Will Fitzgibbon - Secret Offshore Deals Deprive Africa of Billions: Panama Papers show politicians and corporates benefit from dubious multimillion dollar transfers
When he wasn’t aboard
his yacht, Farid Bedjaoui held court in the Bulgari Hotel in Milan, a renovated
18th-century palace nestled between the botanical gardens and the La Scala
theater. Over five years, Bedjaoui’s hotel tab there exceeded $100,000. In the plush rooms and
the granite-lined lobby, Bedjaoui met with Algerian government officials and
executives from Saipem, the Italian energy giant. Their agenda, according to
witnesses later interviewed by Italian prosecutors: arranging some $275 million
in bribes to help the energy company win more than $10 billion in contracts to
build oil and gas pipelines from the North African desert to the shores of the
Mediterranean.
To shift the bribe
money between countries, Bedjaoui used a cluster of offshore companies that
helped him shield the transactions from scrutiny, Italian prosecutors claim.
Twelve of the 17 shell companies linked to Bedjaoui were created by Mossack
Fonseca, the Panama-based law firm that is at the center of the Panama Papers
scandal, a review of the law firm’s internal records by the International
Consortium of Investigative Journalists and other media partners has found.
Italian investigators
described one of those companies, Minkle Consultants S.A., as a “crossroads of
illicit financial flows” that channeled millions of dollars from subcontractors
to an array of recipients whose identities are still being untangled.
Prosecutors allege Bedjaoui used one company set up through the law firm to
funnel as much as $15 million to associates and family members of Algeria’s
then-energy minister.
The cross-border
bribery scandal is one of dozens of cases in Africa in which companies created
or administered by Mossack Fonseca have played a role in oil, gas and mining
deals that have spawned public allegations of tax dodging, corruption,
environmental destruction or other misconduct. In all, ICIJ’s review identified
37 companies within the Panama Papers that have been named in court actions or
government investigations involving natural resources in Africa.
Ventures that drill or
dig for oil, gas, diamonds, gold and other resources have long been dogged by
evidence that contracts are often secured through bribery and other corrupt
tactics that benefit a few and harm average citizens. Suspect mining and energy
deals are usually organized through secretive companies and hard-to-trace bank
accounts, corruption experts say.
“Companies may be
given access to lucrative extractive projects because their owners are
politically connected, or because their owners are willing to engage in
questionable deals aimed at generating quick profits for a few rather than
benefits for wider society,” Fredrik Reinfeldt, former prime minister of Sweden
and now head of the Extractive Industries Transparency Initiative, told ICIJ.
He said the use of
anonymous companies makes it harder to prevent money laundering and corruption
because it allows wrongdoers to “hide behind a chain of companies often
registered in multiple jurisdictions.”
ICIJ’s review of
Mossack Fonseca’s internal records shows that the Panama-based law firm is a
major provider of secrecy to companies involved in extractive industries. The
firm’s internal files include more than 1,400 companies whose names refer to
mining, minerals, oil, petrol or gas. Other less explicitly named companies –
including the 12 companies allegedly used by Bedjaoui in the Algerian energy
deal – also played roles in the extractive sector, the files show.
Mossack Fonseca’s
files reveal offshore companies that were established to own, hold or do
business with petroleum, natural gas and mining operations in 44 of Africa’s 54
countries. Many of them are controlled by politicians, their family members and
business associates. Often, the oil, gas, gold and diamonds formed beneath the
earth’s surface over millions – even billions – of years are traded by shadow
companies that have existed for months.
Companies created and
assisted by Mossack Fonseca include at least 27 subsidiaries of one of the
world’s biggest gold producers, the mining behemoth AngloGold Ashanti and its
predecessor. AngloGold told ICIJ it complies with relevant tax laws and that
its offshore companies held investments and allowed it to “mitigate ‘double
taxation.’”
Mossack Fonseca
declined to answer detailed questions for this story… read more:
