The OILY TRAIL Revealed by the #PanamaPapers

Many big names from the Oil and Gas industry are featured in the Panama Papers Leak. Kavita Nair-Fondekar reports.

The Panama Papers have sent shivers down the spines of some of the world’s richest and extremely powerful personalities cutting across domains of international leadership, politics, sports, business and banking among many others. This global investigation is based on a trove of more than 11 million leaked files or 2.6 terabytes of data and it exposes the extensive, clandestine industry that uses offshore companies in far-flung jurisdictions to assist bribery, arms deals, tax evasion, financial fraud and drug trafficking. It is the largest leak in offshore history with records dating back nearly 40 years and containing details on more than 214,000 offshore entities connected to people in more than 200 countries and territories.

The largest cross-border journalism collaboration ever has uncovered a giant leak of documents from Mossack Fonseca, a global law firm based in Panama. The files reveal that almost 215,000 offshore shell companies and 14,153 clients were tied to Mossack Fonseca. They linked 143 politicians, their families and close associates, including 12 highly placed political leaders from all over the world, who have used tax havens to protect enormous wealth.

Holding money in an offshore company is generally not illegal, although such financial arrangements can be used in illegal ways, like to facilitate tax evasion or money laundering. The Panama Papers story has only just broken and one of the first major casualties was the resignation of the Prime Minister of Iceland.

The oil and gas industry has featured in the Panama Papers with some big names in the red. In Africa, the law firm allegedly helped establish shell companies and offshore accounts for global power players from more than a dozen nations, including at least four business and political leaders with links to oil. This has drawn attention to corruption within the lucrative oil industry across a continent that loses nearly $50 billion every year in illegitimate financial outflows.

Ogronline profiles some of the oil and gas industry giants who have been named in the leaks. The details are based on the data put out by the International Consortium of Investigative Journalists (ICIJ). Responses from most of the personalities under scrutiny, to the media are awaited.

JOSÉ MARIA BOTELHO DE VASCONCELOS

Minister of Petroleum – Angola

JOSÉ MARIA BOTELHO DE VASCONCELOS
Minister of Petroleum – Angola

José Maria Botelho de Vasconcelos has served as Angola’s minister of petroleum since 2008. An engineer by education, Botelho de Vasconcelos worked for years with Angola’s state oil company, Sonangol. He first served as petroleum minister from 1999 to 2002 before becoming minister for energy and water. He was re-appointed minister of petroleum in 2008 and was president of the Organization of the Petroleum Exporting Countries (OPEC) in 2009.

The offshore use goes back to his first time as minister of petroleum. On 6 March 2002, when Jose Maria Botelho de Vasconcelos was minister of petroleum for the first time, he was named as one of two individuals who had power of attorney for Medea Investments Limited, a company that put its own value at $1 million. The company was incorporated on September 13, 2001 in Niue and moved to Samoa in 2006. It was inactivated on February 16, 2009. In both Niue and Samoa, the company was held by “bearer” shares, which belong to the individual who physically holds them, making it easier to obscure ownership. Medea Investments Limited (Samoa) was one of two companies to hold shares in the New York company Blue Nile Consulting LLC in October 2007.

KONRAD MIZZI

Minister of Energy & Health – Republic of Malta

KONRAD MIZZI
Minister of Energy & Health – Republic of Malta

Konrad Mizzi is the minister of energy and health of the Republic of Malta. He was elected to Parliament in 2013 and became the deputy leader of Malta’s ruling Labour Party in February 2016. Mizzi’s quick ascent, earned him the accolade of “one of the most successful politicians in recent history.” Later in February, following media reports, Mizzi announced he would close an offshore company in Panama owned by a New Zealand trust he had created. He claimed that he had declared the company and that he was closing it in the interest of transparency. Malta’s main opposition party has called for an investigation.

In July 2013, four months after Mizzi joined the Maltese government, an accounting firm in Malta bought several Panamanian companies from Mossack Fonseca, including Hearnville Inc. In June 2015, Mizzi established a trust in New Zealand that is the shareholder of Hearnville. The beneficiaries of this trust are his wife, who is Malta’s consul in Shanghai, and two children. In June 2015, Mizzi told Mossack Fonseca he would use Hearnville as a management consultancy and brokerage firm. On this last point, Mizzi said that he filled out a “standard category wording that was included in a template form which was part of the company acquisition process.”

