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International Consortium of Investigative Journalists
Updated: 32 min 53 sec ago

New Panama Papers Leak Reveals Firm’s Chaotic Scramble to Identify Clients, Save Business Amid Global Fallout

Wed, 06/20/2018 - 17:00

On March 9, 2016, employees of Mossack Fonseca, a Panamanian law firm that for decades had kept the financial secrets of global celebrities, oligarchs and criminals, made a stomach-churning discovery. Someone had copied huge amounts of data from its computers.

Emails, contracts, banking statements – 11.5 million documents of the firm’s most sensitive client records, a staggering 2.6 terabytes of data – had been taken.

Suddenly, the day-to-day business of setting up shell companies in tax havens was no longer the priority. Instead, newly obtained Mossack Fonseca documents show, employees began working furiously on a new mission: find out who its clients were.

As a key player in the world of offshore finance, Mossack Fonseca had for years flouted rules requiring lawyers and other offshore specialists to identify and verify their clients, requirements designed to prevent aiding criminal activity.

Over the year, newly leaked documents show, Mossack Fonseca employees frantically emailed bankers, accountants and lawyers – the professionals who had hired the firm to set up shell companies for wealthy clients who wanted to remain anonymous – in an attempt to close the gaps in its recordkeeping. Those intermediaries responded with panic and fury.

“THE CLIENT DISAPPEARED! I CAN NOT FIND HIM ANYMORE!!!!!!!,” Nicole Didi, a Swiss wealth management adviser, wrote in March 2017. A long-time intermediary of Mossack Fonseca, she acted for 80 companies set up by the firm.

Mossack Fonseca’s founding partners, Ramon Fonseca and Jurgen Mossack Mossack Fonseca's founding partners, Ramón Fonseca and Jürgen Mossack

“This has been ridiculous,” wrote Eliezer Panell, a Florida lawyer who grew exasperated at Mossack Fonseca’s multiple requests – sometimes only one day apart – that he obtain and share documents from two offshore company owners to prove their identity.

“WE CAN’T GO BACK a day after asking for papers to ask for something else,” he wrote. “WE LOOK LIKE FUCKING AMATEURS. A Mickey Mouse operation.”

In late March of 2016, Mossack Fonseca told ICIJ that the firm conducts “thorough due diligence on all new and prospective clients that often exceeds in stringency the existing rules and standards to which we and others are bound.”

The new documents reveal that Mossack Fonseca, in fact, often had no idea who was benefiting from its services. The firm couldn’t identify tens of thousands of owners of companies it had registered in opaque, low-tax jurisdictions, the documents show.

Two months after the firm became aware of the records breach, it still couldn’t identify owners of more than 70 percent of 28,500 active companies in the British Virgin Islands, the firm’s busiest offshore hub. It didn’t know who owned 75 percent of 10,500 active shell companies in Panama, the records show.

It shouldn’t be acceptable that a firm like this doesn’t know the owner of one shell company, let alone thousands of them. Jack Blum

The firm’s ignorance about who benefited from the shell companies it helped set up represented a significant risk. Failure to comply with know-your-client rules could expose Mossack Fonseca to lawsuits and even criminal investigations – and force the firm to shutter the shell companies, throwing its own and clients’ businesses into chaos.

Know-your-client standards have grown ever stricter over time as governments have stepped up efforts to combat terrorism funding and money laundering. Mossack Fonseca’s brazen disregard of such a fundamental legal obligation was extraordinary, experts say.

“It shouldn’t be acceptable that a firm like this doesn’t know the owner of one shell company, let alone thousands of them,” said Jack Blum, a U.S. attorney who specializes in tax fraud and money laundering. That there was no record of who owns what, Blum said, “tells you how far the shell business has gone in terms of being a sham. It strikes me that it’s as crazy as crazy can be.”

Mossack Fonseca’s lawyer, Guillermina McDonald, said in an interview in June with ICIJ partners that Mossack Fonseca defined its “clients” as lawyers, bankers and accountants and not end-users. The law firm “always” knew what it was required to know about company owners, she said.

This account of Mossack Fonseca’s final months is the result of a second major leak from the firm. The first leak led to the Panama Papers investigation and the firm’s undoing.

In April 2016 the International Consortium of Investigative Journalists and more than 100 media partners published hundreds of stories based on the leak of millions of internal documents that exposed the firm’s inner workings from the late 1970s to 2015.

The Panama Papers investigation convulsed the worlds of politics, finance and law. The roster of publicity-shy parties who used Mossack Fonseca’s services included members of Vladimir Putin’s inner circle, the then-prime minister of Iceland, and a company suspected of holding proceeds from a famous 1983 London gold heist.

Iceland’s prime minister, Sigmundur David Gunnlaugsson, resigned after the investigation revealed a stake in an offshore company that he and his wife used secretly to hold nearly $4 million in bonds in Icelandic banks, even as his government was negotiating with the banks’ creditors.

Pakistanis protested in the streets when it was revealed that children of then-prime minister Nawaz Sharif had set up shell companies to help discreetly hold multi-million dollar London real estate. Sharif resigned in July 2017 after Pakistan’s supreme court disqualified him from office.

Police raided Mossack Fonseca’s offices in El Salvador, Peru and Panama City. By the end of 2016, governments and companies in 79 countries had opened 150 inquiries, audits or investigations into the law firm, its intermediaries or clients.

The new leak offers a view inside Mossack Fonseca and the circle of professionals it did business with in the weeks before the Panama Papers investigation  broke and during  the aftermath, as the firm scrambled to identify clients, and clients began to drift away. The documents, which include emails, passport copies and criminal case files, are dated from early 2016 through the end of 2017, a few months before the firm collapsed.

The information was obtained by the same newspaper that had received the first leak, Süddeutsche Zeitung. The records were shared with ICIJ and its media partners.

Decades of offshore secrecy and then a data breach

In 1986, Jürgen Mossack, a German immigrant whose father moved his family to Panama after serving in Hitler’s Waffen-SS, and Ramón Fonseca, a prominent Panamanian novelist and attorney, merged their law practices.

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The firm, Mossack Fonseca, developed a niche helping the rich conceal their wealth offshore. From its base in Panama City, the firm expanded its operations to more than 30 countries, working closely with global banks including HSBC, UBS and Credit Suisse and law firms in the Netherlands, Mexico, the United States and Switzerland.

Mossack Fonseca rarely communicated directly with the ultimate beneficiaries of its work. It corresponded instead with the intermediaries that stood between the firm and the wealthy individuals seeking to shield luxury homes, yachts and jets, bank accounts and valuable art collections from unpredictable court battles, former spouses and inquisitive tax inspectors. Some beneficiaries of Mossack Fonseca’s discreet services used shell companies to bribe government officials and hide away mountains of cash.

The arrangement allowed Mossack Fonseca to operate largely in obscurity for decades. Then someone made off with a vast trove of its most confidential records, which made their way to reporters.

In early March 2016, calls from ICIJ journalists began pouring into Mossack Fonseca and to intermediary professionals. With the discovery of the computer breach, the firm shifted fully into crisis mode.

The day after the breach was confirmed, Mossack Fonseca’s lawyer asked Panama’s attorney general to launch a criminal investigation and “urgently interrogate” journalists from France, Denmark, Australia, the United States and Germany who were in Panama filming documentaries for what would become the Panama Papers investigation. The journalists must not be allowed to leave Panama or their Hilton Hotel until they reveal how they obtained documents from Mossack Fonseca, the lawyer demanded – unsuccessfully.

Nicole Didi, the Swiss adviser, was among the first to contact the firm about journalists’ inquiries.

Swiss wealth adviser Nicole Didi included yellow highlighting in one email complaint to Mossack Fonseca. Highlighted email complaining to Mossack Fonseca

“This French journalist wants to publish an article in the newspaper Le Monde which is not acceptable for me!!!,” Didi wrote in an email that included yellow highlighted text.

Mossack Fonseca’s client service coordinator, Jorge Cerrud, tried to calm Didi over the telephone, the records show.

“I will go ahead and talk to our PR department to see how we can help you prepare in case the journalists contact you again,” Cerrud later emailed.

After the Panama Papers investigation was published on April 3, emails and phone calls to the law firm surged. Firm employees increased the use of a CrisisCommittee@mossfon email address, the records show.

Many emails echoed one sent by Charles Hotton, managing director of a Jersey subsidiary of the Bank of Singapore, which helps the wealthy protect their assets.

“URGENT…what documents/BO info was taken from files and when,” Hotton wrote, referring to the so-called “beneficial owners” of offshore companies, whose purpose can be to conceal the ultimate “BOs”.

Cerrud, the client relations coordinator, gamely tried to assuage Hotton. “We have stopped the hack from further retrieving information from our email system as of March,” he replied.

Sometimes, high-profile clients themselves rushed forward to prove to Mossack Fonseca they were, in fact, clients.

Aides of Ukraine’s president Petro Poroshenko sent the embattled law firm an electricity bill to prove his identity after anti-money laundering authorities in the British Virgin Islands demanded ownership confirmation of Poroshenko’s offshore company. Lawyers for the president of the United Arab Emirates, Sheikh Khalifa bin Zayed Al Nahyan, dashed off a password-protected letter to Mossack Fonseca about his passport and his family members. Such proof would allow the monarch to keep owning and managing properties in the United Kingdom through offshore companies.

Among the correspondence are 17 emails with representatives of Hollywood star Jackie Chan, a Mossack Fonseca client who provided his scanned passport and an American Express statement in an attempt to keep open offshore trading and film production companies and to help Mossack Fonseca avoid fines for incomplete paperwork. Mossack Fonseca also corresponded with lawyers who helped manage the Panama company of Argentinian soccer superstar Lionel Messi, who had recently been found guilty of tax fraud in Spain as part of a case unrelated to the Panama Papers.

Others reacted to news of the breach with disbelief and anger. According to internal Mossack Fonseca emails, one Uruguayan accountant rejected the law firm’s suggestion that he hand-write and backdate a document to make it appear that the firm had accurate information from the beginning on the ownership of a company controlled by the family of Argentina President Mauricio Macri. The idea was dropped after the accountant reportedly told Mossack Fonseca the document would be “easily refuted by an expert calligrapher.” (A Macri family company spokesman told ICIJ partner La Nación that the president’s father had declared his ownership and had no further comment.)

A lawyer representing Nigeria’s powerful Senate president Bukola Saraki and his wife took an overnight flight from London to Panama. And one of Switzerland’s highest-profile lawyers excoriated the firm on behalf of the family of Beny Steinmetz, a mining executive now under investigation in Israel for alleged bribery and corruption in Africa.

“The leaking of information of which Mossack Fonseca & Co was the guardian has caused damage to our clients, who were wrong to have trusted you and believed in your abilities and professional rigor,” wrote lawyer Marc Bonnant.

A spokeswoman for Steinmetz told ICIJ the bribery and corruption allegations are baseless.

One finance professional told Mossack Fonseca that he had never given permission for his name to be written on offshore company documents, let alone made public.

“It’s gob smacking, and I demand you DELETE my name from all your files,” Jean-Yves de Louvigny wrote in an email to Mossack Fonseca’s office in Luxembourg.

“I am stunned by the fact that someone else can provide my name without my consent!,” de Louvigny wrote. The banker had seen his name published as part of the Panama Papers but claimed he had never had any involvement with an offshore company. He likened the gaffe to writing the names of then-French president François Hollande and then-U.S. president Barack Obama. “Would you have done that?????”

ICIJ sought comment from de Louvigny and other intermediaries named in this story, but none responded.

Mossack Fonseca goes into damage control

Amid its campaign to identify its clients, Mossack Fonseca was trying to limit the fallout from the leak.

Mossack Fonseca told clients and intermediaries it had installed a firewall to rebuff computer attacks and that it had introduced a system to encrypt emails and documents about the most sensitive part of the offshore industry – who owns what.

The firm hired media relations consultants to “give our version of the events.” It also contacted what it called “industry ambassadors” to ask them for public support, emails show.

The law firm pointed clients to an opinion piece by Daniel Mitchell, co-founder of the libertarian Center for Freedom and Prosperity, in Caribbean News Now. Mitchell proactively wrote that “firms like Mossack Fonseca are merely just the latest stand-ins and proxies for a much wider campaign being waged by left-wing governments and their various allies and interest groups.”

Mitchell told ICIJ that a Mossack Fonseca employee contacted him after the leak but that he was “already on top of the issue.” Mossack Fonseca’s closure is “unfortunate,” Mitchell said.

“The protection and security of information is our most important priority,” Mossack Fonseca told clients in a May 2016 announcement after the Panama Papers publication. “We once again apologize for the difficult situation that has been created by this unlawful breach.”

An angry email from one Swiss intermediary suggesting his email, like those in the first Panama Papers leak, would be “intercepted.”

Clients weren’t much reassured by the firm’s attempts at damage control, records show. One lawyer grew impatient listening to telephone hold music and complained in a July 2016 email to Josette Roquebert, a senior Mossack Fonseca director in Panama. Another grew increasingly frustrated as days passed without a response to an email. “Our customers are not wind vanes to be twirled at your leisure,” the offshore management company employee wrote.

One Swiss intermediary was totally fed up. “By a lot of messages, you, MOSSACK, are trying to convince we clients that you are taking control of this unbelievable situation,” Félix Chille wrote.

The message concluded: “This email will, probably, be intercepted like 11,600,000 other documents. I don’t care.”

Others were more sympathetic but made it clear that Mossack Fonseca had violated the offshore industry’s sacred, if unwritten, code of secrecy.

“We are very sorry about what happened…and wish you the best, but the main purpose of this type of structures has been broken: confidentiality,” wrote Uruguayan financial planner Ignacio Frechou.

Investigations, audits and “significant deficiencies”

The firm received pointed questions from regulators and law enforcement in the weeks and months after the story broke.

Governments opened investigations into companies set up by some of Mossack Fonseca’s busiest office locations, including Panama, the British Virgin Islands, Samoa, the Seychelles and Anguilla.

In April 2016, the Seychelles Financial Services Authority, which regulates operators like Mossack Fonseca to ensure offshore vehicles are not misused, asked the firm to reveal who owned some of the 5,379 active companies it had incorporated in the island archipelago.

One way Mossack Fonseca eluded strict know-your-client rules was to rely on outside lawyers to vouch for the reputation and identity of the actual company owner.

Internal emails show employees acknowledging to each other that they might not be able to comply with the requests – and discussing the potential risk of losing the right to operate in the country.

“This is a gray area that lends itself to interpretation,” wrote Josette Roquebert about the firm’s reliance on certain third parties to vouch for the reputation and identity of clients. The practice “could be considered a breach” of Seychelles law, Roquebert wrote.

An audit by the Seychelles’ financial crime agency months later concluded that Mossack Fonseca’s office did not regularly monitor high-risk, politically-connected clients and had violated six anti-money-laundering laws and regulations, according to the new files.

An audit by Seychelles authorities found Mossack Fonseca’s procedures inadequate. Seychelles audit report

“Overall, the examiners found significant deficiencies in Mossack Fonseca Seychelles’ operations,” wrote Phillip Moustache, director of the country’s Financial Intelligence Unit, in a letter to the firm.

The firm’s clients were also being investigated. Authorities in India, Spain, Sweden and Argentina demanded information from Mossack Fonseca about taxpayers who owned offshore companies through the firm, the newly leaked records show. Local police searched Mossack Fonseca’s British Virgin Islands office for records as part of a British bribery probe involving Nigerian oil mogul Kolawole Aluko.

Two months after publication of the Panama Papers investigation, British authorities forced Mossack Fonseca to hand over documents on a shell company managed by a subsidiary of Eurasian Natural Resources Corporation (ENRC), a publicly-traded mining and energy company. In 2013, the United Kingdom’s Serious Fraud Office announced an investigation of ENRC for alleged bribery in Kazakhstan and Africa. The company delisted from London’s stock exchange later that year.

