11 April 2016

Africa: Panama Papers Tip of Iceberg

Photo: AllAfrica
Campaign against illicit financial flows (file photo).

"In other words, the leaks reveal just how the planet's wealthiest and most powerful citizens hide their money - trillions of it - in offshore tax shelters like the British Virgin Islands or the Seychelles with the help of law firms in swampy backwaters like Panama. Over 11-million horribly incriminating documents, and this is just one - if one of the more prominent - of the many law firms specialising in this line of work." - Daily Maverick, South Africa

The system is world-wide, and the Panama Papers leaks unprecedented in scale. The volume is such that it is daunting even to read a fraction of the stories that are coming out, with their political implications for Iceland, the UK, Russia, China, and multiple African countries. While names from the United States are relatively few to date, as the Panama law firm involved focused its client outreach on Europe and Latin America, the scandal has still called attention to similar practices which are even more advanced in the United States itself. And the story is advancing at country level in many places, with the involvement of many African investigative journalists on the ground, working together in the African Network of Centers for Investigative Reporting (ANCIR).

This AfricaFocus Bulletin contains two articles focused on revelations related to the heads of state of South Africa and the Democratic Republic of the Congo, and a summary of Africa-related stories (so far) from the ANCIR. Expect many more to come. The ANCIR also has a special website for contributing new leaks anonymously to investigative reporters at https://afrileaks.org/

For a wide range of previous background articles on this global system of illicit financial flows and its implications for Africa, visit http://www.africafocus.org/intro-iff.php

Among just a few of recent articles worth noting, an overview in The Nation (http://tinyurl.com/hqdnovn) by Chuck Collins of http://inequality.org, Uganda civil society coalition statement (https://groups.google.com/forum/#!topic/afritax/4xjUSb7Jo3M), and a related but independent investigative report in the Rand Daily Mail on Zuma, Putin, the Guptas and nuclear power plans (http://tinyurl.com/zh9ppym).

For more recent updates and advocacy, see, in addition to other links included in this Bulletin, http://www.taxjusticeafrica.net/en/home/, https://financialtransparency.org/, and https://thefactcoalition.org/

And, after a slow start because they were not among those included in the investigative group, major newspapers such as The New York Times and the Washington Post are also giving major attention to the leaks and to their implications for the status of the United States itself as one of the leading "tax havens" anchoring this global system. See, for a few examples, http://tinyurl.com/zaadjup, http://tinyurl.com/guw6ucv, http://tinyurl.com/ze767av, and http://tinyurl.com/hyj8lwr - Editor's Note

"Panama Papers - How Zuma's Family Is Implicated in the Greatest Corruption Data Dump of All Time"

Richard Poplak, Daily Maverick, Apr 4, 2016

http://tinyurl.com/hu8y4hg

It's early days. But when it comes to the so-called Panama Papers - a 2.4 terabyte leak of documents from a Panama-based law firm called Mossack Fonseca - it does appear that we're dealing with a data leak bigger than both Wikileaks and the Snowden files. Most important, it regards something we have always known, but have struggled to prove: the rich and celebrated hide their money in secret offshore tax shelters. Welcome to one of the biggest stories of our time. And while you're settling in, try guessing which famous South African family immediately pops up in the files?

Here's a booming salvo from the vast global digi-mocracy we were promised by the earliest of the internet's Utopians: Clive Khulubuse Zuma is a big fat scumbag. Oh, I'm aware that this was common knowledge before some unbelievably heroic soul snagged 2.4 terabytes of filth from the servers of a Panamanian law firm called Mossack Fonseca. A resulting collaborative media project has mined the data for recognisable names, and fancy-ass notables like Vladimir Putin, Lionel Messi and the president of Iceland are now implicated in a reverse alchemical process that has turned money into - fresh air!

In other words, the leaks reveal just how the planet's wealthiest and most powerful citizens hide their money - trillions of it - in offshore tax shelters like the British Virgin Islands or the Seychelles with the help of law firms in swampy backwaters like Panama. Over 11-million horribly incriminating documents, and this is just one - if one of the more prominent - of the many law firms specialising in this line of work.

Which, in a round-about way, brings us once again to our thesis: Clive Khulubuse Zuma is a big fat scumbag.