JESÚS VILLANUEVA

Oil Company Executive – Venezuela

Jesus Villanueva rose swiftly within Petroleos de Venezuela (PdVSA), the state oil company, after Hugo Chavez’s election as president in 1998. Villanueva served as general auditor, then as a director in 2002, later returning to auditor and then becoming a director again in 2005. A 2006 filing with the U.S. Securities and Exchange Commission noted that since he was Audit Committee vice president and also the Audit Committee Financial Expert, Villanueva was not “independent” as defined by the New York Stock Exchange. He left the board in 2008, when Chavez replaced six directors but continued as auditor. Villanueva exposed in a 2009 PdVSA confidential memo cost problems with a nationwide food supply network created by Chavez and PdVSA; an audit revealed that only 25 per cent of the more than $2.2 million in food imports ordered by mid-2008 had reached Venezuela within six months after payment. PdVSA is currently the focus of a large U.S. investigation into graft, money laundering and other corruption.

In March 2009, Mossack Fonseca Luxembourg helped to incorporate Blue Sea Enterprises Corp. in Panama. The main purpose of the company was handling offshore savings accumulated by Villanueva, which were deposited in Swiss EFG Bank. Mossack Fonseca’s Luxembourg issued a power of attorney to Villanueva, giving him the right to authorize transactions. However, internal emails showed that the founders of the Panamanian law firm revoked his authority because of “a high risk on doing business with this person” as he had “direct access to the public treasury, and the origin of his funds” could be “questioned at any given moment,” so the probabilities of a scandal” were “higher.” They referred to him as “a total PEP” or politically exposed person. However, one of the company’s partners, Chris Zollinger, favoured continuing the business relationship with Villanueva. In January 2010, Mossack Fonseca skirted the PEP problem by granting power of attorney of Blue Sea to his daughter Anny Josefina Villanueva.

Villanueva’s daughter told Venezuelan media that she has a Panamanian company with “Blue” in the name. She declined to discuss any details or to say where her father is.

BRUNO JEAN-RICHARD ITOUA

Head of National Oil Company – Republic of Congo

BRUNO JEAN-RICHARD ITOUA
Head of National Oil Company – Republic of Congo

Bruno Jean-Richard Itoua rose to power in the Republic of Congo through his family’s close association with President Denis Sassou-Nguesso, first serving as the president’s hydrocarbons adviser, then becoming head of the national oil company (SNPC) in 1998. Itoua was implicated in a massive diversion of company funds that came to light in 2003. A lawsuit two years later by one of Congo’s creditors accused Itoua and the SNPC of conspiring to “divert oil revenues … into the pockets of powerful Congolese public officials.” After a U.S. federal appeals court ruled in 2007 that American courts did not have jurisdiction over the suit against the SNPC because it was a government agency, the creditor did not pursue its case against Itoua.

Itoua had the power of attorney to represent two offshore companies in 2004, while he was energy adviser to the President of the Republic of Congo and CEO of SNPC, the Congolese national oil company. The companies, Denvest Capital Strategies Inc., based in the British Virgin Islands, and Grafin Associated SA, based in Panama, had previously issued unregistered shares, which belong to the person who physically holds them. The companies became inactive in 2006 and 2007 respectively, according to Mossack Fonseca’s records.

JAMES IBORI

Former Governor of Delta State – Nigeria

JAMES IBORI
Former Governor of Delta State – Nigeria

James Ibori, governor of Nigeria’s oil-rich Delta State from 1999 to 2007, pleaded guilty in a London court in 2012 to conspiracy to defraud and money laundering offenses. Ibori admitted using his position as governor to corruptly obtain and divert up to $75 million out of Nigeria through a network of offshore companies, although authorities alleged that the total amount he embezzled might have exceeded $250 million. Ibori, who received a 13-year prison sentence, used millions of dollars to support a lavish lifestyle that included six houses in London and a fleet of Range Rovers, Bentleys and Mercedes.

Mossack Fonseca was the registered agent of four offshore companies connected to James Ibori, including Julex Foundation, of which Ibori and family members were beneficiaries. Julex was the shareholder of Stanhope Investments, a company incorporated in Niue in 2003. Ibori was also connected to Financial Advisory Group Ltd. and Hunglevest Corporation, although Mossack Fonseca’s files do not specify the exact nature of his connection. In 2008, Mossack Fonseca received a request from the Seychelles government to produce documents as part of a probe by the Crown Prosecution Service, England’s principal prosecuting authority, of Ibori and alleged criminal activities. In 2012, Ibori pleaded guilty in a London court to laundering and fraud charges. During court hearings in the United Kingdom, prosecutors claimed that Ibori opened a Swiss bank account in the name of Stanhope Investments through which millions of dollars were later channelled to ultimately buy a $20 million private jet.