The ENRC shell company, Cofiparinter Ltd., was being investigated by the U.K’s Serious Fraud Office for corruption, bribery and money laundering and other alleged offences, according to a copy of the search warrant. The investigation into the company has not previously been reported.

A spokesman for ENRC told ICIJ “it would be inappropriate to comment on any ongoing investigation.”

“The deal involving Cofiparinter raises a host of questions about who benefited from Congo’s natural wealth,” said Anneke van Woudenberg, a Congo mining expert with U.K. nonprofit Rights and Accountability in Development (RAID). “One answer is clear: it was not Congo’s impoverished citizens.”

British authorities declined to comment on what prompted the Cofiparinter investigation or to say if it is ongoing.

Partners Mossack and Fonseca retire, as firm prepares to “wither away”

At first, Mossack Fonseca tried to encourage its clients to remain loyal, despite the raging legal and public relations storm.

The firm slashed fees and offered some clients the option to change their shell company’s name so that business operations could discretely continue.

Mossack Fonseca helped some clients by changing its own business name to remove any obvious reference to the Panamanian founders on mail, packages and invoices. In Samoa, Mossack Fonseca became Central Corporate Services Ltd. In Panama, Mossack Fonseca transferred clients to Orbis Legal Services, which hired some Mossack Fonseca employees to maintain the “same level of service.”

Other clients simply moved their business to other offshore service providers in havens such as Guernsey in the Channel Islands, the British Virgin Islands and  Cyprus.

“YOUR COMPANY IS NOT RELIABLE AND CREDIBLE———-BYE BYE,” wrote Luxembourg-based intermediary, Jeffrey Davies.

Clients started reporting that banks were refusing to accept or process any payments to Mossack Fonseca.

The wall outside Mossack Fonseca’s El Salvador office, where the law firm’s nameplate had been removed. i Photo\: Víctor Peña / El Faro The wall outside Mossack Fonseca's El Salvador office shows the remnants of the law firm's sign

In May 2016, the firm announced to clients that it was shutting down its office in the Isle of Man, the British Crown dependency in the Irish Sea. Office closures in Jersey and Hong Kong soon followed.

Later that year, Fonseca and Mossack announced that they would retire from the firm they had founded. A skeletal Mossack Fonseca would remain open for a few years longer to fulfill existing obligations but would “eventually wither away,” an email to clients said.

In February 2017, Panama’s attorney general, Kenia Porcell, alleged that Mossack Fonseca companies had been used to make and receive bribes across Latin America in connection with the Lava Jato or “car wash” scandal. The probe, which is ongoing, centers on allegations that dozens of politicians and executives at Brazil’s state-run oil company, Petrobras, received billions of dollars in bribes from contractors who were awarded generous contracts.

Attorney General Porcell called Mossack Fonseca “a criminal organization that is dedicated to hiding money assets from suspicious origins.” She ordered Mossack and Fonseca arrested on money laundering charges. The men, who denied wrongdoing, spent several months in jail before making bail.

“The prosecutors are trying to obtain evidence for a crime that does not exist,” Mossack scrawled in a notebook from his jail cell. “If this were Spain in the dark ages they would have us burning at the stake.”

Mossack and Fonseca were released in April 2017. About a year later, the law firm bearing their names closed for good.

In May 2018, Panama prosecutors charged 10 other Mossack Fonseca employees with money laundering as part of investigations into Brazil’s Lava Jato scandal. Mossack remains under investigation by prosecutors in Cologne, Germany, as an accessory to tax evasion, according to a statement provided to Süddeutsche Zeitung.

Panama’s attorney general’s office told Süddeutsche Zeitung that five criminal investigations related to Mossack Fonseca are ongoing.

Share a story with ICIJ

Mossack and Fonseca did not respond to specific questions from ICIJ or its partners. In June, the lawyers issued a press release that said the law firm, its employees and its founders were “never involved in unlawful acts.”

Client offered last bit of help with list of alternative offshore firms

The messages from Nicole Didi didn’t let up. The Swiss adviser was one of the first intermediaries to email Mossack Fonseca after being questioned by journalists, and she continued to write to the firm, with mounting frustration, for the next 19 months.

She accused the firm of misplacing documents, wrongly identifying the owner of an offshore company and repeatedly asking questions that Didi felt she could not answer.

“I can not believe your company!!!!!!!!!!!!!!!!!!!!!,” Didi wrote in May 2017.

Eventually, Makya Villarreal, the manager of Mossack Fonseca’s Seychelles office, told Didi it was time she took her business elsewhere.

“We will not reply to any messages that you send, and you must sort out any issues with the new Agent that you choose to work with,” the manager wrote.

The Mossack Fonseca employee did offer one last bit of help.

Villarreal pointed Didi to a list of 67 other offshore specialists based in the Seychelles that offered the same services as Mossack Fonseca.

Contributors to this story: Ryan Chittum.

The post New Panama Papers Leak Reveals Firm’s Chaotic Scramble to Identify Clients, Save Business Amid Global Fallout appeared first on ICIJ.

Categories: News

New Panama Papers Leak Includes Offshore Links To Lionel Messi, Cartier, Argentine Leader

Wed, 06/20/2018 - 17:00

Two years after the Panama Papers rocked the offshore financial system, a fresh document leak from the law firm Mossack Fonseca reveals new offshore details about an array of global elites, including soccer superstar Lionel Messi, the Argentine president’s family and a former senior Kuwaiti official convicted of looting his country’s social security system.

The documents also show Mossack Fonseca scrambling to contain the fallout from the leak and identify its own clients.

The 1.2 million documents date from a few months before April 2016, when the International Consortium of Investigative Journalists and more than 100 media partners published the initial Panama Papers stories, and continue through December 2017. The documents were leaked to Munich-based Süddeutsche Zeitung, which shared them with ICIJ.

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Mossack Fonseca’s founders, Jürgen Mossack and Ramón Fonseca, issued a press release in June that said the law firm, its employees and its founders were “never involved in unlawful acts.” They did not respond to requests for comment for this story.

In the coming days, ICIJ partners in dozens of countries will publish stories based on the new batch of Panama Papers files. Those stories will shed new light on the financial dealings of people from the first investigation and connect other influential and politically-connected people to the firm.

Here, in brief, are some of the findings:

Soccer star Lionel Messi’s offshore tax mess

Lionel Messi, a star soccer player for Barcelona, was already under investigation in Spain on charges that he and his father, Jorge Horacio Messi, used offshore companies in Belize and Uruguay to avoid paying millions of dollars in taxes when the Panama Papers revealed he owned yet another offshore company: Mega Star Enterprises, based in Panama.

When asked about the company in April 2016, the Messis told ICIJ and partners that Mega Star was “totally inactive.” Internal emails from the newly-leaked Mossack Fonseca records call that claim into question.

The “Uruguay office tells me that the client is using the company,” a law firm employee wrote in May 2016, a month later. Mossack Fonseca resigned as the registered agent for Mega Star Enterprises in July 2016, the documents show — the same month the Messis were convicted by a Spanish court of tax fraud. Lionel was given a 21-month suspended sentence and fined $2.2 million.

A lawyer for Messi told Spanish newspaper El Confidencial, an ICIJ partner, that Mega Star Enterprises was an old issue and was part of the former corporate scheme that had already been adjudicated. The company is not being activity used, the lawyer said.

‘Very risky’ plans linked to Argentina’s Mauricio Macri

Emails between Mossack Fonseca’s head office in Panama and its Uruguay branch in September and October 2016 show employees discussing a plan to backdate documents to conceal the fact that the firm did not know that a company it had set up in the Bahamas, Fleg Trading Co., was controlled by the family of Argentine president Mauricio Macri.

Macri and other family members were directors of Fleg Trading, the original Panama Papers investigation revealed. His father was the owner. Anti-money-laundering laws required Mossack Fonseca to know such information.

Mossack Fonseca employees discussed having Macri’s accountant produce a handwritten document in 2016, but dated years earlier, that would confirm the company’s owner, according to emails. The accountant dismissed the idea as “very risky” since the letter “could be refuted easily by an expert calligrapher,” who would pick up that the document was written more recently than the purported earlier date, according to Mossack Fonseca’s internal emails.

The client did not want to “gamble,” the emails said, “since there is the President of Argentina and his family involved.”

The email about Argentine president Mauricio Macri and his family. Panama Papers Email About Macri and Family

The new files also show that Mossack Fonseca didn’t know of the Macri’s family connections to BF Corporation, another shell company. BF Corporation was owned by Macri’s brothers, Mariano and Gianfranco, according to Argentine press reports. Those reports have noted that German prosecutors alerted Argentine authorities in 2016 about suspicious transactions involving BF Corporation based, in part, on revelations from the Panama Papers investigation. The transactions occurred days before the October 2015 first round voting that led to Mauricio Macri’s election the following month.

A spokesman for the Macri family’s company, Socma, told ICIJ media partner La Nación that the president’s father declared his ownership of Fleg Trading, which was confirmed by a judge in Argentina. The spokesman said he had no information or comment on the discussions between Mossack Fonseca and the Uruguayan accountant.

Politicians linked to missing millions in Malaysia, Kuwait, Russia

The new documents also reveal details of swollen bank accounts and offshore assets of political figures accused of statewide looting.

In March 2017, Mossack Fonseca discovered that a company it had registered in the British Virgin Islands was owned by Mohamed Nizam bin Abdul Razak, the brother of Malaysia’s former prime minister, Najib Razak. The company, Everbright Universal Holdings Ltd., owned property in the United States, according to the files.

Najib Razak, who fell from power after his party lost parliamentary elections in May, is now under scrutiny as part of a probe into billions of dollars found missing from the country’s state-owned investment fund during his tenure. A focal point of the investigation has been $10.6 million that was transferred into a bank account owned by the former prime minister.  Najib Razak denies wrongdoing.

ICIJ revealed in the original Panama Papers two offshore companies owned by Najib Razak’s son, Mohd Nazifuddin bin Mohd Najib. Calls to Abdul Razak’s phone number went unanswered, and his Credit Suisse banker did not respond to ICIJ’s emails.

The new files also reveal a company registered by Mossack Fonseca was owned by Fahad al-Rajaan, the former head of the agency that oversees Kuwait’s social security system. Al-Rajaan was convicted in absentia in 2016 of embezzling up to $390 million. He has denied the accusations and called them politically-motivated, according to reports. The files show he owned Tawny Real Estates Ltd., which in turn owned a Macau apartment and a Swiss bank account. Al-Rajaan was arrested in Britain in April 2017, but Mossack Fonseca was still the registered agent as of November 2017, despite learning of the allegations against him in March 2016.

Also named in the new files: Vitaly Malkin, a Russian oligarch who resigned a seat in Russia’s senate in 2013 after reports that he had undeclared assets overseas. Malkin appears as the owner of two British Virgin Islands companies, Audrey Holdings Group Ltd. and Top Matrix Holdings Ltd. Audrey Holdings Group held Swiss bank accounts worth $200 million, according to Malkin’s source of wealth file compiled by Mossack Fonseca. Malkin did not respond to a letter delivered to his Luxembourg address.

Cartier among Mossack Fonseca’s glitzy clients

The newly-leaked files reveal a bevy of other celebrities, politicians and alleged criminals whose links to Mossack Fonseca have not been reported — and, often, that the firm itself didn’t know it represented.

In July 2017, Mossack Fonseca learned that Panama shell companies it had set up were controlled by heirs of iconic French jeweler Pierre Cartier. The companies owned a Canadian forest and Swiss bank accounts, according to the new documents.

Members of the Cartier family did not respond to requests for comment. The heirs’ financial adviser declined to answer questions from ICIJ media partner Le Monde.

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Reporters also discovered that Dariga Nazarbayeva, the daughter of Kazakhstan president Nursultan Nazarbayev, was the sole shareholder of a British Virgin Islands company, information not previously reported.

Dariga Nazarbayeva, a former deputy prime minister, is a senator who heads the Kazakh Senate’s Committee of International Relations. Her political rise is viewed by some Central Asian politics watchers as an indication she may one day replace her father.

In October 2007, Nazarbayev became a shareholder of Asterry Holdings Ltd., which held a stake in sugar factories in Kazakhstan, via a chain of other companies, according to ICIJ media partner OCCRP.

Nazarbayeva did not respond to requests for comment.

Another company set up and managed by Mossack Fonseca was owned through a trust by Israel Perry, the new papers show. Perry, who died in 2015, was an Israeli attorney convicted of defrauding other Israelis, most of whom were Holocaust survivors. The firm only learned of Perry’s ownership of the company, called Mallett Ford Inc., through a lawsuit brought against it, according to the documents.

None of the Mossack Fonseca correspondence found in the new leak mentions that Perry was a convicted criminal, and it is not clear whether the firm knew.

Contributors to this story: Marcos Garcia Rey, Miranda Patrucic, Mariel Fitz Patrick (Infobae), Sandra Crucianelli and Emilia Delfino (Perfil), Hugo Alconada Mon, Iván Ruiz and Maia Jastreblansky (La Nación).

The post New Panama Papers Leak Includes Offshore Links To Lionel Messi, Cartier, Argentine Leader appeared first on ICIJ.

Categories: News

Ross shorted Russian-linked shipping company ahead of Paradise Papers

Mon, 06/18/2018 - 21:10

U.S. Commerce Secretary Wilbur Ross shorted stock in a Kremlin-linked shipping firm days after reporters working on the Paradise Papers informed him that they were about to reveal his holdings in the firm, according to a new report by Forbes.

While serving as Commerce Secretary, Ross had retained a financial stake in the shipping firm Navigator Holdings, which earns tens of millions of dollars each year from a Russian energy company owned by oligarchs sanctioned for their close ties to President Vladimir Putin. On November 5, 2017, the International Consortium of Investigative Journalists and media partners around the world revealed this connection when they published the Paradise Papers investigation.

Today’s story by Forbes shows that Ross took a short position on Navigator stock soon after reporters reached out to him for comment – positioning him to profit from the advance notice of a potentially damaging media story.

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ICIJ spent more than six months researching Ross as part of the Paradise Papers investigation, working closely with media partners including the New York Times. On Oct. 26, 2017, New York Times investigative reporter Mike McIntire sent a letter to the U.S. Department of Commerce requesting comment from Ross on behalf of the Paradise Papers team.

In the days before publication, McIntire corresponded with Commerce Department officials and received a statement from the department on Nov. 1. The statement did not dispute the main findings of the story and said that Ross “works closely with Commerce Department ethics officials to ensure the highest ethical standards.”

New York Times reporter Mike McIntire wrote to Wilbur Ross on behalf of the Paradise Papers investigation. New York Times letter to Wilbur Ross

It turns out that the Commerce Secretary had been busy in the days after receiving the letter.

On Oct. 31 – the day before the Commerce Department’s statement was sent to the New York Times but not yet public – Ross took out a short position in Navigator stock valued between $100,001 and $250,000, Forbes reported.

One of the most incredible things about Wilbur Ross’ hidden filings is just how clear they are that he shorted Navigator holdings just before negative stories came out about his ties to the company. They just lay it out in perfectly plain English.

— Dan Alexander (@DanAlexander21) June 18, 2018

Taking a short position on a stock is to bet that the value of the stock will decrease. Ross’ move meant that if Navigator shares went down after publication of the Paradise Papers, he could cash out with a gain. Navigator stock declined four percent in the 11 days before Ross exited his short position with an apparent profit, according to Forbes.

Ross had previously served on the board of Navigator Holdings and his private equity firm, the WL Ross Group, had long been its largest shareholder.

Federal law prohibits government officials from using information obtained by reason of federal employment for private gain. If an official obtains such information and knows that is not available to the general public, they are prohibited from profiting from it, said Virginia Canter, the Chief Ethics Counsel for the watchdog group Citizens for Responsibility and Ethics in Washington.

“The Office of Government Ethics have certified that the transactions documented are in compliance with federal ethics requirements,” a spokesman for the Commerce Department told ICIJ.

The federal disclosure forms revealing Ross’ short position with Navigator were posted today by the Office of Government Ethics, he added.

