{"id":76990,"date":"2016-08-01T12:00:46","date_gmt":"2016-08-01T11:00:46","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=76990"},"modified":"2016-08-09T16:53:45","modified_gmt":"2016-08-09T15:53:45","slug":"new-panama-papers-secret-offshore-deals-deprive-africa-of-billions-in-natural-resource-dollars","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2016\/08\/new-panama-papers-secret-offshore-deals-deprive-africa-of-billions-in-natural-resource-dollars\/","title":{"rendered":"New Panama Papers: Secret Offshore Deals Deprive Africa of Billions in Natural Resource Dollars"},"content":{"rendered":"<p><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers.jpg\" ><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-76991\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers-1024x512.jpg\" alt=\"worker panama papers\" width=\"600\" height=\"300\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers-1024x512.jpg 1024w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers-300x150.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers-768x384.jpg 768w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/worker-panama-papers.jpg 1800w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a><\/p>\n<p><em>New Panama Papers Series Exposes Secret Deals in Africa<\/em><\/p>\n<p><em>The Panama Papers show politicians and mining, oil and gas interests benefit from secrecy and dubious multimillion-dollar transfers.<\/em><\/p>\n<ul>\n<li><em>Twelve of 17 companies under investigation by authorities in Italy in relation to a $10 billion oil and gas deal in Algeria were created by Mossack Fonseca<\/em><\/li>\n<li><em>Italian authorities called one offshore company \u201ca crossroads of illicit financial flows\u201d<\/em><\/li>\n<li><em>Dozens of companies created by Mossack Fonseca have been involved in law suits or public allegations of wrongdoing, according to an ICIJ analysis<\/em><\/li>\n<\/ul>\n<p><em>25 Jul 2016 &#8211; <\/em>When he wasn\u2019t 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\u2019s hotel tab there exceeded $100,000.<\/p>\n<p>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\u00a0win more than $10 billion\u00a0in contracts to build oil and gas pipelines from the North African desert to the shores of the Mediterranean.<\/p>\n<p>To shift the bribe money between countries, Bedjaoui used a cluster of offshore companies\u00a0that 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\u2019s internal records by the International Consortium of Investigative Journalists and other media partners has found.<\/p>\n<div id=\"attachment_76992\" style=\"width: 710px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/bulgari-hotel-milan.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76992\" class=\"wp-image-76992\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/bulgari-hotel-milan.jpg\" alt=\"The garden at the Bulgari Hotel in Milan. Photo: bulgarihotels.com\" width=\"700\" height=\"466\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/bulgari-hotel-milan.jpg 800w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/bulgari-hotel-milan-300x200.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/bulgari-hotel-milan-768x512.jpg 768w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><p id=\"caption-attachment-76992\" class=\"wp-caption-text\">The garden at the Bulgari Hotel in Milan. Photo: bulgarihotels.com<\/p><\/div>\n<p>Italian investigators described one of those companies, <a target=\"_blank\" href=\"https:\/\/offshoreleaks.icij.org\/nodes\/10113610\" >Minkle Consultants S.A.<\/a>, as a \u201ccrossroads of illicit financial flows\u201d that channeled millions of dollars\u00a0from subcontractors to an array of recipients whose identities are still being untangled. Prosecutors allege Bedjaoui used one company\u00a0set up through the law firm to funnel as much as $15 million to associates and family members of Algeria\u2019s then-energy minister.<\/p>\n<p>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\u2019s review identified 37 companies within the Panama Papers that have been named in court actions or government investigations involving natural resources in Africa.<\/p>\n<p>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.<\/p>\n<p>\u201cCompanies 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,\u201d Fredrik Reinfeldt, former prime minister of Sweden and now head of the Extractive Industries Transparency Initiative, told ICIJ.