The X, Y and Zumas of the ‘Panama Papers’ leak

By AAT & AAF author, Michael-James Currie.

During the week of 04 April 2016, headlines around the world reported on what may turn out to be one of the most significant developments in the fight to combat the use of offshore accounts for purposes of hiding proceeds derived from various forms of white-collar crime, including fraud, corruption, and tax evasion among others.

The leaked documents — from about 214,000 offshore entities, covering almost 40 years from 1977 up until the spring of 2016 — were obtained from an anonymous source by the respected German daily Süddeutsche Zeitung (“SZ”) and made public through the Washington-based International Consortium of Investigative Journalists (“ICIJ”).

The Panama Papers leak is the second major scandal in recent history, relating to leaked information on individuals’ private bank accounts, following the HSBC Switzerland scandal in 2015. In the HSBC scandal, a number of high-ranking African individuals were identified as having utilised private bank accounts by HSBC’s Switzerland branch. This information came about as a result of a whistleblower HSBC employee (at the time) who leaked confidential information relating to various individuals who allegedly utilised these Swiss accounts for purposes of money laundering and tax evasion.

Inter alia, the following African individuals were identified as a result of the HSBC information leak:

• Rachid Mohamed Rachid, Egypt
• Fana Hlongwane, South Africa
• Jean-Yves Ollivier, South Africa
• Gad Elmaleh, Morocco
• Johnson Nduya Muthama, Kenya
• Belhassen Trabelsi, Tunisia
• Roger Boka, Zimbabwe
• Patrick Bédié, Côte d’Ivoire
• Aziza Kulsum Gulamali, Burundi
• Abdul-Karim Dan Azoumi, CAR
• Saïd Ali Coubèche, Djibouti

The Panama Papers have now shown, perhaps unsurprisingly, that the Zuma family is also embroiled in this scandal. This time it is President Zuma’s nephew, Khulubuse Zuma, who is identified as being authorised to represent Caprikat Ltd.  Andreas Stargard, a partner at Pr1merio Africa advisors, notes that “Caprikat is no stranger to the white-collar crime news.  Four years ago, the Financial Times ran an investigative report on this offshore entity and its connections to Dan Gertler, an entrepreneur with ties to the Congolese president.  It and other reports detailed how Caprikat (which had been incorporated only months before in 2012 in the BVI) was able to obtain oil blocks 1 & 2 of the ‘Albertine Graben’ in the Western Rift Valley bordering Uganda.”  Stargard notes that Mr. Zuma was also revealed to have ownership stakes in two other offshore companies, Foxwhelp Ltd. and Aurora Empowerment Systems Ltd:

“Taken together, Mr. Zuma’s three companies’ financial interests comprise not only the estimated 2 billion barrels of oil reserves in Lake Albert, but also several gold mines in the South African republic itself, potentially implicating direct political favours from the leadership there, as well as suspicion of any potential influence exerted by President Zuma on Congolese President Joseph Kabila to grant the oil blocks to his nephew’s company in 2012.”

The following passage in relation to Mr. Zuma was posted on The Centre For Public Integrity’s webpage:

“In late summer 2010, as published reports raised questions about the acquisition, British Virgin Islands authorities ordered Mossack Fonseca to provide background information on Zuma, which the law firm had not previously obtained. That same year, Mossack Fonseca decided to end its relationship with the companies.  Zuma and representatives of the companies have rejected allegations of wrongdoing and claimed the oil deals are ‘quite attractive’ to the DRC government.”

Mr. Zuma is, however, just one of a number of hundreds of individuals identified in the Panama Papers, which include individuals from all over the globe. While the papers will no doubt form part of broader investigations, the public outcry has already resulted in Iceland’s Prime Minister, Sigmundur Davíð Gunnlaugsson resigning on Tuesday, 05 April 2016.  John Oxenham, also with Pr1merio, observes that the Panama Papers “truly show the global scale of anti-corruption efforts: this is no longer a question of domestic or even regional enforcement, but one of worldwide dimensions.  The dealings of Mr. Zuma’s companies may simply be the tip of the iceberg.  Associates of Presidents Vladimir Putin (Russia), Nawaz Sharif (Pakistan), Mauricio Macri (Argentina), Petro Porochenko (Ukraine) and others are likewise reportedly implicated by the Papers.”  Time will tell whether there will be more casualties, as politicians around the world, including UK Prime Minister David Cameron, are called on to explain their financial links to Panama.

The Panama Papers represent no doubt an important breakthrough in the global war on corruption. As David Lewis, Chairperson of Corruption Watch in South Africa said:

“Well hopefully it means a number of good things because this is a big revelation and law enforcement authorities will be hard pressed to do so given the scale of the leaks or follow up I guess … looking at critically exposed persons who have been hiding large amounts of assets that vastly exceed the salaries that they earn. So it will aid law enforcement and exposure of people who use these structures to hide illicitly sourced gains. It’s a big deal.”[4]

AfricanAntifraud will keep you posted on all major developments in relation to this story.