Shortly after the publication of the Paradise Papers, Ross pledged to divest his shares in Navigator Holdings. In December, Commerce Department spokesman James Rockas told ICIJ that Ross “has now completed the process he began months ago of divesting” from Navigator.

Neither Ross nor the Commerce Department has provided ICIJ with documentation of this divestment. In April, Rockas told ICIJ that Ross’ interest in the companies “was divested through a transfer to an irrevocable trust,” a transaction which is not subject to federal financial disclosure regulations.

In May, an ICIJ reporter asked Ross at an event at the National Press Club why he had retained his investments in Navigator for nearly a year after taking his cabinet post in light of the company’s dealings with sanctioned Russian oligarchs.

“The Office of Government Ethics did not require the sale of these holdings,” Ross said. And since the Russian company owned by sanctioned oligarchs was not itself sanctioned, Ross added, “there was no reason not to hold it.”

The post Ross shorted Russian-linked shipping company ahead of Paradise Papers appeared first on ICIJ.

Categories: News

‘Analyze the footnotes’: Why US reporter Margot Williams starts at the end

Tue, 06/12/2018 - 16:21

ICIJ has hundreds of members across the world. Typically, these journalists are the best in the country and have won many national and global awards.

Our monthly series, Meet the Investigators, highlights the work of these tireless journalists. This month, we speak with award-winning American reporter Margot Williams, research editor for investigations at The Intercept. Previous to her current position Williams worked at the Washington Post, National Public Radio, The New York Times, and, even at ICIJ. At the Washington Post, Williams was a member of two Pulitzer Prize-winning teams for an investigation into police shootings and for national coverage of terrorism. 

While at the New York Times, you took notes on 16,000 pages of court documents regarding the detainees held in the shadows at Guantanamo Bay, Cuba. This became the first comprehensive look at who the United States was holding at the island detention facility during the George W. Bush administration. How did you become interested in making this list?

As soon as the first orange-suited men arrived at Guantanamo Bay detention camp in January 2002, I became obsessed by the secrecy and anonymity of the military operation. Who were these people, and how did they get there? How did their capture and detention relate to the still-raw tragedy of the attacks on the World Trade Center and the Pentagon? What were their names? I was determined to uncover these facts as much as I could from behind a computer screen in Washington, D.C.

Can you talk at all about what research methods you used and how you figured out how to piece it all together?

Remember that a list of names did not become public until April 2006 in response to a Freedom of Information Act lawsuit by the Associated Press.

Before that I had been compiling my own list, using news accounts and information from lawyers and the web, like an Arabic language web site called and the official publication of the Yemeni Defense Ministry, also in Arabic. I did not read Arabic so it was a struggle. This list was published in The Washington Post with the project reported by Scott Higham and Joe Stephens in May 2004, and I was the third name on the byline. Pride!

I read for details and clues more than the general meaning. I obsessively analyze the footnotes. Margot Williams

In 2006, when the documents, the records of the Combatant Status Review Tribunals held in Guantanamo, were made available via the AP’s FOIA lawsuit, I had moved to the New York Times as the research database editor on the computer assisted reporting (now we’d call it “data journalism”) team.

My colleagues there figured out how to use “new” optical character recognition tools to make the pages searchable, and we created a database. But first I had to read them and connect each document to an individual detainee on the public list. No, the documents did not have the detainee names on them.  So I entered the information found by reading all those documents into a spreadsheet, and it became data!

At first reporters used the information for background on Guantanamo stories. Soon my colleagues Aron Pilhofer, Tom Torok, Andrei Scheinkman, Jacob Harris and Archie Tse created an interactive, first published online in November 2008, that is still alive and updated regularly by Jeremy Bowers.

The entrance to the current Guantanamo facilities. Margot Williams Did this enormous effort require a degree of personal obsession?

True. I know all their names and still am trying to learn their stories. I finally was able to go to Guantanamo myself for The Intercept, twice in 2017, to attend the pre-trial hearings of the five men charged with the 9/11 attacks. It looks like I am going back in June, if approved, to get on the official media tour of the base.

In 2009, you told ProPublica: “I am a reader of documents. There’s no substitute for reading every line of every page.” For all our skills in acquiring documents, could reporters stand to improve how closely we read the documents we obtain?

I have to confess that I read for details and clues more than the general meaning. I obsessively analyze the footnotes. On a big document, I start at the end and read backwards because I know everyone else is starting from the beginning and often stops before the end. I try to find within a document what can be counted, aggregated, analyzed.

Your title is research editor, right? I’ve also seen you referred to as a librarian of various types. Is there a difference between reporting and research/library work?

My career started at Time Inc.’s research library after graduation from Pratt Institute with a Master’s in Library and Information Science. I’ve been a Research Librarian, News Research Analyst, Library Director, News Researcher, Research Editor, Research Database Editor and Investigative Research Editor. I’ve also reported, fact-checked and done data analysis. My work (and the work of most news researchers, I believe) is centered on documents and data, rather than sources, interviews and writing. We work in partnerships with reporters and as members of project teams, with editors, reporters, graphics designers and developers. We’re collaborators. We’re all journalists.

What can reporters learn from researchers and librarians? How can we incorporate a researcher/librarian approach into our own work?

The skill of the researcher/librarian is finding the best, most reliable sources of information. We’re trained and steeped in fact-finding and verification. In an expanding universe of facts and falsehoods, new tools and traditional skills are essential.

Related articles You’ve created this great list of databases in a shared Google Doc, can you name a couple of favorites?

I have been keeping that list of databases current for twenty years. A new version will be available at the Investigative Reporters and Editors (IRE) conference in June. Of course, my favorite database at the moment relates to whatever the project or beat I’m researching, so right now its Marine Traffic ( for tracking ships and FlightRadar24 ( for unblocked planes. I’m recommending Enigma ( for its free and accessible repository of public data. I subscribe and pay for databases that are superior to free ones. Often reporters ask me how to get stuff for free when, indeed, it has to be paid for. Nexis, Accurint, TLO, Ancestry, Arachnys are worth paying for, in my opinion.

As newsroom budgets shrink, more and more investigative journalism is done on a freelance basis. A lot of reporters are starting their careers as freelancers without professional mentors or formal on-the-job training. How can freelancers both learn and stay up to speed on investigative reporting methods?

My best answer to that is to be a member of IRE and attend its workshops and conferences and use the tools and tip sheets on the web site. The GIJN (Global Investigative Journalism Network) conferences and its web site are awesome, too. Join your country’s investigative reporting organization, join the listserv, be grateful for your colleagues’ generosity and share your knowledge, too.

The post ‘Analyze the footnotes’: Why US reporter Margot Williams starts at the end appeared first on ICIJ.

Categories: News

Swiss authorities propose major money-laundering law reforms

Mon, 06/11/2018 - 16:36

Switzerland’s federal government appears poised to crack down on money laundering in the wake of banking scandals and investigations linked to FIFA chiefs and Vladimir Putin’s favorite cellist among others.

After the International Consortium of Investigative Journalists 2016 Panama Papers investigation, the inter-governmental Financial Action Task Force (FATF) called on the Swiss, known for bank secrecy, to do more to thwart financial crime.

On June 1, the federal government proposed three key changes to the Anti-Money Laundering Act, including stricter fiduciary obligations for those involved in creating, managing or maintaining companies and trusts; disclosure of beneficial ownership; and establishment of a commercial register.

Related articles

Under the proposed changes to be weighed for four months before being deliberated upon by Parliament, lawyers and others would be required to do due diligence to ascertain whether clients represent a risk for bribery or other wrongdoing, something that hasn’t previously been required.

“The main point is that the government has now sided with FATF and journalists in saying this loophole has to be closed,” said ICIJ member Oliver Zihlman, who writes for SonntagsZeitung and Le Matin Dimanche.

ICIJ and its media partners, including Zihlman, exposed records listing Sergei Roldugin, a classical cellist and long-time friend of Russian President Vladimir Putin, as the owner of offshore companies that have obtained payments from other companies worth tens of millions of dollars.

It also found bank accounts linked to major figures in FIFA, the international governing body of soccer.

Next major impact of @ICIJorg in Switzerland. The government presents a law against Lawyers, who offer Offshore-Company’s to dodgy clients like Putins Friends. The Reason for this move: the #PanamaPapers

— Oliver Zihlmann (@oliver_zihlmann) June 2, 2018

ICIJ and its media partners found that FIFA’s ethics head Juan Pedro Damiani and his law firm had done work for offshore companies linked to Eugenio Figueredo, a former FIFA vice president who has been charged by U.S. authorities with wire fraud and money laundering, as well as to Hugo and Mariano Jinkis, a father-son team of businessmen accused of offering bribes to gain broadcast rights to FIFA events in Latin America.

Zihlman had testified before the European Parliament that “90 percent of Swiss lawyers” used the loophole that they were not required to do due diligence when incorporating companies with the now-closed Panamanian law Mossack Fonseca, whose files provided basis for the Panama Papers investigation.

The changes proposed by the Swiss government also include requiring those involved in setting up companies to verify who actually owns them and to regularly check that client information is up to date. Still another proposal is to require associations, especially those “mainly involved in collecting or distributing asset abroad” to be listed in the commercial registry.

Jean Claude Bastos, a key figure in the Paradise Papers, has close connections to Angola’s former leaders – and worked closely with global accounting giant KPMHG.

In another development resulting from an ICIJ investigation Swiss prosecutors have raided four offices linked to the Swiss-Angolan businessman at the heart of Paradise Papers revelations about the secretive financial management of Angola’s multi-billion-dollar sovereign wealth fund.

Federal prosecutors searched two offices in late May while Swiss tax officials separately visited two more, including the family office of Jean-Claude Bastos, according to ICIJ reporting partner Tager Anzeiger.

Bastos, who is well-connected to Angola’s former leaders, founded Swiss management company Quantum Global, which received a lucrative management contract with Angola’s sovereign wealth fund. Launched in 2012, the $5 billion fund paid $63.2 million in management fees to his company in 2015.

ICIJ confirmed the raids through Switzerland’s office of the attorney general.

Switzerland’s attorney-general told ICIJ that it had “opened criminal proceedings in April 2018 in response to reports of money laundering” against unnamed “persons” connected to the National Bank of Angola and the Angolan sovereign wealth fund.

Bastos and Quantum Global declined to comment to ICIJ on the recent developments. Both have previously denied wrongdoing and said that all payments were accounted for and in line with industry standards.

Bastos is a friend of the former head of Angola’s sovereign wealth fund, José Filomeno dos Santos. Santos, the son of former president Jose Eduardo dos Santos. He was sacked by Angola’s new president in January and is facing fraud charges relating to a $500 million transaction from the central bank.

In April, authorities in Mauritius froze 91 bank accounts linked to Bastos and Quantum Global.

In an affidavit seen by ICIJ, Mauritius’s financial investigation unit requested the Supreme Court freeze the accounts due to “a serious risk of dissipation, or unlawful transfer of moneys” belonging to the Angolan people.

There were reasonable grounds to believe that “the acts and doings of Mr Jean-Claude Bastos …[are] tantamount to offences of corruption, embezzlement and money laundering,” the affidavit stated.

Bastos and Quantum Global are appealing the decision.

The post Swiss authorities propose major money-laundering law reforms appeared first on ICIJ.

Categories: News

One Company’s Tax ‘Heaven’ Is Senegal’s Tax ‘Hell’

Tue, 05/22/2018 - 12:11

When one of the world’s largest engineering companies scored a $50 million deal to build a processing plant in Senegal, one of the world’s poorest countries, it looked to a tiny Indian Ocean island for help.

That island, Mauritius, has an established banking system, a level of political stability unusual across Africa and a well-trained workforce.

It is also a renowned tax haven.

And Mauritius offered engineering company SNC-Lavalin a significant benefit: a lopsided treaty signed with Senegal that, with the right paperwork, made it easy for the Canadian firm to avoid up to $8.9 million in taxes.

That lost revenue is no small matter in Senegal, a country where nearly half of the population lives in poverty, where 5 percent of newborns die and where one in six children are stunted by years of poor nutrition. The forgone tax would have covered half the cost of running Senegal’s largest public hospital for a year.

The Senegal-Mauritius treaty, concluded in 2004, is one among scores of agreements that keep billions of dollars in tax revenue every year from reaching poor African and Asian countries.

Related articles

That was never the intention. Countries usually sign treaties to avoid taxing a company’s income twice, once in each country. Developing countries, in particular, have signed agreements in the hope that clarifying taxes paid by multinationals would encourage investment and jobs in countries that multibillion dollar operations might otherwise deem too risky.

Although originally hailed as deals that would benefit both sides of the agreements, a chorus of critics increasingly denounces treaties between wealthier and developing countries, particularly in Africa, as harmful to nations like Senegal.

Senegal is in West Africa, a poor region in one of the world’s most impoverished continents. While parts of the capital, Dakar, teem with creperies and upscale seaside fish restaurants, most of the countryside remains trapped in poverty. In remote thatched-roof villages on Senegal’s lush coast, just 2 percent of the residents receive piped water provided by public infrastructure.

In 2011, century-old Montreal company SNC-Lavalin signed a deal to design and build the $50 million processing plant for the Grande Cote mineral sands mine. At the time, the project appeared to represent great opportunity for Senegal.

The mine is now the largest operation of its kind in the world. It extracts mineral-laden sands from 60 miles of beach along Senegal’s coastline.

The sand yields, among other minerals, finely grained zircon, which is used in the United States, Norway and beyond as a glaze that brightens ceramic kitchen tiles, toilets and sinks. It also yields an ingredient in titanium dioxide, a whitener used in toothpaste.

But the mine wasn’t universally welcomed. Local tensions began to flare in 2012 during construction of the processing plant. At least seven villages were forced to make way for the project. Vegetable farmers and other residents complained of foot-dragging resettlement schemes that displaced them from more-fertile to less-fertile land.

In June 2017, members of Senegal’s parliament issued a report – obtained by International Consortium of Investigative Journalists – that faulted Grande Cote on several fronts. In particular, the report criticized the lack of diverse compensation options for those who were resettled.

The agreement between SNC Lavalin and the shell company based in Mauritius. SNC Lavalin Mauritius's agreement - Paradise Papers

On paper, the company that engineered and built the processing plant was SNC Lavalin-Mauritius Ltd, a local division of SNC Lavalin.

In reality, SNC Lavalin-Mauritius wasn’t involved. It was a shell, created for the specific purpose of helping the engineering giant avoid tax payments. The company had no construction equipment and no office of its own. It operated from inside the Mauritius office of the offshoring law firm Appleby, which helped SNC-Lavalin create the shell company.

The company’s true nature as a conduit rather than as a contractor is revealed in emails, invoices, financial statements and bank statements from the Paradise Papers, a trove of 13.4 million documents, most from Appleby, which specializes in administering tax-shelter companies.

SNC-Lavalin’s involvement with the mine ended when it finished building the processing plant. A French-Australian consortium owns most of the operation, and the government of Senegal holds a 10 percent stake.

By 2012, when almost all the work on the Senegalese plant was done, Grande Cote had paid $44.7 million in fees to SNC-Lavalin Mauritius, according to the company’s 2012 financial statements and 24 invoices.

Senegal’s taxes disappear

Experts estimate that Senegal could have missed out on $8.9 million in taxes as a result of the 2002 tax treaty between Senegal and Mauritius. Under the treaty, companies like SNC-Lavalin with a subsidiary company in Mauritius can avoid Senegal’s usual 20 percent tax on the kind of technical service fees paid to SNC-Lavalin. The final tax rate in some cases can be reduced to zero. Senegal is one of only two continental African countries with a Mauritius treaty with a zero percent tax rate.

SNC-Lavalin insists that it did not use the Mauritius company, SNC Lavalin Mauritius Ltd., with the main goal of reducing its taxes. Its reasons for choosing the tax haven, it said, instead included low political risk, a bilingual workforce, good banks and “facility for doing business in Africa.”

