Panama Papers: The Role of Western Secrecy Jurisdictions in Looting Africa

Yves here. The US elections results are eating a lot of other news, and we are endeavoring to give you a balanced diet despite that.

Originally published at the Tax Justice Network

This blog comes from Johannesburg, South Africa, where investigative journalists from 28 countries are sharing their work at the African Investigative Journalism Conference. One session looked at stories dug out from the Panama Papers leak from offshore law firm Mossack Fonseca and investigations which have revealed a colourful mix of characters involved in looting Africa.

The stories uncovered include a mafia lawyer linked to the film The French Connection, an absentee landowning Russian oligarch, plus, of course, a former politician, and a “millionaire receptionist” who denies knowledge of having owned nine offshore companies registered in the British Virgin Islands.

The common factor in all these stories is the role of offshore secrecy jurisdictions populated by western banks, western lawyers, western accounting firms, and protected by leading western nations like the United Kingdom, which even as I write is vigorously trying to protect its Crown Dependencies from attempts to crack down on offshore secrecy.

Unsurprisingly the British Virgin Islands – a British overseas territory – feature heavily, as does Switzerland.

The story of the “millionaire receptionist” Letitia Diergaardt, covered by The Namibian newspaper, provides fascinating insights into the duplicity of offshore secrecy.  Diergaardt works as a receptionist/clerk in Windhoek, Namibia. Yet according to The Namibian she technically owns or owned nine offshore companies registered in the British Virgin Islands.  However, as The Namibian reports, she denies all knowledge of owning these companies, which were registered in the BVI between 13th and 25th April 2007.

Apparently unknown to her, Diergaardt’s identity was used to provide a nominee shareholder for all nine companies.  As The Namibian dryly notes: “on face value, the use of her name in these companies is to represent hidden owners . . “ 

Secretive shell companies are a core part of the secrecy jurisdiction offer.  They provide immunity from criminal investigation and prosecution.  They are the ‘get-out-of-jail-free’ card for crooks and their enablers.  Secretive shell companies allow nominee owners to front for those known as the ‘ultimate beneficial owners’, as The Namibian comments:

“The secretive offshore industry relies on a network of individuals whose names are used on official records as directors, company secretaries and shareholders. Often, the real owners who call the shots remain invisible, hiding behind dummy directors, who are only owners of these companies on paper.”

Yet despite all the evidence of abuse of offshore companies registered in Road Town, the British Virgin Islands government persists in blocking moves to make a registry of ultimate beneficial ownership available to public scrutiny.  In Jersey, another British tax haven, the authorities refuse to make company ownership information available to investigative journalists by claiming that a public registry would “lead to fraud and cybercrime.”

Let’s be frank.  For all their pious words about wanting to crack down on corrupt practices, western governments remain deeply implicated in facilitating the looting of Africa.

As Shinovene Immanuel from The Namibian told this blogger earlier today:

“The West must help Africa by locking the doors through which the money flows, and the West must also pull up their socks to make these offshore companies more transparent.  If Western countries want to help developing countries, they must stop standing in the way of investigating corrupt business practices.”

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  1. Moneta

    What I find most intriguing is the number of 99% who don’t see a link between this looting and their current lifestyle that is gradually receding.

    If we rich Westerners wanted to protect our standard of living we would have had to make sure that our household income never got too high relative to the billions in emerging markets. This discrepancy generates huge instability that can only get eroded or be supported by force.

  2. rich

    Western governments certainly are complicit in looting Africa but I think African governments are chiefly to blame.

    1. TheCatSaid

      But where did African governments learn it from? Al Jazeera has had some compelling documentaries documenting that corruption was introduced into African governments and eventually society through colonial powers: France, UK, Belgium, Portugal. The colonial powers enriched local rulers who would be cooperative and do their bidding. The UK may have created the model in India.

      The Western so-called “advanced” economies corrupt Africa, then complain about corruption in those same countries once the local rulers start exercising more independence.

  3. susan the other

    I’d like a diagram of just how money gets looted. I’ve read lotsa stories about the looting of banks in Romania, Moldova, Latvia, the UK, the US, Greece, Spain, Iceland, Ireland, Cyprus and etc. etc. “The best way to rob a bank is to own one” and etc. But it seems like there’s little or no finesse to any of it – it’s about as subtle as grabbing the money and stuffing it in your overcoat. So beneficial owners are in fact blatant thieves, of course. There should be no problem stopping this.

    1. TheCatSaid

      A problem is corrupt judges. If you have judges who you can control–via blackmail or other methods–then the rest is easy.

      A dinner guest told me just a few days ago about a book published in Ireland in 2015 called “Waiting for the Sheriff”. It’s about the corruption of the financial/judicial system in Ireland as a key factor leading to the abuses of power that have occurred and that continue to occur. The book names names. Apparently all the judges are technically bankrupt and are therefore ineligible to be judges–but no one will take action. Predictably, the media said nothing about this book.

    2. OpenThePodBayDoorsHAL

      “There should be no problem stopping this”
      Correct, it’s clear as day in black and white. All that lacks is the political will.
      Luckily our former SoS pushed a “free trade” deal with Panama…for the benefit of all of those American companies just aching to sell things to Panamanian citizens LOLOLOL
      Not saying that the orange-haired TV showman will do anything different, but perhaps now we can organize an actual opposition via the democratic wing of the Democratic Party

      1. TheCatSaid

        “All that lacks is the political will.”

        If you have information about a high official who has compromised themself (e.g. evidence of pedophilia, financial corruption, sexual indiscretions, shady business deals) then they and their colleagues can be controlled to prevent disclosure.

