For all the mislabeling that characterizes contemporary financial coverage, the press has gotten one thing right: The Panama Papers story is truly a crisis. It's a story that directly threatens the ability of the Panamanian law firm Mossack Fonseca -- and, by extension, other firms operating in the corporate services industry -- to effectively service its clients. No one is accusing Mossack Fonseca of not taking this seriously, but everyone is accusing them of managing the crisis poorly. And that just plain misses the mark.
For those who have been on vacation without TV, internet, or coconut telegraph service in recent weeks, here's a brief recap: The biggest data leak in history was revealed on April 3 by the International Consortium of Investigative Journalists. The leak contained 11.5 million files detailing the financial workings of many offshore companies with ties to Mossack Fonseca, including some who have connections to public figures around the world. Since the release and initial media coverage, the prime minister of Iceland has resigned, and other prominent individuals have come under intense criticism for their use of so-called tax havens to reduce their tax payments. Some of the biggest names in the world, from Russian President Vladimir Putin to soccer star Lionel Messi, are connected to the leak, which makes this story particularly sexy.
Mossack Fonseca has firmly and repeatedly denied any wrongdoing, claiming unequivocally that all of their operations are legal. It released on social media, in English, long and technical statements defending this position. These statements have been directed at some of the news outlets covering their crisis most aggressively, and have in turn been covered as news stories in and of themselves.
This all falls back on a classic public relations tactic that has until recently fallen out of favor with the corporate social responsibility-obsessed world of traditional PR: the "Wall Street defense." It's a straightforward concept and a crisp and memorable talking point: Making money is not illegal. The defense is also effective because it happens to be true.
For Mossack Fonseca, it's getting them closer to their objective -- to look less interesting as a target, all while doing a full damage assessment and convincing their clients that they are still able to service their needs. Anger about the leak and the contents of the documents has been increasingly directed at governments who have failed to enact substantive tax reforms or to address the issue of tax avoidance head-on. Mossack Fonseca has wisely (for the convenience of journalists seeking balance in their coverage) collected much of the commentary on these points of contention from the more prominent outlets on their website, which also houses the above mentioned statement. While these calls for reform may in the long term present a new challenge to their business, the extra time allows them to address the roots of the crisis at hand.
The Panamanian law firm has also effectively used the mundanity of international tax law to buy themselves more time for triage. "Delay" is a tried and true crisis communications tactic that doesn't get enough respect. They did this by overwhelming reporters with technical, in-depth explanations of international finance law, not pithy quotes subject to ridicule or contradiction. By design or by accident, this substance-over-sound-bites strategy is proving effective.
Silly and baseless calls for the law firm to "get out in front of the story" or "be more responsive on Twitter" fail to understand the nature of this particular crisis. While it's still early to tell, Mossack Fonseca's crisis management strategy seems to be working. At least for the moment.