It could have reduced its taxes in the same way by billing for services from Canada under a treaty signed with Senegal, the company told ICIJ.

Experts consulted by ICIJ said it was unclear if the Canada treaty could have delivered the same tax benefits to the company.

Senegal potentially could tax fees under the treaty with Canada, said Prof. Vern Krishna from the University of Ottawa who is the managing editor of the legal publication Canada’s Tax Treaties. He added that Senegal’s ability to tax would be consistent with the United Nations’ philosophy of encouraging developing countries to tax income “as soon as possible.”

A spokesman for Senegal’s tax office said it signed the treaty in the hope of a win-win situation but now feels it is “unbalanced in Mauritius’ favor” and allows companies to set up in Mauritius for treaty benefits only.

It is renegotiating Mauritius and waiting for the island’s response. “Failing that,” the spokesman said, “Senegal may withdraw from the treaty – pure and simple.”

SNC-Lavalin said it was “entitled to rely on the Mauritius-Senegal Tax Treaty similar to any other company based in Mauritius.”

But experts say that tax treaties of the kind that SNC-Lavalin used to avoid paying millions to Senegal should be a thing of the past.

“You are legalizing the earning stripping-out of the country,” said Alexander Ezenagu, a tax researcher at McGill University.

“It’s a redesign of neocolonialism,” Ezenagu said, who is Nigerian. “In the 1800s, in the 1900s, they came with violence. Now, they come with sophisticated accounting systems and the lure of investment. But no country needs investment if it’s not going to be rewarded.”

A tax haven might be heaven for multinational companies to avoid taxes, but, for the country, it’s hell Ousmane Sonko

Around the world, civil society, academics and members of parliament have criticized many of the estimated 500-plus tax treaties signed between developed and developing countries.

While the overall value of losses is not known, the International Monetary Fund estimated that U.S. tax treaties cut the revenue of less developed countries by $1.6 billion in 2010. Dutch nonprofit SOMO estimated that developing countries lost more than $1 billion in 2011 alone through tax treaties signed with the Netherlands. In response to fears of inequitable deals, countries such as Rwanda, South Africa, Zambia and Mongolia have cancelled or renegotiated some of their tax treaties.

Senegal and Mauritius present a sharp contrast. While a third of Senegal’s population lives in poverty, Mauritius is considered Africa’s second-most-developed country and one of its richest. When the two nations signed the agreement, officials said it would spur development in both by encouraging investment in Senegal by Mauritius.

Increasingly, however, critics say the agreement has allowed foreign companies to bypass Senegal’s tax laws with shell companies in Mauritius or elsewhere. The companies created in Mauritius generally don’t invest in Senegal, but they do provide huge tax savings to their parent companies, outside Africa,  and deprive Senegal of badly needed tax revenue.

Tax heaven or hell?

“A tax haven might be heaven for multinational companies to avoid taxes, but, for the country, it’s hell,” said Ousmane Sonko, a former tax inspector who became a member of Senegal’s parliament in 2017 after running on a platform on tax fairness.

Sonko is currently lobbying other members of parliament to reject a proposed treaty with another tax haven, Luxembourg. “At the time when we should be talking about ending the tax treaty with Mauritius,” Sonko said,  “they are instead talking about signing a new one with Luxembourg.” Luxembourg is also well known for its creation of shell companies.

Ousmane Sonko speaking in Senegal Parliament. Senegal parliamentarian Ousmane Sonko

SNC-Lavalin Mauritius’ lack of real involvement in the mining project is evident in emailed financial discussions involving the mining company SNC-Lavalin, its accounting firm Deloitte and Grande Cote employees.

“When can we expect payment?” SNC-Lavalin’s finance manager in Canada asked his counterpart at Grande Cote about the Senegalese company’s unpaid $2.6 million invoice.

Grande Cote confirmed payment after two weeks of email exchanges. The only people based in Mauritius who were included in the discussion were Deloitte accountants and offshore experts at Appleby. They did not include anyone from SNC-Lavalin’s Mauritius company.

Sonko said the tax agreement allows Mauritius and Senegal to swap information to determine whether the Mauritius company is real and whether taxes have been avoided. But often, he said, the information swap never happens. Mauritius ranks highly on corporate secrecy rankings with restrictive laws on what company information can be publicly disclosed.

“Our tax inspectors can’t just get on a plane, fly to Mauritius and do an audit of these companies,” Sonko said.

SNC-Lavalin said it created the Mauritius company in 2008 as a holding company for projects in India and Africa. The company said it balances the obligation to pay “its appropriate share of tax” against “responsibilities to its shareholders. SNC-Lavalin structures its business in a tax efficient manner while remaining compliant with all applicable tax laws.”

The multinational, which prides itself on efficiency, completed Grande Cote’s processing plant in less than two years, adding the finishing touches in 2013.

SNC-Lavalin’s need for a shell company in Mauritius was just as short-lived.

The Mauritius subsidiary reported more than $41 million in revenue in 2012 from work in Senegal. Two years later, it reported no revenue at all.

Contributors to this story: Momar Niang

The post One Company’s Tax ‘Heaven’ Is Senegal’s Tax ‘Hell’ appeared first on ICIJ.

Categories: News

Why We Decided To Dig Into West Africa’s Offshore Links

Tue, 05/22/2018 - 12:09

West Africa was high on our need-to-do list when the International Consortium of Investigative Journalists launched the Panama Papers in April 2016.

Even though there were more than 370 journalists from close to 80 countries working together, sharing ideas and offering a helping hand, there were still many parts of the world that demanded more coverage.

Since then, ICIJ has immersed itself in soliciting, training and working with journalists from new countries – including those in West Africa. It’s part of what we do: bringing journalists together and creating cross-border reporting partnerships to help shine a light in every corner of every continent of the world.

In the Panama Papers, ICIJ previously had found and reported that companies and individuals from 52 of Africa’s 54 countries were in the data. Nearly every country had a potential story.

So we had a hunch that West Africa, a family of 15 countries that speak French, English, Portuguese and hundreds of local languages, would have plenty of secrets to reveal.

ICIJ teamed up late last year with a regional nonprofit organization that specializes in producing West African investigations, the Norbert Zongo Cell for Investigative Journalism (Cenozo).

The organization is named after one of West Africa’s most celebrated reporters, Burkina Faso’s Norbert Zongo, who was killed in unresolved circumstances.

In February, ICIJ and Cenozo held an event in Senegal. We helped journalists every step of the way, from setting them up with email encryption so we could communicate securely, to tracking down documents in the United Kingdom, the United States, Italy and elsewhere that had a connection to West Africa. When needed, we made calls from the United States to politicians who had previously refused to speak with local African reporters.

This investigation uses ICIJ’s collaborative technology so journalists can search for stories of public interest in nearly 30 million records that come from four different data sets: Offshore Leaks, Swiss Leaks, Panama Papers and Paradise Papers.

West Africa is too important to be left out of this reporting because the impact of tax avoidance, financial crime and corruption there is huge. Gross domestic product per capita would be 15 percent higher across Africa if money had not been siphoned from the continent, experts say.

The region is one of the least developed in the world. In 2016, it had the slowest growth of any of Africa’s five regions, according to the African Development Bank.

Untraceable money piped out of West Africa accounts for more than one-third of all the money that leaves the entire African continent each year, according to the United Nations.

ICIJ wanted to help bring more of West Africa’s offshore stories to light, and we knew that local knowledge and expertise would be key.

But challenges to investigative journalism in West Africa, as in many countries in Africa, are daunting. Journalists earn little money, work under extreme pressure and are often disconnected from the wider world.

Telling stories about any country’s most powerful individuals and companies is never easy. But it’s a lot harder to ignore a global community of reporters than it is one investigative journalist working alone.

That’s the power of collaboration.

It is part of ICIJ’s mission that no stone is unturned in the pursuit of truth and that no investigative journalist, if they have the passion and have the skills, works alone. That’s why we had to be there.

The post Why We Decided To Dig Into West Africa’s Offshore Links appeared first on ICIJ.

Categories: News

‘We are the enemies of our leaders’: Meet the journalists behind West Africa Leaks

Tue, 05/22/2018 - 12:07

West Africa Leaks is a collaboration of 13 journalists from 11 countries, the International Consortium of Investigative Journalists and Cenzo.

Many of these journalists face tough conditions, including legal threats, commercial pressure and technology constraints. But their will to unearth and report on some of the region’s biggest issues is indisputable.

Ahead of West Africa Leaks we spoke with some these journalists about what life as an investigative journalists is like and the challenges (and benefits) of the job.

Moussa Aksar, managing director, L’Evenement (Niger)

Question: What is life like for an investigative journalist in Niger?

Answer: We work in a difficult time.

We have people who believe in us, good citizens who believe in what we do, but we are the enemies of our leaders.

And so, every day, we are persecuted, it must be said. They use legal means and they try, very often, to discredit us.

But what I have to say is, honestly, and you will see it with your own eyes, is that ICIJ, which wasn’t known in West Africa before, is today known in Niger – people know what it is.

The average citizen, the poor man in the street, who has his money stolen by the government, we have seen, even in the street, they respect us, and they respect the work we do.

Even though we don’t have much security and even if we don’t have all the means we need to do our jobs, we are committed to holding the powerful to account.

Related articles Emmanuel Dogbevi, owner and managing editor, Ghana Business News (Ghana)

Q: You bring some special skills to this reporting, don’t you?

I think to some extent you’re right. I haven’t come across any investigative journalists who focuses on finance and business in the way that I do. And that’s because of my skills. There aren’t’ many training for journalists…

My experience also counts, the fact I’ve been practicing for many years… for 28 years… and each year gets more exciting for me. I never get tired of work.

Sandrine Sawadogo from Burkina Faso. i Al Jazera ICIJ partner Sandrine Sawadogo Sandrine Sawadogo, L’Economiste du Faso, (Burkina Faso)

Q: What is life like for an investigative journalist in Niger?

Answer: I hope that this investigation we created here in West Africa will continue. It’s very important for us as investigative journalists to work together, to be sure that our article can be taken up.

I know, for example, that if I can’t publish my article in my own country that I can have it published in another country through a colleague.

Question: What does it mean to be producing this work in Africa?

We should be aware as well for this West African project, for one of the first times or for one of the rare times, it isn’t us selling or sending our articles outside Africa.

Ignace Sossou, reporter, Benin Web TV (Benin)

Q: What is the situation for investigative journalism in Benin?

Answer: Investigative journalism isn’t terribly well developed in Benin.

Because the press here is more in a mindset of daily news. But there are journalists who are interested in investigative journalism, especially when it comes to environment, good governance and other subjects. The real challenge for investigative journalism in Benin, as I said before, is money.

When you’re a journalist, you’re doing daily news. You have a regular job. An investigative project can take three months without being paid. Who will pay for those three months?

The boss of a newspaper will resist hiring a journalist who only does investigations. They’ll say ‘We prefer someone who does daily news and who from time to time does investigations.’

So that means that when you are working on an investigation, you don’t have the time to dig, to really get to the bottom of the subject.

Q: What are you expecting from your first ICIJ collaboration?

A: What I’m hoping for from this collaboration is to go beyond my limits. Because ICIJ has a database that is not usually available to journalists in Benin. So in that database, nobody know what we will find about Benin.

And if, ultimately, we can say, ‘OK, that won’t have any outcome in the courts, but it will allow us to publish subjects that attract the public’s attention about trafficking, tax evasion, tax fraud.’

The post ‘We are the enemies of our leaders’: Meet the journalists behind West Africa Leaks appeared first on ICIJ.

Categories: News

Wanted: Honorary Consuls For ‘Cash-Strapped’ African Nations

Tue, 05/22/2018 - 12:06

On an overcast afternoon in September 2009, Benin President Thomas Boni Yayi raised a pair of golden scissors above a ribbon at the entrance to the sprawling new Erevan superstore in the heart of Cotonou, Benin’s seaside seat of government.

Beside him, in a dark suit and sporting a yellow pocket handkerchief was Erevan’s founder, Marcel Tchifteyan. “The land of Benin welcomed me, seduced me, and for more than half a century, I have never left,” Tchifteyan declared.

Tchifteyan then accompanied Boni Yayi, who left office in 2016, through the sparkling aisles of one of the largest superstores in West Africa, brushing past packs of bottled water and locally roasted peanuts.  Not far away was Tchifteyan’s son and superstore co-owner, Jean-Luc.

Marcel Tchifteyan’s legacy is visible throughout the country. He launched a construction company in the 1950s, followed by West Africa’s first paint business and then, in 2001, a beachfront hotel with tennis courts named “Dad’s House.”

He and his son have also accumulated titles. Marcel is an honorary consul representing Armenia in Benin, a ceremonial role that confers little official power, but is an indication of his ties to authorities. Jean-Luc, 57, is an unpaid trade adviser for France, appointed by the prime minister.

The Erevan website featuring a number of Benin supermarkets. Erevan supermarkets in Benin

On the day the superstore opened, Boni awarded Tchifteyan the National Order of Benin to recognize his work. “It’s a true marriage that united Benin and I,” Tchifteyan said. “And it is a happy and fruitful marriage.”

Leaked files examined by the International Consortium of Investigative Journalists suggest that the Tchifteyans’ avowed love for their adopted country is not reflected in their tax filings. The Tchifteyan’s Erevan superstore routed payments from suppliers through a Panamanian company and to a bank account in Monaco for years, according to documents related to ICIJ’s Panama Papers investigation. The payments, which experts say could have been taxed if they had stayed Benin, were out of sight and out of reach of the country’s overstretched tax authority.

“Of course something like this is going to interest us,” said a Benin tax official, who asked not to be named because of the sensitivity of the subject.

Honorary consuls, also known as “honoraries,” occupy a little-known niche in the global elite. They are loosely regulated, generally unpaid, part-time public officials chosen for their economic and political clout – or sometimes for a favor done or a donation made.

In documents from  ICIJ’s four major offshore investigations – Offshore Leaks, Swiss Leaks, Panama Papers and Paradise Papers –  honorary consuls’ offshore financial dealings sometimes intermingle with those of corporations and kleptocrats accused of looting Africa to the tune of at least $50 billion a year.

An investigation found that some individuals who represent foreign countries in West Africa or who represent West Africa abroad have squirreled away money in tax havens, out of reach of the strapped treasuries of the nations that welcome them. The honorary consuls who used offshore companies and bank accounts to shelter money and potentially reduce tax bills include a soft drink baron representing Panama in Nigeria, a Portuguese executive representing Burkina Faso and a Belgian diamond cutter representing Liberia.

While it is not illegal for honorary consuls to own or use offshore companies, critics say that combining controversial financial practices and quasi-diplomacy is wrong.

Using foreign tax shelters is unacceptable, said French Sen. Eric Bocquet who led a 2012 parliamentary inquiry into tax evasion. “That’s true for any individual, and it is even more so for people who officially represent France.”

The honorary diplomatic corps

While some honorary consuls have exploited the position, for others it is a labor of love, an opportunity – with some nice perks – to help countries they adore.

On a cool Thursday evening recently in Los Angeles, the three-tier 115-foot-long yacht RegentSea idled at Marina del Rey.

In their finest, including fur stoles, bespoke suits and sequined mermaid skirts, guests approached the boat on a red carpet, stopping at the stern for photos in front of a large banner that read: Diplomat’s Diversi-Tea Gala.

Breezy conversation swirled as attendees arrived in Ubers and jet black diplomatic people movers with tinted windows. “We missed you at my country day the other week,” said one member of LA’s diplomatic corps, leaning in to greet another. “I saw you at the King Tut exhibit at the Science Center!” exclaimed yet another.

At precisely 7:15 p.m., the RegentSea pulled away from the shore. The gala was to honor one of Los Angeles’ most indefatigable honorary consuls, Robert Sichinga, who represents Zambia.

