, is in Geneva. Its complex of storage facilities is said to contain enough treasure to rival any museum in the world.

Natural Le Coultre, a company owned by Yves Bouvier, rents almost a quarter of the space in the Geneva freeport. Bouvier is also a primary owner of other freeports in Luxembourg and Singapore and a consultant to a facility under construction in Beijing. These interests have earned him the title “the King of the Freeports.”

But it is Bouvier’s activities as a middleman in private deals that have made him the talk of the art world and a target for civil suits. Russian billionaire Dmitry Rybolovlev has filed complaints against Bouvier in Monaco, Paris, Hong Kong and Singapore, accusing him of fraudulently marking up the prices of paintings before selling them. After reviewing the claims, a judge in Singapore lifted a freeze on Bouvier’s assets and a judge in Hong Kong followed suit. Bouvier has strongly denied the charges.

“It was like a steroid injection to the market.”

Not surprisingly, given the number of billionaires and art dealers who use Mossack Fonseca’s services, both men are clients of the firm.

The law firm’s records show at least five companies connected to Bouvier, although none appear to be related to the Rybolovlev case.

Bouvier’s antagonist, Rybolovlev, has two.

Rybolovlev declined to comment. A representative for Bouvier said his client used offshore companies for well-established legal purposes.

The auction game
Many trace the art market’s wild enthusiasm for modern art to a sale on a Monday evening in November 1997. Held at Christie’s in New York, the auction of the Victor and Sally Ganz collection produced record valuations for paintings and proved a milestone in the transformation of art into a global commodity.

“All of a sudden the game was afoot with the Ganz sale in a way that hadn’t happened before,” says Todd Levin, director of Levin Art Group, a New York-based art advisory firm. “It was like a steroid injection to the market.”

The full story behind the Ganz auction has never been revealed. The leaked documents show it involved hidden interests and one of the art world’s favorite offshore middlemen, Mossack Fonseca.

The Ganzes were collectors of works by Pablo Picasso, early champions of Frank Stella, and friends and patrons of Jasper Johns, Robert Rauschenberg and Eva Hesse. After the couple died, their children were forced to sell a collection that had adorned the walls of their childhood home.

It had cost the Ganzes about $2 million over 50 years to assemble. In one evening, the collection sold for a record $206.5 million.

Unknown until now is that the Ganz heirs appear to have sold the collection months before the auction. The key player in the transaction was a corporation based on Niue, a speck of an island in the South Pacific. The company was named Simsbury International Corp.

Simsbury International appears to have been created solely for the Ganz transaction. It was incorporated in April 1997. A month later it purchased the collection. Simsbury’s registered agent was Mossack Fonseca. Employees of the Panamanian law firm served as Simsbury International’s “nominee” directors, stand-ins who controlled the company on paper but who exercised no real authority over its activities. These paper directors signed agreements on the company’s behalf with a bank, an auction house and an art shipping company.

Ownership of the company was held through “bearer shares.” These are simply certificates that allow whoever holds the paper to anonymously transfer or claim their value. Today, they are banned in many countries because of their usefulness to those who want to engage in tax evasion and money laundering.

In a deal struck on May 2, 1997, Simsbury International bought the most valuable Ganz paintings for $168 million from Spink & Son, the London auction house then owned by Christie’s, according to the leaked documents. The exact nature of the arrangement between the Ganz family and Christie’s is not clear from the documents.

A representative of the Ganz family declined to answer questions from ICIJ about the specific details of the auction transaction.

The sale came with a side deal. If the auction for the works brought a higher price, the owner of Simsbury International and Spink & Son would share in the difference.

The man who had power of attorney for Simsbury, and thus exercised control over the company and its bank account, was British billionaire Joseph Lewis. Then the richest man in England, Lewis made his fortune betting on currency movements. He was also Christie’s largest shareholder.

The Ganz catalog stated “Christie’s has a direct financial interest in all property in this sale,” but the terms of that interest were never explained.

Lewis had made a bet that would pay off in multiple ways.

The Ganz auction would help turn 1997 into one of Christie’s biggest years for sales up until then. The auctioneer raked in more than $2 billion that year.

Lewis did not respond to a request for comment.

One of the most expensive paintings sold at the Ganz auction was Picasso’s “Women of Algiers, version O.” It’s one of a celebrated series of fifteen paintings Picasso made in the mid-1950s. In addition to “O,” the Ganz auction featured versions “M,” “H,” and “K.”

Bidding on the works were members of the billionaire Nahmad clan. David Nahmad went home with version “H,” adding it to what is considered one of the largest collections of Picassos in private hands.

An art dynasty
The Nahmads began as a banking dynasty of Sephardic Jews from Aleppo, Syria. In 1948, Hillel Nahmad relocated his wife and eight children to Beirut.

Three of his sons — Giuseppe, David and Ezra — eventually moved to Milan and, by the early 1960s, had become active art dealers. Giuseppe, the patriarch of the family, had a taste for expensive sports cars and, according to his brother David, once dated Rita Hayworth. He also pioneered treating the art business like a stock market, buying and holding paintings until exactly the right time to sell to maximize profit.

He died in 2012. David assumed the mantle of family leader. He and his older brother Ezra both named their sons Hillel after their grandfather. Both go by Helly. Together the four continue the family business.

The two surviving brothers are worth a combined $3.3 billion, according to Forbes. They live in Monaco, among other locales. In addition to currency trading and art dealing, David Nahmad is also a championship backgammon player. Each has a namesake gallery. Ezra’s son has the Helly Nahmad Gallery in London and David’s offspring, an identically named one in New York.

The Mossack Fonseca records indicate the Nahmads were early adopters of the benefits of offshoring art.

Giuseppe Nahmad registered International Art Center S.A. in 1995 through the Swiss bank UBS and the Geneva office of Mossack Fonseca. It may have existed in another form prior to that date. A document in the Mossack Fonseca files mentions International Art Center acquiring the pastel “Danseuses” by Edgar Degas in October 1989.

The Nahmads’ business, which stretches across jurisdictions, is tailor-made for offshoring. With the Nahmad principals based in three countries, galleries on opposite sides of the Atlantic Ocean and most of the paintings stashed in Switzerland, the family requires the kind of legal siloing made possible by offshore companies.

International Art Center is not the family’s only corporate entity with Mossack Fonseca. Giuseppe Nahmad also created Swinton International Ltd., which was registered in the British Virgin Islands in August 1992.

