Putin denounces Panama Papers leak as attempt to weaken Russia - The Washington Post
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Russian President Vladimir Putin speaks during a media forum in St.Petersburg on Thursday. (Dmitri Lovetsky/AP)
Putin denounces Panama Papers leak as attempt to weaken Russia - The Washington Post
Putin denounces Panama Papers leak as attempt to weaken Russia
MOSCOW — Russian President Vladimir Putin on Thursday condemned a leak of confidential offshore account details that has shaken politicians around the world, claiming that it was part of a Western plot to weaken Russia.
The comments were Putin’s first public reaction to the Panama Papers, a leak of millions of documents from a Panamanian law firm that for decades has helped some of the world’s most prominent leaders set up offshore accounts, shell companies and other transactions.
An international consortium of journalists examining the papers found that Putin’s childhood friend, renowned cellist Sergei Roldugin, was connected to a web of transactions totaling more than $2 billion.
Roldugin has denied any wrongdoing. Putin was not personally named in the papers, a fact that the Russian president used to suggest the disclosures were meant to harm him by association.
The Panama Papers consist of 11.5 million documents from Panama-based law firm Mossack Fonseca. The papers apparently implicate a number of high-profile global figures in potentially illegal financial activities. (The Washington Post)
“Yours truly is not there,” Putin said, referring to himself. “So what did they do then? They produced an information product. They found some acquaintances and friends. They dug up some stuff and glued it together.”
Putin said that Roldugin — who introduced Putin to his wife — was simply involved in a bit of business.
“Many creative professionals in Russia — probably half of them — are trying to do business and, to my knowledge, Sergei Pavlovich has been trying, too,” Putin said, referring to Roldugin by his first two names in remarks carried by the Interfax news agency.
“What is his business? He is a minority shareholder in one of our companies, and he is making some money but definitely not billions of dollars. Nonsense, there is nothing of the sort,” Putin said.
The reports are aimed at dividing Russia from within, Putin claimed, “by infusing some mistrust in society toward government bodies and the government, and by setting people against each other.”
The Panama Papers documents carry references to people around the world, including prominent Chinese officials. On Tuesday, Iceland’s prime minister, Sigmundur Gunnlaugsson, was forced to tender his resignation amid an uproar about a previously undisclosed offshore account held by his wife.
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And British Prime Minister David Cameron had to repeatedly clarify his stance on offshore trusts after it was disclosed that his late father had an offshore account.
In many cases, the offshore accounts were politically embarrassing but not illegal, highlighting a loophole in the international financial system that has helped generations of the world’s wealthiest people sidestep taxes and guard their money.
The public reaction in Russia to the Panama Papers has been muted, in part because pro-Kremlin outlets have paid little attention to the Russians named in the files. Far more publicity has been given to the offshore accounts of Ukrainian President Petro Poroshenko, who has also denied any wrongdoing.
Read more:
Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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· · · · · · · ·
Panama Papers: Putin rejects corruption allegations
- 15 minutes ago
- From the section Europe
President Putin has denied "any element of corruption" over the Panama Papers leaks, saying his opponents are trying to destabilise Russia.
Mr Putin was speaking for the first time since the leak of millions of confidential documents from the Panama-based law firm Mossack Fonseca.
The papers revealed a number of offshore companies owned by close associates of Mr Putin.
They suggest the companies may have been used for money laundering.
Mr Putin, speaking live on TV, said Russia's Western opponents "are worried by the unity and solidarity of the Russian nation... and that is why they are attempting to rock us from within, to make us more obedient".
He said that because they could not find Mr Putin in the Panama papers "they've made an information product".
"They've found a few of my acquaintances and friends... and scraped up something from there and stuck it together."
He referred to Wikileaks tweets which accused US government organisations - the Organized Crime and Corruption Reporting Project (OCCRP) and USAid - of producing and funding "the #PanamaPapers attack on Putin".
The OCCRP was among a network of 107 organisations - including the BBC - which received the documents from the International Consortium of Investigative Journalists.
The papers name Mr Putin's long-time friend and godfather to his daughter, the cellist Sergei Roldugin, as the owner of two offshore firms, International Media Overseas and Sonnette Overseas.
According to the papers, the firms were involved in a number of suspicious deals, including one in which International Media Overseas received a loan of $6m (£4.2m) in 2007, which was written off three months later for just $1.
