«Panama papers»: how the Algerian elite diverted money from oil

 

The documents of the Panamanian cabinet Mossack Fonseca reveal a complex network of redistribution of bribes and retro-commissions for the benefit of the Algerian elite.

The diamond-maker Laurent Bloch did not suspect, in December 2006, that his reunion with his childhood friend’s brother would bring him eight years later to testify before the Italian courts. In the 1970s, the current manager of the Parisian diamond dealer Raymond Bloch SA was attending the same primary school in Neuilly-sur-Seine (Hauts-de-Seine) as Ryad, younger brother of Farid Bedjaoui. It was before the Bedjaoui family emigrated to Canada in the early 1990s, before the Bedjaoui brothers made a fortune and the elder brother bought him two diamonds for his wife worth nearly $ 1 million ( Approximately 900,000 euros).

“The price paid by Farid corresponded to the value of these diamonds on the market,” Laurent Bloch told the Milan court to justify two transfers made by Farid Bedjaoui to the account in Geneva (at the private banking union). An offshore company, Bexhill International Inc., of which the Bloch family was an economic beneficiary.
A continent of secrets: a new series on “Panama papers” in Africa

The International Consortium of Investigative Journalists (ICIJ), of which Le Monde is a partner, publishes a new series of articles on Monday 25 July from the “Panama papers” document on the evaporation of resources in Africa.

The 11.5 million documents issued by the Panamanian firm Mossack Fonseca highlight the role of offshore companies in the plundering of the continent, whether it is the diamond industry in Sierra Leone, the concealment structures of the Nigerian billionaire Kolawole Aluko, owner of a yacht on which Beyonce spent holidays and linked to former Nigerian oil minister Diezani Alison-Madueke, or the systematic use of tax havens by the extractive industry.

According to the ICIJ, companies from 52 of the 54 African countries have used offshore structures, contributing to the evaporation of $ 50 billion from Africa each year. ICIJ, for this new series, has relied on its regular partners and journalists in Algeria, Ghana, Tanzania, Niger, Mozambique, Mauritius, Burkina Faso and Togo, coordinated by the independent network ANCIR.

In this case, it was not the Bloch offshore structure that concerned justice, but the lifestyle of Farid Bedjaoui, the nephew of the former Algerian foreign minister, Mohammed Bedjaoui. Farid, a flamboyant figure now 47 years old, is being prosecuted for corruption and money laundering in the Sonatrach-Saipem case.

The case broke out in 2009. Former Sonatrach CEO Mohamed Meziane, his two sons, and many senior officials of the Algerian national oil company were convicted in February 2016 after the Algerian trial called “Sonatrach 1 “. The Algerian subsidiary of Saipem was also found guilty of “increasing prices by taking advantage of the authority and influence of agents of an industrial and commercial establishment”, a conviction appealed against. The case cost Paolo Scaroni, the former CEO of ENI, the Italian oil company, and Pietro Tali, the managing director of Saipem. Until 1984, Saipem belonged 100% to ENI. At the time of the alleged acts in Algeria, ENI was still the largest shareholder in Saipem, with 43%, a 30.5% stake in October 2015 to lighten ENI by nearly 5.1 billion euros, Euro of debt.

A second procedure was opened in Italy in the wake of letters rogatory sent by Algeria. This time, the trails lead to Farid Bedjaoui, fleeing and last seen in Dubai, and to the entourage of the then Minister of Energy, Chakib Khelil. Italian magistrates accuse Bedjaoui of having received the equivalent of $ 205 million from Saipem through Pearl Partners Ltd, a company based in Hong Kong. He suspected that he had watered many Algerian officials in order to facilitate Saipem obtaining eight contracts between 2006 and 2009 for $ 10 billion: hundreds of kilometers of pipelines and several treatment plants.

“Corrupting pattern”

“The role of intermediary played by Farid Bedjaoui in the corruptive scheme … would have been imposed on Saipem by Minister Khelil. (…) Algerian magistrates have identified payments that have benefited Najat Arafat, wife of Chakib Khelil, “said the Swiss Federal Criminal Court on January 14, 2015, solicited by an Algerian request for mutual legal assistance.

In 2013, “Doctor Chakib”, as he liked to call his collaborators to the Ministry of Energy and Sonatrach, was briefly placed by Interpol on the wanted list before the warrant issued against him by The public prosecutor’s office in Algiers is void. Refugee in the United States, he returned triumphantly to Algeria in 2016. Joined by telephone, Chakib Khelil said he did not have time to talk about this subject.

