Offshore and Africa – what’s in the leaked Panama Papers?

The leaked Panama Papers exposing the workings of offshore law firm Mossack Fonseca resulted in a number of stories published on Monday detailing offshore entities stretching from Uganda to Sierra Leone. The internal documents expose the company’s questionable dealings in Africa highlighting missing taxes, dodgy infrastructure tenders and secret holdings in the diamond industry. RFI spoke to Amanda Potgieter, managing editor, African Network of Centers for Investigative Reporting.

Company sign for Mossack Fonseca in Panama City, 3 April 2016. Reuters/Carlos Jasso

Spotlight on Africa

What are the most significant leaks relating to the African continent?

We have a number of very strong stories and while a lot of them seem to be quite small - in the sense that they might focus on countries that we don't consider economic powerhouses, such as Botswana or Guinea - they really do link to a major problem, where Africa loses some $150 billion to illicit financial flows every year. So they all link to a much bigger picture. For me, the strongest stories would be Uganda, where we see oil companies trying to avoid paying $400 million in capital gains tax through restructuring. Sierra Leone, which is very strong, because of the links between Steinmetz, who through shelf companies does business with Tiffany & Co, selling them diamonds. As well as Guinea and links with the Beny Steinmetz Group.

Could you explain what the leaked papers show in Uganda? Why did Heritage Oil and Gas try to move their legal place of business from the Bahamas to Mauritius?

Because it would have benefitted from the double taxation agreement between Uganda and Mauritius. The company went about trying to do the whole change and then suddenly got caught out by the Ugandan government, as well as by the British government. So they learnt ahead of time that there would be an imminent tax liability before it was officially imposed. And suddenly they needed major changes to take place before this actual tax would happen. So the leak shows a number of emails sent in advance to lawyers where they try and fight the paying of taxes. It also then ends up being a four year court case - courts in the UK as well as Uganda - where they really try and get out of paying something that they owe the Ugandan government.

The leaks reveal very interesting information about the tender for a Namibian port. Could you tell us more?

I feel like we're going to be able to explore this story more because it’s a shell company that's linked to a bribery scandal in Brazil that paid $1 million to another firm, which is completely owned by a Trinidadian politician. His company is trying to win the $340 million tender to expand the Walvis Bay port in Namibia. It’s just so bizarre when you look at some of the links - there are links to a firm incorporated in New Zealand, that seems to be paying kickbacks to the Pendrey Associates Corporation and all of this is almost managed by Mossack Fonseca. So the leaked court documents from the Brazil ‘Car Wash’ scandal, which is what the company was involved in, shows that Santa Tereza Services paid $1 million to Pendrey which is the company that belongs to the Trinidadian politician to develop the technical studies that will support the pricing and the technical proposal for the expansion of the Walvis Bay port. While the leak exposes the involvement of the offshore company in the bid for the Namibian port tender, we still are missing a link - which international company subcontracted Santa Tereza. And what's even more worrying is that port officials claim they don't have any access to the names of companies that determined the technical aspects of the international companies’ bids. So again, we can't prove exact illicit behaviour. But it’s the secrecy around it that allows for illicit behaviour.

Your investigation has revealed more about Israeli businessman Beny Steinmetz and his dealings in Sierra Leone's diamond mining industry. The country is home to some of the world's most valuable diamonds, yet it seems unclear whether any taxes are being paid. What's going on here?

Beny Steinmetz and his companies seem to be followed by controversy. He is currently being investigated for an alleged tax avoidance scam in South Africa. There is also the ongoing US grand jury investigation into corruption in Guinea. He really should be trying to keep his name out of the papers. He sold his company, or his share in the Steinmetz Group's diamond segment to his brother Daniel in 2014. All of this was done via Mossack Fonseca. However, leaked emails seem to indicate that while his share had technically been sold to his brother, which meant that he would then make the decisions around the company, there seems to be emails that seem to request backdating to hide the fact that he possibly was still running the company from the side-lines, despite visibly selling his shares to his brother. So between 2013 and 2015 he was still linked to the company and seemed to be listed as the person who makes the calls. We've also got incomplete diamond export data that shows that another company that he’s linked to, Octea, exported more than $330 million in rough diamonds. That company is specifically alleged to be more than $150 million in the red, dozens of creditors are waiting to be paid, including the government of Sierra Leone and Standard Chartered bank. If these debts aren't paid, the company could then lose its license. Conspiratorial rumours seem to say that this could entirely be part of their plan. There's selling, there's heaps of money coming in, and yet the company's showing it doesn't have any money. This means that under the agreement it made with the Sierra Leonean government, it isn't paying the taxes it owes.

What are you hoping will happen next following the publication of this information?

What we're really hoping to do is find more stories. To me, what we've uncovered so far is only really scratching at the surface, especially for the Africa side. Now that some of the international stories have been published, we'll certainly be seeing more links outside of Africa. So I'm hoping to do more cross-continental investigations, using the data that is already available. Then to see what’s the outcome of this leak. We have had a response from Mossack Fonseca, who are basically saying, 'we've done nothing wrong, we followed due diligence'. The next step will be seeing what happens to these politicians and national leaders that have been mentioned. We're also hoping to launch further investigations with more of the data available and preferably with some of the countries, now that they know about it.