‘Panama Papers’ Expose Dirty Dealings in Syria

The leak of millions of documents from Panamanian law firm Mossack Fonseca shows how Syrian companies and regime insiders were able to hide their assets in offshore companies. One of the worst offenders is none other than Bashar al-Assad’s cousin Rami Makhlouf, the wealthiest man in Syria.

Written by Suchitra Vijayan & Francesco Conte Published on Read time Approx. 4 minutes
Abdullah Ahmed, 10, who suffered burns in a Syrian government airstrike and fled his home with his family, stands outside their tent at a camp for displaced Syrians in the village of Atmeh on Dec. 11, 2012. AP/Muhammed Muheisen

Among the international figures named in the “Panama Papers,” the trove of more than 11 million leaked financial and legal documents made public over the weekend, is the richest man in Syria, Rami Makhlouf, The WorldPost reports.

Makhlouf, 46, is a cousin and close friend of Syrian president Bashar al-Assad. He’s also one of the most hated men in the country. His flagrant corruption helped spark Syria’s 2011 uprising, when protesters attacked his businesses and chanted “Rami Makhlouf is robbing us.”

He sure was. Makhlouf exploited his close connections to the Assad regime to amass a fortune of some $5 billion and control of nearly 60 percent of the Syrian economy. In 2011, Reuters reported that Makhlouf had total or partial monopolies in Syria’s telecommunications, real estate, oil, airline, duty free, construction and import sectors. Any foreigner who wanted to do business in Syria had to go through Makhlouf, analysts say.

The 11.5 million leaked documents from the Panamanian law firm Mossack Fonseca, obtained by the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung and published last Sunday, together make up the largest-ever data leak about offshore companies. They shed more light on how Makhlouf stashed his cash overseas with the help of foreign business partners.

Mossack Fonseca set up and ran several companies owned by Makhlouf that were registered in the British Virgin Islands, where it’s relatively easy to hide cash from tax, regulatory and criminal authorities. Makhlouf’s businesses appear to be classic “shell” companies — financial entities that don’t really do anything in their own right, instead mainly serving as places through which to move money.

The U.S. has been chasing Makhlouf’s wealth since at least 2008, when it banned American companies from dealing with him or his businesses because of his role fueling corruption in Syria. Analysts believe that Makhlouf serves as Assad’s “bagman,” managing the president’s own ill-gotten gains.

The Panama Papers reveal that international banks and law firms kept working with Makhlouf and other regime allies in spite of U.S. sanctions and as war broke out in Syria.

Mossack Fonseca rejected the advice of its own compliance department to cut off the Syrian tycoon in 2011, as protesters took to the streets to decry the regime. Despite years of U.S. sanctions, one partner in the firm dismissed the claims against Makhlouf as “rumors.” He defended the decision based on the advice of U.K.-headquartered bank HSBC, whose role as Makhlouf’s banker was revealed in previous leaks and prompted a U.S. Senate investigation.

After the Syrian regime responded to the protests with deadly force, and the European Union imposed sanctions on Makhlouf and other members of the regime in mid-2011, HSBC and Mossack Fonseca finally cut ties with him.

A Syrian man cries while holding the body of his brother, killed by Syrian army shelling, near Dar al-Shifa hospital in Aleppo on October 11, 2012. (AP/Manu Brabo)

A Syrian man cries while holding the body of his brother, killed by Syrian army shelling, near Dar al-Shifa hospital in Aleppo on October 11, 2012. (AP/Manu Brabo)

“We did not know this individual until his name and association were reported in the media,” Mossack Fonseca said of Makhlouf in a statement following the leaks. “While we were the registered agent for a company that, as we later discovered, was resold to him, we did not deal with him directly. Due to the banking secrecy laws in Switzerland we did not have access to information regarding the final beneficiary of the company in question.”

The law firm has denied that the Panama Papers establish any wrongdoing, noting that there is nothing illegal about setting up offshore companies. The Guardian notes that there are legitimate reasons why people might want anonymity, or to protect their money overseas.

Still, the scale of the practice is staggering. One 2012 study reported that at least $21 trillion, and perhaps as much as $31 trillion, has been parked in offshore accounts to put it beyond the reach of various authorities, and Mossack Fonseca itself says it has set up more than 240,000 offshore companies. The Panama Papers reveal that Mossack’s clients include more than 143 world leaders, officials and their relatives, as well sports stars, arms dealers and drug lords. Icelandic prime minister Sigmundur David Gunnlaugsson stepped down on Tuesday after revelations about his offshore dealings sparked massive protests.

This article originally appeared on TheWorldPost, a partnership between The Huffington Post and the Berggruen Institute. For weekly updates about international news, opinion and analysis, sign up for The WorldPost email list.

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