The following is yanked from a site called The Center for Public Integrity, which serves as the landing page for much of the Panama Papers data dump. And grok what bubbles up on the very first day - the very first hour! - of the leak:

Clive Khulubuse Zuma is a nephew of South Africa's President Jacob Zuma. A mining magnate, Khulubuse Zuma has reportedly enjoyed a lifestyle of cigars and up to 19 collectible cars. In June 2015, a South African court found Zuma liable as chairman in the collapse of a gold mining company that led to more than 5,000 job losses. In court submissions, Zuma denied responsibility for the company's failure.

Zuma was authorised to represent Caprikat Limited, one of two offshore companies that controversially acquired oil fields in the Democratic Republic of Congo. In late summer 2010, as published reports raised questions about the acquisition, British Virgin Islands authorities ordered Mossack Fonseca to provide background information on Zuma, which the law firm had not previously obtained. That same year, Mossack Fonseca decided to end its relationship with the companies. Zuma and representatives of the companies have rejected allegations of wrongdoing and claimed the oil deals are "quite attractive" to the DRC government.

To that last part: yeah, whatever. But what this document proves, without any shadow of a doubt, is that Clive Khulubuse Zuma is a big fat scumbag. More specifically, it reminds us that President's Zuma's nephew was linked to Caprikat Limited, one of two companies that successfully scammed what could amount to a R100-billion oil fortune from the beleaguered people of the Democratic Republic of the Congo.

What, you ask, does our blame-free, super-apologetic president have to do with any of this?

Nothing. Except for the fact that in 2010, he paid a visit to DRC President Joseph Kabila in Kinshasa, where they allegedly had a discussion about these impressive oil fields, and nudge-nudge, winkwink, the corpulent Khulubuse would later come right.

Joseph Kabila has more than his fair share of fat scumbag friends, but it does seem that Khulubuse Zuma served as one of the more important. It's a grim little instance of the kind of collusion that goes on all the time - two powerful dudes meet, and billions of dollars goes errant shortly thereafter.

As the Panama Papers now make achingly clear, this is how the world works. The average South African citizen may be enraged with Zuma, the Guptas, or the Zuptas, but we now have proof that they're little more than a pimple on the ass of an endless global corruption network that has no overarching aim - no Illuminati-like pseudo religious objective - other than fleecing as much dough as possible for as long as possible. Everyone - the prime minister of freaking Iceland included - is in on the game. The game being petty theft on an unpetty scale.

In this it would be impossible, embarrassing even, for a Zuma to be left out of the conversation.

The Panama Papers are one of the most significant leaks of all time, and they are currently laying bare a legal-ish loophole that has disappeared trillions of dollars from the global financial system. There is much, much more to come in what promises to be the biggest continuing news story of our epoch.

But only hours after the leak was made public, a Zuma pops up. And he's not alone. The world, we now know for sure, is full of them. DM

"The entities behind dodgy Congo deal"

Craig McKune, Business Day Live, Apr 08 2016

http://tinyurl.com/z6j3tuk

[The amaBhungane Centre for Investigative Journalism (http://amaBhungane.co.za), an independent non-profit, produced this story.]

THE Panama Papers data leak has unmasked the people originally behind a highly controversial Congolese oil deal that was fronted by President Jacob Zuma's nephew Khulubuse Zuma.

One is South African businessman Mark Willcox, although in 2010, he told amaBhungane that he held no financial interest in the deal, however remote. Willcox was then CEO of Tokyo Sexwale's Mvelaphanda Holdings, and Sexwale served in Zuma's cabinet at the time.

The other is the family of controversial Israeli citizen and diamond scion Dan Gertler, a personal friend of Democratic Republic of Congo (DRC) President Joseph Kabila. Gertler's stake was made public in 2012, two years after the deal.

Hidden behind layers of offshore opacity, Willcox and Gertler's family were intended to be the original owners of Caprikat and Foxwhelp, the mysterious British Virgin Islands (BVI) companies to which Kabila handed highly sought-after oil rights in June 2010, according to the leaked papers.

Willcox said this week he never accepted these shares. The evidence appears to support this.

The papers indicate that Khulubuse Zuma held no formal stake, despite his 2010 claim that he was the sole owner.