        This is what happened with Dennis Hastert, former House Speaker. There was evidence of horrible wrong-doing, including pedophilia, which had been reported to the FBI. TPTB did not want this being disclosed in open court, because too much would be revealed about too many people in high places. Thus there was a slap on the wrist plea bargain for only a minor financial or tax issue, and everything else was brushed under the carpet. The problem is that SO MANY high officials have been compromised, nothing ever comes to court. Sibel Edmonds is a whistleblower who has described this situation. Here’s a discussion that deals with the Hastert case, and how widespread this situation is. Here’s an article about this written by none other than the stalwart Cynthia McKinney. An excerpt:

        In her deposition, when Dennis Hastert’s name was mentioned, Edmonds commented that the problem that she stumbled upon while translating these conversations was that illegal activities that went against the interests of the U.S. and that benefitted foreign governments and foreign entities were discussed. In her deposition, she testified that it was well known that Hastert engaged in activities in non-secure locations and was videotaped; Edmonds testified that Hastert was not the only Member of Congress who was given this treatment. What she describes is a criminal enterprise that has embedded itself inside the U.S. government, operating both overtly and covertly for the interests of foreign governments and foreign companies. According to Edmonds, this enterprise carried out blackmail of U.S. political personalities, espionage, efforts to get highly classified U.S. weapons technology, and bribery. Edmonds’s whistleblowing was investigated by the U.S. Department of Justice Inspector General (OIG), which issued a report stating that the FBI should have done a more thorough job of investigating Edmonds’s allegations.

        So, when Edmonds saw that Hastert had been indicted, she hoped that some of these larger issues were going to finally be investigated in public. She wanted the wrongs to be corrected. But she also had feelings of foreboding; that the case would go nowhere, that the Prosecutor would be forced to “lose” or “drop the case.” She calls it the scandal “too deep, too dark and covers too many people from both sides of the political aisle for it to ever proceed in public.”
        Edmonds poses several questions about the U.S. media narrative that scrupulously avoids allegations from other witnesses about Hastert’s activities. A real investigation by either the media or the Feds could have helped to expose what’s really wrong with U.S. leadership in Washington, D.C. I believe this would help us to also fundamentally change the scorched earth policies that are burning the people of the U.S. as well as people in the rest of the world. Edmonds was able to overhear the plans that Wesley Clark describes as a “policy coup” that changed the course of U.S. foreign policy. Edmonds has now launched a social network campaign to prevent Dennis Hastert’s plea deal and expose the real crimes. The United Kingdom is embroiled in a few scandals of its own along these very same lines: from the Westminster pedophile scandal to the Hillary Clinton e-mail imbroglio that seemed to implicate former President George W. Bush and former Prime Minister Tony Blair in a commitment to go to war together, the U.S. and the U.K., against Iraq.

        One of the frustrations Edmonds & FBI colleagues had was that after years of gathering evidence, the FBI then gave instructions to move the Hastert files to the FBI’s Counter-terrorism Unit. The result of that administrative move was that none of the evidence gathered over a 10 year period would ever be able to used as evidence in a prosecution.

        The issue is unfortunately more complex than “political will”. Too many highly-placed people are compromised. Bizarrely this effectively makes them above the law.

      2. TheCatSaid

        I posted a long reply that has disappeared. Many high officials have been compromised–espionage, bribery, pedophilia, corruption. So many are involved that no one wants anything to start coming out. Hence Dennis Hastert’s slap on the wrist. See Cynthia McKinney’s piece here. More detail and documentation, see this Boiling Frogs roundtable discussion and the show notes with source information.

        The situation is more complex than “political will”. Who is both clean and powerful enough to undertake this Herculean task? Have a look at those links and you’ll understand the scope.

          1. TheCatSaid

            I was told the author has done extensive documentation. He has details about the indebtedness of all the Irish High Court judges, maybe more than that. In Ireland you’re not legally allowed to be a judge if you’re bankrupt–and apparently the facts are grim. I was told there’s a small group of consultants that always act to favor the banks, even if they’re hired by someone taking a case against the bank. They’ve all been bought out. So it doesn’t matter how sound your case is and what the facts are–you won’t win your case if you take the banks to court.

            The person who told me all this still has an active case pending wrt the RBS scandal featured here on NC. There’s a report due out in the UK in another week. The person thought this might change the playing field.

            I wondered if it might be worth putting somebody with the details onto Yves–I don’t know if she’s interested in whistleblowing of that kind.

  4. RBHoughton

    Please excuse this post all you knowledgeable chaps but this is a subject that really angers me.

    I once investigated the ability of tax havens to exist. They are the natural development of a legislative process started by England a century and a half ago when British shipping carried most of international trade and British ships were being arrested in foreign ports for cargo damage.

    To get the ship-owners off the hook parliament enacted a new provision in the Companies Act making a company a human being. Then British ships could be owned by a minimum of two companies instead of two people and those companies would have the status of real people.

    This made the identification of real ship-owners impossible and became known by lawyers as the corporate veil but it was when the dodge was understood by other businessmen that it really took off. That was after an incredulous chap named Solomons required a judicial construction of the Companies Act clause about a century ago. Once the business world understood the High Court’s construction gave them carte blanc to trade without identifying themselves, every crook leapt onto the bandwagon and that’s the way it remains today.

    There are two amazing concessions that MPs gave away to businessmen – limited liability and anonymity – and they allow business to cheat customers and avoid debts.

    1. TheCatSaid

      It’s invaluable to understand the origins. Do these legal constructions have a name or a date to be able to find out more?

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