EXCLUSIVE UPDATE, 2:45 PM with more information and insight throughout: Iceland’s Prime Minister Sigmundur David Gunnlaugsson resigned Tuesday, the first political casualty following a leak reported Sunday that dwarfed in scale reveals from the likes of data from Sony e-mails and Edward Snowden’s purloined National Security Agency documents. The repercussions already are being felt, from the Kremlin to Iceland to Hollywood — and the newsroom of The New York Times.
Documents from Panama-based law firm Mossack Fonseca showed that Gunnlaugsson and his wife set up an offshore shell company in 2007 in the British Virgin Islands; he then sold his half of the company to his wife for $1 on the last day of 2009 to shield them from a new law that would have required him to declare his ownership as a conflict of interest. (In the latest development — the first to publicly reach Hollywood — filmmaker Pedro Almodovar canceled screenings and press tomorrow for Julieta. The Mossack Fonseca files show that from 1991 through 1994, Almodovar and his brother Agustin ran an offshore company managed by Mossack Fonseca.)
Mossack Fonseca is not exactly a household name — unless the household falls within the world’s tenth-of-one-percent of politicians, business leaders and celebrities involved in stashing cash away from the prying eyes of tax collectors, nosy journalists, law enforcement or even just revenge-seeking former spouses. On Monday, Gunnlaugsson insisted that he would not quit, that the leak contained no news and that he and his wife, Anna Sigurlaug Palsdottir, had not hidden their assets or avoided paying taxes.
But no speechifying bluster could undermine evidence of the PM’s law-flouting conflict of interest, turned up during a yearlong investigation into a cache of some 11.5 million documents. The search-and-explain mission resulted from an extraordinary collaboration among 370 journalists from 100 news organizations in 70 countries. Dubbed the “Panama Papers” — an obvious tribute to the Pentagon Papers, which were published in 1971 by The New York Times and The Washington Post, hastening the end of the Vietnam War and the resignation of President Nixon — the story has pols and moguls on edge around the world, including Abu Dhabi’s Sheikh Khalifa bin Zayed Al Nahyan, China’s Xi Jinping and Russia’s Vladimir Putin, along with the now former Iceland P.M.
In a rare gesture by organizations that more typically compete for the first scoop on such material, the story was published simultaneously around the world on Sunday at 2 PM New York time.
“A year ago Süddeutsche Zeitung was contacted by an anonymous whistleblower,” Michael Hudson, a senior editor at the Washington-based International Consortium of Investigative Journalists (ICIJ) told me in an interview Tuesday. The Munich newspaper was not asked for any money in return. “No one involved paid anything for the records,” said Hudson, who devoted about six months to the project as reporter and editor. “All the whistleblower wanted was protection for himself and his family, since there were criminals involved in some of the transactions.
“You don’t want newspapers parachuting into a story where they have no history. And with a story this size, there is no way a lone wolf can cover it. It requires something journalists aren’t always known for: teamwork and patience. Nobody tried to scoop anybody else.” — editor Michael Hudson
“The [German] paper came to us because they wanted to make use of our expertise and reputation around the world,” Hudson continued. “With these stories, you don’t want newspapers parachuting into a story where they have no history. And with a story this size, there is no way a lone wolf can cover it It requires something aren’t always known for: teamwork and patience. Nobody tried to scoop anybody else.”
That fact alone struck Ken Auletta, the longtime media reporter and analyst for The New Yorker magazine, as remarkable. “The fact that it didn’t leak is absolutely awesome,” he said in a telephone interview. “And it’s testimonial to the fact that journalism is a public service.”
Mossack Fonseca’s bread and butter is establishing shadow businesses in tax havens including the British Virgin Islands, the Bahamas, Seychelles and Panama. The activity is legal, but the businesses often are used to hide assets, evade taxes and launder cash. As other names and unsavory dealings are exposed in follow-up reports, the Panama Papers undoubtedly will yield more information about the shadowy financial machinations that allow the world’s wealthiest people to remain the world’s wealthiest people.
