ICIJ stories from The Center for Public Integrity

Finnish finance minister calls state-owned postal company’s links to tax havens 'repulsive'

Cyprus — 2013-04-24T17:57:33-04:00

Finnish state-owned postal company Itella has offshore subsidiaries in both Cyprus and the BVI, documents obtained by the International Consortium of Investigative Journalists show.

The revelation comes at a time when the Finnish government promised to be at the frontline of the fight against tax evasion. Since 2011, Finland has explored the possibility of adopting a stricter set of criteria for tax havens, surpassing the standards applied by the Organization for Economic Cooperation and Development.

Itella, part of the National Mail Company, has had four subsidiaries in tax havens over the past five years; three in Cyprus and one in the British Virgin Islands.

In 2008, Itella bought the Russian logistics company NLC International Corporation, which was registered in the BVI with subsidiaries in Cyprus. Internal documents obtained by the ICIJ and MOT/Finnish Broadcasting Company, YLE, show that the transaction was made through the offshore firm Commonwealth Trust Limited.

The director of Itella Logistics in Russia, Vesa Vertanen, said in an interview with Finnish state television that Itella is going to dissolve the company in the BVI by the end of this year and move it to Cyprus.

Cyprus is a known tax haven favored by Russians who want to hold assets offshore.

Continue reading at ICIJ.org.

Secrecy for sale: Offshore subsidiaries sell to militaries, intelligence agencies

2013-04-02T11:25:54-04:00

A number of so-called nominee directors of companies registered in the British Virgin Islands (BVI) have connections to military or intelligence activities, an investigation has revealed.

In the past, the British arms giant BAE was the most notorious user of offshore secrecy. The Guardian in 2003 revealed the firm had set up a pair of covert BVI entities.

The undeclared subsidiaries were used to distribute hundreds of millions of pounds in secret payments to get overseas arms contracts.

Today the investigation by the International Consortium of Investigative Journalists and the Guardian uncovers the identities of other offshore operators.

Louthean Nelson owns the Gamma Group, a controversial computer surveillance firm employing ex-military personnel. It sells bugging technology to Middle East and south-east Asian governments.

Nelson owns a BVI offshore arm, Gamma Group International Ltd.

Gamma's spyware, which can be used against dissidents, has turned up in the hands of both Egyptian and Bahraini state security police, although Nelson's representative claims this happened inadvertently.

He initially denied to us that Nelson was linked to Gamma, and denied that Nelson owned the anonymous BVI affiliate.

Martin Muench, who has a 15 per cent share in the company's German subsidiary, said he was the group's sole press spokesman, and told us: "Louthean Nelson is not associated with any company by the name of Gamma Group International Ltd. If by chance you are referring to any other Gamma company, then the explanation is the same for each and every one of them."

After he was confronted with evidence obtained by the ICIJ/Guardian investigation, Muench changed his position. He told us: "You are absolutely right, apparently there is a Gamma Group International Ltd."

Click through to ICIJ.org to continue reading.

Secrecy for sale: Post-Soviet billionaires invade UK, via British Virgin Islands

United Kingdom — 2013-04-02T11:25:54-04:00

Britain’s friendly regime of offshore secrecy has tempted an extraordinary array of post-Soviet billionaires to descend on London, sometimes to the sound of gunfire.

These billionaires justify their use of British-controlled secrecy jurisdictions because they say they must protect themselves from corporate predators and political enemies in their home countries.

Vladimir Antonov fled permanently to Britain after his father, Alexander, was gunned down in a Moscow street in 2009. Another associate, German Gorbuntsov, narrowly survived a volley of shots in London last March.

When Antonov bought a luxury yacht in Antibes, the Sea D, he was careful to register its ownership to an anonymous British Virgin Islands (BVI) entity, Danforth Ventures Inc.

He also got his hands on enough cash to try to take over the ailing Swedish car manufacturer Saab, though he did not take control. He did succeed for a while in owning Portsmouth FC, the even more ailing British football club.

Antonov is currently on bail in Britain. Lithuanian authorities are trying to extradite him for allegedly looting their collapsed bank Snoras, which he denies.

The allegation that oligarchs exploit Britain’s offshore secrecy regime to shift assets out of their own countries is not an uncommon one. Another refugee from the law is the Kazakh billionaire Mukhtar Ablyazov, who was last seen in February allegedly heading out of London on a coach to France.

Ablyazov has been sentenced to 22 months in jail for contempt of a UK court as the BTA Bank in Kazakhstan attempts to pursue his maze of offshore assets. The bank’s lawyers claim Ablyazov, who denies it, has made off with an astonishing £4 billion using BVI and Seychelles companies, nominee directors and layers of front-men.

