It’s 9:30 on a damp Thursday evening in October, and the Bavarian state government’s motorcade is waiting for a prominent guest on a tarmac at Munich International Airport. The reflection of the headlights adds a shimmer to the puddles as the passengers of flight LH 2081 from Hamburg look around and wonder who the convoy is waiting for.

Little do they know they’ve just flown in the company of Juan Carlos Varela, the president of Panama, a friendly-looking man who slightly resembles a bear. His visit to Bavaria is unusual; the Panamanian president has never been to Munich before. But it’s clear that he hasn’t come to visit the Süddeutsche Zeitung, the Munich-based media outlet at the root of the Panama Papers.

The newspaper’s journalists were the first to receive the 11.5 million secret documents that made up the biggest data leak in history. In total, 400 journalists from 80 countries researched the material. In April of this year, the first reports were published about Mossack Fonseca, the Panamanian law firm that helped some of the world’s biggest villains hide their money to avoid taxes, violate sanctions, and dodge investigations of all kinds. In the wake of the revelations, several politicians were forced to resign, there were mass protests in half a dozen countries, and investigations were launched around the world.

Panama’s image took a major beating as the story unfolded. Over a period of many years, the shell company business was one of the pillars of the country’s economy – alongside the Panama Canal. Damage control is one of the reasons why Juan Carlos Varela, the president of Panama, recently travelled to Berlin, Hamburg, and Munich. In the process, he was forced to talk about the Panama Papers over and over again. Following a reception at the Bavarian ministry of the economy, Varela even faced an impromptu Q&A session with SZ reporters, during which he said a few surprising things, especially about Ramón Fonseca. The founder of the Mossack Fonseca law firm is Varela’s friend, fellow party member, and former advisor.

Documents published in the United States show that Varela’s communication blitz is apparently managed by Bellwether, a PR firm that specializes in damage control. More specifically, Mike Holtzman, a PR professional known for handling sensitive situations, is on the case. Holtzman stood by the Chinese government when China put in a bid for the Olympic Games. Syrian dictator Bashar al-Assad has also called on Holtzman’s services. Panama, a country that was recently unable to pay the salaries of hundreds of teachers for six months, shells out USD 50,000 a month to Holtzman.

The atmosphere makes it easy for Varela to be all smiles

Varela kicked off his PR tour in Berlin at a meeting with Angela Merkel on Tuesday afternoon. The Kanzleramt rolled out the red carpet for Varela. He was received with the guard of honor and all the trimmings of a state visit. Varela and Merkel spoke for about an hour before they addressed the press corps. It seemed as though the German Chancellor went to great pains to stick to diplomatic protocol. The press conference with Varela was garnished with speaker’s podiums, national flags, and a striking absence of critical words. Not surprisingly, Merkel hopes that German companies will get business from Panama. And she would like to see an agreement come to fruition on the exchange of tax-related data between Panama and Germany. Such an agreement would make it easier to track down tax evaders and money launderers.

Merkel makes an effort not to have Varela portrayed as the president of tax tricksters. “The good thing is,” she says, “that we already have a previous agreement.” The bad thing is that said agreement isn’t worth the paper it’s printed on: it has never entered into force.

The relaxed atmosphere makes it easy for Varela to be all smiles. He nods in a friendly manner and talks about the Panama Canal and how beautiful Germany is. He meets Norbert Lammert, the president of the German parliament, as well foreign minister Frank-Walter Steinmeier and representatives of the chamber of commerce. He’s even got time for a siesta between appointments. Panama’s minister of the economy Augusto Arosemena and foreign minister Isabel Saint Malo are also on hand, and both make an effort to paint Panama in a positive light. They describe it as a country with next to no inflation. Its economy is growing, and Lufthansa has several direct flights from Frankfurt to Panama each week. In fact, the president himself flew to Germany with the airline. Saint Malo goes so far as to describe Panama as an “investment magnet”.

But what about the Panama Papers?

The minister says the term itself is misleading. “The Panama Papers don’t refer to the country. They refer to the Mossack Fonseca law firm. While it’s headquartered in Panama, it has offices all over the world.” And tax evasion is a global problem: “I think the documents were named Panama Papers because our country has such a great name.” The Panamanian delegation go on to make similar statements at events all over Berlin. But they conveniently skip the Wilhelmstrasse on their tour, where specialists at the German Ministry of Finance have been waiting in vain for months on secret information about companies and accounts in Panama.