Mr Roldugin has not yet publicly commented on the allegations.
Mr Putin did not go into the details of allegations against Mr Roldugin or other Russian offshore interests, but he praised his friend.
He said he was proud of people like Mr Roldugin, who he said had spent nearly all the money he had earned on musical instruments and donated money to state institutions.
More on the Panama Papers
- Ten things we have learned
- Who's been caught in the scandal?
- Tax havens and the new politics
- BBC reporters on global reaction
- Major banks' denials
- How assets are hidden and taxes dodged
Several countries are investigating possible financial crimes by the rich and powerful following the Mossack Fonseca leak.
Iceland's prime minister stepped down earlier this week after it was revealed he owned an offshore company with his wife which he did not declare when he entered parliament. He denies any wrongdoing.
The mass leak revealed the extent to which Mossack Fonseca appeared to help some clients evade tax and avoid sanctions, although the firm has denied it has done anything wrong and says the information is being presented out of context.
Panama said on Thursday it was creating an international panel to help improve transparency in its offshore financial industry.
Panama Papers - tax havens of the rich and powerful exposed
- Eleven million documents held by the Panama-based law firm Mossack Fonseca have been passed to German newspaper Sueddeutsche Zeitung, which then shared them with the International Consortium of Investigative Journalists. BBC Panorama and UK newspaper The Guardian are among 107 media organisations in 76 countries which have been analysing the documents. The BBC does not know the identity of the source
- They show how the company has helped clients launder money, dodge sanctions and evade tax
- Mossack Fonseca says it has operated beyond reproach for 40 years and never been accused or charged with criminal wrongdoing
- Tricks of the trade: How assets are hidden and taxes evaded
- Panama Papers: Full coverage; follow reaction on Twitter using #PanamaPapers; in the BBC News app, follow the tag "Panama Papers"
- Watch Panorama on the BBC iPlayer (UK viewers only)
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· · · ·
12:21 PM 4/7/2016 - Putin Denounces 'Panama Papers' as Western Plot by Mike Nova (noreply@blogger.com)
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Putin Denounces 'Panama Papers' as Western Plot
- VOA News
Russian President Vladimir Putin during media forum of the All-Russia People's Front in St.Petersburg, Russia, April 7, 2016. Putin rejected links to offshore accounts, calling the leaks part of Western efforts to weaken Russia.
Russian President Vladimir Putin has denied allegations that documents leaked from a Panamanian law firm contain evidence of corruption among his closest associates, saying the so-called Panama Papers are part of a Western campaign to undermine Russia.
Speaking Thursday to a media forum in St. Petersburg, the Russian president said the leaked documents are part of an attempt to make his country "more docile," to create "distrust within society toward the authorities, the state administration bodies, and to set one against the other."
Citing an allegation made by WikiLeaks founder Julian Assange, Putin accused the U.S. government of being behind the Panama Papers. "That behind this stands...officials and official bodies of the United States, WikiLeaks has now shown us."
Putin noted that he himself was not mentioned in the documents. "You went through these offshore [documents]," he told the assembled journalists. "Your humble servant is not there, so there is nothing to talk about. But there is an assignment! [So] what did they do?...They found acquaintances and friends."
A screenshot of the Panama Papers Web site, April 3, 2016.
According to the journalists who analyzed the Panama Papers, the cellist Sergei Roldugin, a close friend of Putin since the 1970's, is linked in the documents to offshore transactions worth $2 billion.
Putin defended Roldugin Thursday.
"Many creative people in Russia, maybe every second one, is trying to do business, and, as far as I know, Sergei Pavlovich [Roldugin] as well," he said. "But what is his business? He is a minority shareholder in one of our companies and earns some money there, but this is certainly not billions of dollars. Nonsense, there's nothing like that."
Putin said Roldugin had spent his own money to advance Russian culture, and to acquire musical instruments abroad and bring them to Russia.
"I am proud that I have such friends," said the Russian president.
FILE - Russian cellist and House of Music Director Sergei Roldugin, left, escorts then Russian Prime Minister Vladimir Putin, center, and President Dmitry Medvedev as they tour a restored House of Music, a former palace of Great Prince Alexei Alexandrovich Pomanov, in St. Petersburg, Nov. 21, 2009.