The offshore entities are interconnected, their use a family affair. Giuseppe Nahmad had power of attorney over International Art Center’s UBS bank account as early as 1995. David and Ezra could also sign for the company’s bank account at UBS. For a company bank account with Citibank two years later, Giuseppe co-signed with his brother Ezra Nahmad, the documents show.

In 1995, Swinton International authorized David Nahmad to negotiate the sale of five paintings it owned — an oil on panel by Picasso, “Danseuses” by Degas, two oils on canvas by Henri Matisse and an oil on canvas by Raoul Dufy. Some of the paintings subsequently went on auction at Sotheby’s, identified as being from a “private collection.” Two of the paintings had been the property of International Art Center.

International Art Center’s ownership was initially held in bearer shares, making it impossible to tell who actually owned it. In 2001, a board resolution by Mossack Fonseca nominee directors created 100 shares in the company and granted them to Guiseppe. In 2008, those hundred shares were reassigned in equal portions to David and Ezra Nahmad. A year later, Ezra split his shares with his son Hillel. David did not do the same with his son.

“If they need justification, you know what I mean? You just be like, Oh yeah, I bought a, you know, Picasso drawing or something.”

A hint of tension between David and his son surfaced in 2007, in a rare profile of the family in Forbes. The article quoted David as saying, while “frowning,” that “My son likes publicity a lot. I don’t like publicity.”

His son Helly’s extracurricular activities could have made him an unsuitable shareholder of International Art Center. Like his uncle Giuseppe, Helly had big appetites. The tabloids charted his exploits: models for girlfriends, a floor of multi-million dollar apartments in Trump Tower, movie star pals and high-stakes gambling. None of that was likely a problem until the US Attorney for the Southern District of New York, Preet Bharara, secured an indictment against him in April 2013 for his leadership role in an alleged $100 million gambling and money-laundering ring with ties to Russian gangsters.

Wiretaps in the case caught him discussing how his family art business could be used to hide money. “[S]ometimes a bank needs a justification for a wire, right?” he said, according to a conversation from March 2012, quoted in the government’s sentencing memorandum. “We can just say, Ohh, you are buying a painting. If they need justification, you know what I mean? You just be like, Oh yeah, I bought a, you know, Picasso drawing or something.”

It was never proven in court that the behavior discussed took place. The conversation did not factor into the ultimate charge and the Nahmads’ lawyer said in an interview it has nothing to do with the Modigliani case.

Helly Nahmad pleaded guilty to operating an illegal gambling business in November 2013. A judge sentenced him to a year and a day in prison. He also agreed to forfeit $6.4 million and relinquish rights to a painting by Raoul Dufy. He served five months.

Missing art
The Nahmads are not the only prominent art collecting clan that has found their offshore holdings embroiled in legal actions.

The Mossack Fonseca data provides new insight into a legal dispute involving the Goulandris family, a Greek shipping dynasty that is in the middle of a fight over what happened to 83 missing art masterpieces.

“All told this is about $3 billion worth of paintings,” Ezra Chowaiki, a gallery owner who is helping to bankroll one of the legal claims, told ICIJ in an interview. “It could be the largest collection of missing paintings in history.”

Two lawsuits and a criminal investigation are underway in Lausanne, Switzerland, to try to determine the whereabouts and ownership of the art collection. The cases feature a sprawling and wealthy family at war with itself, shell companies based in Panama, allegations of a forged document and museum-quality paintings by the likes of Van Gogh, Matisse and Picasso.

Some of the paintings have been sold. The seller did not want the history known. In a $20 million sales agreement found in the Mossack Fonseca files for one of the Goulandris paintings, Van Gogh’s “Nature Morte aux Oranges,” there is a section about confidentiality. It forbids revealing “the identity of the parties to this Agreement (including the identity of the Seller’s sole shareholder)” and “any information or documentation pertaining to the Provenance of the Work and the chain of title.”

The art once belonged to Greek shipping tycoon Basil Goulandris. In 1994, Goulandris died of Parkinson’s disease. After his widow, Elise, died in 2000, her heirs learned the couple’s massive art collection had changed hands years earlier. A Panamanian company called Wilton Trading S.A. owned the paintings.

In 1985, according to Basil’s nephew Peter J. Goulandris, Basil sold the entire collection of 83 paintings for the extraordinarily low price of $31.7 million dollars to Wilton Trading. Despite the sale, the paintings never left the couple’s possession. During this period, Basil and Elise Goulandris lent the artwork to museums and sold pieces to dealers with the provenance listed as if the artwork belonged to them.

Much of what is known about Wilton Trading comes from the court cases in Switzerland. It was created in 1981 but didn’t have directors until 1995, ten years after the sales agreement was supposedly signed. According to a Swiss prosecutor, the paper on which the sales agreement is inked didn’t exist in 1985, and no one has been able to prove that any money changed hands.

Peter J. Goulandris told a Swiss court that his late mother, Basil’s sister-in-law Maria Goulandris, was the owner of Wilton Trading.

Through his lawyer, Peter Goulandris declined to comment.

Elise died without offspring. Her niece Aspasia Zaimis believes she deserves a share of the 83 paintings and is suing the executor of Elise’s will.

In November 2004, anonymous companies set up by Mossack Fonseca started the process of selling some of the Goulandris paintings that Wilton Trading had kept.

Early the next year, at a Sotheby’s auction in London, a company called Tricornio Holdings sold a painting by Pierre Bonnard called “Dans le cabinet de toilette.” Another company, Heredia Holdings, signed an agreement with Sotheby’s to sell a painting by Marc Chagall, “Les Comédiens.” A third company, Talara Holdings, put up for auction a Chagall painting called “Le Violoniste Bleu.”

Around the same time, the 1888 Van Gogh depiction of a basket of oranges went to California direct marketing tycoon Greg Renker and his wife Stacey in a private sale. The seller was a company called Jacob Portfolio Incorporated.

Renker did not respond to a request for comment.

All four companies were registered just before the transactions and shuttered shortly afterwards, leaving no public trace of who was behind them. The documents now reveal that all four shared a mysterious owner: Marie Voridis.

One of the transactions provides a clue to the identity of Marie Voridis. On October 22, 2004, Voridis transferred all rights to an oil painting by Pierre-Auguste Renoir known in English as “the Seamstress” to Talara Holdings. A few weeks later, Talara Holdings transferred the painting back to Voridis.