Click through to ICIJ.org to continue reading.

Secrecy for sale: Offshore alchemy hides real estate speculators buying up Britain

United Kingdom — 2013-04-02T11:25:54-04:00

Selective trusts and companies born in the British Virgin Islands have helped anonymous buyers snap up luxury properties in London and other UK locales.

Today we are setting out to demolish the wall of offshore secrecy that hides many UK property transactions.

In our joint investigation with The Guardian, we disclose the identities of some of the people secretly buying up Britain.

Our findings, covering nearly 60 sample premises, demonstrate the way the UK is turning into a property speculators' haven, thanks to tax loopholes and the secrecy offered by the British Virgin Islands. Anonymous buyers are taking over more and more blocks of luxury housing, particularly in London.

Some purchasers live abroad. Other buyers live in the UK itself while they build up property empires using these artificial structures.

Click through to ICIJ.org to continue reading.

Medical journal issues warning about human tissue trade

2012-11-15T12:35:26-05:00

In its latest issue, the prestigious British medical journal The Lancet warns about the dangers of “profiteering” in the $1 billion international trade on human tissue and the lack of sufficient regulation worldwide – echoing the findings of an International Consortium of Investigative Journalists seriesearlier this year.

The November 10 issue of The Lancet – one of the world’s leading medical journals -- said that “profiteering threatens the altruism of tissue donation” and that doctors and health agencies in many nations have trouble tracing improperly-obtained bones, skin and tissue when problems occur.

The Lancet article highlighted case studies and major concerns contained in last July’s four-part ICIJ series, including the legal consequences of stolen tissue implanted in hundreds of patients because of convicted body-snatcher Michael Mastromarino, now in a New York prison.

The Lancet said the for-profit tissue industry “is not as tightly regulated as organ donation worldwide”. Voluntary donors -- and many families who allowed the use of loved ones’ bodies after death -- are not fully aware of the money-making uses of bones, tissue and skin for such things as cosmetic surgery and dental repairs, it said.

“When you introduce money into the process, then you increase the risk to quality and safety,” Imogen Swann, Director of Regulation at the United Kingdom’s Human Tissue Authority told the Lancet. “Donation should be about altruism.”

Read the full story.

Interpol reacts to ICIJ story

2012-01-11T12:49:59-05:00

Editor’s note: In the wake of the story on Interpol, produced by the International Consortium of Investigative Journalists and published on www.iwatchnews.org, Interpol officials submitted the following letter, signed by Rachael Billington, Interpol’s chief press officer. It is published here in its entirety. Below the Interpol letter is a response from ICIJ, written by Libby Lewis, author of the Interpol story.

Dear Sir,

As the world’s largest police organization, INTERPOL attracts global attention and is the subject of many articles, some correct and some containing errors and appearing to be biased, such as the one written by Libby Lewis and published on iWatch News on Monday 18 July.

This response to Ms Lewis’s article while mainly aimed at addressing the factual errors contained in the piece, also highlights examples of bias against INTERPOL.

After reading this response, readers of iWatch News can make their own assessment as to the overall accuracy of the article.

The article starts with the false premise that certain countries use INTERPOL for political purposes in violation of our rules and in ways that INTERPOL cannot prevent. In fact, we have a structure and processes in place to ensure that INTERPOL’s rules and regulations are respected concerning, among other things, the issuance of INTEROL Red Notices aka international wanted persons’ notices.

Even the article’s reference to the Head of INTERPOL’s independent Commission for the Control of Files (CCF) as existing ‘to try to keep INTERPOL within the lines of international law and data protection law’ was intended to be prejudicial. INTERPOL in fact complies with international law and standards concerning data protection; it does not just ‘try’ to do so.

The article also misstates INTERPOL’s statistics to suggest that Iraq, Libya, Rwanda, Tajikistan and Vietnam feature in the top 30 of any kind of Red Notice list, either as yearly requests or the overall number published.

It is clear why the article fails to mention that the United States has the most valid Red Notices of any INTERPOL member country, but instead chose to misstate that Russia and Belarus were fourth and fifth on the list.

Another glaring error intended to serve the same purpose is the article’s false statement that North Korea is a member country of INTERPOL. It is not and never has been. So, why would the article make such a conspicuous error?

INTERPOL did not ‘refuse to give ICIJ any indication or estimate of how many cases INTERPOL deals with that are political in nature,’ a claim which is immediately refuted in the subsequent sentence which states that we did say that approximately three percent of cases are referred to our Office of Legal Affairs for review. How is this not an estimate?