<\/p>\n<p>He said the use of anonymous companies makes it harder to prevent money laundering and corruption because it allows wrongdoers to \u201chide behind a chain of companies often registered in multiple jurisdictions.\u201d<\/p>\n<p>ICIJ\u2019s review of Mossack Fonseca\u2019s internal records shows that the Panama-based law firm is a major provider of secrecy to companies involved in extractive industries. The firm\u2019s internal files include more than 1,400 companies whose names refer to mining, minerals, oil, petrol or gas. Other less explicitly named companies \u2013 including the 12 companies allegedly used by Bedjaoui in the Algerian energy deal \u2013 also played roles in the extractive sector, the files show.<\/p>\n<div id=\"attachment_76993\" style=\"width: 610px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/160725-sierraleone-04-miner-diamonds.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76993\" class=\"wp-image-76993\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/160725-sierraleone-04-miner-diamonds.jpg\" alt=\"An independent miner panning for diamonds in Sierra Leone. Photo: Cooper Inveen \/ GroundTruth\" width=\"600\" height=\"415\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/160725-sierraleone-04-miner-diamonds.jpg 800w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/160725-sierraleone-04-miner-diamonds-300x207.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/160725-sierraleone-04-miner-diamonds-768x531.jpg 768w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a><p id=\"caption-attachment-76993\" class=\"wp-caption-text\">An independent miner panning for diamonds in Sierra Leone. Photo: Cooper Inveen \/ GroundTruth<\/p><\/div>\n<p>Mossack Fonseca\u2019s files reveal offshore companies that were established to own, hold or do business with petroleum, natural gas and mining operations in 44 of Africa\u2019s 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\u2019s surface over millions \u2013 even billions \u2013 of years are traded by shadow companies that have existed for months.<\/p>\n<p>Companies created and assisted by Mossack Fonseca include at least 27 subsidiaries of one of the world\u2019s 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 \u201cmitigate \u2018double taxation.\u2019\u201d<\/p>\n<p>Mossack Fonseca declined to answer detailed questions for this story. It told ICIJ that \u201cour firm, like many firms, provides worldwide registered agent services for our professional clients (e.g., lawyers, banks, and trusts) who are intermediaries. As a registered agent we merely help incorporate companies, and before we agree to work with a client in any way, we conduct a thorough due-diligence process, one that in every case meets and quite often exceeds all relevant local rules, regulations and standards to which we and others are bound.\u201d<\/p>\n<p>The law firm added: \u201cFiling legal paperwork to help incorporate a company is a very different thing from establishing a business link with or directing in any way the companies so formed. We only incorporate companies, which just about everyone acknowledges is important, and something that\u2019s critical in ensuring the global economy functions efficiently.\u201d<\/p>\n<p>Saipem, the Italian energy company, told ICIJ it is \u201cfully cooperating\u201d with prosecutors and it has \u201cimplemented significant managerial and administrative restructuring measures.\u201d External consultants reviewed the company\u2019s books, Saipem said, and \u201cfound no evidence of payments to Algerian public officials through the brokerage contracts or subcontracts examined.\u201d In February 2016, an Algerian court found a Saipem subsidiary <a target=\"_blank\" href=\"http:\/\/www.reuters.com\/article\/us-algeria-corruption-idUSKCN0VB27W\" >guilty<\/a> of fraud, money laundering and corruption in obtaining contracts from Algeria\u2019s national oil company,\u00a0Sonatrach.<\/p>\n<p>Criminal charges have been <a target=\"_blank\" href=\"http:\/\/www.interpol.int\/notice\/search\/wanted\/2013-41746\" >filed against Bedjaoui<\/a> by Italian authorities. Prosecutors allege that he inflated contracts for the benefit of Algerian officials, adding a standard cut for himself, which earned him the nickname \u201cMr. 3 Percent\u201d after police found the ratio scrawled on Bulgari Hotel stationery during a raid.<\/p>\n<div id=\"attachment_76994\" style=\"width: 510px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/interpol-red-notice-Bedjaoui-italy.