The Panama Papers consist of more than 11.5 million documents leaked from the Panamanian law firm Mossack Fonseca that detail hidden offshore accounts held by world leaders and celebrities.
The International Consortium of Investigative Journalists (ICIJ), in a collaborative effort by more than 300 journalists from more than 70 countries, analyzed the financial data.
Released recently, the ICIJ report contains details on more than 214,000 offshore entities connected to people in more than 200 countries and territories. It also named 140 international politicians, including 12 current and former political leaders, who allegedly set up offshore bank accounts to hide their assets and possibly evade taxes.
WATCH: Putin Makes 1st Public Appearance Since 'Panama Papers' Leak
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· · · · · · ·
The massive data leak from the Panamanian law firm Mossack Fonseca indicated that Azerbaijani President Ilham Aliyev's wife and daughters have been secret shareholders in several offshore companies with a multimillion-dollar property portfolio. But while the "Panama Papers" reports have caused uproar in some countries this week, there was barely a ripple on the streets of Baku. (RFE/RL's Azerbaijani Service)
Russian President Vladimir Putin has denied having any links to offshore accounts and described the Panama Papers document-leaks scandal as part of Western attempts to undermine Moscow.
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In Russia, criticizing the president can lead to criminal charges. Russian authorities have launched a hate-crime investigation against regional lawmaker Olga Li after she published a YouTube video accusing President Vladimir Putin of a "criminal conspiracy" against the Russian people. (Vadim Kondakov, RFE/RL's Current Time TV)
Amnesty: ‘Disturbing’ Rise in Executions Worldwide in 2015by webdesk@voanews.com (Henry Ridgwell) Wednesday April 6th, 2016 at 6:33 PM
Amnesty: ‘Disturbing’ Rise in Executions Worldwide in 2015by webdesk@voanews.com (Henry Ridgwell)
Amnesty International says there was a disturbing rise in the number of executions carried out worldwide in 2015. At least 1,634 people were executed last year – a rise of more than 50 percent in 2015 and the highest in 25 years. But the true figure is likely much higher, as Henry Ridgwell reports for VOA from London.
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7:35 PM 4/6/2016 - New Survey Reveals Americans Believe Country has ‘Lost its Identity’by Mike Nova (noreply@blogger.com)
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4.6.16 - Sites
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Link - Summit Underscores Obama's Mixed Results on Nuclear Security by Mike Nova (noreply@blogger.com)
Summit Underscores Obama's Mixed Results on Nuclear Security
President Obama convened more than 50 world leaders in Washington this week hoping that international progress on one of his long-standing policy priorities, nonproliferation, would outlast his administration, but the gathering served mostly to highlight the mixed record of Obama’s nuclear agenda.
NEWS: The World and Security Review: http://newslinksandbundles.blogspot.com/ The main news stories from the major sources; selected, compiled, and occasionally commented on by Mike Nova
Amnesty: ‘Disturbing’ Rise in Executions Worldwide in 2015by webdesk@voanews.com (Henry Ridgwell)
Amnesty International says there was a disturbing rise in the number of executions carried out worldwide in 2015. At least 1,634 people were executed last year – a rise of more than 50 percent in 2015 and the highest in 25 years. But the true figure is likely much higher, as Henry Ridgwell reports for VOA from London.
Why Oil Prices Will Rise and You Will Be Caught By Surpriseby Brad Beago / Oilprice.com
I follow oil pretty closely given our exposure. As such, I get frustrated with many press and news show accounts of the commodity. It gets worse when the pundits and writers should know better. Frequently inexact terminology leads to misconceptions and sometimes I see outright falsehoods that completely distort the truth.
As a former oil analyst and professional energy investor, I feel compelled to take those to task. As a realist, I see that all markets require a difference of opinion and all investors talk their “book”. For this reason, when Jeff Currie at Goldman Sachs Commodities Group gets on CNBC and opines about future price movements, I give little notice. Jeff is posturing for his customers’ and GSs’ positions. Jeff can spin the story either way and chooses his statistics accordingly…That’s what he is paid very well to do.