Nigeria is Africa’s largest oil producer, and allegations of corruption and mismanagement of funds within the lucrative industry are nothing new. A report published last summer by the National Resource Governance Institute, a global governance watchdog in New York, revealed that Nigeria’s state-run oil firm has increasingly withheld large sums of money from government coffers. The Nigerian National Petroleum Corporation has failed to remit about $12.3 billion from the sale of 110 million barrels of oil over 10 years. Nigerian President Muhammadu Buhari has made reforming the NNPC a top priority since he took office last year.

EDUARDO CUNHA

President of Chamber of Deputies – Brazil

EDUARDO CUNHA
President of Chamber of Deputies – Brazil

Idalécio de Castro Rodrigues de Oliveira is a Portuguese corporate executive who, according to Brazil’s attorney general, supplied money that was paid as a suspected bribe to Eduardo Cunha, the president of Brazil’s Chamber of Deputies, currently under indictment for alleged corruption. De Oliveira is the chief executive of the Lusitania Group, which purchased certain oil licenses in West Africa in 2011 and entered into a partnership with Petrobras, Brazil’s oil giant, which is currently at the heart of the country’s largest-ever corruption probe. Cunha has repeatedly denied accusations against him and recently told reporters, “I am not worried… I will continue to work.”

De Oliveira owned a conglomerate he called the “Lusitania Group,” made up of 14 companies incorporated in the British Virgin Islands from 2003 to 2011, with interests in oil, gas and mining operations. In October 2015, a report by Brazil’s attorney general connected de Oliveira to Brazil’s Lava Jato (“Car Wash”) corruption scandal. In 2011, Brazil’s state-owned energy company Petrobras bought a 50 per cent stake of an oil field in Benin controlled by de Oliveira’s companies. Twelve of his 14 offshore companies were incorporated just months before his agreement with Petrobras. According to the attorney general’s report, in May 2011, de Oliveira wired $10 million to a Swiss bank account held by João Augusto Rezende Henriques, a lobbyist for Brazilian party PMDB, through Acona International Investments Limited, a Seychelles company also registered by Mossack Fonseca in 2010. Over the next several weeks, the report said, Rezende Henriques wired $1.5 million to a Swiss bank account controlled by Eduardo Cunha, president of Brazil’s Chamber of Deputies and a member since 2003.

GALO CHIRIBOGA

Former Minister of Mining & Petroleum – Ecuador

GALO CHIRIBOGA
Former Minister of Mining & Petroleum – Ecuador

Galo Chiriboga is an Ecuadorian lawyer and politician. Chiriboga is currently Ecuador’s attorney general. He previously served as minister for labour, minister for mines and petroleum and ambassador to Spain. He is a distant relative of Ecuador’s president, Rafael Correa.

In 1999, Chiriboga, then a lawyer in private practice, was hired to collect a debt from a couple who owned a house in the exclusive residential area of La Viña. In November that year, Chiriboga created Madrigal Finance Corp. in Panama, and in December, in order to buy the house, the company granted him a power of attorney including “full authorization to set the price of the property.” Madrigal Finance purchased it for less than $2,800. The former owners later sued Chiriboga for fraud, as they estimated it was worth about $1 million. He finally prevailed, with the court ruling that the couple had not proven the property’s actual value. From 2005, when he was appointed labour minister, to now as Ecuador’s attorney general, he has been inconsistent in disclosing his connection to the company when he declared his assets. Weeks before he took office as attorney general in July 2011, his wife María Victoria Espinal asked Mossack Fonseca to remove Chiriboga and other directors of Madrigal and to replace them with nominees supplied by the Panamanian law firm, although her husband remained the sole shareholder.

BJARNI BENEDIKTSSON

Minister of Finance & Economic Affairs and Former Chairman of N1 and BNT – Iceland

BJARNI BENEDIKTSSON
Minister of Finance & Economic Affairs and Former Chairman of N1 and BNT – Iceland

Bjarni Benediktsson is Iceland’s Minister of Finance and Economic Affairs and has been a member of parliament since 2003. Benediktsson has led the Independence Party since 2009 and formed a coalition government with Sigmundur Davíð Gunnlaugsson and the Progressive Party after 2013 elections. He comes from a wealthy family and served as chairman of both N1, Iceland’s biggest oil firm and gasoline retailer, and its holding company, BNT, from 2005-2008. Benediktsson weathered a minor scandal in 2015 when it emerged that he had registered on the Ashley Madison cheating website for married men. His great uncle, also named Bjarni Benediktsson, was prime minister of Iceland from 1963 to 1970.