The political exposure of the deal to Kabila, Jacob Zuma, and Sexwale raised concerns in 2010, but everyone involved denied that the politicians played any role.

The Panama Papers do not shed any more light on this. But the high level of ownership secrecy that they show — including the fact that the Panamanian law firm that set up Caprikat and Foxwhelp was long in the dark about the owners — may underscore concerns about political exposure.

Through spokesman Vuyo Mkhize, Khulubuse Zuma declined to answer questions, saying he had no obligation to declare his private business interests publicly.

...

On Sunday, journalists around the world began to publish a series of exposés based on the Panama Papers, a trove of 1.5-million leaked confidential documents, or 2.6 terabytes of data, from Panamanian law firm Mossack Fonseca.

The cache was obtained by the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung and other media partners.

The documents name politicians, businesspeople, and celebrities around the world, who have used bank accounts in offshore tax havens and jurisdictions that offer a high degree of corporate anonymity. In many cases, the suggestion is that these people used the offshore financial system to avoid taxes or hide their wealth, but most deny any wrongdoing.

Included in the documents is e-mailed correspondence among BVI regulators, Mossack Fonseca, and Hassans, an international law firm in Gibraltar that conducts business with Gertler's group of companies.

The correspondence was sparked when Foxwhelp and Caprikat hit the news in June 2010. Kabila had just approved their production-sharing agreement with the Congolese government for the two blocks in Lake Albert, along the Congolese-Uganda border.

Until then, the blocks had been allocated to Irish oil major, Tullow. But Kabila's action had nullified this arrangement and Tullow was furious.

It accused Congo of orchestrating a "smash-and-grab", and questioned the legitimacy of Caprikat and Foxwhelp, which had just been founded and had no energy sector experience.

This week, Gertler's Fleurette Group countered that "Tullow did not have a valid contract with the DRC. (It) took Fleurette to court over this issue and lost conclusively."

Khulubuse Zuma emerged at the time as a spokesman for the two BVI companies. He claimed to own them. AmaBhungane revealed at the time that Khulubuse Zuma had signed the production-sharing agreement on Caprikat's behalf and that Jacob Zuma's lawyer Michael Hulley had signed for Foxwhelp.

Hulley did not respond to several messages seeking his comment.

The controversy deepened when it emerged that Willcox had travelled to Kinshasa with Khulubuse Zuma and Hulley, and that the BVI companies had used Mvelaphanda and Sexwale-linked addresses as their legal domicilium.

Willcox said at the time that he had simply given Khulubuse Zuma "strategic advice" on the deal, but strongly denied any personal financial interest.

About two years later, one of Kabila's cabinet ministers let slip that Caprikat and Foxwhelp were actually Gertler's companies. Gertler did not challenge this, and now openly states that his Fleurette Group owns 100% of Caprikat and Foxwhelp.

According to Fleurette Group, the oil blocks hold estimated reserves of 3-billion barrels. Fleurette says it has spent $100m developing the field.

But while the deal's political exposure was downplayed, there was panic among Mossack Fonseca's staff in Panama and the BVI. E-mail correspondence in the papers suggests that when Mossack Fonseca registered Caprikat and Foxwhelp in March 2010, they did not know that Willcox and Gertler were intended to be their ultimate beneficial owners despite, "know your client" requirements.

And when they learned through news reports that Khulubuse Zuma, a "politically exposed person", had been granted power of attorney to sign contracts, they considered this reason enough to resign as the companies' registering agent.

Having not received a proper explanation from Hassans, the Gibraltar law firm representing Gertler, one senior staffer wrote to his colleagues: "Perhaps we need to send a clear message that we will not be a dump for dodgy companies."

When a Hassans staffer wrote back, she sought to ease Mossack Fonseca's concerns: "I have contacted the lawyers here at Hassans who deal with these companies from this end. They have clarified the situation, which seems to be a case of bad press and sour grapes."

...

That same month, Mossack Fonseca's alarm bells rang over two more BVI companies registered at Hassans's request: Norseville Estates and Burford Commercial. Apparently they had also failed to do any due diligence on these and did not know who owned them.

The e-mails flowed back and forth, with apparently frantic Mossack Fonseca staffers setting deadlines for Hassans that were usually not met.