In September 2005, a Greek fashion magazine featured the opulent New York apartment of a Greek socialite, Doda Voridis, the sister of Basil Goulandris. Masterpieces by well-known artists decorated the Upper East Side apartment of Voridis, who died in December 2015. In the gossip columns she was always known as Doda but her real name is Marie. Hanging above a handsome armoire in one photo was Renoir’s “the Seamstress.”

War and treasure

The controversy over Modigliani’s “Seated Man with a Cane” began in a time when the fog of war provided the kind of concealment the offshore world offers today. Oscar Stettiner, the Jewish dealer who is alleged to have been the original owner of the painting, fled Paris in 1939, in advance of the Nazis, leaving behind his art collection.

After the city fell, the Germans seized the collection and appointed a French “temporary administrator,” who auctioned off the painting for the benefit of the Nazis, according to legal filings. In October 1944, a U.S. military officer bought the Modigliani in a café for 25,000 francs, according to court documents.

In 1946, Stettiner filed a claim in France to begin the process of recovering the painting, court documents filed on behalf of his grandson say. He died two years later, with his petition still pending.

The Nahmad’s lawyer Richard Golub disputes this narrative. He questions whether Stettiner ever owned the painting.

The Modigliani stayed hidden within a private collection where it stayed hidden until 1996, when International Art Center bought it at Christie’s in London for $3.2 million, according to documents filed in New York courts. The Helly Nahmad Gallery exhibited the painting in London in 1998 and at the Musee d’Art Moderne in Paris in 1999. Six years later it was part of a Modigliani exhibit at the Helly Nahmad Gallery in New York.

Toronto-based Mondex Corp., a firm that specializes in recovering Nazi-looted art, discovered the painting’s alleged provenance by accident while looking through files in a French ministry. The company helped initiate the legal battle to return it to Philippe Maestracci, Oscar Stettiner’s grandson. Mondex does not disclose its fee for this service.

On Feb. 11, 2015, the Nahmad’s lawyer in the Maestracci case in New York, Nehemiah Glanc, wrote an email to International Art Center’s attorney in Geneva. Glanc was on record as the lawyer for IAC, but he needed some key facts about the company before he could proceed, the leaked records obtained by ICIJ show.

“Please advise as soon as possible as to who is authorized to sign on behalf of IAC,” he wrote in an email.

If the Nahmads had signed the documents as the owners of International Art Center, they would have likely lost the legal protection the company provided.

The attorney in Geneva put Glanc in touch with Anaïs Di Nardo Di Maio in Mossack Fonseca’s Geneva office. Di Nardo could get the signatures of the Mossack Fonseca nominee directors in Panama as long as Glanc’s clients would pay for it. He agreed.

As the case progressed, emails flew back and forth between Glanc and Mossack Fonseca, the leaked documents show. Every time a motion came from International Art Center, the stand-in directors had to sign.

In September 2015, in an austere courtroom in New York, state Supreme Court Judge Eileen Bransten dismissed the Maestracci case. Among her findings, the plaintiffs had failed to properly serve the complaint on International Art Center because they had served papers at the Nahmad Gallery in New York instead of going to Panama. She also ruled that a court-appointed administrator, not Maestracci, was the proper plaintiff. Two months later, the administrator re-filed the case in state Supreme Court in New York as plaintiff.

The new complaint against the Nahmads made another effort to link the family to ownership of International Art Center, which it described as an alter ego of the family enterprise “in a manner so as to confuse and conceal their identities, and hide revenues generated” from the Nahmad family’s art dealing business.

As the case continues on, Modigliani’s 1918 portrait, “Seated Man with a Cane,” is tucked away in the Geneva freeport in Switzerland, another treasure hidden from view.

3a. It is interesting and revealing that Ken Silverstein broke the Mossack Fonseca story while working for First Look Media, Citizen Olmidyar’s contribution to journalism. First Look would not publish the interview! Nonetheless, when Silverstein broke the story with Vice News Omidyar demanded payment for the story! Pterrafractyl has commented on this as follows:

Keep in mind that Ken Sil­ver­stein was actu­ally work­ing for Pierre Omidyar’s First Look Media at the time the arti­cle was pub­lished, it was a lit­tle odd for a First Look reporter’s story to show up in Vice. But now we have a bet­ter idea of why that hap­pened: When Mark Ames raised this wrin­kle to Sil­ver­stein in a tweet, here’s Silverstein’s reply:

Ken Sil­ver­stein ?@KenSilverstein1
@KenSilverstein1

.@MarkAmesExiledFYI @pierre wouldn’t pub story but demanded my fee from VICE. Oh well, at least I’m not in Moscow.

6:46 PM — 3 Apr 2016

So Omid­yar blocked the block­buster story, the story gets pub­lished by Sil­ver­stein in Vice any­way, and Sil­ver­stein leaves First Look a cou­ple months later, call­ing it the place where ‘jour­nal­ism goes to die’. There’s no doubt quite a bit hid­ing under that rock too.

3b. Mossack Fonseca–appropriately already being journalistically abbreviated as “MF” in the media–performs many of its machinations through MF Corporate Services in Nevada. The primary operative of the organization in MF Corporate Services is a native Chilean named Patricia Amunategui. Her Facebook “likes” are indicative, numbering the Dalai Lama, the Tea Party and Chilean dictator Augusto Pinochet (the Pinochet likes are HERE–clearly a Pinochet love-fest.

“This Shady Bank Keeps Helping Banks and Oligarchs Launder Money” by Ken Silverstein; Vice; 3/13/2015.

As I reported after an extensive investigation that included trips to Panama and Las Vegas—where Mossack Fonseca uses a closely-linked firm, MF Corporate Services, to help its clients set up bogus shell companies—the Panamanian law firm has a long list of shady prior clients. . . .

. . . . Incidentally, the main employee of MF Corporate Services is Patricia Amunategui, a native Chilean who previously worked as a casino cocktail waitress and, based on her Facebook page, enjoys yoga, spiritualism, and hiking, and admires the Dalai Lama, the Tea Party, and former Chilean dictator Augusto Pinochet. . . .

4. Amunategui’s Facebook “likes” include Mitt Romney, Sarah Palin and Americans for Prosperity, a Koch-brothers front organization. No surprise there.

Another of Amunategui’s Facebook “likes” is Paramahansa Yogananda, the founder of the Self-Realization Foundation. Like so many New-Age gurus, he expressed admiration for fascism.