Last week (March 28, 2016), I heard Dennis Gartman of the Gartman Letter, a trader and investor that I respect and have learned much from, spout an outright falsehood on CNBC. Everyone can have a bad day, but I’ve been hearing various versions of this for months. Dennis said in essence that oil prices could not rise very much because of “all the capped wells that could be brought on line very rapidly”. He predicted no more than $42/bbl this year. He estimated that at current strip pricing, you could lock in $45/bbl in 12 months, making large numbers of these “capped” wells profitable. The implication being that at current prices, the market would be rapidly flooded with new oil.
I’ll take the over on price, the under on production and bet all my capital that I’m right. (Oh, I already did that…). Dennis should know better. For fun though, I thought I’d like to take apart his thesis.
First, there are no “capped” wells in the U.S. To my knowledge not one well has been capped due to low prices, especially relatively young horizontal shale wells. Older wells are capped all the time when production is no longer sufficient to pay operating expenses for the well. Generally, onshore wells may cost something in the order of only $2,000 per month to operate. At $40 dollar oil, 3 barrels per day of production (gross) should cover operating costs.
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What Dennis is likely referring to is the “Drilled Uncompleted” or DUC well inventory in the various shale plays. Some estimates have shown as many as 4,000 of these DUCs exist and the numbers are rising. Many pundits cite these DUCs as an effective ceiling on oil prices.
However, a DUC is very different from Gartman’s implied “capped” well. There are many reasons why a producer would drill and not complete a well. They may have had a rig under contract, they may want to beat competitors, retain their or their service companies’ good employees, they may be able to hold expiring acreage, they may just want to see what the rocks look like in a particular area. However, the most likely reason is that the completion costs of these wells can amount to over 60 percent of well cost maybe – $3 to $4 million per well. As such, this investment is very difficult to recoup if a well’s flush initial production is sold at low prices. This is compounded when whole well pads are completed at the same time to increase efficiency. If you don’t like the price one well gets, six wells coming on line at the same time is worse.
This also flows into the other reasons why this production will not flood the market, namely the intersection of costs, timing and decline rates.
• Costs – 4,000 wells at even $3 million per well is $12 billion dollars. Given the upheaval among producers, where does Dennis suppose the $12 billion will come from to “instantly” “uncap” these wells and increase production? Not from the banks, the high yield market is tight, equity investors have stepped up for some Permian and Eagle Ford producers, but $12 billion is a lot of money.
• Time – Let’s say that oil prices above $40/bbl equals a green light for energy producers to attack their DUCs. (There appears to be no factual basis for this, but let’s pretend.) A quick look at C&J energy services, which controls the country’s third largest frac fleet as well as other completion services, tells part of the story. Today, just over 50 percent of the companies’ fleet is working and the rest is “stacked” or to be retired. The people were laid off months ago. Clearly, when they get the signal that their customers want more completion services, they will begin to reactivate some of this idle iron – one frac fleet at a time. The problem is the C&Js stock price is $1.46 and they have close to $1.2 billion in debt. Where will the money come from to rehire people, and reactivate idle equipment? After that, will the people return? Yes, but slowly and at a high cost. What about Baker and Schlumberger? Both are in better financial shape but their fleets have been stacked also and at this time, investors are in no mood to hear a company talk about adding capacity. When these companies return fleets to active status, they will be competing to hire a smaller pool of laid off workers.
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• Decline rates – Wells producing from tight rock or shale (wells that must be fracked) exhibit steep decline curves on the order of 75 percent during the first year of production. The implication is that producers are on a never ending treadmill in order to maintain or grow production volumes. That is, they must complete new wells in order replace the natural declines from existing wells. There are two critical points associated with these steep decline curves that pundits like Gartman don’t appear to grasp. The first is that based on current data, the four key liquids rich shale plays have declined by over 600,000 bopd since their peak of production in March, 2015. This production is gone. These wells have depleted. They can’t be turned back on. The only way to increase production again is new completions and new wells – in other words massive new reinvestment. This is very different from past cycles when OPEC dialed back production by idling a major field or two until demand rebounded. These OPEC giant and super giant fields are a totally different animal. It’s all about the infrastructure, not the productivity of a single well. The entire complex can be shut down, reworked, maintenance performed, etc. then turned back on…more akin to a refinery than typical single or multiple well fields. But that’s another story. Bottom line – that 600,000 bopd is not magically coming back. It took the onshore industry something like 12 months running flat out to add those volumes. Given oil prices, it will be quite a while and it will take higher prices before the industry even gets back to a steady walk, much less a flat run.
