Legal Translations of Panama Papers

Legal Translation to Have Panama Papers Reviewed by SEC

We have blogged about the need for financial document translation services generated by the Panama Papers scandal and the tremendous challenges that lawyers, translators, and legal systems across the globe will face in sorting through upwards of millions of pages of documents, many of which involve different foreign languages, in regards to the civil and legal proceedings that are sure to arise.

As previously discussed, the controversy known as the “Panama Papers” refers to the purported release of approximately 11.5 million confidential documents that were hacked from the Panamanian law firm Mossack Foseca. The leaked documents purportedly show how wealthy individuals, celebrities, politicians, and others have been able to keep assets confidential or hidden and possibly evade taxes through the use of various offshore accounts. Although owning an offshore account is not in itself a crime, various countries are investigating its citizens for tax avoidance. For example, Newsweek has reported that the Australian Tax Office is now investigating over 800 of its own citizens for possible tax evasion.

In addition to tax evasion issues, the release of the Panama Papers could reveal signs of corruption and bribery in foreign countries, implicating U.S. anti-bribery laws. Kara Novaco Brockmeyer, chief of the SEC’s Foreign Corrupt Practices Act (FCPA) Unit was asked whether the SEC was looking into the Panama Papers reports and she stated that although she could not comment specifically, “Yes, we will be looking at it, as we do all public sources.” An SEC spokesman later clarified that she was not confirming formal action regarding the leaked documents. Nevertheless, according to a senior manager of Crowe Horwath’s anti-money laundering compliance consulting practice, “there will be much for the SEC to review.”

According to the SEC’s website, The FCPA Unit was created by the SEC’s Enforcement Division in 2010 as a specialized unit “to further enhance its enforcement of the FCPA, which prohibits U.S. companies from bribing foreign officials for government contracts and other businesses.” Many of its actions involve cases where U.S. companies engage in illicit bribery in China.

For example, on June 7, 2016, the SEC announced non-prosecution agreements with two unrelated companies accused of paying bribes to Chinese officials by foreign subsidiaries in violation of the FCPA. One of the companies, a Massachusetts-based services provider, allegedly provided government-owned entities with gift cards, meals, and entertainment in an effort to persuade them to purchase more services than they actually needed. Another company based in Rhode Island allegedly made $290,000 in improper payments and gifts to Chinese officials in order to receive preferential treatment, relaxed oversight, or reduced taxes and fees. Both companies agreed to pay certain sums in disgorgement and interest as part of the non-prosecution agreements.

But the SEC’s interest in foreign corruption is not limited to just U.S.-based companies.

Last year, the SEC initiated a case against former executives of a Hungarian telecommunications company for violating bribery and securities laws by attempting to stop competition from entering Macedonia’s telecom’s market. Even though none of the companies involved are located in the United States, the SEC maintains it can bring charges under the FCPA because the telecommunications executives used a Hotmail email account operated by Microsoft Corp, which flowed through a U.S. server, satisfying the interstate commerce requirement of the law.

Although the SEC has not announced any legal proceedings against any individuals named in the Panama Papers documents, it will be interesting to see what, action, if any, the SEC pursues under the FCPA. If and when the SEC does initiate legal proceedings, the SEC and any defense counsel are sure to involve professional legal translators and interpreters to assist with such proceedings.

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