“Yogananda Praising Fascism in the 30s;” The Gold Scales

The average man cannot think clearly . . . He needs the master mind of a Dictator in order to think right and do right.” – Yogananda. “Interview”. East West Magazine, February 1934, p. 25.

“A master brain like that of Mussolini does more good than millions of social organizations of group intelligence.” – Yogananda. “Interview, East-West, February 1934, p. 3. [◦Download]

“What the heart is full of, the mouth overflows with.” On this page are some Yogananda stands from the first half of the 1930s. He was about 40 years old then. He is quoted verbatim from his own magazine. Learn about little skeletons in the closet and hot potatoes for his fellowship. [Emphasises below are added by me. – T.K.]

Hitler is to be admired for leaving the League of Nations because peace can never be attained by the victor and vanquished attitude, but on a basis of equality and brotherhood. Instead of preventing Hitler from having equal armament with other nations, the other nations should reduce the armaments to the level of Germany, then the millions of dollars that are thrown away on idle battleships could be used for national or international prosperity. America, France, and Great Britain should reduce their armaments first, and thereby destroy the desire of Japan, Russia, and Germany to become equally armed. An insulted, snubbed Germany, if it gets away from the uplifting guidance of Hitler, may join Russia and make her a more powerful enemy of France and so on. The Allies must reduce their own armaments first, and then they will find out that the example speaks louder than words.

[Swami Yogananda. “Christmas message to the Nations of the Earth”. East-West Magazine, December, 1933, p. 25]

The next year, when Yogananda toured Germany, he tried to have an interview with Hitler. Hitler declined. Also, Hitler desired to be not just equally armed. And in Yogananda’s fellowship they say they find no faults with his guidelines, and that his wisdom is flawless (!). So do they admire Hitler in public? No way. Does the fellowship or all sorts of Yogananda followers adhere to guru dictatorship, calling that spade a spade? Maybe, and maybe not. You may hear good tales of black magic like:

[Yogananda] said that he even put into Hitler’s mind, later, during WW II, the thought to invade Russia and thus hasten his own demise and the end of the war.

[You may ask: “Why end a war by escalating it horribly? Has someone gone out of his mind?]

amanda.org/ask/nagayonda-opinions-about-the-quazis/”> [The content on the reference page I have got, may get rather embarrassing for the author of it, so I won’t give its address away very easily. I have saved a copy of it in case I should need it, though.]

If the tale be true, Yogananda murkily invaded Hitler’s mind and violated his free will and caused massacres of millions. It seems like a better idea of Yogananda to put into Hitler’s mind just to end the war – to influence Hitler to make peace, not war. Alternatively, if that did not work, causing one bad guy to kill himself might be a lot smarter than causing millions of victims to be maimed and killed.

Now we have been told by Yogananda’s follower Kriyananda and one more clergyman in Kriyananda’s line, that millions could have a good reason to grumble over Yogananda: “He caused Hitler to enlarge the war so that millions got wounded and killed if that be true!” Should we then blame Yogananda for “the eastern half of World War 2”?

I won’t tell you what to do; I make do with “One has to hear a lot before one’s ears fall off (Norwegian proverb)”. Tales without fair evidence is not factual evidence.

The authoritarianism of Yogananda should not remain hidden to young and ardent ones today. When we get engulfed by cult thinking and get humanism-poor*, it could do almost irrepairable harm. Better watch out.

Some Interview

In East-West of February 1934, Volume 6, No. 4, there is an interview with Swami Yogananda. [◦Download]

. . . Answer: We may stumble on the way, we may slip backward a little, but being endowed with Divine Intelligence, mentally we shall be moving constantly toward the goal of Truth and understanding. . . .

Individual national selfishness must be sacrificed for the greater patriotism of international common well-being. Then it will be found that real international upliftment includes the national upliftment.

Question: Individualism and socialism are conflicting philosophies in the modern world. Which is more likely to prevail in the future?

Answer: Individual perfection and social upliftment are interdependent. A master brain like that of Mussolini does more good than millions of social organizations of group intelligence. Yet, {p. 3] if many persons in a group should develop the brain power of a Mussolini, they would be greater than the individual Mussolini.

Socialism, consisting of evolved individuals, will prevail in the end, but as long as people are not highly evolved, individualism will keep coming to the surface. Individualism exists only for the ushering in of Spiritual socialism . . .

. . . . [Swami Yogananda. “An Interview”. East West Magazine, February 1934, Vol 6, p. 3 and 25. Emphasis added] . . .

 

 

Discussion

One comment for “FTR #900 The Panama Papers and the Underground Reich”

  1. The EU’s official investigation into the ‘Panama Papers’ revelation is getting underway which means it’s time to get ready to pretend that this won’t be an underwhelming investigation like all the other investigations of this nature:

    EurActiv.de

    Panama Papers parliament committee keen to avoid LuxLeaks mistakes

    By Daniel Mützel | | Translated By Samuel Morgan

    Jul 12, 2016 (updated: Jul 12, 2016)

    The initial outrage provoked by the Panama Papers is over. Now that the dust has settled, a European Parliament committee will examine the case in detail. EurActiv Germany reports.

    A few months ago, two and a half terabytes of leaked data threatened to take down some of the most powerful companies and individuals on the planet. The documents that were made public shone a spotlight on the intricacies of legal and illegal transactions, made by, among others, FIFA officials, heads of government, drug smugglers and banks, which picked Panama as their hideaway for their financial transactions.

    It is one of the biggest financial scandals in recent history, but now the EU has begun the process of picking apart the evidence and translating it into real policy. On Tuesday (12 July), the committee tasked with carrying out this task, given the moniker PANA, met for its first meeting.

    PANA’s official mandate is to investigate whether EU law was broken by anyone mentioned in the Panama Papers, including tax evasion, tax avoidance and money laundering. This will mean a certain amount of self-examination, as it will have to be firmly established what is and what is not allowed under the EU’s mass of tax law. Additionally, the committee will have to establish which member states have not transposed EU regulations into national law, thus allowing tax fugitives to carry out their illicit practices.

    The committee is composed of 65 members and they have been given 12 months to carry out their work. If needed, a three month extension can be granted up to two times. In the end, a final report will be published in order to summarise the committee’s findings.