Instead of addressing such unsavory topics, Panama’s minister of the economy Arosemena waxes poetic about his country: it’s one of the few places in the world where one can bathe in the Caribbean in the morning and the Pacific in the afternoon. Also of interest: Panama, the global transport hub, is a worthwhile place of investment for German technology companies of all kinds. They could help Panama become Central America’s Singapore!

Varela’s next stop is the Latin America Club (LAV) in Hamburg. In the lobby of the Grand Hotel Elysée, hot sauce, tender cobia from Caribbean aqua-farming, and fresh pineapples are being served up. A photography exhibit accompanies the food stands: the pictures show the canal that secured Panama’s existence and generates the lion’s share of the country’s income. There is even a stand with “Ron Abuelo”, the premium rum from the Varela Hermanos distillery. It was once run by Juan Carlos Varela himself, whose family has been one of Central America’s biggest rum producers for three generations. The distillery recently put out new products that were distilled in sherry and cognac barrels – but the sales manager is quick to point out that the president isn’t here to sell rum.

Dubious financial transactions and shell companies are not part of the Panama that Varela is presenting in Hamburg. An interview with the Süddeutsche Zeitung has been turned down. “Time: time is our biggest enemy,” says Ambassador Guido Spadafora, all the while waving his hands.

The president shakes the reporter's hand and says "Let's talk!"

Christoph G. Schmitt sees things differently. A mix of north German reservation and Latin American cheer, the German-Colombian is the managing director of the Latin America Club, the strong representative of German industry in Latin America. Schmitt thinks that President Varela would be well advised to speak openly about his country’s situation. “I will tell Varela he must speak to you,” he says, before disappearing into the crowd of dark suits in the full conference room. A few minutes later, Varela is working the room, shaking hands and kissing cheeks. He suddenly turns around to shake the reporter’s hand and says “Let’s talk!”

Varela puts his feelers out at a short initial interview. The real interview takes place the next day: in Munich, where he is set to speak to business VIPs at Bavaria’s Ministry of the Economy. Just as he is done throughout his German tour, he adopts the strategy of minimizing the importance of the Panama Papers by comparing them to a very famous German children’s story about a tiger and bear that head out together to find Panama.

He uses this tactic to greet the two reporters after his talk: “Ah. The tiger and the bear!” Then he gets straight to it via his press secretary, who claims that branding Panama in such a manner was unfair and politically motivated. Since the story broke, the Panamanian view has been that the Panama Papers are a conspiracy against the tiny country.

Except for a brief shrug, Varela himself doesn’t show his annoyance at the representatives of the newspaper that, in his view, made his country a symbol for tax fraud. He begins in Spanish, but then switches to English to avoid being misunderstood. A dozen people are listening in, and more arrive as the minutes pass. Concerned about keeping to the schedule, the people in Varela’s entourage start shuffling their feet. Perhaps they are worried that their president will be humiliated.

But Varela answers each question in detail. The atmosphere is tense, but the tone is calm and objective.

The president says that financial transactions were made at many locations, including Luxemburg, the Bahamas, and Delaware. He himself is committed to the fight against tax evasion and money laundering. In the past, under his predecessor Ricardo Martinelli or the autocrat Manuel Noriega, there were dubious dealings. “But all that is over.” The canal, tourism, and German investors: that is Panama’s future. Not money from dodgy sources. Varela asserts that he himself has focused on cleaning up since he was elected president in 2014.

But the facts paint a different picture. Until the Panama Papers were published, Jürgen Mossack, co-owner of the Mossack Fonseca law firm, sat on Panama’s national foreign relations council. His brother was honorary consul in Germany. Ramón Fonseca, the law firm’s other owner, is Varela’s personal friend and more: Fonseca was deputy chairman of the governing party and the president’s close advisor. He had his own cabinet seat, and in the past his candidacy as Panama’s minister of public safety was even considered. Apparently, his appointment failed because of U.S. government protests. Traditionally, the U.S. has wielded considerable power in Central America, and the Americans didn’t want to see an alleged enabler of money laundering holding public office.

Is that what Señor Presidente calls cleaning up?

“Well, yes,” says Varela. Ramón Fonseca once supported him in his fight against his predecessor Ricardo Martinelli. Ramón Fonseca, the Panamanian president says, was a good friend “and he still is”. Varela pauses for a moment and looks over to his advisors.

For the past six months, this friend has been badgering journalists, calling them liars and left-wing activists. In April, investigators raided the headquarters of Mossack Fonseca in Panama City, combing the offices for 28 hours. At the time, it was said that the purpose of the raid was to assess whether the company had been used for illegal activities. However, the opposition suspected that damaging material may have been destroyed rather than seized. And in fact, Mossack Fonseca appears to have largely been left alone since then.

