Panama Papers: Staunch allies of the West among world leaders implicated

List includes ‘anti-corruption champions’ and recipients of foreign aid

Kim Sengupta
Diplomatic editor
Monday 04 April 2016 20:37
Ukrainian President Poroshenko has been promoted by the EU and the US as an anti-corruption champion
Ukrainian President Poroshenko has been promoted by the EU and the US as an anti-corruption champion

Some of the staunchest allies of the West are among political leaders, past and present, who have been exposed in the leaked documents for being involved in secret offshore business dealings.

Ukraine’s President Petro Poroshenko, backed by Nato in his country’s conflict against Russian backed separatists; Ayad Allawi, who became the Prime Minister of Iraq after Saddam Hussein was overthrown by American and British forces; former Jordanian Prime Minister Ali Abu al-Ragheb, whose country hosts a large number of Syrian refugees and is a major recipient of international aid; Hosni Mubarak of Egypt; King Salman of Saudi Arabia; the former Prime Minister of Qatar, Sheikh Hamad bin Jaber al-Thani; and the President of the United Arab Emirates, Sheikh Khalifa bin Zayed al-Nahyan all appear in the Panama Papers.

Opponents of the West, such as Vladimir Putin, the Syrian president Bashar al-Assad, and the former Libyan leader Muammar Gaddafi, have also been linked to the network of companies mostly registered in the tax haven of the British Virgin Islands, as are 33 other people and companies blacklisted by the US, such as various Iranian concerns and the Lebanese Shia militia, Hezbollah.

The list of 140 political figures, 12 of them current or former heads of state, in the 11.5 million tax documents, also includes Prime Minister Sigmundur Davíð Gunnlaugsson of Iceland, a country only just recovering from economic collapse and the family of Prime Minister Xi Jinping, who has led a highly publicised anti-corruption campaign in China.

President Poroshenko has been promoted by the European Union and the US as an anti-corruption champion in Ukraine, a state notorious for malpractice among politicians and public officials. Western aid,along with weapons, have poured into the country as the government in Kiev presses for fast-tracked entry to the EU and Nato. Two months ago the International Monetary Fund threatened to halt its $ 40bn ( £28bn) bailout programme because the Ukrainian government had failed to tackle widespread corruption.

Mr Poroshenko, while running for the presidency, promised that he would sell his business interests including his multinational confectionery empire, the Roshen Corporation, which had led to his nickname of the Chocolate King. But this is yet to take place two years on.

Oleksandr Klymenko, Ukraine’s former tax minister claimed, in an interview with The Independent, that Mr Porosehenko, before his election, had attempted to get Mr Klymenko to rescind penalties imposed on Roshen by the tax inspectors. Mr Klymenko is now in exile facing criminal charges brought by the Poroshenko government, he claims, as part of a vendetta. This is denied by the authorities in Kiev.

The documents from the law firm Mossack Fonseca reveal that President Poroshenko set up a hidden offshore company in the British Virgin Islands while Ukrainian forces were engaged in some of the fiercest fighting with separatists in the east of the country. The company, Prime Asset Partners Ltd, was registered on 20 August 2014, the very day more than a thousand Ukrainian soldiers were killed in one of the bloodiest battles of the war, at the city of Ilovaisk. The defence minister, Valeriy Heletey, was forced to resign in the outcry which followed the debacle.

“It is the height of cynicism to open offshore companies at a time when hundreds of our soldiers were dying,” said Oleh Lyashko, the leader of the Radicals, an opposition party, while a member of the President’s own coalition, Serhiy Leschenko, added: “I think it will have an impact in terms of further erosion of confidence in Poroshenko.”

President Poroshenko, however, stated that he had handed over the management of his assets to financial consultants and lawyers. His spokesman said a trust was managed by advisers “without any relation to any political and military events in Ukraine”.

Ayad Allawi, who became Iraq’s Prime Minister in 2004 following the US-led invasion, was the sole shareholder of IMF Holdings, a company registered in Panama where he also had a second company, Moonlight Holdings, registered. Mr Allawi’s spokesman said “any income generated in the United Kingdom from properties owned by the companies have been properly accounted for”, and “taxes have been paid promptly and in time”.

King Salman of Saudi Arabia had “an unspecified role” in Verse Development Corporation and Inrow Corporation, both set up in the British Virgin Islands. The two companies had taken mortgages worth more than $34m, which was used to buy property in London. The King was also the “principal user” of a yacht, named after the royal palace in Riyadh and registered in London by the British Virgin Islands company, Crassus Limited.

Sheikh Khalifa bin Zayed al-Nahyan, who became UAE President 16 years ago, used the services of Mossack Fonseca to set up 30 companies in the British Virgin Islands that owned and operated commercial and residential properties worth $1.7bn in the UK. Shares were held through a trust, but the beneficiaries were the sheikh and his family.

Former Jordanian Prime Minister, Ali Abu al-Ragheb, owned several companies registered in the British Virgin Islands and Seychelles, which he co-directed with his wife, Yusra.

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