Panama Papers trail leads to Mideast, among other places

Syria’s Bashar Assad, left, and Russia’s Vladimir Putin have both been implicated in the ‘Panama Papers’ scandal.
Syria’s Bashar Assad, left, and Russia’s Vladimir Putin have both been implicated in the ‘Panama Papers’ scandal. AP

It will come as no surprise that the moment the Panama Papers burst into view, conspiracy theorists got to work. As usual, a knee-jerk reaction from the perennially suspicious crowd is that nefarious string-pullers at the CIA are at work here, releasing financial information for all manner of devious purposes.

I haven’t yet seen the word Mossad in the conversations, which is not to say that the theorists have not mentioned the Israeli spy agency.

What I have seen is claims that the leaked documents detailing offshore accounts set up by a Panamanian firm do not include any Americans or Israelis. This is easily, verifiably false.

In fact, the reams of Panama Papers dealing with the Middle East are some of the most intriguing of all. They illuminate the wide range of reasons why someone might construct complicated financial transactions, from perfectly legal, even life-saving, to underworld-sinister, prison-worthy illegal.

In Israel, tax authorities are poring over the names of 600 Israeli companies and 850 Israelis listed by the Panama Papers as owning offshore accounts.

Like many nations, Israel allows the ownership of assets in other countries. But owners must declare their holdings and pay taxes due under Israeli law.

Several prominent Israelis appear in the leaked documents, including Dov Weisglass, a close aide of the late former Prime Minister Ariel Sharon. Weisglass says he set up an offshore firm to receive a real-estate loan and has paid all taxes due in Israel. Other listed names include individuals with a history of serious legal troubles, whose troubles may become much worse.

It’s still early in the revelations, but among the most interesting documents are those coming from other parts of the Mideast.

Consider the family-ruled Gulf states. A number of the top figures from the ruling families of Saudi Arabia, the United Arab Emirates and Qatar appear in the Panama Papers. While offshore firms are frequently set up to avoid paying taxes, the Gulf states do not impose personal taxes. The listed royals have not explained why they established offshore firms.

Why, for example, did the president of the United Arab Emirates use 30 different companies to buy properties around the world? Or why, even more puzzling, did the King of Saudi Arabia decide to use two British Virgin Island firms to borrow $34 million dollars in mortgages on his ultra-lavish London homes? Why did one of the wealthiest men on Earth borrow money?

The names from less-wealthy Arab countries tell a different story. Consider the accounts from Ayad Allawi, the former Iraqi prime minister who has survived assassination attempts. The documents show he owned an offshore company that held his home in London. In his case, hiding the link between his home and his identity could prove lifesaving.

Anonymity and tax evasion are the principal reasons why people set up offshore firms, but some are driven by a wish to conceal brazenly illegal activities. Shell companies helped Syrian dictator Bashar Assad dodge international sanctions as he slaughtered civilians.

While hundreds of thousands died, and millions more became refugees in the Syrian civil war, Assad accessed funding, and suppliers circumvented sanctions to sell him fuel and, possibly, weapons. His cousin, Rami Makhlouf, worth as much as $5 billion and privately described as the “poster boy for corruption” by American diplomats, maintained Swiss bank accounts through shell companies.

In Egypt, Alaa Mubarak, the son of deposed President Hosni Mubarak, set up a firm in the British Virgin Islands to handle his fortune. He has been sentenced for embezzling state funds in a country roiled by crushing poverty. Separately, the chairman of the Palestinian Investment Fund appears heading a firm he says moved money “from the Arab world to Palestine,” but for some reason did it through offshore channels.

The search for conspiracies will not stop. Already, authorities in Russia and China, tainted by suspicious transactions, claim this is a plot to undermine non-Western nations.

But the scale of the discoveries extends to friends and enemies of every country. And the information, on the surface, tells little without further examination.

The evidence from the Middle East alone is enough to show the complexity and reach of the revelation from the Panama Papers.