Almost all of the offshore installations used as washing machines for these commissions and retrocommissions were launched by the Swiss trustee Multi Group Finance in Lausanne on behalf of Farid Bedjaoui and executed between 2007 and 2010 by the Panamanian law firm Mossack Fonseca. Documents obtained through the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung reveal the ramifications of this network, which the Italian and Algerian magistrates are trying to elucidate.

Farid Bedjaoui, nicknamed “Mr. 3%,” had a management mandate for Girnwood International Engineering Ltd. And Cardell Capital S.A., which have accounts domiciled at Edmond de Rothschild Bank in Nassau, Bahamas. He appointed Sorung Associates Inc. to manage portfolios at Mirabaud Bank, Switzerland and Dubai. Justin Invest Developments SA manages for him a portfolio placed in 2008 at the Geneva bank BLOM Bank. He also inherited the powers of Pietro Varone, former chief operating officer of Saipem, also cited in the Sonatrach case of Farnworth Consultants Inc., which was used to purchase a boat.
Myriad of offshore companies

Farid Bedjaoui denies the charges against him. His lawyers claim that he has never exerted any influence on the political elites in Algeria to organize a corruption enterprise of such magnitude. Like Saipem, who denies any payment of bribes to Algerian officials. “The external expertise that the company commissioned to examine the company’s accounting records found no evidence of the alleged payments made to Algerian officials through intermediation or subcontracting contracts, “She said.

Although ENI has always maintained good relations with the Algerian State since its founder, Enrico Mattei, provided the technical assistance necessary for its negotiations with colonial France in 1959, it was when it enlisted Farid Bedjaoui As a consultant, in 2003, that she has achieved a meteoric rise, winning many contracts in a few years. The Italian magistrates are convinced that the prices of these contracts between Sonatrach and Saipem have been increased by mutual agreement in order to be able to generate “margins” for the benefit of the managers of both companies.

A graduate of HEC Montréal and with Algerian, French and Canadian nationalities, Farid Bedjaoui earned his living in the food business before embarking on business in the early 2000s with his brothers-in-law, the Ouais group. In 2002, in Beirut, the Franco-Algerian businessman Omar Habour presented him Chakib Khelil, then Algerian Minister of Energy and Mines. The latter was soon to treat him “like a son,” said a witness at the Milan trial.

That same year, Farid Bedjaoui resorted to the services of Mossack Fonseca for the first time. The aim was to open a Swiss account for its brokerage firm Rayan Asset Management. A task he entrusted to his asset manager, Ludovic Guignet, of the Swiss-based multi-group trustee Multi Group Finance, based in Lausanne. It is this same man who will have to manage the buying frenzy of preexisting offshore companies that seizes Farid Bedjaoui from 2006. A myriad of companies domiciled in

Panama and the British Virgin Islands.

Three-point “Panama papers”

Le Monde and 108 other editors in 76 countries, coordinated by the International Consortium of Investigative Journalists (ICIJ), have had access to a mass of unpublished information that sheds a crude light on the opaque world of offshore finance and paradises tax.
The 11.5 million files are from the archives of Panamanian firm Mossack Fonseca, a specialist in the domiciliation of offshore companies, between 1977 and 2015. It is the largest leak of information ever exploited by the media.
The “Panama papers” reveal that in addition to thousands of anonymous leaders, billionaires, big names in sports, celebrities or personalities under international sanctions have used offshore mounts to hide their assets.

Now, Farid Bedjaoui and his princely lifestyle have become emblematic of a corrupt Algerian elite, while Algeria, which today suffers from the fall in oil prices, would have lost every year between 2004 and 2013, According to the NGO Global Financial Integrity, nearly $ 1.5 billion in revenue due to tax evasion, corruption and the theft of public resources.

Yet, the internal investigations carried out by the firm Mossack Fonseca did not detect a suspect. Bedjaoui having used his Canadian passport to open certain accounts and his Algerian identity card for others. Montages that allow a redistribution of the assets to nearly ten members of his family, friends and associates of this offshore network: his Lebanese wife Rania Dalloul, his brother-in-law Ziad Dalloul, Chakib Khelil, Najat Arafat, and his son, Khaldoun, daughter of the current Algerian prime minister Abdelmalek Sellal, Rym, Franco-Algerian businessman Omar Habour, and Saipem’s director of operations, Italian Pietro Varone, and his wife.