Another key thing to understand about decline curves is that they are continuous and right now declines are accelerating. However for example purposes, let’s look at the Eagle Ford. There are some 10,000 wells in the Eagle Ford producing today, and they are all in decline. The EIA estimates the average Eagle Ford well adds 800 bopd in its first month of production. Last month, Eagle Ford production is estimated to have declined by 60,000 bopd. That implies that 75 new wells per month must be drilled and completed to just replace this 60,000 bopd. Assuming it takes 15 days to drill a well, that implies around 38 rigs drilling and around 25 frac fleets running above what is running today! Today, there are 42 rigs drilling for oil and we estimate 10 – 15 frac fleets running in the Eagle Ford…so just to replace production, the industry would have to increase rigs running by nearly 100 percent and frac fleets by 150 – 200 percent. This would require a massive mobilization of capital and manpower. During this whole mobilization process, production from existing wells is declining, month after month. Don’t get me wrong, I believe this will happen. However, I know this won’t happen quickly and won’t happen at $40/bbl oil, making Gartman’s thesis and pricing argument completely false.
Production data, or lack thereof, is a primary hindrance to clear and transparent oil fundamentals. The mechanics of the above discussion would be more obvious if we could measure field production in real time. In fact, production data in Texas takes some three months to even estimate, and these estimates are often revised. The same goes for well completion data. The EIA tries to model this through its “Drilling Productivity Report”. However, there are no similar efforts for the rest of the global oil industry, in fact, OPEC publications use third party reporting not internal or “real” data from the companies themselves.
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In Saudi Arabia, production statistics are a state secret. Not surprisingly, many countries distort the data to suit their own needs. That’s why the IEAs look at G7 storage data is an important industry statistic. It is widely recognized that both global demand and supply data is inaccurate, but changes in storage inventories should reflect supply and demand changes. The only problem with this approach is they only get data for around 2/3 of the global storage capacity. This is what led to the recent headlines “800,000 bopd of oil is missing”. Supply estimates exceeded demand estimates by 800,000 bopd during the quarter, yet storage didn’t build, leaving the question of where did the oil go? The answer is that there never was this extra oil…if it existed, it was burned. More than likely, both supply and demand estimates were off by that amount.
Third parties like “Drilling Info”, BTU Analytics, CERA, etc. provide their looks at the market for very high prices, and as such are much more granular than those from government data providers. As much as they try, they are still limited by the availability of international data and reporting time lags domestically, not to mention their own biases.
Generally it takes 18 months before the world has a decent picture of supply and demand. This is little consolation to those trying to do real time analysis on the direction of prices. That is why I can say categorically “the fix is in”. In other words, fields are declining, meaning investment is far below levels required just to replace production. The only thing that will change the vector of these declines is more spending, lots more spending, and the only thing will spur lots more spending is higher prices. Significantly higher than $40/bbl.
In conclusion, we have a typical commodity price cycle. Prices have dropped to levels destroying capital, bankrupting businesses, idling massive amounts of equipment and manpower. The cycle is reversing now. The weekly EIA numbers are showing steady declines in production (this is a balancing item – not real production estimates) and also increasing demand – In the United States. The IEA is showing the same thing in their monthly report that has a decent look at the G7 countries and attempts to look at the G20. Between these two, there is a large world with little accurate measurement. China for instance jailed a Platts reporter for espionage when he tried to put together a fundamental energy statistics database.
Inevitably, we will have another price shock – or at minimum an upside surprise. It’s unavoidable at this point. Oil never transitions smoothly. Just like all the oil bulls had to be run out during the declining price stage, all the price bears, like Dennis Gartman, will be run out when fundamentals hit them over the head. Gartman, to his credit, will change his tune 180 degrees when he sees the actual data shaping up. That’s how he has survived so long and profitably as a trader.
But by then it will be too late, the world will want incremental supplies immediately – yet the industry cannot scale in real time. In order to motivate producers to get busy and provide incremental supplies, prices must increase sharply from current levels. My prediction – $80/bbl in 18 months, but it won’t last very long. I think $60 – $70/bbl is a healthy range.
This article originally appeared on Oilprice.com
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