    There is concern that PANA could ultimately end up a toothless tiger like its predecessor, the LuxLeaks committee. However, there seems to be a consensus among its members, at least, that the stakes are much higher this time and the price of failure even greater.

    Freie Demokratische MEP Michael Theurer (ALDE) spoke unusually openly about the case, before the committee’s work had even started. In his view, there have been “breaches of law” and “enforcement deficits” on the part of the European Commission and the member states. This is why Theurer, a member of the committee, believes it is the best way to approach the matter and conduct the fight against “tax evasion and money laundering”.

    Although the Parliament’s committee has a narrower mandate than its LuxLeaks forebear, it does have more power. It will be able to inspect files related to the issue and call high-ranking members of the Commission and member state governments to its hearings, which will be mandatory, as well as having access to robust instruments. The LuxLeaks committee, according to experts, suffered because its questioning of concerned parties was weak.

    Die Linke MEP Fabio de Masi (GUE/NGL), PANA’s deputy chairman went one step further than his colleague, Theurer, saying that “it isn’t about Panama, it’s about everything from organised crime to terrorist financing in the heart of the EU”.

    Instead of repeating the mistakes of the past, De Masi called for the committee to put the “thumbscrews” on organised crime. He also called for the committee to go beyond just scrutinising European tax law and to hold the “political backers of offshore business” to account.

    “PANA’s official mandate is to investigate whether EU law was broken by anyone mentioned in the Panama Papers, including tax evasion, tax avoidance and money laundering. This will mean a certain amount of self-examination, as it will have to be firmly established what is and what is not allowed under the EU’s mass of tax law. Additionally, the committee will have to establish which member states have not transposed EU regulations into national law, thus allowing tax fugitives to carry out their illicit practices.

    It sounds like the EU’s investigators are tasked in part with investigating which EU nations may have played a role in facilitating the money-laundering activities associated with Panama Papers by not implementing adequate EU money-laundering. Uh oh. When that’s part of the task at hand, you can see why there might be concerns about repeating Luxleaks committee:

    EurActiv.fr

    Parliament despondent after failure of Luxleaks committee

    By Aline Robert | | Translated By Samuel White

    Feb 11, 2015 (updated: Feb 18, 2015)

    The European Parliament’s refusal to launch a committee of inquiry on tax evasion has been a hard pill to swallow for many MEPs, who have been left questioning the role of their institution alongside the new Commission. EurActiv France reports.

    As the latest Swissleaks revelations raise the pressure to act on tax evasion, Members of the European Parliament are becoming increasingly frustrated by the institution’s impotence.

    Last week, the Parliament refused to open a committee of inquiry into the Luxleaks scandal for legal reasons. The Conference of the Presidents decided instead that a special committee would have sufficient power to address the subject. This will be put to a plenary vote on Thursday 12 February.

    Manfred Weber, the President of the European Parliament’s EPP group, told EurActiv that the special committee was the only option. “You know that the committee of inquiry was not possible for legal reasons, the mandate delivered by the Greens was too flimsy and vague. No concrete cases of tax evasion would have been brought to the table. We want an inquiry that can bring real transparency to the tax affairs of Google, Amazon, etc.,” the German MEP explained. He added that it was important to keep up the pressure on member states, as real power over the subject resides with them.

    But the general feeling is that this pressure will be less effective with a simple special committee, which will not have access to national documents, unlike a committee of inquiry. Only three committees of inquiry have ever been opened since the first legislature of the European Parliament in 1979: on the Community Transit Regime, the Equitable Life Assurance Society and mad cow disease.

    Abuse of power case against Martin Schulz?

    The refusal of this “fourth” committee has added to the frustrations of the Greens, who initiated the procedure.

    “Every time the European Parliament has a sniff of some real power, it takes a step back! If it’s not tax evasion, it’s the budget. This turns the Parliament into a doormat for the heads of state to wipe their feet on,’ said Philippe Lamberts, the President of the Greens in the European Parliament.

    His group is considering taking Parliament President Martin Schulz to the Court of Justice of the EU for abuse of power. “There was no debate over the committee of inquiry on tax evasion in the Conference of the Presidents. Martin Schulz alone decided that the committee of inquiry should not be created for legal reasons. We are witnessing the total submission of the Socialists to the EPP,” the Belgian MEP said.

    The 13 members of the French Socialist party delegation in the European Parliament had signed the motion for a committee of inquiry. Pervenche Berès, the head of the delegation, said “If the Greens had come to see us about requesting a committee of inquiry, it would almost certainly have seen the light of day.”

    A “politically irresponsible” refusal

    The Parliament’s reticence on the issue has upset some Socialists. Eric Andrieu called the refusal “politically irresponsible”. He said, “I think the European Institutions should behave in a more mature way in light of what happened in Doubs this weekend.” This remark struck a chord with the Spanish radical left party Podemos, which plans to collaborate with Hervé Falciani, the whistle-blower that handed the HSBC files to the French tax inspectors.

    “We will work with Mr. Falciani on tax havens. We are all being robbed and we must act against this attack on democracy,” said the leader of Podemos, Pablo Iglesias, currently campaigning for the Spanish elections in May.

    A “puppet” parliament?

    The evident discomfort of the elected representatives over the issue of the committee of inquiry reflects a more general feeling that the Parliament is being sidelined by the new Commission.

    One MEP said “As a former Prime Minister, Jean-Claude Juncker is inclined to give greater power to the European Council.”

    Members have complained that their powers are undermined by the current unofficial, undemocratic structure of governance, which takes the form of a weekly meeting between Jean-Claude Juncker, Martin Schulz, Manfred Weber, Guy Verhostadt and Gianni Pitella.

    “His group is considering taking Parliament President Martin Schulz to the Court of Justice of the EU for abuse of power. “There was no debate over the committee of inquiry on tax evasion in the Conference of the Presidents. Martin Schulz alone decided that the committee of inquiry should not be created for legal reasons. We are witnessing the total submission of the Socialists to the EPP,” the Belgian MEP said.”

    That’s how the Belgian Green MEP saw the decision to use a weaker investigation with fewer inquiry powers for the Luxleaks tax-evasion investigation: “We are witnessing the total submission of the Socialists to the EPP”. And don’t forget that EU Commission President Jean-Claude Juncker was president of Luxembourg during when the nation turned itself into an international financial haven.