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76994\" class=\"wp-image-76994\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/interpol-red-notice-Bedjaoui-italy.jpg\" alt=\"Interpol issued a Red Notice - an international alert for a wanted person - on Bedjaoui at the request of Italian authorities.\" width=\"500\" height=\"295\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/interpol-red-notice-Bedjaoui-italy.jpg 750w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/interpol-red-notice-Bedjaoui-italy-300x177.jpg 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><p id=\"caption-attachment-76994\" class=\"wp-caption-text\">Interpol issued a Red Notice &#8211; an international alert for a wanted person &#8211; on Bedjaoui at the request of Italian authorities.<\/p><\/div>\n<p>Bedjaoui, the nephew of a former Algerian foreign minister, is currently living in a Beverly Hills-inspired gated community in Dubai. He did not reply to repeated requests from ICIJ for comment.<\/p>\n<p>In previous responses to the media, his lawyers have denied he was involved in any wrongdoing. They insist that, as a thirty-something management graduate, he could never have wielded enough influence among Algeria\u2019s political, military and business elites to coordinate a $275-million-dollar bribery scheme.<\/p>\n<p>The Saipem-Sonatrach bribery case fits a pattern in Africa and other developing regions, where countries with the richest natural endowments often lose the most money offshore.<\/p>\n<p>Between 2004 and 2013, Algeria, home to the second-largest oil reserves in Africa, lost an average of $1.5 billion annually through tax avoidance, bribery, corruption and criminality, the research group <a target=\"_blank\" href=\"http:\/\/www.gfintegrity.org\/report\/illicit-financial-flows-from-developing-countries-2004-2013\/\" >Global Financial Integrity estimates<\/a>. Across the continent, the United Nations estimates at least <a target=\"_blank\" href=\"http:\/\/www.uneca.org\/sites\/default\/files\/PublicationFiles\/iff_main_report_26feb_en.pdf\" >$50 billion each year<\/a> goes unaccounted for due to illicit money flows.<\/p>\n<p>Oil-rich Nigeria, for example, routinely tops the list of African nations from which billions of dollars are siphoned each year. Mossack Fonseca\u2019s files show the law firm\u2019s former customers included three oil ministers, senior national oil company employees and two former state governors later convicted of laundering oil-tainted wealth.<\/p>\n<p>British and U.S. investigators said Diepreye Alamieyeseigha, governor of Nigeria\u2019s oil-rich Bayelsa State from 1999 to 2005, used money skimmed from public funds, including government oil contracts, to buy a home in Rockville, Maryland, and four homes in London held by an offshore company set up through Mossack Fonseca.<\/p>\n<p>Alamieyeseigha was arrested on U.K. money laundering charges during a visit to London in 2005, but later reportedly slipped out of the country <a target=\"_blank\" href=\"https:\/\/www.theguardian.com\/world\/2005\/nov\/23\/hearafrica05.development\" >dressed as a woman<\/a>. He returned to Nigeria, where he was impeached and removed as governor. He served a short prison term but in 2013 was <a target=\"_blank\" href=\"http:\/\/www.premiumtimesng.com\/regional\/south-south-regional\/191363-how-alamieyeseigha-died-bayelsa-government.html\" >pardoned<\/a> by President Goodluck Jonathan. Alamieyeseigha died in 2015.<\/p>\n<p>Nigeria\u2019s current president, Muhammadu Buhari, has called on world leaders to do more to help African nations fight money laundering and shine light on offshore hideaways.<\/p>\n<p>\u201cEvery dollar siphoned through dirty deals and corruption to offshore tax havens makes the livelihood and survival of the average African more precarious,\u201d Buhari said in a speech delivered at an <a target=\"_blank\" href=\"https:\/\/www.gov.uk\/government\/topical-events\/anti-corruption-summit-london-2016\" >anti-corruption summit<\/a> in London one month after the release of Panama Papers.<\/p>\n<div id=\"attachment_76995\" style=\"width: 710px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76995\" class=\"wp-image-76995\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa-1024x512.jpg\" alt=\"A drilling rig parked in a shipyard in Cape Town, South Africa. Photo: James Jones Jr \/ Shutterstock.com\" width=\"700\" height=\"350\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa-1024x512.jpg 1024w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa-300x150.