Nearly four months after the initial release of the Panama Papers, investigations into the use of offshore accounts to channel illegal funds have now revealed a large-scale network of offshore deals that took place across Africa. Many of these deals expose misuse of corporate power towards paying exorbitant bribes to win control of natural resources on the continent.
On 25 July, the International Consortium of Investigative Journalists (ICIJ) in association with news agencies in 17 African countries released a new series of investigative reports that shed light on the African network of shell companies and secret deals worth billions of dollars in the oil and mineral gas sector.
Of the 54 countries in Africa, 52 made use of the Panama-based law firm Mossack Fonseca; 44 of these reportedly used offshore companies to conduct secret deals between corporations and government officials to allegedly control oil, gas and mining in a continent that is highly dependent on its revenue from natural resources.
"Companies may be given access to lucrative extractive projects because their owners are politically connected, or because their owners are willing to engage in questionable deals aimed at generating quick profits for a few rather than benefits for wider society," Fredrik Reinfeldt, former prime minister of Sweden and now head of the Extractive Industries Transparency Initiative, told ICIJ.
In some of the new reports, which focused on the natural resources-rich country of Algeria in North Africa, it was estimated that close to $275m (£209m; €250.7m) was allegedly paid in the form of bribes by offshore companies vying for energy contracts. Italian prosecutors listed 17 offshore companies in the region which allegedly belong to Farid Bedjaoui, a middleman who reportedly met with Algerian government officials and executives from an Italian energy company, to help them win "$10bn in contracts to build oil and gas pipelines from the North African desert to the shores of the Mediterranean". Twelve of these 17 companies were created by Mossack Fonseca, the report stated.
Italian investigators described one company, Minkle Consultants SA, as being a "crossroads of illicit financial flows".
Documents relating to Nigeria revealed "secret deals" between companies and at least three oil ministers. Other shell companies are believed to have been traced to owners of diamond mines in Sierra Leone and safari companies in Kenya and Zimbabwe.
In April, 11.5 million documents from Mossack Fonseca were released by an unidentified source, threatening to disclose dubious transactions and offshore deals between companies and individuals from across the world. Since the news came out, the law firm has denied responsibility for any of the illegal deals. "We merely help incorporate companies, and before we agree to work with a client in any way, we conduct a thorough due-diligence process," it said in a statement.
"Filing legal paperwork to help incorporate a company is a very different thing from establishing a business link with or directing in any way the companies so formed. We only incorporate companies, which just about everyone acknowledges is important, and something that's critical in ensuring the global economy functions efficiently," it added.
Note: All of those implicated in the ICIJ Panama Papers report have been afforded the opportunity to respond: Visit the ICIJ website to read the responses.