Benediktsson and two Icelandic businessmen owned a Seychelles shell company called Falson & Co, which was purchased through the Luxembourg branch of the Icelandic bank Landsbanki in 2005. Falson issued bearer shares, which confer ownership to whomever holds the physical share certificates. Bearer shares are typically used to provide an extra layer of secrecy for the ownership of an asset. Falson was struck off the register of companies in 2010. “I have not had any assets in tax havens or anything like that,” Benediktsson told a television interviewer in 2015.

ALI ABU AL-RAGHEB

Former Prime Minister – Jordan

Al-Ragheb was the director of offshore companies in British Virgin Islands and owned others in Seychelles.

In July 2003, just months before he resigned as prime minister, Ali Abu al-Ragheb and his wife Yusra became directors of the British Virgin Islands company Jaar Investment Ltd., which held an account with Arab Bank in Geneva, Switzerland. The company was inactivated in August 2008. Earlier in 2008 they became directors of Jay Investment Holdings Ltd also based in the British Virgin Islands. In neither case were the companies’ activities identified. Until December 2014 al-Ragheb also owned three Seychelles companies. His children were involved as directors in several additional BVI companies, including Desertstar Investment Capital Ltd., which also held an account at Arab Bank in Geneva that was used to invest in Jordan.

PAVLO LAZARENKO

Former Prime Minister & Energy Minister – Ukraine

Pavlo Lazarenko, was the Prime Minister of Ukraine from 1996-97. While in office, he exercised control over a large swathe of the economy and influenced the privatisation of Ukraine’s vast natural gas sector.

Most of the allegations of embezzlement of state funds and abuse of office against him are related to the fight for gas revenues between rival political and business groupings in Ukraine in the 1990s. He had also held the post of energy minister.

Lazarenko was convicted in June 2000 for money laundering in Switzerland and then in the United States in 2004 and then sentenced to 9 years in prison; the sentence was then reduced to 97 months (8 years and 1 month). $250 million from his offshore accounts are still being tracked down by U.S. authorities. He has maintained that his fortune had been amassed through legal business operations.

PANGATES INTERNATIONAL, SYRIA

A long-time Mossack Fonseca customer, UAE-based Pangates International Corp. Ltd. is one of three companies sanctioned by Washington for providing the aviation fuel used by the government of Syrian President Bashar Assad to carry out air strikes against its citizens.

According to ICIJ, Pangates is a subsidiary of the Abdulkarim Group, a Syrian company partly based out of Damascus that also has ties to two other sanctioned Mossack Fonseca clients — Maxima Middle East Trading Co. and Morgan Additives Manufacturing Co. It was established by Mossack Fonseca in 1999 on the Pacific island of Niue, then subsequently moved to Samoa and finally to one of the world’s most popular tax havens, the Seychelles in 2012.

Although the U.S. Treasury issued sanctions against the three companies in June 2014, the leaked documents appear to show that Mossack Fonseca continued to represent Pangates and did not report the company to Seychelles authorities until August 2015.

The law firm has denied wrongdoing, saying that the onus is on intermediaries like banks to check clients’ backgrounds. Pangates also told Reuters in 2013 that it was only “selling to non-Syrian firms” that have not faced international sanctions. “We do not know exactly who is finally using the fuel but according to our information the product is used for civil humanitarian purposes,” it said.

PETROPARS LTD., IRAN

Iranian government-run oil and gas giant Petropars, incorporated by Mossack Fonseca in 1998, was hit with U.S. sanctions in 2010 and dropped by the law firm as a client soon after.

The company was first linked to the Iranian government in 2001, when, according to the ICIJ, its board members were charged with corruption over several deals. Mossack Fonseca continued to represent it for another nine years until co-founder Jürgen Mossack noticed that his firm’s address in the British Virgin Islands had been listed under Petropars’ name in the U.S. Treasury blacklist. Mossack blamed his company’s London office for not adequately scrutinizing its Iran-based clients.

(Images of the individuals have ben sourced from YouTube)

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