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It was a chance for Sichinga, 46, to relax after a day at the Los Angeles County administration building, training with other members of the local consular corps, which describes itself as the third largest in the world. Paid career consuls and a few honoraries, including Sichinga, discussed how to order special license plates or State Department-issued identity cards, whom to call in an emergency, and how to arrange a police escort for visiting dignitaries. They were instructed, too, that no amount of grandstanding would get them off a drunken-driving charge.

Among his peers, Sichinga is known to spend more time than most honoraries selling the country he represents to Americans, who often don’t know where Zambia is or what he is talking about.

“‘Za-who?’ people often ask me,” Sichinga said. “I start having to give everybody a geography lesson.”

Sichinga is one of 1,144 honorary consuls in the United States. Especially prized by small or poorer nations without full-fledged diplomatic missions, honoraries represent foreign nations for a fraction of the cost of a salaried member of the diplomatic corps.

They are retired diplomats, personal injury lawyers, tequila magnates, restaurant managers and part-time singers. Jacqueline Onassis’ longtime partner, Maurice Tempelsman, represented Zaire in New York City. California Democratic  Sen. Dianne Feinstein’s husband has been a proxy for Nepal and Mongolia. From 2007 to 2010, former U.S. Vice President Walter Mondale was Norway’s go-to man in Minnesota.

Some process passports for dual-nationality citizens. Others are on call 24/7 in case a tourist gets lost at Disneyland or a visiting investor is kidnapped, robbed or jailed. Others help facilitate business deals – for instance, hosting oil companies at energy industry conferences.

In nearly every case, they perform the role without drawing an official salary, attracted instead by the love of a country or the promise of privilege.

Countries that use honoraries “get a lot of bang” for their buck, said Pontus Jarborg, former Swedish consul general.

But while some honorary consuls work to rigorous standards, others seem to do mostly as they please.

“You could almost write your own playbook,” said Cynthia Blandford, Liberia’s representative in Georgia since 2009. “It’s very much about trust.”

History shows that not everyone deserves that trust.

In one notorious example, Adolf Hitler’s wartime Spanish translator worked under the cover of “honorary consul general” during and after World War II. Capt. Hans Hoffman was involved in Operation Werewolf, helping to maintain a network of Nazi sympathisers in southern Spain.

Around the world, honorary consuls have been fined, jailed and stripped of their titles for corruption, including alleged money laundering, operating an illegal gambling den, stealing millions from a state-owned lottery and raping a 12-year-old girl. In 2015, Turkey’s honorary consul to Togo, in West Africa, was jailed for allegedly issuing fake travel documents.

The goal was to avoid having a group of people with titles but no responsibilities, freelancing, acting as independent agents and cutting deals on their own. Larry Dunham

Within the United States, officials have a phrase for what happens when things go wrong: “diplomats behaving badly.”

The State Department now requires honoraries to perform meaningful duties. “The goal was to avoid having a group of people with titles but no responsibilities, freelancing, acting as independent agents and cutting deals on their own,” said Larry Dunham, a consultant with Protocol Partners and the State Department’s former assistant chief of protocol.

Jarborg said Sweden was mindful of errant honoraries. “If we find out that the honorary consul could come into a conflict of interest situation or reflect badly on Sweden as a country,” he said, “we would ask the consul either to get out of that business or resign as honorary consul.”

Yet little about what honoraries may or may not do in the business sphere has been spelled out.

While many are honorable, some honoraries push deals with top officials and their wives. Some feel that they have no constraints at all and that, as unpaid volunteers, the concept of conflict of interest does not apply.

Looking for a job as an honorary consul?


Diplomatic Consulting offers assistance to people seeking diplomatic opportunities. Diplomatic Consulting

For anywhere between $60,000 and $500,000, Diplomatic Consulting will find applicants an honorary position representing one of 24 countries in Asia, Latin America, Europe and Africa. West and Central Africa are the company’s chief markets. Promotional material offers possibilities in six countries on the continent: Guinea, Guinea-Bissau, Mali, Gambia, Democratic Republic of Congo and Central African Republic. All are on the United Nations’ list of Africa’s least-developed countries.

Diplomatic Consulting founder Andrew Szabo, who launched the business after making a fortune in online matchmaking services, concedes that money can advance applications.

“It is a common practice that diplomats and foreign ministries don’t like to talk about,” Szabo told ICIJ, explaining that securing a position might involve giving a donation to a hospital, a school or orphanage. Or perhaps to the prime minister’s wife’s favorite charity.

“West African countries are the most cash-strapped countries in the world,” said Szabo, Mali’s honorary consul in Budapest. “And they’re the ones that are generally seeking representation and that have very limited diplomatic representation.”

Few West African countries were as desperate for representation – or taxes – as Liberia at the turn of the century.

Warlord-turned-president Charles Taylor supported and helped train rebels in neighboring Sierra Leone, a U.N. expert panel found. Between 2001 and 2004, the United Nations sanctioned Taylor and other senior leaders and banned Liberian diamond exports.

Around the same period, a little-known Belgian diamond cutter, Marc Robeyns, represented Liberia as its honorary consul in Belgium, home to one of the world’s largest diamond exchanges. It is unclear precisely when Robeyns began this role for Liberia. However, he was linked to four bank accounts with HSBC Private Bank in Switzerland while honorary consul, according to files from ICIJ’s Swiss Leaks investigation. The bank files do not detail Robeyns’ connection with the accounts but make it clear that he was a bank client.

In January, August and October 2005, Robeyns spoke to his banker and predicted that “some good business” would help him increase his offshore account balance. By then, notes of those discussions show, Robeyns had moved to the Bahamas, from where he continued to represent the West African country. Robeyns was thinking of selling his home on the island for up to $3 million, the notes state.

It is unclear how Robeyns divided his time between Belgium and Liberia, although HSBC files listed him as Liberian with mailing addresses in the Liberian capital of Monrovia and Antwerp, the Belgian city known as the world’s diamond capital. Robeyns did not respond to questions, including whether he was ever a Liberian resident for tax purposes and required to declare the accounts.

Since the publication of ICIJ’s Swiss Leaks investigation, several countries have recouped millions of dollars in fines and taxes on bank accounts. A spokesman for the Liberian Revenue Authority told ICIJ that it faces major challenges obtaining information from document leaks such as Swiss Leaks but said it is “definitely” interested in any information that could relate to lost revenue.

Benin superstore mogul’s offshore network

Back in Benin, while superstore entrepreneur Marcel Tchifteyan was constructing his business empire, his son Jean-Luc was building the offshore enterprise where some of the supermarket earnings ended up.  Wagner Corp. was created in Panama in May 2005, according to documents from the Panama Papers. Initially, shares issued by the company concealed the name of the owners.

A banker updated Mossack Fonseca with Jean-Luc’s details via email. Wagner Corporation email.

Years later, a background check by the law firm Mossack Fonseca on Jean-Luc Tchifteyan noted his father’s honorary position. Lawyers classified Jean-Luc a “politically exposed person,” language used to flag clients such as politicians and diplomats for additional screening.

“Mr J.L.T. will use Wagner Corporation, of which he is the sole beneficial owner, to collect commissions” a banker for the family explained to Mossack Fonseca in a 2014 email, which provided the law firm with updated passport and other information.

Supermarket suppliers would pay the shell company up to $150,000 a year, the email continued.

David Sables, CEO of Sentinel Management Consultants, which advises suppliers on deals with supermarkets, said big stores often receive commissions from suppliers who pay for their products to receive prominent placement. But he said routing those payments to shell companies is not common in the industry.

Panama’s taxes on income sources such as commissions are “almost non-existent,” making it possible to enjoy commissions virtually tax-free, said Reine Flore Tamo, a tax specialist in Cameroon.

Jean-Luc did not respond to emails, phone calls, WhatsApp messages and letters. Marcel Tchifteyan did not respond to questions, including those sent to an email account that combines his consular and his Erevan supermarket identities:

Contributors to this story: Ignace Sossou

The post Wanted: Honorary Consuls For ‘Cash-Strapped’ African Nations appeared first on ICIJ.

Categories: News

Explore The Stories

Tue, 05/22/2018 - 12:05

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Categories: News

How Officials, Businesses and Traffickers Hide Billions from Cash-Starved Governments Offshore

Tue, 05/22/2018 - 12:05

Government officials, arms merchants and corporations have spirited away millions of dollars from destitute West African nations through offshore tax havens, an investigation by journalists from the region and the International Consortium of Investigative Journalists has found.

Offshore companies were set up for a global engineering firm that avoided paying millions in taxes to Senegal, one of the world’s poorest countries; for a little-known entrepreneur who won a contract to build West Africa’s largest slaughterhouse and for a well-connected arms trafficker from Chad. In several cases, the companies, as well as the companies’ transactions and offshore bank accounts, were not declared or are only now being revealed in more detail.

The findings were drawn from a collection of almost 30 million documents, representing several leaked financial records obtained by and shared with ICIJ since 2012.

For poor regions of the world like West Africa, the use of shell companies, tax evasion, aggressive tax planning, tax havens and offshore bank accounts can be dramatic. Brigitte Alepin

From Cape Verde’s islands of white-sand beaches and rocky volcanoes to Niger’s vast deserts, West African countries are plundered by companies and individuals, while governments do little to stem the flow.

West Africa accounts for more than one-third of an estimated $50 billion that leaves the continent untraced or untaxed each year, according to the United Nations. Overall, a combination of corruption, drug, human and weapons trafficking and other furtive import and export activities strip Africa of three to 10 times as much as it receives in foreign aid.

“For poor regions of the world like West Africa, the use of shell companies, tax evasion, aggressive tax planning, tax havens and offshore bank accounts can be dramatic” in the deprivation and suffering it creates, said Brigitte Alepin, professor of taxation at the Université du Québec. “These countries are in need of public finances, and these losses of tax revenues affect the basic services they can offer to their citizens.”

The money reappears in safe deposit boxes in European banks, as equity in high-rise New York condos and smooth limestone Parisian apartment buildings, far from the collapsing hospitals and other buildings of West Africa. It also fills wealthy investors’ pockets.

ICIJ partnered with 13 journalists on West Africa Leaks to investigate high-profile individuals and powerful corporations in the region. The investigation included journalists from six countries where reporters hadn’t before examined files pertaining to the individuals and businesses.

The source material is millions of files that make up ICIJ’s four offshore databases: Offshore Leaks, Swiss Leaks, Panama Papers and Paradise Papers.

From the Mali presidential election

The leaked records include the secretive Persian Gulf real estate plans of a candidate in this year’s Mali presidential election; the Swiss bank account of an intimate friend of Togo’s hereditary dictatorship who manages the country’s overseas real estate; and a Seychelles foundation directed by the childhood friend of Liberia’s Nobel Peace Prize-winning former president, Ellen Johnson Sirleaf.

Often the offshore documents paint only a partial picture of the secretive financial affairs of prominent and wealthy West African individuals and businesses. In several cases, emails, spreadsheets and contracts don’t explain why a shell company was created or how much money was held in a far-flung offshore bank account.

Yet the files provide rare insights about untouchable potentates who have long benefited from weak tax enforcement and supine courts in countries that struggle to hold them to account.

While several European nations have recovered small fortunes hidden offshore by citizens and companies exposed by previous ICIJ leaks, no African country has confirmed recovering a cent after previous revelations from these offshore troves.

Ousmane Sonko, a former Senegalese tax inspector who is now a member of parliament, said many West African tax authorities are doubly plagued: They don’t have the means to investigate complex foreign transactions, and, when investigators do make headway, politicians find ways to torpedo their small successes.

Sonko said the situation is made worse by general ignorance of the importance of corporate tax – or any tax – to society.

“When people don’t even understand what taxes are, acting on something like the Paradise Papers is challenging,” Sonko said.

Documents from the Panama Papers relating to David Abtour’s companies. David Abtour Documents - West Africa Leaks

“If you talk about ‘tax havens’ in some countries in Africa, people will look at you and think you’re insane.”

In the Central African country of Chad, David Abtour, who married the sister of an ex-wife of President Idriss Déby, set up two companies after becoming involved in a helicopter deal with Chad’s armed forces.

Abtour teamed up with the air force chief of staff to help Chad buy Russian helicopters in 2006, French journalist Jacques-Marie Bougret reported. It was the beginning of a lucrative association between Chad’s leaders and Abtour.

Chad, which has been identified as one of the world’s 10 least developed countries, was at the time fighting Sudanese-backed rebel groups. In April 2006, rebels and government forces clashed close to Chad’s National Assembly palace in fighting that killed hundreds.

Chad’s army crushed the rebels, who had launched the attack from Sudan’s Darfur region, with tanks and attack helicopters – weaponry that proved critical in the scrappy, small-scale conflict.

At the time, Chad was declared the most “highly corrupt” country in Transparency International’s global corruption rankings. Deby’s government starved schools, roads and hospitals while lavishing millions of dollars on the military.

Politicians and rebels quarreled over a billion-dollar tax windfall from Chad’s oil boom, exacerbating instability. “Chadians are watching to see who will try to take the money, and how,” a New York Times guest columnist wrote in 2007.

From operating bases in Chad, Dubai and Paris, Abtour and his contacts provided Chad with ammunition in 2007, according to Bougret. Abtour fell out of favor in 2008, Bougret reported, after Chad’s prime minister replaced the head of defense.

The next year, Abtour set up two shell companies in Panama, according to the Panama Papers. One company, Bickwall Holdings Inc., had a bank account in Switzerland with HSBC Private Bank. The other, Tarita Management Corp., used UBS. In both cases, the companies were set up to issue shares to Abtour in a way that kept his identity concealed. Panamanian lawyers at Mossack Fonseca held no information on the activities of the two companies, which were closed in 2013.

Abtour did not reply to requests for comment.

In Niger, emails and contracts from ICIJ’s Offshore Leaks investigation show, a little-known New Zealand operator signed a $31.8 million contract with officials to build West Africa’s most modern refrigerated slaughterhouse. Livestock is central to Niger’s culture and accounts for 14 percent of all goods and services produced.

The slaughterhouse was started but not completed. Nine years, three court cases and one coup d’etat later, it is unclear how much Niger paid for the nonexistent slaughterhouse, why an obscure offshore company won the region’s most lucrative livestock-related deal and whether any of the earnings were ever taxed.

According to Niger’s prime minister at the time, Seyni Oumarou, the company, Agriculture Africa, and the operator, Bryan Rowe, were chosen for their “expertise and know-how” and “global reputation.”

“Never heard of them,” said professor David Love, a slaughterhouse management and construction expert who works with international organizations and national governments, including in Africa.

Rowe set up seven companies in the British Virgin Islands, including Agriculture Africa Ltd., according to the documents, leaked from the British Virgin Islands. Agriculture Africa Ltd. was created in February 2009, and he signed the contract two months later.

Rowe, whose background is primarily in emerging market telecommunications, told ICIJ that only Agriculture Africa and Global Development Holdings International Ltd. became operational.

Rowe said that progress on the slaughterhouse was on schedule until a military junta overthrew the government in February 2010. Construction stopped. The new leaders refused to pay Agriculture Africa’s bills for work completed since 2009, Rowe said. He declined to say how much the company had been paid, citing confidentiality. Nor did he explain why he chose to create the companies offshore.

Rowe said that he had won three court cases in Niger seeking payment for work completed to date but that the judgments had not been enforced.

The Niger government did not respond to questions about the slaughterhouse.

Lack of responsiveness was one of myriad challenges faced by reporters during the five-month West Africa Leaks project.

Recurrent, lengthy and erratic power and internet outages hobble reporting in many countries in West Africa. Nigeria averages nearly 33 blackouts a month, many lasting eight hours or more. Another problem is the limited access to even the most benign documents or communications, and government agencies and politicians – even presidential candidates – regularly refuse to comment.

Several ICIJ partners felt pressure to halt publication of their findings from business leaders who threatened to withdraw newspaper advertising. Reporters also struggled with unreliable, essential equipment to do their jobs. Two reporters worked on computers whose malfunctions blacked out at least one-third of their screens.