    So when an MEP charges the Socialists with submitting to the right-wing EPP, keep in mind that the watering down of the Luxleaks investigation into a toothless inquiry was, in part, an attempt to protect the newly elected right-wing European Commission President. And as was made clear in September, when Juncker’s office published a “missing page” from a 1997 Luxembourg government report made shortly after Juncker took office on the potential consequences that made it clear that tax authorities were to play a role in arranging “sweetheart” tax deals with multinational corporations, Juncker was going to need all the protection he could get:

    The Telegraph

    EU’s Juncker releases secret ‘Luxleaks’ tax advice
    Secret Luxembourg document discussed risks of special tax deals, but Jean-Claude Juncker says he cannot remember discussing it with its author

    By Matthew Holehouse, in Brussels, and Henry Samuel in Paris

    8:22PM BST 30 Sep 2015

    The president of the European Commission faces fresh questions about his role in designing Luxembourg’s controversial system of “sweetheart” tax deals after he released an 18-year old document that urged his government to monitor the system more closely.

    Jean-Claude Juncker has published a missing page of a report published in 1997 by a government adviser that highlighted the potential consequences of Luxembourg, a country Mr Juncker ran for two decades, entering into bespoke tax deals with major corporations.

    Just two weeks ago Mr Juncker told MEPs he did not know the page existed. Its author, meanwhile, has claimed Mr Juncker was given a copy at the time.

    Today he insisted he could not remember discussing the report with its author in 1997, but nonetheless insisted he did not ask for the page to be withheld from the public.

    Mr Juncker has always denied any role in the “sweetheart” tax deals, which are said to have helped hundreds of major multinational companies to cut billions from their tax bills by setting up small offices in the tiny state.

    The tax rulings, which saw some businesses pay less than one per cent tax in the Grand Duchy, were entirely legal but have angered politicians from other European states who argue they deprived them of significant tax revenues.

    The ‘Luxleaks’ disclosures – a set of accountants’ papers outlining the deals – led to calls for Mr Juncker to resign last year.

    The page released today was omitted from a 239-page tax inquiry commissioned by Mr Juncker and published a few months after he started his 18-year period as Prime Minister. Its release was highly anticipated by MEPs investigating the affair, who likened it to a “state secret”.

    The page gives advice on entering into tax competition with other states through bespoke tax rulings, and urges the government to monitor the deals closely to ensure they are in compliance with the government’s broader policy.

    The missing page, released by Mr Juncker’s office, notes the “dialogue” between the tax authorities and companies. It acknowledges that they gave companies certainty, but also highlights that it put Luxembourg in “fiscal competition” with other states.

    The document, written in French, warns that informal tax rulings do not “exist in our fiscal legislation” and may not be “consistent with the government’s policies.”

    “To decide in advance the legitimate nature of an operation, means that the administration enters into fiscal competition with other European countries in which the practice of ‘ruling’ is widespread.”

    “In a Europe where competition on a tax level reigns, the negative effect of offshoring is thus reinforced.

    “With this in mind, it is appropriate to cite the Netherlands, a pilot country in the practice of ‘ruling’, which recently introduced innovative types of financing for groups to improve the fiscal climate for investment and to compete against attractive tax regimes on offer outside of the Netherlands.

    “The rapporteur can see the pragmatic approach chosen by the tax bureau. It is recommended that the relevant ministers follows rather more closely the existing accords. From the moment that the government is clearly aware of these practices, it can intervene if the informal rules applied are no longer in accordance with government policy.”

    The author, a former Luxembourg MP named Jeannot Krecke, has said he Mr Juncker one of only three unredacted copies of the report. He said he gave Mr Juncker a fresh copy this year as MEPs investigated the so-called “Luxleaks” scandal.

    Mr Krecke has said he did not release the page originally as he deemed it too sensitive for public disclosure. “My decision was based on the fact that I did not find it appropriate to launch an international discussion on tax rulings during our presidency,” he has told MEPs.

    Mr Juncker today said his recollection of his discussions with Mr Krecke was hazy, but denied misleading the European Parliament – having recently told MEPs he had no knowledge of the missing page.

    In a letter to MEPs, he also insisted he did not ask Mr Krecke to remove the “secret” page, and said this was confirmed in a recent phone call.

    “Mr Krecke, who I always esteemed highly both as reporting Member of Parliament and later as Minister of Economic Affairs, explained in several interviews that he would have discussed the matter with me in 1997, albeit briefly as he makes clear,” he said. “This process has not remained in my memory.”

    “After 18 years, I cannot remember all related events that happened in this context in 1997. I know that memory lapses are often a comfortable evasive excuse. However, I reject the reproach that I have deliberately spoken untruthfully to the Committee of the European Parliament.”

    In an appearance before MEPs earlier this month, Mr Juncker denied any role in creating Luxembourg’s tax regime, and denied knowledge of the page.

    “I didn’t know this page existed. It is an interesting area to discuss, but I wasn’t aware of it,” he told MEPs investigating the affair.

    “Actually, I don’t have that documentation in my cellar and I’m also not going to go in my cellar with you to go and look for it.”

    He also told MEPs it would “exaggerate my political talent” to link him to Luxembourg’s position as a tax haven, saying he “never, never, never” instructed officials “to set in place any tax system”.

    “I never gave instructions to Luxembourg tax authorities,” he told a hearing of MEPs. “I did not set up any system in Luxembourg in order to ensure there was avoidance in order to discriminate against other member states. I have always been against it, this idea. You exaggerate my political talent in that respect.”

    “I have been in no way been in support of a tax administration in Luxembourg that would be of negative impact to other European countries.”

    Critics pointed out Mr Juncker had boasted in speeches in the 2000s of having lured Silicon Valley giants to the country.

    Fabio De Masi, an MEP investigating the affair, called for a full inquiry by the European Parliament into the affair.

    “The missing page, while not revolutionary, makes clear that the Luxembourg system of attracting companies’ profits via a generous ruling practice has been in place since at least the 90s.

    “The government, with Juncker at the top, has been warned about the consequences, and did nothing to prevent the excesses from going on.”

    The European Commission – which Mr Juncker runs – is examining the deals as part of a broader inquiry into whether taxpolicies broke state aid rules.

    “The missing page, while not revolutionary, makes clear that the Luxembourg system of attracting companies’ profits via a generous ruling practice has been in place since at least the 90s.”

    That’s had to be awkward for Juncker. Especially since…

    The author, a former Luxembourg MP named Jeannot Krecke, has said he Mr Juncker one of only three unredacted copies of the report. He said he gave Mr Juncker a fresh copy this year as MEPs investigated the so-called “Luxleaks” scandal.

