Danielle McLaughlin: 'The US-Panama-NZ connection'

Politics trivia has eclipsed the Panama Papers in the US, writes Danielle McLaughlin.
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Politics trivia has eclipsed the Panama Papers in the US, writes Danielle McLaughlin.

OPINION: In her third 'Kiwi in New York' column, Danielle McLaughlin says the Panama Papers will keep investigators in New Zealand and around the world busy for many years.

An enormous international scandal with ties to both the US and New Zealand grabbed the attention of many this week here in the US.  I say "many", because America's obsession with the presidential primaries means that what might have been a bigger story was somewhat eclipsed. Donald Trump's latest flip-flop. Hillary Clinton's latest snafu. If the media's a bonfire, the presidential race is gasoline.

On Tuesday, a new and murky chapter of the Panama Papers opened up as the International Consortium of Investigative Journalists put 11.5 million documents from the law firm Mossack Fonseca online. I use the term "murky" in two respects.  First, because the Panamanian accounts were created to ensure anonymity.  And second, although the act of having an offshore account is not illegal, the purpose for which it is used may be. Laundering money from illegal arms or drugs sales. Evading taxes. Funding terrorism. The list is long.

Mossack Fonseca: the Panamanian law firm linked to a massive leak of documents on offshore trusts.
JOE RAEDLE/ GETTY

Mossack Fonseca: the Panamanian law firm linked to a massive leak of documents on offshore trusts.

Hundreds of New Zealanders and dozens of Americans, some (but not all) with chequered histories, were "named and shamed". Here in the US, we're focused on celebrities (Emma Watson, Stanley Kubrick).  On heads of state (Vladimir Putin, David Cameron).  And on wannabe heads of state (Trump).

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Yes, Trump. As much as I want to escape him, it seems I cannot.  In full disclosure, though, Trump has licensed his name more times than he's had hot dinners. So it's not clear which, if any, of the entities featuring his name are legally connected to him.

In New Zealand, it's clear that the focus has been not only on Kiwi clients of the Panamanian law firm, but New Zealand's foreign trust system, which was used by Mossack Fonseca's clients because of its strict privacy. A registered office in Auckland; allegations that New Zealand has a burgeoning tax avoidance industry; it's enough to make John Key storm out of Parliament.

I'm not exactly "client material" for Mossack Fonseca, so my connection to this unfolding scandal has been limited to explaining how US authorities can use anti-corruption and tax law to punish wrongdoing revealed by the Panama Papers. I did so recently on an early morning appearance on the Fox Business Channel. The host was  Stuart Varney, a warm and engaging Englishman, and 25-year veteran of American TV.  We chatted during a commercial break.  It turns out his son lives in New Zealand. I got the impression he thinks we're all socialists and hippies.  But that we're very nice with it.  Varney's is a business-focused show. I spent about three and a half minutes reassuring US investors that offshore accounts are not illegal per se.  

That's what Watson's  lawyers said this week, just hours after she was named.  And they're right.  But it's clear that the Panama Papers are going to keep investigators and regulators in America, in New Zealand, and across the world, busy for many years. They will dig into how the super-wealthy kept (or hid) their money. And the extent to which our laws failed to stop, or actively allowed, criminal activity under the cover of anonymity.

* Expat Kiwi Danielle McLaughlin, a Manhattan lawyer and American TV political commentator, is the Sunday Star-Times' correspondent in the US.

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