ICIJ partnered with the Norbert Zongo Cell for Investigative Journalism in West Africa (CENOZO), a West African nonprofit that supports regional collaborations and receives funding from philanthropist billionaire George Soros’ Open Society Initiative for West Africa.

To Liberia’s former president

Despite the difficulties, reporters connected many West African power players to offshore accounts and companies. For instance, Liberia’s first female pharmacist, Clavenda Bright-Parker, was the sole shareholder and director of a Seychelles company, Greater Putu Foundation Ltd., according to Panama Papers documents.

Liberia’s first female pharmacist Clavenda Bright-Parker (front row, far right), and former Liberian president Ellen Johnson Sirleaf, seated in the middle. Ellen Johnson Sirelaf and Clavenda Bright-Parker

Bright-Parker went to elementary school with former Liberian president Ellen Johnson Sirleaf. As teenagers, at the cinema one evening, Bright-Parker introduced the future president to her future husband and later took part in Johnson Sirleaf’s wedding as maid of honor. Bright-Parker was also a personal envoy of the president and was appointed chairwoman of Liberia’s medical regulatory agency.

The Panama Papers do not describe the specific purpose of Greater Putu Foundation Ltd. or disclose whether the company had a bank account.

Bright-Parker’s offshore role in Greater Putu Foundation coincided with disagreements between the Canada-based company in charge of the mine and Liberia’s government.

Canada’s Mano River Resources signed a deal to develop the mine in 2005 and later sold its interest to the Russian global steel and mining company Severstal. Residents and members of parliament have long complained that the owners of the mine did not deliver on promises for development.

Mano River Resources’ co-founder, Guy Pas, did not describe Bright-Parker’s work in detail but told ICIJ in an email that Bright-Parker “came recommended to take up this role” with the Putu mine to “defend its interest at the highest level” against ministerial pressure to have a larger mining company take over the project.

“Dealing with the Ministry was sometimes ‘complicated’,” Pas wrote, adding that government officials never asked for money.

Reached by telephone, Bright-Parker said she had no knowledge of the Seychelles company and asked reporters to call back for more details. She did not respond to further calls or to emailed questions. Johnson Sirleaf said she was not aware of Greater Putu Foundation Ltd. and never discussed the Putu mine with her friend.

Other West African findings from the offshore files examined by reporters highlight techniques that profitable foreign companies use to reduce tax payments that could otherwise be owed.

Canada’s SNC-Lavalin, one of the world’s largest construction firms, benefited from a controversial treaty to avoid paying up to $8.9 million in taxes to Senegal.

SNC-Lavalin used a Mauritius company with no employees and no office as a conduit for $44.7 million in payments from a Senegal company throughout 2012. The payments were for SNC-Lavalin work to build a mineral sands processing plant.

Usually, Senegal would have collected 20 percent in withholding taxes on the payments, according to tax experts. But a treaty between Senegal and Mauritius allows multinationals such as SNC-Lavalin to avoid taxation on payments made through a company registered in Mauritius.

The company said it “structures its business in a tax efficient manner while remaining compliant with all applicable tax laws.” It denied making use of Mauritius to benefit from the tax treaty and said that it balances the obligation to pay taxes against its responsibilities to shareholders.

Not a beneficiary of this tax efficiency? Senegal.

‘Our wealth is sold off to rich multinationals’

“We’re one of the 25 poorest countries in the world,” said Ousmane Sonko, the Senegalese parliamentarian. “Our hospitals and schools have dirt floors,” Sonko said, “and our young men take rickety boats across the ocean to reach Europe.”

“We have the potential,” Sonko said. “But our wealth is sold off to multinationals that are already extremely rich and whose home countries are also rich.”

African countries are 20 years behind their European and North American peers in stemming tax abuse, experts say. But there a movement to stop, or at least slow, the flood of cash from leaving the continent.

In March, an organization called the West African Tax Administrations Forum launched a regional campaign to improve cooperation between governments and to crack down on tax abuse.

In a crowded Nigerian hotel conference room with tiger-stripe carpets, officials sat beside their national flags and discussed how to achieve their goals.

Officials had a lot to chew on, one panelist said, and there was much work to do.

Before the attendees dispersed for evening celebrations, the organization’s executive secretary, Nigeria’s Babatunde Oladapo, sounded optimistic.

“Like I always say, we are all partners in progress. We are here because together we believe we can do it.”


Contributors to this story: Moussa Aksar and Alloycious David

The post How Officials, Businesses and Traffickers Hide Billions from Cash-Starved Governments Offshore appeared first on ICIJ.

Categories: News

ICIJ member a victim of ‘data-breach’ rocking Irish media

Thu, 05/17/2018 - 17:15

International Consortium of Investigative Journalists member Sam Smyth is among several prominent victims of a remarkable Irish data-leak scandal that has shaken the nation’s media and political establishments.

Smyth works for the Irish Mail on Sunday and previously worked for the Irish Independent, Sunday Independent and Sunday Tribune.

He is one of Ireland’s most decorated journalist and has built his reputation upon investigations into business and political scandals.

ICIJ spoke with Sam Smyth about events that have left him feeling ‘betrayed’ and ‘sickened’  fearing for the anonymity of his sources and dismayed over media freedom in his homeland.

What happened?

My former employers Independent News Media (INM), Ireland’s largest newspaper group and publishers of the national, daily Irish Independent, have potentially allowed access to every email and communication I sent and received over two decades of being an investigative journalist.

How has this made you feel?

It feels like someone has stolen my personal diaries. I felt nauseous when I learned what is alleged.

Who has made the allegations?

The claims have been made by the State’s corporate watchdog, the Office of the Director of Corporate Enforcement (ODCE), which is now seeking the appointment of inspectors to investigate INM.

Related articles What is known about the breach?

It’s complex but the allegations are that the emails of at least 19 people, including journalists, lawyers and company directors, were taken from INM’s premises in 2014 – on magnetic tapes used as a back-up for the company’s IT system – to be ‘interrogated’ offshore by at least six companies. So, the data was being combed for what the ODCE says in an affidavit were “email hits” against eight of the 19 names, including those of several journalists.

Do we know why the data was being combed? What information was being sought?

ODCE head Ian Drennan says the watchdog has not been able to establish the precise purpose of the data search, but says he wants to establish whether journalists’ email, or other data, was accessed and, if so, by whom and for what purpose. Drennan also says that it is a “striking feature” that INM’s board appears not to know why.

How is Ireland’s richest man, Denis O’Brien, tied to the story?

The roots of the story lie in a boardroom clash over an apparent attempt to sell a news radio station that was owned by O’Brien to INM.

O’Brien holds a substantial stake in INM, and it was INM’s former chairman, Leslie Buckley, who ODCE says ordered the tapes to be ‘interrogated.’

The former chief executive of INM, Robert Pitt, made a whistleblower’s protected disclosure to the ODCE over the price allegedly sought in the aborted radio deal – and as a result of that disclosure, the suspected data leak was revealed.

The ODCE claims the data backup tapes were taken in October 2014 and shared with at least six companies external to INM.

The ODCE also claims two invoices associated with the data interrogation were discharged by Blaydon Limited, a company owned by O’Brien.

It alleges that about 60,000 euros was paid by Blaydon Ltd to Trusted Data Solutions, an American company based in Wales.

Why does the name Blaydon seem familiar?

Blaydon Limited featured in the Paradise Papers. Documents in the leak stated that the company’s bank accounts in Ireland had up to 2 million euros passing through them at times.

Is there a political dimension to these events?

The media’s ability to freely investigate and report is a principle that must remain sacrosanct. So, yes, there is an important one.

Ireland’s prime minister, or Taoiseach, Leo Varadker, has spoken about the importance of a free media. Now his credibility relies upon him supporting a transparent inquiry into the INM scandal.

What do you want from INM?

I have written to INM asking them to candidly explain what happened to my information? Who was it made available to? And for what purpose? I have heard nothing from them.

What has Buckley said about the scandal?

According to the ODCE, Buckley claimed the data interrogation was part of “a cost reduction exercise.”

Does the ODCE accept this explanation?

Drennan says he is not convinced and wants the issue probed further.

Complicating the matter even more, INM is seeking a judicial review to the ODCE’s application to have corporate inspectors appointed to the company.

Have either Buckley or O’Brien commented publicly on the controversy?

Buckley issued a statement saying he planned to defend his position robustly. A spokesman for O’Brien told the Irish Independent he was not commenting.

But the Irish High Court has heard that O’Brien wrote to Drennan, the head of the ODCE, accusing him of leaking information about the data breaches.

O’Brien said he would hold Mr Brennan “fully and personally responsible” for leaking information that O’Brien claims is damaging to his reputation.

Drennan and the ODCE rejected the allegation.

The whole thing sounds pretty damaging to INM. Does it threaten the future of the company?

INM’s chief executive Michael Doorly has warned that there will be significant costs for the company if inspectors are appointed.

But he has given INM’s 815 staff assurances that their jobs are not under threat.

The post ICIJ member a victim of ‘data-breach’ rocking Irish media appeared first on ICIJ.

Categories: News

Fossil fuel funds have unlikely investors: environmental icons

Wed, 05/16/2018 - 15:17

From a 34-foot tall Tyrannosaurus Rex skeleton to a herd of taxidermy elephants forever poised to charge, the American Museum of Natural History is a celebration of nature. Through its exhibits, website and other public education efforts, the New York City institution regularly encourages conservation and protecting the planet from climate change.

But, at least since 2009, the museum’s endowment fund has quietly invested millions in the oil and gas industry through an undisclosed stake in a private equity fund, reveals a report by NBC News, which joined the International Consortium of Investigative Journalists in a new Paradise Papers investigation examining the offshore investments of nonprofit organizations.

The museum invested $5 million in a fund run by Denham Capital, a private equity firm that invests in oil and gas, mining and power plants. That fund has pumped money into fracking for shale oil in Ohio and Pennsylvania and made an unsuccessful bid to invest in coal in Mongolia.

The museum is one of several prominent environmental nonprofits and foundations, including the World Wildlife Fund, whose investments in fossil fuels were uncovered by NBC and other partners in a collaboration with ICIJ in a new look at the Paradise Papers, a leaked trove of 13.4 million documents, obtained by the German newspaper Süddeutsche Zeitung and shared with ICIJ. The files revealed how endowments, foundations and other nonprofits use offshore companies and undisclosed investments to obscure where their tax-exempt dollars are flowing.

The investigation showed nonprofits repeatedly making investments that contradict their missions and lobbying in state legislatures to increase the secrecy surrounding their investments.

NBC’s findings are part of a collaboration, dubbed Alma Mater, organized by ICIJ to examine the offshore investments of U.S. tax-exempt charitable organizations. Originally designed to investigate more than 100 universities whose endowments appeared in the Paradise Papers, the project expanded to include nonprofit museums, foundations and advocacy groups. It includes reporters in California, Montana, New York and Tennessee, working for outlets ranging from national television networks to city newspapers to an independent university publication.

Among the most striking findings were the investments by environmental groups in the fossil fuel industry. Not only the American Museum of Natural History, but also World Wildlife Fund, which states publicly that “we must urgently reduce carbon pollution,” invested in the Denham Capital fund, NBC News found.

The museum told NBC News that the investments represent “a small part of our overall program for managing the Museum’s endowment” and has noted in the past that it holds no direct stock in fossil fuel companies. It has been working since 2014 to reduce its fossil fuel investments. The World Wildlife Fund told NBC News that it is trying to unwind investments in oil and gas, and that, in the meantime, it has put money into a counter investment offered by a Deutsche Bank financial instrument which loses money when fossil fuel stocks rise and earns money when they fall.

While the museum and the World Wildlife Fund are working to cut back their investments in fossil fuels, other nonprofits have resisted.

A major foundation that supports environmental causes, the David and Lucile Packard Foundation, has also turned to the energy sector. The Packard Foundation invested $50 million in a fund managed by U.S.-based private equity firm Energy Capital Partners that invests in oil and gas-related operations, NBC News found.

The Packard Foundation, which states on its website that it “invests in policies and projects to transform the use of fossil fuels around the world” with its grants, told NBC News that when it comes to its endowment it seeks to maximize gains on its investments and does not avoid fossil fuels.

Universities that have taken public stances in the fight against climate changes have also behaved differently when it came to investing their endowments. Earlier this year, the University of Washington was one of 13 universities that formed the University Climate Change Coalition, an initiative to reduce carbon emissions. Yet it invested $9 million in the Denham Capital fund, NBC News noted.

The University of Washington told NBC News that it had resolved in 2015 to divest from coal, but not from other fossil fuels.

The University of Montana, which has not made similar public pronouncements about climate change, also has invested in fossil fuels. The University of Montana Foundation sent $5 million in 2007 to a fund operated by private equity firm Coller Capital, which in turn invested in a joint venture including Royal Dutch Shell, reported the Montana Kaimin, the University of Montana’s independent student newspaper.

In a previous interview with the Montana Kaimin, University of Montana President Seth Bodnar declined to commit to divesting from fossil fuels but expressed openness to considering social responsibility in judging investments.

The University of Montana Foundation has invested more than $30 million in offshore funds, the Montana Kaimin reported.

Universities go offshore

Investments in private equity firms that finance the oil and gas industry are part of a broader shift in how universities manage their endowments. The search for higher returns has led universities to move away from traditional stocks and bonds and focus on “alternative investments,” which include hedge funds, private equity funds and venture capital.

The University of Tennessee’s turn to offshore alternative strategies includes shares in at least 19 funds with a combined value of more than $200 million as of June 2017, reported ICIJ’s partners at the Memphis Commercial Appeal. These investments represent about 20 percent of the endowment, while its investments in U.S.-based stocks and bonds has dropped to about 5 percent, the Commercial Appeal found.

Overall, the percentage of university endowments in alternative investments jumped from 20 percent in 2002 to 51 percent by 2014, according a 2015 report by the Congressional Research Service.

The push for secrecy

As they have embraced alternative investments and tax havens, some universities have also pushed to keep the activities of their endowments secret. Public universities, which are subject to Freedom of Information laws, have taken some of the strongest steps.

Last year, the Board of Regents of the University of Montana System, comprised of sixteen universities and colleges across the state, signed a new contract between the system and the foundation that manages its endowment. The contract included language allowing the foundation 20 days to block public records requests to the university system in order to seek a protective order, the Montana Kaimin reported.

The University of Tennessee also acted last year to keep its endowment’s activities secret. The university successfully lobbied the state legislature to pass a law allowing the university not to disclose the fees that it pays to the funds that invest its money or the identity of the companies that these funds ultimately invest in, reported the Commercial Appeal.

University of Tennessee Chief Investment Officer Rip Mecherle told the Commercial Appeal that its offshore investments were above board and “plain vanilla.” He said that he had personally helped draft the secrecy provision at the request of the university’s money managers and that some of the best investors insist on such secrecy rules as a condition of accepting a client.

Even without new secrecy provisions like those in Montana and Tennessee, universities and other nonprofits face little scrutiny as they seek to maximize returns on holdings as large as tens of billions of dollars. Sometimes the investments conflict with goals the tax-protected institutions have publicly embraced, the Paradise Papers revealed. More often, the destination of these tax-exempt investments remains hidden from view.

Read their stories:

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Categories: News

How ICIJ’s Datashare project will help journalists breach borders

Mon, 05/14/2018 - 19:43

Behind the scenes, the Panama Papers and Paradise Papers investigations were powered by a central platform that made it possible for the International Consortium of Investigative Journalists’ worldwide network of journalists to collaborate while exploring tens of millions of files. As successful as these probes proved, the platform failed to make searchable and to connect data stored in individual reporters’ computers.

Now comes the advent of ICIJ’s Datashare platform, which, for the first time, will allow journalists across borders to collaboratively and discreetly mine information contained in their respective documents.

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To understand how it works, imagine an investigative reporter, let’s call her Gabriela, awash in a flood of potentially damning documents linking a government minister to contract price-fixing. We’ll call our fictional minister João Silva.

By downloading ICIJ’s Datashare, Gabriela can create a search engine for the documents that had threatened previously to swamp her investigation.

