Making a point.

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Were the Panama Papers Planted? Who Cares.

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Last week, a respected Russia scholar in the U.S. speculated that the Kremlin might be behind the so-called Panama Papers, the big dump of data about offshore accounts that has implicated several countries' officials in shady dealings. And on Thursday, President Vladimir Putin of Russia blamed the U.S. for the leak.

So far, the Panama Papers have caused the resignation of Iceland's prime minister (whose wife owned some bank debt that the government was trying to restructure) and Spain's industry minister (who had denied, falsely, that he'd had any offshore dealings). There probably will be further fallout: The millions of documents haven't been fully investigated. Still, it's probably safe to say that there will be no resignations, firings or criminal inquiries in Russia. 

The Russian portion of the Panama Papers is not actionable. It details the offshore activities of Bank Rossiya, a financial institution that belongs to Putin's close friends. Companies linked to the bank, and to Putin's friends, appear to have profited from spurious stock deals and huge, artificially created breach of contract fines. The companies also received inordinately big amounts of money for consulting and lobbying services. Yet the transactions appear legal, and at least in Russia, no one is going to investigate them. All Putin's friends can do is roll their eyes: Most of them -- and Bank Rossiya -- are targeted by Western sanctions and could be subject to property seizure. And Putin's name doesn't appear anywhere in the papers. 

Putin, who doesn't deny the authenticity of the papers, made a point of noting the absence of names. "They are not accusing anyone specifically," he said during his annual call-in show on Thursday. "That's the thing, they are just muddying the waters."

That's exactly what makes Clifford Gaddy, a senior fellow at the Brookings Institution and a top U.S. expert on Russia, suspicious. In an article on the Brookings site, Gaddy called the revelations about Putin's friends a "non-story" that would, "on net," benefit Putin. The geographical breadth of the revelations would allow him to claim that "everybody does it," and he wouldn't be personally affected. Thus it makes sense that the Russians had some role in the leak. Gaddy wrote:

"Any actual reputational damage to Putin or Russia caused by the Panama Papers is in fact pretty trivial. For that cheap price, the Russians would have 1) exposed corrupt politicians everywhere, including in “model” Western democracies, and 2) fomented genuine destabilization in some Western countries. What I wonder, then: Is it a set-up? The Russians threw out the bait, and the United States gobbled it down. The Panama Paper stories run off Putin like water off a duck’s back. But they have a negative impact on Western stability."

Gaddy, however, doesn't see himself as spinning a conspiracy theory. As he told me in an e-mail, "It was a question to those who publish this information and draw conclusions on the basis of it without, it seems to me, asking themselves: `Are we sure in publishing this information that it is reliable? That it is complete and unfalsified, and that it is not designed to serve someone else’s agenda?'”

To Gaddy, Putin's statement that the information in the Panama Papers is accurate is also suspect on these grounds: "It would be fun, but I'm sure unproductive, to ask him: 'Really? And exactly how do you know that?'"

The problem with this theory, however, is that it's well, just a theory. Putin has as much evidence that the Panama Papers are a U.S. plot as Gaddy does that they're a Russian one, and yet the Russian president said,

"We know there are employees of official U.S. agencies in this,  and the story first appeared -- I asked Peskov, my press  secretary, yesterday -- in the Sueddeutsche Zeitung. The Sueddeutsche Zweitung is part of a media holding, and this media holding belongs to the Goldman Sachs financial corporation, so the long ears of those who ordered this stick out everywhere, and those ears don't even blush. We shouldn't expect any remorse from them, they will keep doing it anyway, and the closer to the election, the more such leaks there will be."

On Friday, Dmitri Peskov had to apologize for the Sueddeutsche Zeitung passage -- the German daily has nothing to do with Goldman Sachs. It was all his fault, Putin's press secretary said. But the mistake is telling: Putin the ex-spy has been looking for clues that would link the leak to the U.S. -- because who else could be interested in stirring things up ahead of the  September parliamentary and 2018 presidential elections in Russia?

Gaddy dismisses Putin's conspiracy theory: "Of course he would say this." 

Any corruption-related leak of this magnitude can hurt or benefit multiple parties. It makes sense to apply Occam's razor to these considerations before coming to any conclusions about the leak's source. That can only be established if the leaker comes forward or is exposed.

But I would argue that, in the end, that the provenance isn't important -- only the accuracy of the data is.

Putin has confirmed that the Russian part is accurate. The information is, of course, more damaging than Putin is willing to admit: It exposes the inner workings of Russia's crony capitalism. he material also has proved accurate regarding accounts of people from Iceland, Spain, the U.K. and elsewhere. So why get hung up on its source? It makes much more sense to applaud the work of the investigative journalists who checked and developed the leak. It's an extraordinary collective performance by a much-maligned professional community that has proved convincingly that it has an important social role to play. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net