A PROMINENT Panama law firm that plays a leading role in creating offshore companies, has been linked by Brazil’s public prosecutor to a complex money-laundering operation.
It was allegedly conducted by using properties in a condominium complex in Sao Paulo in which units were owned by companies created by the firm.
In a statement, the firm, Mossack Fonseca says the orders given by Brazil office manager, María Mercedes, in 2007 to destroy and hide documents was not an attempt to distance itself from clients who were being indicted for corruption, but rather because there was a change in its technological platform and that the physical documents would need to be kept somewhere else.
But investigators tell another story, reports La Prensa.
Before ordering the destruction of documents, the firm received an e-mail, probably from one of its clients, which warned that police had raided his office and asking that all his companies be cancelled.
Mercedes, on the day the-mail was received, began the process of hiding and destroying documents.
The investigation into the activities of the law firm is part of the Lava Jato operation, which has focused on bribes paid to politicians by businesses in exchange for lucrative contracts from state oil company Petrobras. Earlier this week, there were arrest warrants issued for four officials of Mossack Fonseca in Brazil, included for María Mercedes.
According to investigators, there were signs of the "existence of a criminal organization aimed at money laundering the bribes, mainly through real estate transactions with offshore companies."
In a document of more than 60 pages, investigators emphasized the participation of figureheads to mask the ultimate beneficial owners of the companies that handled the money and engaged in real estate transactions.
According to the indictment, the company Constructura OAS transferred residential units in a condominium located near Guarujá Beach in San Paulo to offshore companies controlled by politicians in exchange for contracts with Petrobras.
According to police, the offshore company Murray Holdings - registered by Mossack Fonseca in Nevada - acquired several properties from Paulista Plus Promoções Ltda., a company owned by Nelci Warken, who was arrested Wednesday. Prosecutors said that Murray Holdings purchased the units at a far lesser value than they were worth.
"There are suspicions that the fictitious transfer of ownership was allowed, a typical maneuver for money laundering," said the arrest warrant.
The evidence of the alleged links of Warken to the real estate scheme included intercepted telephone calls as well as e-mails.
"Investigations in the available databases identified information that associated Mossack Fonseca to crimes of money laundering in various parts of the world, including Brazil," investigators said.
On Thursday the firm posted a "clarification" on its web site, saying that the documents were destroyed because they firm was changing to an all-digital database.
But prosecutors point to an e-mail sent by Carlo Moratelli to the Mossack Fonseca Office as the reason for the purge. That e-mail requested "that all companies be cancelled" as Federal Police raided his office and seized various documents.
After received that message, Mercedes ordered employees to "take all of the office papers, customer names, due diligence statements, telephone directories and erase everything that can be erased from computers, and do not leave computers on when you go to lunch or when you are not using it."