Datashare integrates ICIJ’s battle-tested Extract technology which pulls out machine-readable text from files (using Apache Tika), applies optical character recognition (Tesseract OCR) to images, then adds information to a search engine (Elasticsearch.)

Effectively, it permits Gabriela to get individuals, like João Silva, organizations and locations automatically extracted from her files in English, Spanish, French and German using open source software, including Stanford CoreNLP, MIT Information Extraction, Apache OpenNLP, IXA pipes and Gate.

The three steps in the Datashare process. i ICIJ ICIJ's Datashare

It also helps her discover other names and connections to her investigation. In the case of João Silva, her analysis shows he has a connection with a corrupt engineering magnate Lucas Machado (another fictional character.)

When our ace reporter Gabriela makes the vital link between Silva and Machado, Datashare does not send the data to third-party platforms, such as servers controlled by Google, for analysis.

Crucially, however, it does allow Gabriela to connect not only with hundreds of other journalists but also with all the leaked data from previous ICIJ investigations she has access to, including the Panama Papers and Paradise Papers, hosted on ICIJ’s Knowledge Center.

Datashare allows Gabriela to upload documents and easily share them with journalists across the world.

The new network also enables our journalist Gabriela to put a call out for more information relating to her character João Silva.

When Anastasia, a Russian journalist, gets an alert from Datashare that someone on the network is chasing information on João Silva, a name mentioned in some of her documents, the plot thickens. By sharing documents, Gabriela and Anastasia connect Silva with Alexander Smirnov, a businessman close to Russian organized crime.

And after further investigation, Gabriela and Anastasia are confident enough in their collective findings to publish a series of front-page stories that they would never have uncovered without their confidential connection and the inquisitorial power of Datashare.

Datashare not only avoids duplication of effort, it opens up new avenues of exploration and encourages diverse thinking and is improving security and privacy to keep information from the prying eyes of the corrupt and the powerful while being accessible to selected journalists 24/7.

American poet and political activist Muriel Rukeyser wrote: “The universe is made of stories, not atoms.” ICIJ’s Datashare project aims to make those atoms collide, with international impact.

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Categories: News

Meet The Funders: How Hollywood is supporting investigative journalism

Tue, 05/08/2018 - 15:48

At the 75th Golden Globes Award ceremony, the Hollywood Foreign Press Association donated $1 million to the International Consortium of Investigative Journalists and the Committee to Protect Journalists. ICIJ relies on big donations like this, and smaller individual donations, to support our investigative journalism.In our Meet The Funders series, we speak with major donors about why they choose to support us.

Can you tell us a little about the Hollywood Foreign Press Association and its role? And the HFPA’s connection to the Golden Globes?

The Hollywood Foreign Press Association is a trade organization of journalists that was founded in the 1940’s during World War II. The journalist members cover the entertainment industry for international outlets across the globe. At present, we have 90 active members representing 56 countries with a combined readership of 250 million.

The HFPA is also producer of the Golden Globe Awards. We celebrated the 75th anniversary of the show in January 2018. Every active member votes for the nominees and winners of the Globes.

I think if investigative journalism is at least supported by Hollywood’s money, we are doing something valuable. Meher Tatna

The mission of the HFPA’s Charitable Trust is to foster education, diversity and creative expression in art and film through a variety of programs and special grants. For more than 25 years, the HFPA has been able to use the funds garnered through Golden Globe licensing fees to donate over $30 million in grants, provide more than 1,500 scholarships for underrepresented student filmmakers and storytellers in the arts and help preserve Hollywood’s legacy through the restoration of over 90 films. In addition, the HFPA has donated millions in humanitarian grants over the years to organizations including the International Rescue Committee and FilmAid.

How did you get your start as a journalist? Can you tell us a little about your experience as a journalist in India and the United States?

I did not work as a journalist in India. I was always passionate about the arts but received a scholarship to study economics at Brandeis University in Waltham, Massachusetts. Upon graduation, I moved to New York City and, soon after, enrolled in drama school. A decade later, I moved to Los Angeles to continue an acting career but fell into entertainment journalism.

What motivated HFPA this year to donate $1 million each to International Consortium of Investigative Journalists and to the Committee to Protect Journalists?

The seed was planted by Meryl Streep in her rousing speech at the Globes two years ago. Our support for our fellow journalists is also a reflection of the times we live in, where more than ever, an informed citizenry can only exist with a press that is free and fearless to tell truth to power.

Why did you feel it was important to make an announcement to support journalism during the 75th Golden Globes announcement? Is this something the HFPA plans to continue doing?

While the Golden Globes show is a household brand, the HFPA is not as well known outside of the entertainment industry. It is my goal to broaden the awareness of our work, specifically in the philanthropic space, and I felt that using the global platform of the show was the right opportunity to educate millions of viewers about who we are, what we do and to spotlight two noteworthy organizations with our grants.

Can you tell us a little about how you first heard of ICIJ? (Which project did you hear about first or perhaps you remember the story that we were part of?)

I remember following the newspaper accounts of the offshore money laundering entities several years ago when the Panama Papers stories were published. It was particularly shocking that so many heads of state and former leaders were implicated – I particularly remember that Margaret Thatcher’s family and Kofi Annan’s family were mentioned. I remember the Icelandic Prime Minister’s resignation – the only politician who was forced out. There were also stories in the Indian newspapers about Bollywood actors who were hiding their income. Then came the Paradise Papers, and there were even more politicians, celebrities and corporations that were named.

What role does Hollywood – or the entertainment industry – have in helping the public understand/realize the importance of journalism in holding the powerful to account?

I’m not sure that Hollywood can be a game-changer in forming people’s opinions. Yes, there have been important movies like “All the President’s Men“, “Spotlight“, “The Post“, “Goodnight and Good Luck“, “Broadcast News”, “The Insider”, to name a few. But I think if investigative journalism is at least supported by Hollywood’s money, we are doing something valuable.

Related articles Can you tell us a little about who else the HFPA has donated money to over the years?

The HFPA provides grants to nonprofit organizations year-round. The most recent of our grantees include Veterans in Film and TV, the Moth Radio Hour, the International Rescue Commission, Santa Monica College, the Los Angeles LGBT Center, and the Zimmer Children’s Museum. We continue to support USC, UCLA, American Cinematheque, the Ghetto Film School, Inner City Filmmakers, Film Noir, The Film Foundation, CSUN, LACC, the Los Angeles Conservancy – 61 grantees to date.

Given you grew up in India, can you tell us a little about what the media is like there compared with the United States? Do you think there is something each can learn from the other?

I read somewhere that India is the second largest market for newspapers in the world. There are more than 82,000 in publication, mostly in the vernacular. The Times of India is the only English-language paper in the top 10.

How do you hope the role of investigative journalism grows over the next five years?

It’s critical to encourage young people to study to be investigative journalists, with the rigorous legwork, fact-checking and integrity that involves. The all-pervasive and careless opinion reports on the web that pass as news are appalling. As journalists all over the world are targeted and harassed, locked up and tortured, all investigative journalists need to be energetically supported, as their work will only expand in the coming years.

We like to ask our network of journalists for tips and advice for upcoming, younger journalists. What would be your advice?

Only write what you can defend. Even honest mistakes in this climate can set back the cause of journalism disproportionately.

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Categories: News

At the heart of Hungary’s battle for democracy: journalism

Mon, 05/07/2018 - 17:50

A couple of weeks before Hungary’s recent, fateful national election last month, one of the nation’s leading public intellectuals, Miklós Haraszti, had a message for an audience of journalists and their supporters:  “The media are the ultimate frontiers in defending freedom in society.”

As if to prove Haraszti’s point, days after the election, the largest opposition paper, Magyar Nemzet, abruptly shut down, as did the English-language opposition site, Budapest Beacon.  Meanwhile a government-allied magazine, Figyelő, published – dramatically, on black paper in white ink – a blacklist of supposed “mercenaries” of financier George Soros.

On it were prominent journalists, including András Pethő, co-founder of the investigative site Direkt36 and a member of the International Consortium of Investigative Journalists, along with the rest of the organization’s staff and board, and about 200 other intellectuals and activists.

“It’s kind of a strange feeling when you see your name on a list in such a context,” Pethő says. “You just accept that is the reality.”

Government-allied magazine, Figyelő, published a backlist, including ICIJ member Andras Petho. Figyelő's black list

Hungarian democracy – once characterized by competing, autonomous centers of intellectual production – is hanging by the thinnest of threads.

That was underscored by recent elections that left the government of Viktor Orbán, which won less than 50 percent of the vote, in control of two-thirds of parliament and the constitution itself. Where the country goes from here – whether the government makes good on its threats against civil society organizations or succeeds in forcing the departure of Central European University, the American-Hungarian institution with which I am affiliated – remains an open question.

To understand the rise of the anti-democratic right that began with Orbán’s election eight years ago, it is important to realize the extent to which media – and even more to the point, journalism – rests at the center of the story.

The Orbán story is a media story.  His rise was built on it. His consolidated power rests on it.

Orbán, 54, grew up in the small village of Felcsút about 40 kilometers from Budapest and has long been at odds with those perceived as Budapest’s liberal elites, including members of the city’s once vibrant and diverse media.

Trained in law, Orbán helped to found Fidesz in the late 1980s as a movement of youthful, idealistic liberals. He made a name for himself with a 1989 speech in Budapest’s Heroes’ Square at a demonstration recalling the failed 1956 Revolution, which had boldly called for free elections and the removal of Soviet troops.

The following year, he received a scholarship from the Soros Foundation, established by his future nemesis, to study at Oxford. But he cut his studies short to run in Hungary’s first post-communist parliamentary election in 1990. His shift to the right a few years later was as abrupt as it was absolute, purging the party of its liberal founders and leaving Orbán firmly in control.

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In 1998, he became one of Hungary’s youngest-ever prime ministers at the age of 35, leading a coalition government through a tumultuous term that ended in defeat – one shocking to Orbán personally – four years later.

Even before the defeat, Orbán  and his allies had considered the need for “media balancing” to counter a perceived left-leaning bias in Budapest media. This had been a government priority, and, with his then-main business ally, Lajos Simicska and other allies, he began shoring up Fidesz-allied media assets, which then included the major daily, Magyar Nemzet, and a conservative weekly.

After the defeat, the party’s media empire-building began in earnest. “This was the first time Fidesz realized it needed a stronger and wider media portfolio,” media scholar and analyst Attila Bátorfy wrote in 2015.  Fidesz-allied and sympathetic business leaders created a news cable channel, Hir Television; a current affairs channel, Echo TV and then acquired another major daily, Magyar Hirlap.  As the left-liberal coalition wobbled after the 2008 financial crisis, business leaders close to Fidesz acquired two billboard companies, then one of the country’s two main radio frequencies, Class FM.

But it was only upon assuming power after a stunning victory in 2010 that Orbán and Fidesz brought to bear the full extent of their media strategy.

The new government’s first major piece of legislation was the landmark Media Law, enacted in  2010. The meticulously prepared law (an English translation, including rebuttals to criticism, runs 189 pages) centralized licensing and regulation under a new panel made up entirely of government allies. It also required media outlets to register with the government, removed legal protection against the disclosure of journalists’ sources and threatened significant fines for a range of vaguely worded infractions (e.g. “imbalanced news coverage” and material considered “insulting” to a particular group or “the majority”).

The new Media Council would also have definitive say over media mergers, a key element in driving out foreign (and independent) media ownership.  While some provisions were rolled back or overturned, most remain in place. The law served as a symbolic marker of the government’s determination to dominate the Hungarian media market and served as a powerful tool to do so.

Public broadcasting became a second front in the war on independent media, with the government obliterating any semblance of independence and more than doubling the state broadcasting budget.

Public TV and radio stations were turned into a “propaganda machine” reminiscent of the communist era, according to the respected public interest media research organization, Mérték Media Monitor.  “It is very telling that colloquially the term ‘state media” is increasingly widely used, even though in the past two decades one was tempted to believe that we would only encounter this notion in history books,” the organization observed in a 2015 report.

In a market the size of Hungary, with a population less than 10 million, the government exerts enormous power over the media market. It succeeds both because large companies are reluctant to support news organizations viewed as problematic by the government and through massive direct advertising through various government agencies, such as the lottery and the public transit company.

A business news site,, found that the government was the country’s largest media advertiser in 2016, after a 80 percent jump in spending from the previous year. And numerous studies have shown that agencies pumped money to the government allied press as though through a firehose.

Batorfy has illustrated how money flowed to the government-allied press.

The orange area shows public advertising flowing to an Orban ally, then plummeting after the ally and Orbán had a bitter public falling out in early 2015. Afterwards, the funds shifted to other Fidesz-allied publications, depicted by the black area. The advertising flow in Hungary

(The orange area shows public advertising flowing to an Orban ally,, then plummeting after the ally  and Orbán had a bitter public falling out in early 2015. Afterwards, the funds shifted to other Fidesz-allied publications, depicted by the black area.)

At its height, the Fidesz-allied media portfolio included five billboard companies, one national and one Budapest-based commercial radio station,  three major daily papers, two weekly magazines, two cable channels and the sprawling public media system with several television and radio channels. Other media outlets fell into line, including TV2, one of two main commercial broadcasters, Batorfy said.

The pro-government press, both state-owned and ostensibly private, has pumped out a relentlessly anti-immigrant message, in line with the government’s policies, and has uniformly attacked Soros with an essentially made-up conspiracy theory that he controls European immigration policy and is trying to destroy the Hungarian way of life.

Posters in Hungary attacking George Soros have been likened to Nazi propaganda featuring “laughing Jews”

— The Times of London (@thetimes) July 10, 2017

If the campaign were only about ballooning pro-government media, that would be one thing. But alas, it is not. A third prong of attack has been to eliminate, through market and regulatory means, the most potent institutions of independent journalism.

When, in 2014, one of the largest news sites,, reported that Orbán’s undersecretary in the office of the prime minister had racked up lavish expenses on business trips abroad, the site’s editor-in-chief, Gergő Sáling, was abruptly ousted. His firing prompted a mass walkout of the editorial staff, including Pethő, who had authored the original stories.

The same year, the government introduced an advertising tax which would have overwhelmingly impacted a single network, RTL Klub, owned by German media giant Bertelsmann, and then a reliable source of hard-hitting reporting. RTL Klub protested: “The objective of the introduction of this tax is nothing less than an aggressive attempt by the government to undermine the biggest media company of the country, which has proved its independence from the political parties and the government over the past 17 years.”

#demo loosely fills square in front of #parliament after owners close main opposition newspaper #Nepszabadsag #Hungary #media

— Márton Éder (@martoneder) October 8, 2016

Perhaps the most significant blow to an independent press in 2016, was when the country’s largest daily, Népszabadság, after a string of hard-hitting stories that had exposed corruption at the highest levels of Hungarian society and government, including Orbán’s family, was abruptly shuttered.

Its publisher, Mediaworks, was owned by a Viennese private equity firm whose principal had close ties to Hungarian oligarchs. At the same time, the publisher sold its portfolio of a dozen local papers, which had a combined circulation exceeding even Népszabadság’s, to an ally of the government, bringing virtually every local paper in the country into government-friendly hands.

Critics noted that every paper began to run the same pro-government stories, as this screenshot of several different local papers illustrates:

Screenshots of a variety of local papers in Hungary.

And while some had hoped that Hungarians would be able to see through the relentless and crude anti-immigrant messaging, there were early signs that it was having an effect.  A widely watched video in October 2017 by, one one of the few remaining independent digital sites, chillingly depicted the fears of residents of a small lakeside town, where an local innkeeper had invited a couple dozen refugee women and children to visit.

The signs were confirmed by the election results of April 8, which, while hotly disputed as the result of rigging and manipulation, nonetheless showed substantial support for the government.

Now, in many ways, hopes for Hungarian democracy rests on the work of journalists like Pethő, who formed Direkt36 with Sáling in 2015, and Tamás Bodoky, who founded in 2011.  Both sites have relentlessly exposed corruption among Orbán’s family members and cronies.