The bias of the article continues when it states that ‘Rosales has been quietly scrubbed from INTERPOL’s public website,’ as if his placement there had been with some fanfare, which was not the case. Red Notices for individuals are added and removed on a daily basis from INTERPOL’s public website for a variety of reasons.

In the quote attributed to a lawyer assigned to INTERPOL’s Office of Legal Affairs, there is a bracketed reference to a ‘front office’ – this is simply sloppy journalism, what is a ‘front office’? The implication here being that INTERPOL is two separate entities, a public front and a hidden workhouse. The ‘front office’ which the article presumably refers to is our Command and Co-ordination Centre which processes enquiries and requests from all of our 188 member countries 24 hours a day/seven days a week.

To ensure that INTERPOL remains neutral, we have an established, formal, recognized system for dealing with Article 3 issues, not some ad-hoc irregular monitoring as the article would have readers believe. We would readily accept that it is fluid as we are constantly assessing the methods in which we deal with enquiries and always strive to be flexible and open to new ideas and approaches.

One basic and essential point that the author fails to mention in her article is that no country is obligated to arrest any person for whom an INTERPOL Red Notice or international wanted person’s notice has been issued. Each country decides for itself what legal value to give Red Notice within their borders.

INTERPOL does not want or expect only positive coverage. We accept and encourage debate on questions relating to our activities as this gives us the opportunity to improve as an organization. All we would ask is that any reports and articles about INTERPOL maintain their neutrality or support non-neutral positions with accurate information.

Rachael Billington

Chief Press Officer

INTERPOL

RESPONSE FROM ICIJ:

On the day the Interpol story was published, ICIJ was made aware of the erroneous listing of North Korea as an Interpol member. ICIJ amended the story and it no longer mentions North Korea.

Rachael Billington says ICIJ’s article begins on a “false premise” that countries can abuse Interpol “in ways that Interpol cannot prevent.” Indeed, as Billington writes, Interpol has “ … a structure and processes in place to ensure Interpol’s rules and regulations are respected.”

The ICIJ article describes Interpol’s structure and process in detail. It is the first time the Interpol process has been presented in such detail in a news article.

ICIJ did not assert Interpol cannot prevent abuses.

The evidence shows that Interpol’s structure and processes still allow some countries to abuse Interpol. Witness the cases in Iran and Venezuela. It also raises questions about Interpol’s increasing automatization of its processes, which allows police to directly enter fugitive notices into Interpol’s database on their own – before Interpol even sees them.

DATA PROTECTION

Billington writes that is prejudicial to describe Interpol’s appeals body as existing “to try to keep Interpol within the lines of international law and data protection law,” because, she says, Interpol complies with international law and data protection law.

Unfortunately, the outside experts interviewed for this story do not agree. And there is no outside court to independently decide.

Interpol’s data protection regime allows an unidentified number of police officers around the world – in dictatorships and democracies alike – to enter personal data directly into a global Interpol database that is instantly seen before it is vetted for accuracy or political concerns.

COUNTRIES' USE OF INTERPOL

ICIJ makes it clear in the article that the numbers on countries that use Interpol’s public Red Notices most often come from an analysis of the database as of December 10, 2010. Russia and Belarus came in fourth and fifth, respectively, in that lineup.

Billington asks why ICIJ did not write about the heavy use of Interpol by the U.S. We wanted to write about how the U.S. uses Interpol – but the U.S. office of Interpol, housed in the U.S. Justice Department, refused our interview request – after consulting with Interpol’s headquarters in Lyon, France.

INTERPOL POWERS AND LIMITS

Billington writes that ICIJ failed to mention no country is obligated to arrest any person who is wanted by Interpol. The story states clearly that Interpol doesn’t have the power to order arrests.

STATISTICS

Billington says Interpol complied with ICIJ’s request for data on the number of cases Interpol deals with that are political in nature.

After meeting with Interpol’s lawyers, and Billington, on Jan. 6, 2011 in Lyon, ICIJ followed up with a request for the following statistics on Jan. 20, 2011:

Questions pertaining to data on Article 3 cases (Article 3 is the article in Interpol’s constitution that bans it from involvement in political cases.)