    Mr Krecke has said he did not release the page originally as he deemed it too sensitive for public disclosure. “My decision was based on the fact that I did not find it appropriate to launch an international discussion on tax rulings during our presidency,” he has told MEPs.

    Mr Juncker today said his recollection of his discussions with Mr Krecke was hazy, but denied misleading the European Parliament – having recently told MEPs he had no knowledge of the missing page.

    In a letter to MEPs, he also insisted he did not ask Mr Krecke to remove the “secret” page, and said this was confirmed in a recent phone call.

    In an appearance before MEPs earlier this month, Mr Juncker denied any role in creating Luxembourg’s tax regime, and denied knowledge of the page.

    He also told MEPs it would “exaggerate my political talent” to link him to Luxembourg’s position as a tax haven, saying he “never, never, never” instructed officials “to set in place any tax system”.

    “I never gave instructions to Luxembourg tax authorities,” he told a hearing of MEPs. “I did not set up any system in Luxembourg in order to ensure there was avoidance in order to discriminate against other member states. I have always been against it, this idea. You exaggerate my political talent in that respect.”


    Critics pointed out Mr Juncker had boasted in speeches in the 2000s of having lured Silicon Valley giants to the country.

    So Juncker apparently had one of only three unredacted copies of the 239 report but didn’t have anything to do with the removal of the “missing page” that demonstrated that, surprise surprise, his government had an policy of attracting international companies with offers of really low tax rates.

    Instead, he “never, never, never” instructed officials “to set in place any tax system”. Although he did later boast about luring Silicon Valley giants to the country. It raises the question of what exactly he did to lure these giants if it didn’t involve really low tax rates. Fortunately, one of the nice things about the international nature of the tax evasion regimes Luxembourg set up is that even if the EU investigations into these kinds of activities fail the companies that move to Luxembourg might still be investigated in their home countries. So, for instance, if the IRS is investigating Amazon in the US over its Luxembourg corporate shells, we might get to learn more about how Juncker lured Silicon Valley giants to Luxembourg:

    Newsweek

    Amazon: How the World’s Largest Retailer Keeps Tax Collectors at Bay

    By Simon Marks On 7/13/16 at 5:10 AM

    When Jeffrey Bezos was deciding where to base his new e-commerce business in 1995, Seattle was not his first choice. Instead, the CEO of Amazon, now the world’s largest online store, eyed an Indian reservation near San Francisco that would have considerably lowered his tax bill.

    The state of California quashed that scheme, but Bezos’s zeal for tax avoidance did not stop there. Throughout much of Amazon’s more than 20-year history, he has carved out competitive tax positions for the company as it expanded globally. His business acumen in that regard has even attracted the wrath of presumptive Republican presidential candidate Donald Trump, who earlier this year accused Bezos of buying The Washington Post to gain political influence and avoid taxes. During a speech in Texas, Trump said, “If I become president, oh do they have problems. They’re going to have such problems.”

    Newly revealed documents seen by Newsweek from a landmark court case in Seattle between Amazon and the IRS reveal how the company has attained global dominance over competitors in part by moving its global headquarters to the small, landlocked state of Luxembourg. While Amazon’s corporate structure there has been well-documented, the court documents from Seattle shed new light on allegations of tax avoidance. They also raise questions about how and why Luxembourg handed one of the world’s largest companies a tax deal that private citizens can only dream of.

    At the heart of Amazon’s arrangement with Luxembourg is Jean-Claude Juncker, who was that country’s prime minister between 1995 and 2013 and is now president of the European Commission, the European Union’s executive branch.

    Following the “LuxLeaks” revelations in 2014, which exposed many of Luxembourg’s cozy tax deals with multinationals, Juncker’s position at the EU came under intense scrutiny, with some in the European Parliament calling for his resignation. Through it all, Juncker has distanced himself from the taxation deals made by his government. “It’s the tax authorities that develop the specific rules that are applied,” he said last September during a hearing of the European Parliament. “I haven’t taken a position on individual tax dossiers because that also isn’t my role. The Luxembourg tax authorities are very allergic to the idea of ministerial interference.”

    But documents from the Seattle court case show a very different version of events. In a brief to the tax court in Seattle, the IRS says Juncker met with four senior Amazon tax officials between September 9 and 12, 2003. The officials included Bob Comfort, a key player in setting up Amazon’s European tax structure; Jocelyn Krabbenschmidt, who served as Amazon’s director of global direct tax from 1999 until 2012; and Jeroen Pit, Amazon’s head of EU VAT (value-added tax). “Amazon tax executives met with the Luxembourg prime minister,” the documents state.

    This evidence of a meeting between Juncker and Amazon’s top tax officials at a key moment in the company’s negotiations with Luxembourg could hasten the work already underway by the European Parliament’s Special Committee on Tax Rulings, which has questioned Juncker and a host of multinational companies—including McDonald’s, Google and Apple—about how they calculate their taxable revenues.

    Sven Giegold, a German lawmaker in the European Parliament who has challenged Juncker in the past over his role in Luxembourg’s taxation policies, says the revelations concerning Juncker’s meeting with key Amazon officials were extremely worrying. “Given that Juncker met senior Amazon tax officials, it is beyond belief that tax questions weren’t discussed in these meetings,” he tells Newsweek.

    Alex Cobham, director of research at the Tax Justice Network, an international network of organizations fighting tax avoidance, says there were four main actors in the LuxLeaks scandal: the multinationals, some of which are having their tax-planning practices investigated; whistleblowers Antoine Deltour and Raphael Halet, who were handed suspended sentences and fines by a Luxembourg court for theft and breaking strict professional-secrecy laws; the tax advisers at several global accounting companies; and the politicians who approved the deals.

    But at no point in time since revelations appeared about Luxembourg’s sweetheart deals has Juncker, or any other politician in his home country, been held to account for what is the biggest distortion of corporate tax collection to ever be publicly exposed, Cobham says. He adds that “if this [meeting between Juncker and Amazon’s tax officials] shows a direct involvement in effectively marketing Luxembourg for this purpose, you have to think his position [as European Commission president] is untenable.”

    A spokesperson for Juncker tells Newsweek that “it [was] entirely normal” for Juncker to have met with representatives of companies seeking to invest in the country and that “any decisions related to the tax arrangements of large companies during his time in office were…strictly a matter for the tax administration.”