One e-mail suggested the reason for the panic: "It is necessary that the client (Hassans) understands the urgency of this, as in the eyes of the (financial regulator), this info should have been in our offices in BVI…. We are in breach of the obligation to have the info on BVI."

After several days, Hassans wrote and explained the Foxwhelp and Caprikat shareholding, but only up to a point. The letter described a Cayman Islands investment fund, owned by Norseville and Burford in Panama, whose true ownership was masked by a nominee shareholder, and a chain of beneficial ownership reaching through foundations and trusts in Liechtenstein, Gibraltar, and the BVI.

The letter did not disclose the identity of the real people behind the web.

Having had enough, Mossack Fonseca's Jennifer Mossack wrote to say it was resigning from Foxwhelp, Caprikat, Norseville and Burford "based on the lack of due diligence information provided by you. We stand the possibility of being fined or our licence being revoked or suspended for noncompliance with the relevant legislation in the jurisdiction of BVI and Panama."

It was only then that Hassans disclosed that Willcox and the family of Gertler were behind the structure, with 10% and 90%, respectively.

The news came as a relief to one senior Mossack Fonseca staffer: "If these are really their clients, we are speaking about very highprofile and worldwide-known entrepreneurs. The fact that they are doing business in Africa makes their position difficult. We would need to analyse further, but it is good to know that they are not machine guns (sic) criminals."

By this stage, however, the BVI's Financial Investigations Agency was asking questions, demanding all due diligence information, particularly in respect of Khulubuse Zuma. A copy of his passport and various bills were passed on.

But the agency still required the share register of the investment fund that owned Foxwhelp and Caprikat. Nearly a year later, Mossack Fonseca complained that this was never received.

According to one final e-mail before it dumped the four Gertlerlinked companies, Jennifer Mossack complained: "Hassans has proven to be unco-operative, secretive, and dishonest with us as they hid the identity of their client and are apparently assisting him with his asset protection."

Willcox says he has never heard of Mossack Fonseca, Norseville, or Ranna Investments, an entity the documents indicate held his intended stake.

...

His lawyer Rael Gootkin says: "It is possible that it could have been part of Fleurette's initial structuring to offer such a shareholding to our client. This factually never materialised."

He says Fleurette approached Willcox in 2010 "to find an industry partner and/or a capital partner to develop the oil blocks".

In response to questions this week, the Gibraltar firm says: "Hassans fully complies with all local and international standards regarding ownership disclosures and (know your client) practices.

"Details regarding ultimate beneficial ownership was made available to Mossack Fonseca at all times.

"We understand that the only item of due diligence outstanding was the register of members of the (investment fund), which, as explained, could not be provided, as the fund had not been launched."

A Mossack Fonseca statement says: "Before we agree to work with a client in any way, we conduct a thorough due-diligence process. We follow both the letter and spirit of the law. Because we do, we have not once in nearly 40 years of operation been charged with criminal wrongdoing."

A spokesperson for the Fleurette group says: "Businesses all over the world use special-purpose vehicles in their corporate structures for a variety of reasons. Fleurette uses companies incorporated offshore to ensure tax efficiency."

Khulubuse Zuma's role remains a mystery. Fleurette says: "Mr Zuma did have some early involvement as a signatory for the companies, at a time when it was expected that he would have a greater role to play; however, that role did not materialise."

#PanamaPapers

How The Elite Hide Their Wealth

https://panamapapers.investigativecenters.org/

[Excerpts from home page as of April 11, 2016]

The Panama Papers: About this project

The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe's most prominent figures.

The International Consortium of Investigative Journalists (ICIJ), together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, including the African Network of Centers for Investigative Reporting (ANCIR), spent a year sifting through 11.5 million leaked files to expose the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more.

The trove of documents is likely the biggest leak of inside information in history. It includes nearly 40 years of data from a little-known but powerful law firm based in Panama. That firm, Mossack Fonseca, has offices in more than 35 locations around the globe, and is one of the world's top creators of shell companies, the corporate structures that can be used to hide ownership of assets.

...

As ANCIR started researching, it discovered data disclosing 40 years of service from Mossack Fonseca stretching from Uganda to Namibia to Sierra Leone. The company's questionable dealings is already well known after being exposed by investigative journalists such as Ken Silverstein.