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa-768x384.jpg 768w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/drilling-rig-cape-town-south-africa.jpg 1800w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><p id=\"caption-attachment-76995\" class=\"wp-caption-text\">A drilling rig parked in a shipyard in Cape Town, South Africa. Photo: James Jones Jr \/ Shutterstock.com<\/p><\/div>\n<p><strong>Ensuring anonymity<\/strong><\/p>\n<p>In 2005, Algeria announced that its enormous gas reserves were open for business. At stake was the opportunity to help build the first direct route from largely untapped gas reserves in the heart of the Algerian desert to Europe\u2019s energy-hungry market. It was an important move for Algeria, a country with an unsteady economy that relies heavily on oil and gas revenue.<\/p>\n<p>Executives from China, France, Britain, Spain and Japan flew into Algiers to submit bids.<\/p>\n<p>Saipem emerged as one of the big winners. Between 2006 and 2009, the Italian company \u2013 which bills itself as \u201cone of the world leaders\u201d in drilling and pipelines \u2013 won seven contracts to lay hundreds of kilometers of pipelines and canals and to build treatment plants capable of <a target=\"_blank\" href=\"http:\/\/www.saipem.com\/en_IT\/static\/documents\/2136AlgeriaCountrySu.pdf\" >processing<\/a> 100,000 barrels of oil a day.<\/p>\n<p>The flurry of activity in Algeria was matched by the expansion of Bedjaoui\u2019s offshore network.<\/p>\n<p>Bedjaoui, who is French, Canadian and Algerian, earned his business management degree in Montreal, then worked in his family\u2019s coffee-importing venture before landing at a Dubai-based oil and gas investment firm with a valuable North African client list.<\/p>\n<p>By 2002, Bedjaoui had used Mossack Fonseca to open a Swiss bank account for his company <a target=\"_blank\" href=\"https:\/\/offshoreleaks.icij.org\/nodes\/10097260\" >Rayan Asset Management<\/a>. A Swiss tax lawyer then went on a buying spree on the Algerian\u2019s behalf, ordering pre-existing \u201cshelf\u201d companies in Panama and the British Virgin Islands.<\/p>\n<p>Mossack Fonseca\u2019s background checks on Bedjaoui in 2008 and 2009 revealed nothing suspicious, the law firm\u2019s internal files show. Bedjaoui didn\u2019t make it easy; he used his Canadian passport to open some bank accounts and his Algerian ID to open others.<\/p>\n<p>For 11 years, Mossack Fonseca worked for Bedjaoui and half a dozen of his family members, friends and associates. Into this world Bedjaoui brought his wife and brother-in-law, relatives of Algeria\u2019s energy and water ministers, the CEO of Algeria\u2019s government-controlled oil and gas company and Saipem\u2019s in-country Algeria manager. Italian prosecutors later said the close-knit web of kinship led them to suspect that many of the companies created though Mossack Fonseca were used \u201cfor corrupt payments or for improper personal enrichment.\u201d<\/p>\n<p>It was, according to investigators, a network of graft and slush funds organized in hotel lobbies and coffee bars in Paris and Milan and on yachts in the Mediterranean. Outside the Bulgari Hotel, attendees exchanged secret cell phone numbers to keep in touch; it wasn\u2019t to \u201cexchange Christmas wishes\u201d, an Italian judge wryly suggested years later.<\/p>\n<p>In setting up his offshore companies, prosecutors allege, Bedjaoui chose countries with secrecy rules \u201cthat ensure the anonymity of the shareholders\u201d and further obscured the paper trail by scattering money into 16 bank accounts in Dubai, Algeria, Singapore, London, Hong Kong, Switzerland and Lebanon.<\/p>\n<div id=\"attachment_76996\" style=\"width: 410px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/Algerian-energy-minister-OPEC-president-Chekib-Khelil.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76996\" class=\"wp-image-76996\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/Algerian-energy-minister-OPEC-president-Chekib-Khelil.jpg\" alt=\"Former Algerian energy minister and former OPEC president Chekib Khelil. Photo: Northfoto \/ Shutterstock.com\" width=\"400\" height=\"360\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/Algerian-energy-minister-OPEC-president-Chekib-Khelil.jpg 800w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/Algerian-energy-minister-OPEC-president-Chekib-Khelil-300x270.