Despite the controversial allegations within the Panama Papers, there are nonetheless a number of flaws – such as the failure to list any high-profile U.S. officials – that the Kremlin might be able to exploit as proof of the West’s information campaign against Russia.

President Vladimir Putin’s spokesperson Dmitry Peskov (pictured) was also included in the Panama Papers, which cast a shadow over top Kremlin officials. Photo: AP

On Apr. 7, Russian President Vladimir Putin responded to the Panama Papers, describing them as an attempt to undermine the nation’s political situation from within. Moreover, Putin sees the release of the Panama Papers as “an attempt to make Russia more amenable” to Western demands. He also denies that his close friend Sergey Roldugin earns billions of dollars, as alleged in the documents.

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As long as the Russian political elites coalesce in support of the Kremlin’s position, the impact of the Panama Papers on the Kremlin could end up being insignificant. Moreover, in one possible scenario, the Russian authorities might even exploit the flaws of the investigation and turn them to their advantage.

The flaws of the investigation

One of the primary flaws of the Panama Papers is the lack of reliable information about their provenance. Despite a great deal of media attention surrounding the Panama leaks, there is simply not enough information to be confident about their reliability. They are reported to include the scans of many letters, contracts, personal IDs and documents, all of them transmitted through the Panama-based company Mossack Fonseca over a more than 40-year period, dating all the way back to the 1970s.

However, there is no information about the anonymous source that handed over the Panama Papers to the respected German newspaper Süddeutsche Zeitung, which requested assistance from the International Consortium of Investigative Journalists (ICIJ) to verify the documents. Hundreds of journalists from 76 countries had been conducting the first analysis of the papers over the past year.

Despite the fact that they published the results of the investigation at the ICIJ website and in partner newspapers (Russia’s liberal media outlet Novaya Gazeta is among them), there are no originals of the documents in the public domain. They are available primarily to the ICIJ. One can find some scans of the papers on the Internet, but they are selective in their nature and might be placed out of context.

At any rate, this will be not enough for an independent investigator, if he or she decides to conduct another investigation, become familiar with the originals and attempt to confirm the results. Because these documents are very difficult to verify, the exposure itself seems to be flawed in comparison with previous large-scale revelations like WikiLeaks, which published numerous documents at its website.     

Thus, the Panama Papers don’t seem to meet all the criteria of a high-quality investigation, which requires verification, first and foremost. Moreover, such an investigation should also involve the examination of independent experts, who are experienced in such inquiries.

So, despite all the potential political implications and the significant impact of the Panama Papers on political careers in Europe, some questions remained unanswered. Why don’t they include any representatives of the U.S. political establishment? The very fact that the Panama Papers so far haven’t revealed the names of any Americans is another argument, which the Kremlin might use to discredit the authors of the investigation. If journalists were free and flexible in choosing the topic and figures of the probe, why didn’t they question the activity of U.S. citizens?

After all, skeptics are hardly likely to believe that politicians or public figures of a country like the United States don’t use offshore companies to alleviate their tax burden. So, this might be Panamagate’s weak point, which the Kremlin could exploit later. If journalists won’t reveal the dubious activity of U.S. citizens, is there some deeper political motivation for that? 

Russia’s response to the Panama Papers  

Yet, even given these flaws, the response of the Kremlin to the Panama Papers leaves much to be desired. The Russian authorities are doing their best to discredit the Panama Papers. They even started the media campaign in advance. One week before the release of the documents, Kremlin spokesperson Dmitry Peskov told journalists the West was going to launch another information attack against Russia, aimed at undermining Putin’s positions before the 2016 September parliamentary elections.

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The Russian President’s Apr. 7 response to the Panama investigation, with him seeing it as the West’s conspiracy, echoes this view and reflects the general trend of attempting to downplay – or even completely ignore - the findings within the Papers.   

“Obviously, Putinophobia [in the West] has reached such a level that it is forbidden a priori to talk about Russia and its successes in a favorable way,” said Peskov in response to the Panama revelations.

But do the Russian authorities have any reason to overreact to the Panama documents so harshly? On the surface, their response appears too aggressive and defensive, suggesting there really might be something to hide. Yet, the investigation didn’t reveal anything extraordinary or unbelievable, but rather confirmed the suspicions about some Russian officials, whose integrity and reputation had already been called into question.

Moreover, the mention of the name of Putin’s close friends like cellist Roldugin in the documents didn’t produce such a big effect among ordinary Russians. And certainly not to the degree that it did in the West and among members of Russia’s opposition. One of the reasons why the Russian authorities were not affected by the revelations is the high level of loyalty toward Putin and his team in Russian society, according to Sergey Veselovsky, associate professor in the World Politics Department at the Moscow State Institute of International Relations (MGIMO University).

Because the Kremlin might have not known about the global scale of the Panama Papers revelations, it had been preparing for the worst and, thus, overreacted. It was too late to step back and retreat after the publications of the documents: The Russian authorities couldn’t reverse the information campaign against the Panama Papers without losing face. It was too difficult to stop. In fact, the Kremlin became the hostage of its own aggressive rhetoric. Now it finds itself in a very tricky situation, given the investigation targets not only Russian politicians, but also leaders and high-ranking officials from other countries.  

Putting the Panama Papers into context

However, despite the fact that the list of “guilty” individuals includes some big names, one should take into account that the media is inclined to exaggerate for the sake of sensationalism. It is easier to lambast the practice of using offshores rather than to understand how complex financial and legal offshore schemes really work.

After all, experts from all over the world reiterate that making deals through offshore holdings is not illegal. The fact that a particular person has an offshore company, or even a few of them, does not prove anything, apart from the fact that he or she indeed is the owner of these companies.

“In Europe the impact that the exposure provoked is quite limited because, as I understand it, formally there were no legal violations – offshores are not banned and they are actively used,” Veselovsky told Russia Direct.

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Likewise, Andrey Movchan, a Russian economist and expert at the Carnegie Moscow Center, echoes this view. He argues that even though the Papers certainly do “create an intrigue,” they do not contain any sensation. They only describe the use of offshores, which technically speaking is completely legal, because their goals also include optimization of business processes.

However, one should not underestimate the impact of the Panama Papers. Although some of those mentioned in the documents might have used offshore schemes legally, there is the possibility that others participants of the scandal could have been involved in corruption and money laundering.

After all, it is almost impossible to track down directly the origins of transactions, Veselovsky argues. The very fact that some politicians participated in these schemes casts a shadow on their reputation, implying that they might be engaged in corruption, he added.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.