Panama Papers reveals EPN friend and govt. contractor moving money to hidden offshore accounts

Posted by DD republished from ICIJ and Forbes

First of all, I want to apologize to our readers in being so slow in getting the story up about the Panama Papers and  what they revealed about Mexican Businessman  Juan Armando Hinojosa Cantú, described as Mexican President Enrique Peña Nieto’s “favorite contractor.”

I started working  on this story  last Sunday, the 3^rd of April, the day the leak went public.   I spent between 30 and 40 hours this week researching, reading new stories  and writing as more information was made public.    

About 6AM this morning as I was writing the last few paragraphs that would have it ready to publish disaster struck.   The whole “text box” with the draft went blank.   The story was gone.   I tried to retrieve it and even contacted Google and asked the question on the web as to how to retrieve it.   No luck.

In my opinion, the real stories to be gleaned from the Panama Papers is in the details.   That is what I tried to do in my story – where the leaks came from, the dates of the offshore transfers in relation to pending scandals,  who the major players were (including Hinojosa’s mother and mother-in-law) , possible motivations for the offshore transfers to secret bank accounts, etc. 

Rather than try to re-write my story,  what I am presenting today is mostly excerpts from what I consider some of the best stories that in effect give a summary of what Panama Papers is and some of the material that deals with possible corruption in Mexico.  

It should be emphasized that  in none of the material that I have read would be proof that Hinojosa Cantu committed any crime.   But taken in context of his relationship, both business and personal,  raises some eyebrows and is evidence that justifies further investigation.

I am confident that from the 11 ½ million files constitute Panama Papers there will be much more to report that will be of interest to our readers.    Next time I will write the stories in such a manner that I know I have a backup.

The following are excerpts from the International Coalition of Investigative Journalist (ICIJ) that give a summary of the Panama Papers and material about Armando Hinojosa Cantu:

  Leaders, criminals, celebrities

"A giant leak of more than 11.5 million financial and legal records exposes a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies.

The Panama Papers: An Introduction

"Behind the email chains, invoices and documents that make up the Panama Papers are often unseen victims of wrongdoing enabled by the shadowy offshore industry.

“A massive leak of documents exposes the offshore holdings of 12 current and former world leaders.  The leak also provides details of the hidden financial dealings of 128 more politicians and public officials around the world.

. The cache of 11.5 million records shows how a global industry of law firms and big banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.

They also include at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.

The leaked data covers nearly 40 years, from 1977 through the end of 2015. It allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.

The leaked data covers nearly 40 years, from 1977 through the end of 2015. It allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.”

Excerpts from  ICIJabout Armando Hinojosa and EPN ties.

“Juan Armando Hinojosa, who has been called Mexican President Enrique Peña Nieto's "favorite contractor," runs a well-connected business empire that secured at least $750 million in business with government

Controversy broke out when it was revealed in late 2014 that first lady and former soap opera star Angélica Rivera was in the process of buying a $7 million mansion for the presidential family that was built by one of Hinojosa's companies and registered under the name of the firm.

After controversy, a complex offshore network was created to hold about $100 million

Throughout the summer and fall of 2015, not long after the controversy over the Casa Blanca, Mossack Fonseca helped Hinojosa create three trusts to take over accounts worth approximately $100 million previously held in banks. Hinojosa was the primary beneficiary of the trusts, nominally controlled by his mother and mother-in-law. His wife and children were named beneficiaries in the event of his death . His network was complex, with nine entities set up in three different jurisdictions — New Zealand, the United Kingdom and the Netherlands.

 

DD:  This graphic from the ICIJ shows the complexity of his offshore operation;

READ THE ENTIRE ICIJ  STORIES HERE

Though Forbes was not part of the ICIJ group, Forbes has a excellent story that summarizes the  Hinojoso Cantu material. Here are some excerpts from that story that was written by Dolia Estevez.

"The International Consortium of Investigative Journalists (ICIJ), a Washington-based nonprofit anti-corruption investigative group, and 100 other international news organizations—including Proceso and Aristegui Noticias from Mexico-worked for a year sorting through the massive data.

 "Proceso, Mexico’s leading weekly magazine, reported that Hinojosa, a wealthy entrepreneur whose company, Grupo Higa, won multimillion-dollar contracts from the State of Mexico when Peña Nieto was its governor, secretly shuffled $100 million through banks and shadow companies.

"According to Proceso, Mossack Fonseca, in collaboration with the Mexican branch of the law firm D’Orleans & Bourbon Associates, helped Hinojosa and his wife set up a series of shell companies on behalf of family members—including their respective mothers who are in their 80s–in New Zealand. Hinojosa and his wife then “donated” millions of dollars to the shell companies, which acted as beneficiaries of a foundation in Holland.

The firms were aware that the $100 million was just a “small part” of Hinojosa’s wealth, Proceso reports. In July 2015, an advisor with D’Orleans, Bourbon & Associates in Miami, sent an “urgent” email message to a Olga Santini, director of Mossack Fonseca’s branch in Florida.

“Please note that we have been working together with the advisor of a very high profile client for some time and we envision that we will be appointed to assist in the restructure of his patrimonial vehicle outside his country of residence.

The structure would involve:

(1) Transfer of six (6) companies—four (4) BVI and two (2) Nevis from current provider (Trident);
(2) Appointment of nominee director & nominee shareholder for the above mentioned companies;
(3) Formation of three (3) NZ Trusts—which will be the beneficiaries of a Dutch foundation (STAK) and subsequent settlement of assets (portfolio accounts in four banks—JP Morgan, UBS, DB and MS—of circa USD 100M) owned by the before mentioned six (6) companies.
(4) Once the transfer is complete, dissolution of the six (6) companies,” reads the email.
nsfer is complete, dissolution of the six (6) companies,” reads the email.

The author of the email added;

 “This is only a small part of the client’s portfolio and we see great potential of (sic) growth as he is one of the most prominent business man (sic) in Mexico. Unfortunately due to his success and high profile, he has quiet (sic) a number of people whom greatly dislike him and unfortunately, there is a great deal of negative publicity surrounding the client.“
 
"According to Proceso, Hinojosa began transferring his wealth in March of 2015, a week after Peña Nieto ordered the investigation of himself   Pena Nieto appointed one of cabinet ministers  to conduct the investigation.  

Finance Minister Luis Videgaray, Hinojoso, and Virgilio Andrade

READ THE ENTIRE FORBES  STORY  HERE

DD: In a e hour long press conference where reporters were throwing rotten tomatos at him (speaking figuratively, not literally)  he minister, (federal comptroller Virgilio Andrade)  reported his investigation showed that neither his boss EPN nor Andrade's good friend Minister of Finance Luis Videgaray (who had also bought a house from Hinojoso) had done nothing wrong and there was no corruption involved in the sale and purchase of either house.  It kind of reminded me of Nixon's "I am not a crook" speech, but EPN didn't have the nerve to do it himself - he had a subordinate do it for him.

Mexico’s Service of Tax Administration, the country’s equivalent of the IRS, said Monday that it would review the information on the Mexicans mentioned in the Panama Papers to determine if there was evidence of tax evasion.