Earlier this year, the European Union’s Anti-Fraud Office rocked Hungary’s political establishment with a scathing report that found “seriously irregularities” in the Orbán government’s handling of important EU-funded public contracts. The bulk of the findings of the report had been previously reported by Direkt36 and Atlatszo.

And now, Pethő and the other journalists are government targets.

If nothing else, the Hungarian media experience of the last eight years settles one question:  for anyone doubting whether journalism matters, Viktor Orbán knows it does.

The post At the heart of Hungary’s battle for democracy: journalism appeared first on ICIJ.

Categories: News

Journalist Andras Petho on fighting Hungary’s powerful ‘propaganda machine’

Mon, 05/07/2018 - 15:17

ICIJ has hundreds of members across the world. Typically, these journalists are the best in the country and have won many national and global awards. Our monthly series, Meet the Investigators, highlights the work of these tireless journalists.

This month, we speak with award-winning Hungarian reporter Andras Petho who founded Direkt36. He became an ICIJ member in 2014 and has worked on ICIJ’s Luxembourg Leaks, Panama Papers and Paradise Papers investigations. You can follow him on Twitter here.

How is the situation for journalists in Hungary?

In Hungary, it’s becoming more and more difficult to do independent journalism as the government and its allies are increasing their control over the media landscape. They have built a powerful propaganda machine while they are treating independent journalists as enemies.

If you are not a friend of the government (and you don’t need to be a critic), you can easily be labelled a foreign agent. As bad as the situation is, there are still many good journalists working in Hungary.  We at Direkt36 are also determined to keep doing the kind of fair but hard-hitting investigative reporting we believe in.

One of the assumptions about investigative journalists is that they like confrontation. But in my case it’s not true. Andras Petho

Apart from the attacks from the government’s propaganda machine we’ve been also receiving legal threats, but I guess it’s pretty normal everywhere. Fortunately, physical threats are not common in Hungary. That’s why we were all deeply shocked when we heard about the death of Ján Kuciak, the Slovakian investigative journalist. It happened too close to us. I hope we will not see anything like that happening in Hungary, but in general I’m worried that the Hungarian media industry may go in the same direction as in Ukraine, Russia, or the Balkan region.

Before we started Direkt36, I had worked for Origo, a popular news website. It was a good place to do journalism for a long time. But, as the government stepped up its efforts to take the media under its control, we also came under pressure. The management of Origo’s publishing company, which was then owned by a big telecommunications corporation, became less supportive of our reporting, and they even pressured us to drop certain stories that were uncomfortable for the government.

What was your most challenging situation as a journalist?

When we did not give in, they forced out Origo’s editor-in-chief. This happened on the very same day when I arrived at an International Consortium of Investigative Journalists meeting in Brussels on Lux Leaks, my first project with the consortium. I remember it was quite hard for me to concentrate on the meeting as I was also following the turbulent situation back home. Then, when I returned to Budapest, I resigned from Origo, and soon with some of my colleagues we started discussing launching a new project. Direkt36 was born out of those discussions.

Related articles How are you funded?

We are a nonprofit organization with a mixed revenue model. We’ve received grants from international foundations, and we also have a growing community of supporting members. Since our launch in 2015, more than three thousand people have supported us through crowdfunding. The supporters get special insight into our work via newsletters, e-books and live events. In addition to all these, we also have some business revenue. We do research for other media organizations, and we are getting some income from our publishing partners (websites and magazines that run our stories) as well.

What is your tip for young aspiring journalists?

My advice would be for non-English speakers: learn to read and speak English. That was what greatly advanced me in my career. I was reading lots of stories in the U.S. and British newspapers and tried to understand how the journalists did the reporting and how they put their stories together. Those stories educated and inspired me. Spending time abroad and learning how other, more developed, media environments work is also very helpful. I was lucky enough to work for the BBC World Service as a radio producer and later spent time at the investigative unit of The Washington Post as a visiting reporter. Needless to say, I learned a lot in both places.

Why do you love journalism?

Because it’s one of the most exciting jobs available! You start with just a piece of information, then you investigate, dig in further until you have a complete story – and you’ll be the first person to tell it to the public. This is a very rewarding and fascinating process. Also, it’s intellectually exciting to unravel complex matters and topics and break them down so the audience can understand them.

Do you have a tip on how to gather information?

I love data, but I think I like people even more. So, I try to spend as much time as I can with sources or potential sources. I often organize lunch meetings. It’s a good way to catch up with people. My experience is that you often pick up the best pieces of information during casual conversations.

Is there anything about the job you do not like?

Well, one of the assumptions about investigative journalists is that they like confrontation. But in my case it’s not true. I always feel a little uncomfortable when I approach the subjects of our investigations. After all, you’re about to publish something that will hurt their interests. So, these are not very nice encounters, though sometimes they can lead to funny moments.

Something like this happened in the Panama Papers project when I approached a major politician whose wife (who works as teacher in a public school in a poor town) appeared in the leaks as the owner of an offshore company with a Swiss bank account. I started the conversation with a vague question on what he knows about his wife’s foreign business activity. First he asked back, “Does she have such a thing?” Then he claimed he didn’t know about any foreign company owned by his wife. When I told him that I found a company in Samoa on her wife’s name he simply said “then she must have such a company.”

What do you enjoy most about your job?

I love the field work. Last year a colleague and I followed the leads to a story about the Hungarian Prime Minister Viktor Orbán’s family and how they got involved in state-funded construction projects. We launched our investigation based on tips, and we used the whole toolbox of investigative journalism to find hard evidence. We developed confidential sources in the construction industry, built databases about public projects, filed freedom of information requests, mined documents and did extensive field work, including tailing trucks that carried products from the Orbán companies’ sites. That’s what I enjoy most: Leaving the city, going to places, speaking to people on the ground and observing what happens there.

Read more from our Meet the Investigators series:

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Categories: News

Paradise Papers: ICIJ partners and Appleby agree to settlement

Fri, 05/04/2018 - 19:25

Law firm Appleby has ended its legal action against the the Guardian and the BBC over their roles in the Paradise Papers investigation into the use of offshore tax havens by some of the world’s richest and most powerful individuals and companies.

In an agreed statement following the confidential settlement, the parties announced that they had “resolved their differences” in relation to Appleby’s breach of confidence claim concerning the leak.

Appleby said it wanted to know which of its confidential documents had been taken so that it could “respond meaningfully” to clients, regulators and colleagues about them.

The statement said the Guardian and the BBC had, “without compromising their journalistic integrity,” assisted Appleby by explaining which of its documents may have underpinned their journalism.

Prior to the settlement, the Guardian reported that Appleby had sought damages for both the disclosure of what it claimed were confidential legal documents obtained in a hack, and disclosure of any documents that had informed the news organizations’ reporting.

The agreement between Appleby, the Guardian and the BBC was reached after it became evident that most of documents were, in fact, not legally privileged.

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The joint statement explains that it is “now clear” that the vast majority of documents were related to a fiduciary business no longer owned by Appleby and “so were not legally privileged documents.”

The settlement statement does not refer to any requirement to pay damages.

A spokesperson for the Guardian said: “The Guardian’s reporting from the Paradise Papers is investigative journalism that has raised important issues in the public interest.”

The BBC said the settlement preserved its ability to carry out investigative journalism in the public interest.

About half of the 13.4 million confidential electronic documents in the Paradise Papers were from Appleby, a Bermuda-founded firm that is one of the world’s largest providers of offshore legal services.

The leaked data covering seven decades, from 1950 to 2016, exposed the offshore tax affairs of hundreds of politicians, celebrities and household names, including Queen Elizabeth’s private estate.

Appleby group managing partner Michael O’Connell said, “From the outset we wanted to be able to explain to our clients and colleagues what information of theirs had been stolen.

“That was our duty. As a result of this legal action we are well on our way to achieving our objectives.”

The BBC and the Guardian were part of a global investigation into offshore tax havens involving nearly 400 journalists in 67 countries after the Paradise Papers were leaked to German paper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists.

Earlier this week, in a surprise response to the Panama Papers and Paradise Papers investigations, the British Parliament voted to force overseas UK territories, including the Caymans and the British Virgin Islands, to abolish corporate secrecy.

The Guardian said last year that it would defend the Appleby claim because to not do so could have profound consequences that would deter the UK media from undertaking serious, investigative journalism.

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Categories: News

Press freedom slides as journalists face growing threats around the world

Thu, 05/03/2018 - 07:47

Hostility towards the media is spreading from dictatorships to democracies, encouraged by U.S. President Donald Trump’s and other leaders’ attacks on ‘fake news,’ according to the 2018 World Press Freedom Index.

The annual yardstick produced by the advocacy group Reporters without Borders, which measures media freedom in 180 countries, found assaults on the press – ranging from taunts to murder – were becoming graver.

The worst decline in freedom was in Europe, though the region is still the world’s safest for journalists, according to the index. Two murders helped drive the decline. In October 2017, Daphne Caruana Galizia, a prominent Maltese journalist who probed corruption by the country’s elites, was assassinated in a car bomb.

In Slovakia, 27-year old investigative reporter Jan Kuciak and his fiancée Martina Kusnirova were shot to death during Kuciak’s investigation of ties between Slovakian officials and Italian Mafia figures.

Both murders were galvanizing. Kuciak’s led to massive popular protests that ended up toppling the regime of Prime Minister Robert Fico.

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The killings also prompted other journalists, including those in the International Consortium of Investigative Journalists’ network, to carry on the work of their late colleagues and continue their efforts to expose corruption.

“The silver lining here is that those who attack journalists are finding that their old, vicious methods are not as effective anymore,” said Marina Walker Guevara, ICIJ’s deputy director. “Investigative reporters are working together in teams, using technology to share data and documents and helping one another across national borders. These networks of collaboration keep stories alive even when a reporter is harassed or killed.”

In the case of Caruana’s murder, 45 journalists from 15 countries joined forces to publish the Daphne Project, a cross-border investigation of both her death and stories she was reporting on at the time of her death.

Following Kuciak’s death, longtime ICIJ media partners at the Organized Crime and Corruption Reporting Project (OCCRP), Czech Center for Investigative Journalism (CCIJ) and the Investigative Reporting Project Italy (IRPI) published Kuciak’s final stories.

Another troubling trend noted in the World Press Freedom Index is increasing efforts to delegitimize and intimidate the press in countries with traditions of democracy. U.S. President Donald Trump has branded the media  an “enemy of the American people,” and his attacks on “fake news” to denounce unfavorable coverage have been adopted by authoritarian leaders in nations such as Turkey and Cambodia. Trump’s attacks on the media have led the U.S. to fall two places to 45th in the world in press freedom.

Other leaders of democratic countries who have adopted or encouraged violent rhetoric against the media include Rodrigo Duterte of the Philippines, Narendra Modi of India and Milos Zeman of the Czech Republic. The report noted that “Duterte not only constantly insults reporters but has also warned them that they ‘are not exempted from assassination.’”

“The unleashing of hatred towards journalists is one of the worst threats to democracies,” said Reporters Without Borders secretary-general Christophe Deloire.

World Press Freedom 2018 map

Reporters Without Borders also noted a substantial decline in press freedom in the Asia Pacific region, where China is taking censorship and surveillance to new heights, and Vietnam, Cambodia and Singapore rank increasingly close to China among the world’s worst countries for journalistic freedom. These nations have been adopting China’s model of stifling dissent through strict control of mass media and censorship of social media, the press freedom index found.

Although conditions in Africa have improved somewhat from 2017, and three of its most oppressive presidents are no longer in office, Reporters Without Borders called attention to the huge difficulties facing journalists on the continent.

“Frequent Internet cuts, especially in Cameroon (129th) and Democratic Republic of Congo (154th), combined with frequent attacks and arrests are the region’s latest forms of censorship. Mauritania (72nd) suffered the region’s biggest fall (17 places) after adopting a law under which blasphemy and apostasy are punishable by death even if the accused repents,” the report noted.

Norway tops the list of countries where journalists have most freedom, followed by Sweden, the Netherlands, Finland and Switzerland, based on pluralism, media independence, media environment and self-censorship among other factors.

North Korea finished last at 180, with Eritrea, Turkmenistan, Syria and China completing the bottom five. Overall, the 2018 report concludes, journalists around the world face more hostility towards their work in 2018 than they did last year.

Marking World Press Freedom Day, the Australian Press Council awarded ICIJ director Gerard Ryle with the 2018 Press Freedom Medal, alongside journalist and journalism academic Peter Greste. In accepting the honor, Ryle hailed the strength of collaborative journalism in bringing about positive change in the face of a challenging media environment.

“Never have we seen such calculated campaigns of misinformation from positions of authority. It has never been so easy for powerful people to undermine the work of journalists,” Ryle said. “It is more important than ever for journalists to stand together to protect each other and to protect the integrity of our profession.”

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Categories: News

UK backs Panama Papers crackdown on ‘dirty money’ havens

Tue, 05/01/2018 - 20:33

The United Kingdom is to force its overseas territories, including the Cayman Islands, British Virgin Islands and other well-known corporate secrecy havens, to reveal the names of the ultimate owners behind companies in these remote locations.

The surprise move, which until Tuesday had not been supported by prime minister Theresa May’s government, is a victory for corporate transparency campaigners who have long claimed that offshore secrecy encourages and enables corruption, tax evasion, money laundering and other crimes around the world.

It comes two years after the ICIJ’s Panama Papers investigation showed one in every two companies found in Mossack Fonseca’s files — the controversial law firm at heart of the scandal — was incorporated in the BVI. Mossack Fonseca closed down in March.

Duncan Hames, of Transparency International UK, said “these jurisdictions have long been the Achilles’ heel of our defenses against dirty money.”

Global Witness, a nonprofit campaigner against corruption, said the U.K.’s intervention was “a huge win in the fight against corruption tax dodging and money laundering.”

Many campaigners credited investigative work by ICIJ, including the Panama Papers and the Paradise Papers, and its partners for highlighting controversial practices in the offshore world.

Andrew Mitchell, a Conservative member of parliament who proposed the disclosure rule alongside Labour MP Margaret Hodge, rejected suggestions that it was sufficient for overseas territories to maintain confidential registers of company ownership. He said this “misses the point.”

“[The] point is made eloquently but passively by the Panama and Paradise papers: it is only by openness and scrutiny — by allowing charities, NGOs and the media to join up the dots — that we can expose this dirty money and the people standing behind it, and closed registers do not begin to allow us to do that.”

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The U.K. measure, which will force overseas territories to make public the owners of all their registered companies by the end of 2020, was set out in a proposed amendment to a government anti-money laundering bill, which is before parliament this week.

The proposal had not been supported by ministers until it became apparent that they were likely to be defeated in a vote. Foreign Office minister Alan Duncan told MPs the government had “listened to the strength of feeling in the House [of Commons].”

Those representing the corporate services industry in some U.K. overseas territories reacted angrily to the news. Robert Briant, acting chair of BVI Finance, said the U.K. had “shot itself in the foot” and argued that it could call into question the viability of the BVI’s financial industry.

Despite having a population of less than 31,000, the BVI currently has about 417,000 active companies on its register. They hold assets around the world worth an estimated $1.5 trillion.

Earlier today, Lorna Smith, executive director of BVI Finance, said the proposal “smacks of colonialism.”

The overseas territories are self-governing former British colonies, setting most of their own laws. However, they maintain strong constitutional links to the U.K.

Britain has only rarely imposed its authority on the affairs of its overseas territories.  It used its interventionist powers — known as “orders in council” — to outlaw the death penalty, and decriminalized homosexual acts in its overseas territories in 1991 and 2000.

The U.K.’s 14 overseas territories also include Anguilla, Gibraltar, Bermuda, Montserrat and the Turks & Caicos Islands. Their constitutional relationship with the U.K. is slightly different to that of the Crown Dependencies of Jersey, Guernsey and the Isle of Man — none of which will be subject to the new rules.

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Categories: News