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Africa/Global: Panama Papers Tip of Iceberg
AfricaFocus Bulletin
April 11, 2016 (160411)
(Reposted from sources cited below)
Editor's Note
"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
++++++++++++++++++++++end 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.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with a
particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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