Warhol, Miro and Dali paintings seized

According to Italian magistrates, the tracks are scrambled by accounts scattered in several countries, in Dubai, Singapore, London, Hongkong, Switzerland and Lebanon. Minkle Consultants SA, for example, described as a “hub of illicit financial flows” by Italian investigators, served for the routing of nearly $ 15 million in bribes. It has benefited a range of recipients who are still not identified by the judicial inquiry. The share capital of the companies created by Mossack Fonseca consists of bearer shares (anonymous), which makes it difficult to raise the final beneficiaries’ chain.

The suspicions about Farid Bedjaoui for his role in the transactions between Sonatrach and Saipem made the headlines of the press of Algeria and elsewhere as of February 2013. A few months later, the Canadian police seized its assets in Montreal ; The French authorities searched his apartment in Paris and seized many paintings by Andy Warhol, Joan Miro and Salvador Dali. His 43-meter yacht was also seized.

It is however only in September 2013 that Mossack Fonseca seems to realize that there is a problem with Farid Bedjaoui. This is a bit of a coincidence: the British Virgin Islands authorities demanded from the Panamanian authorities the documents of Abode Finance Services Corporation, whose economic beneficiary, Omar Habour, who is linked to Farid Bedjaoui, is actively sought by the courts Italian and Algerian courts in the Sonatrach-Saipem case.
“Embarrassing,” says an employee of Mossack Fonseca

For years, Mossack Fonseca has had no contact with Mr. Habour. In one of his e-mails, Mossack Fonseca’s director in the British Virgin Islands, Rosemarie Flax, says it is “embarrassing” and exposes the cabinet to a fine. In addition, Mossack Fonseca continued to look after Farid Bedjaoui’s Rayan Asset Management until at least November 2015.

Mr Habour, who has not responded to our calls, as well as his lawyers from the Swiss firm Chabrier, is also accused of corruption and money laundering. He had mandates on six offshore companies created by Mossack Fonseca through Ludovic Guignet, some of whom have changed hands in the meantime to benefit Chakib Khelil’s wife, Najat Arafat, Abdelmalek Sellal’s daughter Rym. The latter appears as the beneficiary of Teampart Capital Holdings Limited (TCH). It became the beneficiary four months after its formation on 26 October 2004 by Multi Group Finance and its registration in the British Virgin Islands by Mossack Fonseca in favor of Omar Habour.

Najat Arafat, in 2005, had two offshore companies in Panama. Two companies acting as a bank screen in Switzerland: Carnelian Group Inc., created in May 2005, and Parkford Consulting Inc., in October of the same year. Mrs Khelil’s credentials were transmitted two years later, on 26 and 27 November 2007 to Omar Habour.
“You want $ 10 million?” ”

Collingdale Consultants Inc. benefited respectively from Khaldoun, younger son of Chakib Khelil, and Regina Picano, wife of Pietro Varone. The company managed a “patrimony” of nearly $ 15 million.

As for property acquired during this period by Farid Bedjaoui, the US authorities conducted an investigation into three apartments in New York, including two in Manhattan, valued at more than $ 50 million. One of these apartments is a condominium located at 5, Central Park Avenue, bought for $ 28.5 million. According to documents provided to the Italian investigators by the US Department of Justice, payment was mostly made through a company domiciled in Delaware.

In Italy, the Milan court handed down prison sentences against former ENI officials, such as Tullio Orsi, former director of the Algerian subsidiary of Saipem, who pleaded guilty in exchange for ” A remission of punishment. Orsi, who has now served two years and ten months in prison, told the investigators of his meetings with Farid Bedjaoui at the Bulgari Hotel in Milan, where the nephew of the former Algerian foreign minister rose to More than 100,000 euros in five years. He said that Bedjaoui had also invited him to a party organized on his yacht moored off the coast of Spain and that he offered him 10 million dollars. “He did it with others that he helped financially and he did it with pleasure,” Orsi testified, adding that he refused this sum.

This investigation by Lyas Hallas, Will Fitzgibbon and Leo Sisti was coordinated by the International Consortium of Investigative Journalists (ICIJ), of which Le Monde is a partner, based on the Panama papers obtained by the Sueddeutsche Zeitung.
This article was amended on 29 July 2016 to clarify the nature of relations between ENI and Saipem, as well as the verdict of the Algiers Court of 2 February 2016 which did not mention corruption and money laundering as written by mistake , But “increased prices by taking advantage of the authority and influence of agents of an industrial and commercial establishment”.

 

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