New Delhi: The story of the offshore companies created within Dubai’s corporate enclave casts fresh light on Dubai’s rise as one of the world’s financial capitals – and on the UAE’s role as a nexus for money laundering and other financial crimes, The International Consortium of Investigative Journalists (ICIJ) said in a report.
The UAE is home to a thriving trade in financial secrecy. It offers shell companies that mask their real owners’ identities; dozens of internal free-trade zones that provide even more shadows for them to hide in; and a regulatory system known for what anti-corruption advocates call its “ask no questions, see no evil approach” to dealing with money tied to gold smuggling, arms trafficking, and other crimes.
The more than 11.9 million files in the Pandora Papers include some 190,000 confidential files from SFM Corporate Services, a UAE-based firm that has billed itself as “the World’s number one Offshore Company Formation Provider.” SFM is one of the thousands of firms in the Emirates that help clients incorporate companies, including hard-to-track companies for people living and doing business outside of the UAE. These company formation providers are part of a global web of lawyers, accountants, and other operatives who make the offshore financial system possible, the report said.
ICIJ’s review identified the owners of at least 2,977 companies in the UAE, the British Virgin Islands, and other offshore financial centers that were incorporated with SFM’s help or received other services from SFM. The owners of these companies include the Belgian gold tycoon, the internet mogul, the dark web impresario, and more than 20 other people accused of financial crimes and other wrongdoing around the world, ICIJ research found.
For several years, SFM operated out of an office on the 16th floor of the H Hotel tower at 1 Sheikh Zayed Road, a building that ICIJ research indicates is owned by Sheikh Hazza bin Zayed Al Nahyan, the UAE’s former national security adviser and brother of Sheikh Mohammed bin Zayed, the crown prince of the emirate of Abu Dhabi and next in line to become UAE president, the report said.
Along with internal records from SFM, the Pandora Papers include tens of thousands of additional files related to the UAE, including documents from Seychelles and other jurisdictions that reveal offshore holdings of at least 35 members of the UAE’s ruling families.
Heavyweight Emirati royals with offshore holdings revealed in the data include Sheikh Hazza; his successor as national security adviser, his brother Sheikh Tahnoon bin Zayed, and the UAE’s Prime Minister and Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum.
The files show that the Prime Minister is connected – via two companies in the British Virgin Islands – to the founder of Dark Matter, a UAE-based cybersecurity firm that has been accused of spying on human rights activists and government officials in multiple countries.
In September, three former senior managers at Dark Matter, all former American military and intelligence personnel, admitted in a deferred-prosecution agreement with US authorities that they had helped hack mobile phones and computers around the world. Dark Matter has not been charged. It has acknowledged working closely with the UAE government but denies it has engaged in hacking.
The leaked records also show that Sheikh Tahnoon, the UAE security adviser, owned a British Virgin Islands company using unregistered “bearer shares,” which provide deep levels of secrecy because they are owned by whoever physically holds the share certificates. Long associated with financial misconduct, bearer shares have been banned in many jurisdictions.
Sheikh Tahnoon became embroiled this year in a US political scandal involving the chairman of President Donald Trump’s 2016 inaugural committee, the American billionaire Thomas Barrack. A US indictment charges that Barrack acted as an unregistered agent for the UAE by providing help to high-level Emiratis – including an Emirati official widely understood to be Sheikh Tahnoon – as they sought to covertly sway Trump administration policies. Barrack has pleaded not guilty.