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/Algerian-energy-minister-OPEC-president-Chekib-Khelil-768x690.jpg 768w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/a><p id=\"caption-attachment-76996\" class=\"wp-caption-text\">Former Algerian energy minister and former OPEC president Chekib Khelil. Photo: Northfoto \/ Shutterstock.com<\/p><\/div>\n<p>According to prosecutors, a company linked to Bedjaoui, Collingdale Consultants Inc., was used to divert as much as $15 million to associates and family of Chekib Khelil, Algeria\u2019s energy minister from 1999 to 2010. A witness in the Italian case later recalled overhearing Khelil describe Bedjaoui as \u201clike a son.\u201d<\/p>\n<p>In 2013, Khelil, a graduate of Ohio State who lived for many years in Maryland, was briefly placed on Interpol\u2019s wanted list. Khelil returned to Algeria after authorities withdrew corruption charges they had leveled against him.<\/p>\n<p>Reached by telephone by ICIJ, Khelil said he did not have the time to speak and hung up.<\/p>\n<p>Official suspicions about Bedjaoui\u2019s role in Algerian energy deals first became public in February 2013. Months later, Canadian police <a target=\"_blank\" href=\"http:\/\/www.algerie-focus.com\/2013\/08\/scandale-de-corruption-des-biens-immobiliers-de-farid-bedjaoui-saisis-par-la-police\/\" >seized<\/a> Bedjaoui\u2019s assets in Montreal and French authorities raided Bedjaoui\u2019s apartment on a tree-lined avenue in Paris. French police later reportedly <a target=\"_blank\" href=\"http:\/\/www.jeuneafrique.com\/232593\/societe\/affaire-sonatrach-saipem-bedjaoui-face-la-justice-italienne\/\" >seized<\/a> a 43-meter yacht and paintings by Warhol, Mir\u00f3 and Dali.<\/p>\n<p>The investigations into Bedjaoui\u2019s activities and assets made headlines in Algeria, Canada and Italy. But Mossack Fonseca remained unaware of its customer\u2019s legal issues for much of 2013.<\/p>\n<p>Heather Lowe, an attorney with Global Financial Integrity, an anti-corruption group based in Washington, D.C., said that offshore middlemen have economic incentives \u201cnot to know what the companies they are forming are going to be used for. If they know too much, they might have to turn away business. \u2026 As a result, there\u2019s often no gatekeeper to prevent illicit money from entering the financial system.\u201d<\/p>\n<p><strong>\u2018Mandatory high-risk cluster\u2019<\/strong><\/p>\n<p>International standards and laws in many countries generally require that financial middlemen like Mossack Fonseca screen their clients to make sure they\u2019re not involved in wrongdoing. They are also required to take extra steps to check up on clients who are \u201cpolitically exposed persons\u201d \u2013 government officials or their family members or associates.<\/p>\n<p>In its written procedures, Mossack Fonseca acknowledges that transactions involving industries linked to oil, gas and mining carry high risks for money laundering and other crimes.<\/p>\n<p>The law firm classifies the mining industry as a \u201cmandatory high-risk cluster\u201d and requires workers to do extra background searches on anyone involved in digging, drilling, trading and exporting natural resources.<\/p>\n<p>But documents within the Panama Papers show Mossack Fonseca employees often fail to conduct adequate checks on clients involved in extractive industries and in some cases offer services that make it difficult for government authorities to identify the players behind offshore companies and natural resources deals.<\/p>\n<p>In 2014, Mossack Fonseca offered to provide a stand-in shareholder to shield the real owner of a phosphate mine who said he wanted to \u201cstop the chain\u201d of \u201cadditional enquiry\u201d into the company\u2019s ownership by Tanzanian authorities. In 2013, a Mossack Fonseca employee asked colleagues for a \u201cquick answer\u201d to help El\u00edsio Figueiredo, a former Angolan ambassador to the United Nations, bank $26 million from the sale of his shares in a mining company. Figuerido\u2019s nationality and high profile might be problematic, one colleague noted, but Mossack Fonseca kept alive the possibility of sending an employee to visit a bank in Hong Kong and open an account in his place. It\u2019s unclear from the records whether that plan was carried out.<\/p>\n<p>Figueiredo could not be reached for comment.