Former Virgin Islands (VI) law firm Mossack Fonseca & Co, which was hit with the biggest fine in the territory’s history following an investigation into the Panama Papers scandal, has now seen its CEO get acquitted of charges in latest court action. Photo: Internet Source/File

Jürgen Mossack founded Mossack & Fonseca with then associate Ramón Fonseca, who died in May. Mossack was acquitted on Friday along with others after a Panamanian judge found that the evidence against Mossack didn't comply with the chain of custody after authorities raided the office of the now defunct firm. Photo: Internet Source

Virgin Islands News Online (VINO) reached out to Deputy Premier and Minister for Financial Services, Labour and Trade Hon Lorna G. Smith for comments on the ruling however, none was received up to publication time. Photo: GIS/File

Back in November 2016, the Financial Services Commission (FSC) imposed the $440,000 administrative penalty against Mossack Fonseca’s (BVI) operation, citing eight breaches of BVI’s Anti-Money Laundering and Terrorist Financing codes and its Regulatory Code including failures in risk assessment, due diligence and identification procedures at the law firm.

The Panama Papers investigation, based on a trove of 11.5 million leaked files from inside Mossack Fonseca, reportedly exposed the inner workings of a secretive financial system used by world leaders, wealthy individuals, drug lords, fraudsters and more. More than half of the offshore companies in the leaked files were incorporated in the [British] Virgin Islands.

Largest ever penalty 

The penalty is the largest ever levied by BVI authorities and followed a six-month investigation, which included on-site compliance inspections and the appointment of an officer to monitor Mossack Fonseca’s operations in the jurisdiction.

Since then, in a recent court case, a Judge acquitted 28 people accused of money laundering in the Panama Papers, including the co-founder of the Mossack Fonseca, which authorities say was at the center of a conspiracy to hide money linked to illegal activities.

Jürgen Mossack founded Mossack & Fonseca with then associate Ramón Fonseca, who died in May. Mossack was acquitted on Friday, along with others, after a Panamanian judge found that the evidence against Mossack didn't comply with the chain of custody after authorities raided the office of the now-defunct firm.

ABC News in a report said prosecutors had accused Mossack, Fonseca and others of creating offshore companies and using complex transactions to hide money from illegal activities related to the so-called car wash corruption scandal involving Brazilian construction company Odebrecht, which pleaded guilty in US federal court to a charge related to using shell companies to hide millions of dollars in bribes paid worldwide to win public contracts.

Evidence not sufficient - Judge Ruled 

The judge noted that other evidence in the Panama Papers case “was not sufficient and conclusive to determine the criminal responsibility of the accused.”

In addition, the judge lifted personal and property precautionary measures against all the defendants, according to a judicial statement, “We feel satisfied in the midst of mixed emotions, because many lives were affected along the way,” Guillermina Mc Donald, who was the defense attorney for Mossack and Fonseca, told The Associated Press. Her firm also represented 80% of the accused firm’s collaborators.

Judge Balaoisa Marquínez had decided to combine the Panama Papers case with another known as “Operation Car Wash,” a major anti-corruption investigation that began in Brazil.

On Friday, June 28, 2024, she ruled that in the car wash case, “it was not possible to determine the entry of money from illicit sources, coming from Brazil, into the Panamanian financial system with the purpose of hiding, concealing, disguising or helping to evade the legal consequences of the preceding crime.” 

In June 2022, Mossack, Fonseca and 37 other people were acquitted in a separate money laundering case.