In Munich, Varela says that such investigations need time. He doesn’t want to interfere with the work of the public prosecutor, who he personally appointed. His friend Fonseca resigned as presidential advisor and co-chair of the governing party last spring, after he received the SZ’s questions. President Varela now says that he ordered Ramón Fonseca to step down. “He will have to take responsibility for his actions – and ultimately face the judge.”

A remarkable statement.

To this day, Varela’s friend maintains he is innocent. The reporter asks the president if he also sees it this way. Varela’s answer: “If he had always really always acted correctly, he wouldn’t have any problems currently either.” According to Varela, Ramón Fonseca lost control of his company. He focused on expanding and opening offices in other tax havens. But the president says that’s over now . The law firm has let dozens of employees go, and several offices have had to close. The firm is finished, says Varela.

In fact, the law firm had questionable clients, and the Panama Papers give the impression that Mossack and Fonseca knew exactly what was going on at their company. But Varela unexpectedly distances himself from his friend’s law firm.

Critics have spoken of Varela’s “offshore cabinet”

Mossack Fonseca is only one of many Panamanian law firms that are involved in the offshore business. The others also have ties to the president. For instance, Varela’s presidential minister owns a law firm that provides offshore services. And Panama’s minister of the economy once worked for Morgan y Morgan, a law firm also in the business of shell companies. One of its partners happens to be Varela’s deputy foreign minister. Critics have spoken of Varela’s “offshore cabinet”.

Should Mossack Fonseca be sacrificed so that the others can carry on?

In Panama, political observers see the president as an innocuous bear that can be paraded around the world as a show of repentance while business keeps running behind the scenes. Is he aware of this?

Varela nods, thinks for a moment, and then continues: it goes without saying that certain “forces” have resisted his course: “Whoever sits on my cabinet has an obligation toward me, and not toward their business.” Then he speaks about the agreement with Germany, which will be signed in a matter of months. And by the way, it is only a first step. The automatic exchange of tax-related data with other countries is also on the horizon, “as promised.” But this could take a while. Varela needs a few hundred people first, and “this won’t happen over night”. And in fact, it took years for countries like Switzerland and Lichtenstein to break down the walls that protected tax fraudsters. Varela says that the international data exchange will be introduced by 2018 at the latest. His promise went on record in Munich, and he will be measured against it.

A registry of legal owners, of the people behind the facades of mysterious companies, is also in planning, Varela promises.

This would be a decisive step, as it would lift the fog that has thus far kept the business dealings of offshore providers hidden. But it remains to be seen whether Varela follows through on his promise.

Just a few days after the Panama Papers were first published, Varela presented a commission of international experts that was going to analyze what happened and deliver ideas on how to stop illegal business transactions from being carried out in Panama. The team included the star economist and Nobel Prize Laureate Joseph Stiglitz, as well as Mark Pieth, the Swiss corruption expert.

However, both Stiglitz and Pieth stepped down a few weeks later and accused the Panamanian government of censorship. The government - according to Stiglitz and Pieth - wanted to decide itself which of the working group’s results should be published, if any. In Munich, Varela said that the commission had continued to work without Stiglitz and Pieth, and that its independence from the government was still guaranteed. The results are set to be presented in the coming days.

In speaking to Stiglitz on the phone, it is clear that he is still angry about how the Panama situation unfolded. The SZ reached him in New York, two days after Varela’s meeting with Angela Merkel. He is upset about the Panamanian government’s PR tour in Germany. He read in the New York Times that Chancellor Merkel had praised Varela. “I don’t understand why Merkel would do that.” Stiglitz doesn’t see real progress. Varela has made a lot of promises, but he hasn’t kept any of them, says Stiglitz. While Panama agreed to the automatic global exchange of data, it then withdrew from the deal, supposedly over fears that information could fall into the wrong hands.

Other countries don’t have a problem with sharing information, so why should Panama? “What’s so special about the information Panama has?” Stiglitz asks, and then answers his own question: “The Panama Papers showed it.” Dictators, arms dealers, the financiers of terrorism, pedophiles, money launderers, and sanctions violators used the services of the Mossack Fonseca law firm. “The truth is that matters were far worse than I had imagined,” Stiglitz says.

The SZ reporters would have liked to ask Varela about this as well, but he ran out of time. His last engagement at the Munich fair had to do with marketing Panama, not as a paradise for tax evaders, but as a paradise for tourists.

Contributors: Cerstin Gammelin, Gianna Niewel; Translation: Valérie Callaghan