<\/p>\n<p>In June 2011, a Mossack Fonseca employee wrote to her superiors to report a problem. Acting under pressure from an English law firm, the employee noted, Mossack Fonseca had made \u201can exception\u201d to its anti-money-laundering practices.<\/p>\n<p>In 2010, the employee explained, Mossack Fonseca created two companies and offered its own employees as stand-in shareholders without first learning the identity of the true owner. \u201cWithin one month,\u201d the employee wrote, the firm learned that the companies\u2019 owner was \u201ca Mr. Dan Gertler who is an Israeli diamond dealer under investigation for bribery in the Congo and involved in the \u2018blood diamond\u2019 business. His name is plastered all over the internet.\u201d<\/p>\n<div id=\"attachment_76997\" style=\"width: 610px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/israeli-dan-gartler-katanga.jpg\" ><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-76997\" class=\"wp-image-76997\" src=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/israeli-dan-gartler-katanga-1024x683.jpg\" alt=\"Israeli billionaire Dan Gertler, left, takes a tour of the Katanga Mining Ltd. copper and cobalt mine complex with Shimon Cohen, right, his communications advisor, right, in Kolwezi, Democratic Republic of Congo, on Wednesday, Aug. 1, 2012. Since he first arrived in wartime Congo in 1997 at only 23 years old, Gertler has amassed an empire worth almost $2.5 billion dollars, according to Bloomberg calculations using publicly available documents. Photographer: Simon Dawson\/Bloomberg via Getty Images\" width=\"600\" height=\"400\" srcset=\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/israeli-dan-gartler-katanga.jpg 1024w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/israeli-dan-gartler-katanga-300x200.jpg 300w, https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/07\/israeli-dan-gartler-katanga-768x512.jpg 768w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a><p id=\"caption-attachment-76997\" class=\"wp-caption-text\">Israeli billionaire Dan Gertler, left, takes a tour of the Katanga Mining Ltd. copper and cobalt mine complex with Shimon Cohen, right, his communications advisor, right, in Kolwezi, Democratic Republic of Congo, on Wednesday, Aug. 1, 2012. Since he first arrived in wartime Congo in 1997 at only 23 years old, Gertler has amassed an empire worth almost $2.5 billion dollars, according to Bloomberg calculations using publicly available documents. Photographer: Simon Dawson\/Bloomberg via Getty Images<\/p><\/div>\n<p>Some of the companies Mossack Fonseca had incorporated for Gertler were under investigation in the British Virgin Islands, the employee added.<\/p>\n<p>Despite these issues, Mossack Fonseca did not immediately resign as the British Virgin Islands agent for Gertler\u2019s companies, the employee wrote, but retained him as a customer \u201cunder the auspices of trying to obtain as much due diligence as possible in order to look like we had done something in this area and then resigning afterwards.\u201d<\/p>\n<p>Amid concerns that Panamanian authorities would soon investigate, Mossack Fonseca ended its relationship with Gertler\u2019s companies.<\/p>\n<p>A representative for Gertler told ICIJ that he is not aware of any investigation by Panamanian or BVI authorities into his companies in the DRC. \u201cOffshore companies have never been used to hide\u201d ownership information, the representative said.<\/p>\n<p>The representative declined to comment \u201con what would appear to be baseless and defamatory allegations made by an employee of a firm, which we didn\u2019t ultimately do business with, in a private email.\u201d Gertler\u2019s companies have invested approximately $100 million in the DRC, the representative said.<\/p>\n<p>In a written response to ICIJ, Mossack Fonseca said it follows \u201cboth the letter and spirit of the law. Because we do, we have not once in nearly 40 years of operation been charged with criminal wrongdoing. We\u2019re proud of the work we do, notwithstanding recent and willful attempts by some to mischaracterize it.\u201d<\/p>\n<p><strong>\u2018Modus operandi\u2019<\/strong><\/p>\n<p>Mossack Fonseca\u2019s due diligence methods appear to have fallen short in the case of Bedjaoui, the wheeler-dealer at the center of the Algerian bribery affair.