The torrid saga of the so-called Panama Papers seems to have come to a head with the arrest of Mossack Fonseca's partners and the takeover of FPB Bank by the Panamanian Superintendency of Banks.

Panama's banking regulator has taken over the day-to-day administration of the bank because of its alleged involvement in Latin America's largest ever corruption investigation, Lava Jato or 'Operation Car Wash.'

A tale of two websites

The relevant press release, written by Panamanian attorney-general Mrs Kenia Porcell, states in rough translation: "Two years ago I took on a commitment to lead a public ministry, where we began our historic fight against corruption. We have initiated more than 40 investigations, many of which are awaiting decisions from the judiciary.

"The deputy organised crime prosecutor is conducting a money-laundering investigation, initiated ex officio. The alleged relationship of a Panamanian law firm with the commission of crimes in Brazil in the Lava Jato case is highlighted.

"The information that we have collected identifies the Panamanian firm, allegedly, as a criminal organisation that is dedicated to hiding suspicious assets (money) and creating corporate and financial structures directly associated with the law firm.

"The...Panamanian law firm [was] reportedly directed to instruct the person in charge in Brazil to conceal documents [and] remove evidence regarding people who had been involved in...illegal activity related to the Lava Jato case. In simple words, the money from the bribery circulates through different structures and returns to Panama."

Mrs Porcell acknowledged the help that she had received from the attorney-general of Brazil, Rodrigo Janot; their counterpart in Peru, Pablo Sánchez; Galo Chiriboga of Ecuador; Néstor Martínez of Colombia; and the prosecutors-general of Switzerland and the United States.

The seized bank's website proclaims: "The diversity of products and services that we offer to each customer is the result of our experience, knowledge and tradition in the financial market. Our commitment is to continue to grow with our customers and to enter new markets with proven and competitive financial solutions for a distinguished clientèle."

The regulator's website, for its part, mentions the matter very obliquely and briefly. It merely states, in translation: "Take administrative Control and operation 1. FPB Bank, INC view full resolution." A click on the tab reveals another terse message: "Seizure of Administrative and Operating Control Total: 0."

Operation Car Wash

Lava Jato is a Brazilian bribery probe involving prosecutors in many countries outside Brazil, including the United States. It involves Petrobras or Petróleo Brasileiro SA, Brazil's state-run oil company, and Odebrecht, a Brazilian-listed engineering company (the largest one in Latin America) which is accused of bribing public officials to secure contracts.

The International Business Times has reported that 57 politicians and companies embroiled in the Petrobras scandal have also been named in the Panama Papers leak, whose progress Compliance Matters has covered many times during the past year. Indeed, the whole saga is so politically charged that Teori Zavascki, the investigative judge without whom there would have been no Operation Car Wash, has recently died in a mysterious aeroplane crash in the usual manner. Michel Temer, Brazil's president who is facing allegations that he solicited $2.9 million in illegal campaign donations in 2014 and who has been implicated in the Lava Jato case by the plea-bargaining testimony of oilman Sergio Machado, is in charge of choosing the judge's replacement.

Lava Jato is so called because it began as a money-laundering investigation. It ballooned into an international corruption case when various Brazilian suspects struck plea bargains with Mrs Porcell's office - a commonplace occurrence in the United States but still a relative rarity in Brazil.

Enter Odebrecht

The investigation is now targeting another giant company, Odebrecht, whose jailed founder, Marcelo Odebrecht, signed a plea deal in December. This month Brazil's Supreme Court validated 77 plea deals concerning Odebrecht employees.

In December Odebrecht and Braskem, a Brazilian petrochemical company, pled guilty in the US to offences under the the Foreign Corrupt Practices Act 1977 and agreed to pay at least $3½ billion in global penalties to resolve charges with authorities in the United States, Brazil and Switzerland arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world. Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit — a ‘department of bribery’ — that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents.

Odebrecht and Braskem each pled guilty to a one-count criminal information filed by the Securities and Exchange Commission's Criminal Division’s Fraud Section and the US Attorney’s Office in the US District Court for the Eastern District of New York, admitting to conspiracy to break the FCPA. The case was heard in the US because they used the US banking system and because Braskem, Odebrecht's affiliate, is listed on the New York Stock Exchange.

According to its admissions, Odebrecht engaged in a massive and unparalleled bribery and bid-rigging scheme for more than a decade, beginning as early as 2001. During that time, it paid approximately $788 million in bribes to government officials, their representatives and political parties in a number of countries in order to secure contracts in those countries. The criminal conduct was directed by the highest levels of the company, with the bribes paid through a complex network of shell companies, off-book transactions and offshore bank accounts.

May lightning strike me if I lie!

Jurgen Mossack and Ramon Fonseca, in the meantime, have been refused bail. Their offices in Panama were raided last week. Fonseca has already denied that his firm was involved with Odebrecht in any way and has also told reporters, rather sensationally, that his former friend President Varela told him that he had received bribe money from that firm, adding dramatically: "may lightning strike me if I lie!" He also denied any involvement in the Lava Jato case in general, adding: "they're using me to divert attention."