“I wish I was more optimistic about the economic future of newspapers. Investigative reporting is absolutely essential in a democracy to keep people honest. But publishers are constantly saying to the newsroom ‘What do we do to get more readers? Give me more Kardashian.’ ” — media reporter Ken Auletta
On Tuesday I also spoke by phone with Bill Kovach, a board member of the Center for Public Integrity, the investigative journalism nonprofit that established ICIJ in 1997. Kovach is one of the country’s most highly regarded journalists, having served long stints as reporter and editor at The New York Times, where he ran the Washington bureau, and The Atlanta Journal-Constitution, which he ran as editor in chief. I was curious about the ethical aspects of a story like this, issues familiar to Deadline’s readers in the wake of the leak of Sony e-mails and the decision by our competitors to publish much of the purloined material. Is anything private any more, I wondered, and how had ICIJ dealt with that?
“Ethical issues are talked about all the time here, not just on specific projects,” Kovach said. “The reporters involved at ICIJ understand what the standards are of accuracy and verification and all the issues that a good reporter faces.”
Michael Hudson added that ICIJ had a history of reporting on data sets and that the ethical issues always were discussed. With Mossack Fonseca, he said, there had been no internal opposition to publishing the information.
“We consider this not a privacy issue but about public service,” Hudson said. “Governments demand that public officials in many countries be required to disclose their holdings. It’s in the public interest to reveal that. Similarly, revealing criminal activity is in the public interest.”
Banks in the countries where ICIJ was investigating, Kovach said, had co-operated by confirming the existence of accounts, so those caught red-handed “knew damn good and well the details the reporters had.”
I asked Kovach whether such collaborations were the key to the survival of investigative reporting, which is the costliest and often most dangerous part of the journalism trade, at a time of media consolidation and shrinking attention spans. Not to mention the fact that journalists with hot stories generally are loathe to share the glory with competitors.
“As the economic model has broken and it’s clear that print journalism may disappear entirely, [investigative journalists] are the one group of people out in the field who began working together and didn’t give a shit about who got the byline.” — veteran journalist Bill Kovach
“I think that’s exactly what’s happening,” he said. “The best reporters in the business in my lifetime have been the investigative reporters. As the pressure on news organization has grown, as the economic model has broken and it’s clear that print journalism may disappear entirely, they’re one group of people out in the field who began working together and didn’t give a shit about who got the byline.
I was reminded, as Kovach spoke, of the great success of Spotlight, the Oscar winner with its emphasis on the grueling shoe-leather work of deep-digging reporting by folks drawn to the task as a mission with few obvious rewards. The film may have raised journalists in peoples’ estimation a few notches — but will it, along with serious, impactful reporting like the Panama Papers — have a lasting impact?
“I wish I was more optimistic about the economic future of newspapers,” Auletta said. “Investigative reporting is absolutely essential in a democracy to keep people honest. But I am wary and worried because this reporting doesn’t necessarily attract the most readers. So publishers look at declining profits and are constantly saying to the newsroom ‘What do we do to get more readers? Give me more Kardashian.’ It’s only sustainable if you have wealthy individuals or crowd sourcing.”
One journalistic bastion was notably absent from the global front page interest in the Panama Papers. The New York Times was comparatively slow coming to the party and buried its first coverage of the story on page 3 of Monday’s paper. Public Editor Margaret Sullivan, in her blog, noted that some Times readers expressed surprise and even anger that the Paper of Record seemed intent on underplaying what obviously is a major story. The Times does not participate in ICIJ, though it has published investigative stories from other journalism collectives (and collaborated with the Guardian on the release of the Snowden data). Even more reason to think the Times misjudged the importance of the story.
“The Times is still the greatest paper in the world,” Auletta said. “But it didn’t deserve to be on page 3.”
On Tuesday morning, the Times still downplayed the Panama Papers, at least until Gunnlaugsson’s resignation. That story was reported quickly along with stories about the story. As a former New York Times reporter myself, I asked Kovach about the paper’s response to the Panama Papers. He, too, had followed the back-and-forth that played out on the Public Editor’s blog.
ICIJ was in touch with the Times about the original Sunday story. “It’s so depressing that they couldn’t bring themselves to give space to someone else,” he said. Knowing that there is no more competitive place on Earth than the Eighth Avenue newsroom of The New York Times, I reminded Kovach of Harry Truman’s dictum: “It is amazing what you can accomplish if you do not care who gets the credit.”
“The Times insisted they had to do their own verification of the documents,” Kovach said. I heard him laughing on the line. Laughing quite heartily, in fact, until he stopped. “But having made that decision not to recognize it when it appeared, to underplay the story?” he said. “I was really disappointed.”