<\/p>\n<p>The law firm\u2019s internal emails suggest that Mossack Fonseca did not become aware of Bedjaoui\u2019s involvement in the Saipem-Sonatrach scandal until September 2013. By chance, an internet search relating to another client turned up information that Bedjaoui was under investigation in connection with the case. One of the law firm\u2019s employees reported that Bedjaoui was \u201csuspected of being one of the main protagonists of this scandal.\u201d<\/p>\n<p>Mossack Fonseca told British Virgin Islands officials that it could not provide contact information for its own employees who had served as place-holder directors for some of the companies suspected of being involved in the alleged bribery scheme. Rosemarie Flax, Mossack Fonseca\u2019s managing director in the BVI, acknowledged in an internal email that not having \u201cthis basic information on employees is totally embarrassing\u201d and put the law firm at risk of a fine.<\/p>\n<p>Mossack Fonseca reported Bedjaoui and his network to BVI authorities in 2013, but it continued processing paperwork for another one of his companies, Rayan Asset Management, until at least November 2015.<\/p>\n<p>U.S. authorities are <a target=\"_blank\" href=\"http:\/\/www.jeuneafrique.com\/232593\/societe\/affaire-sonatrach-saipem-bedjaoui-face-la-justice-italienne\/\" >reportedly<\/a> examining three New York homes worth more than $50 million bought by Bedjaoui, including one Central Park-Fifth Avenue condominium acquired for $28.5 million. The U.S. Department of Justice provided Italian investigators records showing that a Delaware company linked to the global asset hunt transferred $26 million from the Bank of New York Mellon to JP Morgan Chase to help complete the purchase of the condominium.<\/p>\n<p>\u201cThe investment of the proceeds of bribery in real estate in the United States is a typical modus operandi of the criminal group attributable to Bedjaoui,\u201d Milan\u2019s public prosecutors said in a letter to U.S. authorities in March 2015. The prosecutors sought U.S. help to obtain ownership records and information on the origin of the funds used to buy properties in Rockville and Potomac, Maryland, that prosecutors suspect were purchased with bribe-tainted money.<\/p>\n<p>In February, a court in Algeria fined and jailed 19 people and companies in the first phase of prosecutions tied to the Saipem-Sonatrach scandal. Across the Mediterranean Sea, an Italian court handed down a <a target=\"_blank\" href=\"http:\/\/www.ilsole24ore.com\/art\/notizie\/2016-02-24\/saipem-algeria-cassazione-annulla-l-assoluzione-scaroni-e-eni-222122.shtml?uuid=AC9TMYbC\" >prison sentence<\/a> to a former Saipem executive, Tullio Orsi, who accepted a plea bargain to avoid trial.<\/p>\n<p>Orsi told prosecutors he met for discussions at least three times at Milan\u2019s Hotel Bulgari, including one with Bedjaoui.<\/p>\n<p>On another occasion, while relaxing on a boat moored off the Spanish coast, Orsi testified, Bedjaoui offered him $10 million.<\/p>\n<p>Bedjaoui, Orsi says, told him that \u201cthere were others like me that he helped financially and he had pleasure doing it.\u201d<\/p>\n<p>_________________________________________<\/p>\n<p><em>Contributors to this story: <a target=\"_blank\" href=\"https:\/\/icij.org\/journalists\/leo-sisti\" >Leo Sisti<\/a> and Lyas Hallas<\/em><\/p>\n<p><a target=\"_blank\" href=\"https:\/\/panamapapers.icij.org\/20160725-natural-resource-africa-offshore.html?utm_source=Watchdog&amp;utm_campaign=b21c57e84f-160725_Africa_package_launch7_24_2016&amp;utm_medium=email&amp;utm_term=0_ffd1d0160d-b21c57e84f-100282365&amp;mc_cid=b21c57e84f&amp;mc_eid=83dae00c90\" >Go to Original \u2013 panamapapers.icij.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New Panama Papers Series Exposes Secret Deals in Africa &#8211; Politicians and mining, oil and gas interests benefit from secrecy and dubious multimillion-dollar transfers.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[127,62,55,146],"tags":[],"class_list":["post-76990","post","type-post","status-publish","format-standard","hentry","category-africa","category-media","category-capitalism","category-economics"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/76990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=76990"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/76990\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=76990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=76990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=76990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}