ANCIR and its media partners' investigations led to findings around Uganda's missing taxes from oil revenue; a mega-infrastructure deal in Namibia connected to a FIFA-related entity; secrecy in Steinmetz's diamond empire; and hidden players in Angola's Sovereign Wealth Fund, to mention a few.

Further explosive stories from Zimbabwe, Kenya, South Africa and Nigeria will follow this week.

But the data revealed something far more insidious than a willingness to look past illegal activities.

It reflects a deliberate design on the part of companies like Mossack Fonseca to commercialise the inherent weaknesses of national and international legal and financial regimes by bulldozing the substance, process and purpose of "due diligence".

Thanks to these structures - banking secrecy, opaque shell entities, use of nominees to conceal beneficial owners etc - each year, the continent loses some $150 billion to illicit financial flows (PDF)

[for links to these stories, and more to be added, got to the ANCIR website home page at https://panamapapers.investigativecenters.org/]

Namibia - Leaked documents show details about a well-publicised mafia's business connection between a convicted mafioso and Zacky Nujoma, the youngest son of founding president Sam Nujoma.

Uganda - Leaked documents show the paper trail of the Heritage Oil and Gas Ltd Company's attempts at avoiding tax payment in Uganda, writes Tabu Butagira.

Nigeria - Africa's richest man, Aliko Dangote, and his brother Sayyu Dantata have been linked to shell companies in tax havens, writes Joshua Olufemi and Emmanuel Mayah.

Kenya - Kenya's Deputy Chief Justice Kalpana Rawal was a director and a shareholder of four companies located in a known tax haven, writes Jacqui Kubania

DRC - Despite international laws stipulating disclosure of the origins of gold, a tranche of leaked documents points to unsavoury behaviour by tax havens trading in commodities, writes Khadija Sharife.

Botswana - The president of Botswana's highest court, Ian Kirby, has invested in seven offshore companies domiciled and registered in a tax haven of the British Virgin Islands, writes Ntibinyane Ntibinyane.

Namibia - The tender for the Walvis Bay port in Namibia is tied to a Trinidad politician with links to Brazil's ‘Car Wash' scandal, writes Shinovene Immanuel.

Sierra Leone - Dodgy dealings within the Steinmetz Group seems to indicate undervaluing of diamonds, which is costing Sierra Leone tax payments, reports Khadija Sharife and Silas Gbandia.

Zimbabwe - The leaks show an offshore company called HR Consultancy had been created to pay salaries to Zimplats, which is largely owned by South Africa's Impala Platinum Mines. However, it denies any knowledge of the HR Consultancy and its purpose, writes Ray Choto.

Guinea - Leaked documents pry open the corporate structure of companies involved in a mining rights scandal in Guinea, writes Khadija Sharife

Senegal - Homme d'affaires sénégalais a créé des sociétés offshore grâce à l'entreprise Mossack Fonseca. Les documents citent également l'architecte Pierre Goudiaby Atepa et Aliou Sow, l'entrepreneur du Sahel Société des entreprises (CSE).

Tunisia - Une fuite de documents internes révèle la création de sociétés offshore via Panama et expose comment le droit tunisien est contourné pour éviter de payer des impôts sur les actifs à l'étranger.

Mali - Les fuites révèlent que le milliardaire Seydou Kane , l'homme d'affaires puissance Mali-Gabonaise, a créé deux sociétés offshore. Il est également impliqué dans une affaire de blanchiment d'argent à Paris.

Tunisia - En plein entre-deux-tours de l'élection presidentielle, Mohsen Marzouk, alors directeur de campagne de Béji Caid Essebsi, prend contact avec Mossack Fonseca, pour ouvrir une société offshore.

Senegal - Le procès pour enrichissement illicite de Karim Wade, fils de l'ancien président sénégalais Abdoulaye Wade, a connu son verdict il y a un an. Il s'était terminé avec la condamnation par la Cour de répression de l'enrichissement illicite (Crei) de M. Wade-fils et de ses co-accusés à des peines de prison ferme.

More on This

What the Panama Papers Mean for Global Development

The financial secrecy and tax evasion revealed by the Panama Papers has an extraordinary human cost in developing… Read more »

Copyright © 2016 AfricaFocus. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 900 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.