    His defenders also point out that as the European Commission’s president, Juncker has pushed for laws to curtail aggressive tax planning. In January, the commission presented its anti-tax-avoidance package, which member states formally backed last month. The package attempts to block the most common methods used by companies to avoid paying taxes, such as the artificial shifting of profits to low-tax jurisdictions. Juncker’s commission has also pushed a proposal that would oblige multinationals to disclose profits earned and taxes paid in each of the EU’s 28 member states and other fiscal havens.

    Still, Juncker is having to answer questions about his role in the LuxLeaks affair. In a 2014 interview with d’Lëtzebuerger Land, a Luxembourg newspaper, Amazon’s Comfort revealed that during a meeting with state officials, Juncker reportedly told Amazon he would try to help if the company encountered any problems in setting up its Luxembourg operations. Comfort, who was made an honorary consul for Luxembourg in 2011, also says officials promised to expedite visas and help facilitate schooling for Amazon employees’ children.

    In an email, Giegold says that Juncker’s response to questions over his role in Luxembourg’s taxation regime for multinationals was to make the public believe that, as prime minister, he only met with “future-orientated companies” to diversify the structure of Luxembourg’s economy. “In fact, during his term of office, Juncker made tax dumping the new business model of the Grand Duchy.”

    Project Goldcrest

    Amazon’s IRS case in the U.S., which could force it to pay more than $1.5 billion in unpaid taxes, has revealed some findings that are, at best, awkward for the company. According to court documents, Amazon hired an economist from the global financial advisory company Deloitte in 2001 to review the various approaches that could be adopted to reduce its taxes.

    As Amazon’s director of global direct tax, Krabbenschmidt was responsible for estimating the cost benefits of establishing the company’s headquarters in Luxembourg and implementing a new tax regime through a labyrinth of subsidiaries designed to shift profits into Luxembourg. Amazon dubbed the tax-planning initiative Project Goldcrest, a title worthy of a James Bond thriller.

    Project Goldcrest, which is still in place, uses a series of complex intercompany contracts to transfer intangible assets—vital software, trademarks and other intellectual property (IP)—to one of Amazon’s Luxembourg companies, Amazon Europe Holding Technologies. A separate subsidiary, Amazon EU Sarl, then pays AEHT huge sums every year in royalty fees, reducing the amount of taxable income within the company.

    In return for controlling the European licensing rights, AEHT makes payments to one of Amazon’s U.S. companies. U.S. authorities believe these payments are too low, which is why the case has gone to court. Amazon has largely avoided federal taxation by managing its books to avoid reporting any meaningful profits over the past 20 years. In the last quarter of 2015, for example, Amazon paid just $73 million in taxes on $35.7 billion in revenues.

    After it audited Amazon’s 2005 and 2006 tax filings, the IRS questioned the amount of taxes the company was paying into U.S. state coffers. Documents outlining the IRS findings show that Amazon hid key data from the IRS during an audit of the company’s tax arrangements in Luxembourg. It did this by hiding part of its model projecting tax benefits from Project Goldcrest, not providing the IRS with part of the model titled “S Team Meeting,” a senior leadership outfit that reports directly to Bezos. The court documents also show that Amazon’s chief financial officer, Tom Szkutak, “was briefed on the projected tax benefits” from Project Goldcrest before its implementation in 2006.

    Queried about the missing data, an Amazon spokesperson says, “Amazon pays all the taxes we are required to pay in every country where we operate.”

    The spokesperson explained that Amazon’s corporate tax payments are based only on profits and not revenues, and profits have remained low for much of the past 20 years because of Amazon’s heavy investments in specialized staff and projects such as data centers. Amazon also says its profits are low because it is in a “highly competitive, low-margin business.”

    Tax justice campaigners are outraged by the evidence suggesting Amazon withheld key information from the IRS. “We always tend to give the benefit of the doubt to multinationals and talk about avoidance rather than evasion. But hiding relevant material does suggest the crossing of that line,” says the Tax Justice Network’s Cobham.

    The IRS also presents a compelling case that Amazon conducted an improper valuation of the IP assets it transferred to Luxembourg in order to undervalue them.

    Since 2014, the European Commission’s competition services have embarked on a similar inquiry due to suspicions that Amazon has inflated royalty payments for the use of IP rights paid to one of its subsidiaries in Luxembourg. Margrethe Vestager, the EU competition commissioner, who is conducting the investigation, is expected to report back soon with a verdict on whether the deal with Luxembourg amounted to illegal state aid.

    Jack Blum, a leading white-collar defense attorney in the U.S. specializing in money laundering, tells Newsweek there is no doubt about the premeditated nature of Amazon’s aggressive tax planning. “It’s a system that is beyond the capacity of governments, or for that matter the public, to really understand, and it allows the corporations tremendous ability to play games and in a way that negates the effectiveness of national tax systems,” he says. “For the most part, this is stuff that is kept in the deepest, darkest recesses of tax courts and corporate vaults, protected by secrecy provisions.”

    “Newly revealed documents seen by Newsweek from a landmark court case in Seattle between Amazon and the IRS reveal how the company has attained global dominance over competitors in part by moving its global headquarters to the small, landlocked state of Luxembourg. While Amazon’s corporate structure there has been well-documented, the court documents from Seattle shed new light on allegations of tax avoidance. They also raise questions about how and why Luxembourg handed one of the world’s largest companies a tax deal that private citizens can only dream of.

    Amazon paid $73 million in taxes on $35.7 billion in revenues and we can thank Jean-Claude Juncker, in part, for that generous tax rate. Or, rather, Amazon can thank him. Everyone else should be kind of pissed.

    So that’s the kind of can of worms that the Luxleaks opened up…it threatened the EU Commission President. And this is with the defanged investigation. It’s the kind of experience that raises a lot of questions about the prospects of a successful EU investigation into the Panama Papers. Or an investigation anywhere into the Panama Papers since the scandal presumably impacts powerful people all over the world.

    We’ll see how the Panama Papers investigation proceeds and whether or not it impacts Juncker. And, of course, we’ll also see how the investigation’s potential impact on Juncker impacts the investigation. Or maybe we won’t see it. It depends on the quality of the cover up.

    But one thing is increasingly clear: no matter what happens, we’re probably going to see more Juncker.

    Posted by Pterrafractyl | July 14, 2016, 1:42 pm

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