Number of total new requests for red notices by year 2005-2010. (Interpol did provide these figures.)
Number of cases where the Office of Legal Affairs (OLA) acts to reject, either initially, or following review, a request for a red notice due to Article 3 concerns, by year, for 2005-2010, by year.
Number of cases where OLA concludes, either initially or subsequently, that a diffusion – an informal email notice – should be withdrawn or rejected, due to Article 3 concerns, for 2005-2010, by year.
Number of cases in which Article 3 action is undertaken by INTERPOL based on the recommendation of the Commission for the Control of Files, for 2005-2010 by year. To the extent possible, please provide these statistics separately for red notices and diffusions.
Number of cases in which Red Notices have been published by INTERPOL, that are subsequently reviewed for Article 3 questions, for 2005-2010, by year.
Number of cases where diffusions have been published, that are subsequently reviewed for Article 3 questions, for 2005-2010, by year.

Here is Interpol’s emailed response, 16 weeks later, on April 7, 2011:

“The Office of Legal Affairs is responsible for assessing the compliance of the processing of information through INTERPOL’s channels with its Constitution. The relevant statistics on this are difficult to assess, as this depends entirely on the type of notice request or diffusion received by the INTERPOL General Secretariat at any one time.
“In short, when a notice request is received from a National Central Bureau (NCB) of a member country, or a diffusion, is sent through INTERPOL’s communication channels, the Command and Coordination Centre of the General Secretariat examines the details of the request itself including whether the required information is present and the context of the case. If there is an element to the notice request or diffusion which raises potential concerns in regards to its compliance with Article 3, the matter will be referred to the Office of Legal Affairs for legal analysis.
“The Office of Legal Affairs assesses the information to ensure that cooperation by INTERPOL would not breach Article 3 of the Constitution – ‘It is strictly forbidden for the Organization to undertake any intervention or activities of a political, military, religious or racial character’. In the event of a potential breach of this Article, the General Secretariat will refuse to process the information, and deny publication of the notice.”

The response contained no data.

On April 25, 2011, ICIJ repeated its request for Interpol data. Two days later, Billington provided the figure that “roughly three percent” of Red Notices are referred to Interpol’s Office of Legal Affairs for review.

She did not share any data on the number of cases that Interpol concludes are political.

Does Interpol have this data, in some form? Billington does not answer this question. Interpol’s own documents suggest that it does.

Interpol’s internal guidelines for dealing with political cases contain “real-life” examples from Interpol’s work that illustrate how it has dealt with individual political cases.

As written in the story, ICIJ knows from other sources that Interpol has rejected a number of Red Notices from Venezuela – for political concerns.

ICIJ did not get that information – or any information on political cases or the names of the countries behind them – from Interpol.

The secret factory: Take an undercover tour of Baltic Tobacco

Kaliningrad,Kaliningrad Oblast,Russia — 2012-02-27T12:55:25-05:00

Notorious as a haven for smugglers and money launderers, Kaliningrad, Russia, is not a place where it’s safe to ask many questions. In 2006, troops raided a local newspaper office that criticized the police for, among other things, protecting cigarette smugglers. In April 2008, ICIJ reporters went undercover to investigate the source of Europe’s “most disturbing” new development in contraband tobacco: Jin Ling cigarettes. Made in Kaliningrad by the Baltic Tobacco Factory, Jin Lings are flooding the black market across the European Union.

ICIJ reporters, carrying concealed video gear, posed as smugglers and set out to follow the Jin Ling trail.

The expert: listen to John Colledge

2012-07-09T12:14:26-04:00

In his more than 30 years in law enforcement, John W. Colledge investigated cigarette smuggling, narcotics, money laundering, and arms trafficking. At the U.S. Customs Service, Colledge developed the International Tobacco Smuggling Program, which he oversaw between 1999 and 2002. In this interview, he talks about the tobacco industry’s complicity in cigarette smuggling; the massive profits that prop up criminal organizations; and the new tobacco black market now booming on the U.S.-Canada border.

The lawsuit: read how Gallaher smuggled

Gallaher Limited — 2012-10-16T14:28:19-04:00

Since a series of press exposés in 2000-2001 documented the tobacco industry’s extensive history of smuggling, the industry has seemingly retreated from the practice. Yet for Britain’s largest cigarette manufacturer, Gallaher Tobacco, the smuggling may have continued. According to lawsuits brought by former Gallaher distributor Ptolomeos Tlais, the company used companies like his to funnel large quantities of cigarettes to developing countries with no real market — and then smuggle them back into the European Union.

Here are some of the key documents related to the lawsuits:

The Affidavit — Former Gallaher executive Norman Jack reveals how the company set up its smuggling strategy.

The Verdict — A British judge rejected Tlais’s breach of contract suit against Gallaher, but found the company’s practices “gave rise to a risk of smuggling.”

The Dirty Deal — Gallaher arranged with Tlais to dump tons of moldy cigarettes overseas, while U.K. customs officials signed off on the deal.

The Moratorium — When Japan Tobacco International bought Gallaher in 2007, it also got a two-year moratorium on European Union enforcement of smuggling laws against Gallaher.

Read the full story.

The team

2012-02-27T12:56:24-05:00

Tobacco Underground is a project of the International Consortium of Investigative Journalists. Working with reporters in more than a dozen countries, ICIJ is charting the frontlines of the illicit traffic in cigarettes. In coming months, look for new stories on this ever-shifting trade, from the underground factories of China and America’s Indian reservations to the lawless border lands of northwest Pakistan and southeast Paraguay.

PROJECT STAFF
Editor: David E. Kaplan
Deputy Editor: Marina Walker Guevara
Web Editor: Andrew Green
Deputy Web Editor: Cole Goins
Multimedia Editor: Ariel Olson Surowidjojo
Audio Editor: Sarah Laskow
Research Editor: Peter Newbatt Smith
Fact-Checking: Laura Cheek, Paulette Garthoff
Copy Editor: Sara Bularzik
Additional Editing: Gordon Witkin, Tom Stites
Communications: Steve Carpinelli

REPORTING TEAM
Stefan Candea (Romania), Duncan Campbell (United Kingdom), Patricia Chan (Hong Kong), Te-Ping Chen (United States), Gong Jing (China), Alain Lallemand (Belgium), Aamir Latif (Pakistan), Vlad Lavrov (Ukraine), William Marsden (Canada), Paul Christian Radu (Romania), Mabel Rehnfeldt (Paraguay), Roman Shleynov (Russia), Leo Sisti (Italy), Daniel Santoro (Argentina), Marcelo Soares (Brazil), Drew Sullivan (Bosnia-Herzegovina), Kate Willson (United States).

DESIGNERS
Interactive Map/Homepage Design: Stephen Rountree
www.rountreegraphics.com
Web Site Design: Top Dead Center Design
www.tdcdesign.com

ADDITIONAL THANKS
El Paso Inc.
Le Soir
Novye Kolesa
ABC Color

FUNDING AND SUPPORT
Funded by a grant from the Johns Hopkins University Bloomberg School of Public Health. The grant was part of the Bloomberg Initiative to Reduce Tobacco Use, supported by Bloomberg Philanthropies, and coordinated by the Campaign for Tobacco-Free Kids.

In addition, organizational support is provided by Carnegie Corporation of New York, the Ford Foundation, Greenlight Capital LLC Employees, the John D. and Catherine T. MacArthur Foundation, the Open Society Institute, the Park Foundation, the Rockefeller Brothers Fund, and other generous institutional and individual donors. The Tobacco Underground project is also grateful for pro bono assistance from PIERS (Port Import Export Reporting Service), the primary source of U.S. waterborne import-export trade data.

The team

2012-02-24T13:58:47-05:00

ICIJ Director: Wendell Rawls
Editor: Diane Brozek Fancher
Editorial Projects Coordinator: Leah Rush

Writers: Sheetal Doshi, Prangtip Daorueng, Alejandra Fernández Morera, Sarah Fort, M. Asif Ismail, Daniel Kalinaki, Patrick Kiger, Adri Kotze, Victoria Kreha, Anna-Maria Lombard, Arthur Okwemba, Olayinka Oyegbile, Devin Varsalona, Marina Walker Guevara

Translators: Kaleyesus Bekele (Ethiopia), Guy-Claude Jean-Baptiste Jr. (Haiti)

Researchers: Susanna Hamblin, Rakesh Kalshian, Rachel Leven, Sarah Laskow

Associate Editor: Tom Stites
Copy Editors: Marcia Kramer, Tonia E. Moore
Research Editors: Michelle R. Harris, Elizabeth Levine, Peter Newbatt Smith
Database Editor: Helena Bengtsson
Graphic Designer: Jyoti Sauna

Network Administrator: Chatchai Sae-Tung
Web Site Architect: Han Nguyen

Project funding

2012-02-27T13:13:18-05:00

Divine Intervention was made possible through generous grants from the Popplestone Foundation and the William and Flora Hewlett Foundation.

Core support of the Center for Public Integrity was provided by:

Carnegie Corporation of New York
Park Foundation, Inc.
Rockefeller Brothers Fund
John D. & Catherine T. MacArthur Foundation
John S. and James L. Knight Foundation
Supporters and members of the Center for Public Integrity