Tuesday, April 5, 2016

Top AL family set up offshore company network

One of the big international news stories right now is the leak of information concerning the establishment of off-shore companies by politicians and businessmen around the world involving the Panamanian law firm, Mossack Fonseca.

Just over two years ago, the International Consortium of Investigative Journalists were also involved in another leak of information about offshore companies in the British virgin islands.

Whilst the connections of Bangladeshi politicians and businessmen to the offshore companies identified from the most recent leak of the Panama law firm papers are not yet known, here are the stories published just over two years ago in The New Age about the offshore companies set up by Bangladesh politicians and businessmen in the British virgin islands

Below is the main  article, first published in New Age on 12 July 2013 concerning a network of off-shore accounts set up Kazi Zafrullah - a member of the Awami League's 12 member presidium and also relative of the prime minister by marriage.

As far as I am aware no action of any kind has been taken against any of these politicians, family members or businessmen

Offshore companies
Top AL family set up offshore company network

David Bergman 
A top Awami League politician along with his family established a network of offshore companies in the British Virgin Islands, a country known as a secretive tax-free haven, New Age can reveal.
In July 2006, Kazi Zafarullah, a member of the party’s 12-member presidium, along with his wife Nilufer Zafar, the current member of parliament for the constituency which her husband previously held, became directors and shareholders of two offshore companies.
As directors of one of the companies, documents show that Kazi and Nilufer opened up a bank account in the Singaporean branch of a Swiss bank, making themselves joint signatories.
The application form which the pair signed gave details of their Gulshan address and stated that the company was for ‘investment purposes.’
Two years later, in April 2008, their son Kazi Raihan Zafar became director and shareholder of another British Virgin Island company, with his wife Fahra Murad (providing a Canadian address) and his mother Nilufer, who has recently been appointed chairman of the parliamentary standing committee on the ministry of foreign affairs, also joining him as directors by the end of June that year.
And then after six more months, whilst a ‘fugitive’ from a court verdict which had sentenced him to two years’ imprisonment for failing to submit his wealth statement to the Anti-corruption Commission, Kazi Zafarullah - a distant relative of the prime minister by marriage - set up a further offshore company in which he was the sole director and shareholder.
Kazi Zafarullah, told New Age that ‘the information is not accurate as far as it relates to me any my wife…. I don’t know about the rest.’
The information on the Zafarullah family offshore trusts, which also includes one set up by the AL presidium member’s sister, her husband and two nephews all based in New Zealand, is contained amongst 2.5 million electronic files which were leaked to the International Consortium of Investigative Journalists, and which was then shared with New Age.
The leaked ICIJ documents, which relate to the period up to early 2010, provide information on the ownership of a total of 1,22,000 offshore companies and trusts set up in the British Virgin Islands and other offshore tax havens.
The leaked files include information on dozens of Bangladeshis, many of whom are well-known businesspeople in the country, who own or owned offshore companies. After 2010, it is possible that the companies were dissolved or otherwise became defunct.
People often use the secrecy afforded by offshore companies to place assets beyond the reach of their country’s tax authorities although people may also use them for entirely lawful purposes.
In the context of Bangladesh, which unlike the developed countries tightly restricts the outflow of money, residents using offshore companies also risk being in breach of the foreign exchange laws.
Bangladesh bank officials have confirmed to New Age that the Foreign Exchange Regulation Act 1947 and the associated guideline do not allow Bangladesh residents to establish offshore companies.
Abu Hena Mohd. Razee Hassan, the Bangladesh Bank deputy governor responsible for the bank’s Financial Intelligence Unit told New Age that only branches of Bangladesh companies can be established under the law.
Ziauddin Ahmed, the director general of the Anti-Corruption Commission in charge of the unit within the commission which investigates money laundering, added that it was ‘suspicious’ for any Bangladeshi to own an offshore company in the British Virgin Islands and that his unit would be interested in undertaking inquiries into any information provided.
Three months ago, after the Indian Express newspaper had published information about offshore companies owned by prominent Indian politicians and business men, the country’s finance minister P Chidambaram announced an investigation. ‘We have taken note of the names and inquiries have been put in motion in respect of the names that have been exposed.’
The Council of the European Union has also formally requested the ICIJ to release to each EU government any information from its leaked cache of offshore financial data that may involve citizens of those countries.
In 2008, during the caretaker period, the Anti-Corruption Commission filed cases against four members of the Zafarullah family for owning assets disproportionate to their known sources of income. It also prosecuted the former lawmaker for money laundering and failing to provide a wealth statement.
After the Awami League government had come to power in 2009, the High Court quashed three cases relating to Kazi Zafarullah, in one of which he had been convicted and sentenced for two years imprisonment, and the Anti-Corruption Commission withdrew cases against his wife and two sons. There are no outstanding cases against any members of his family.
On July 27, 2006, Trustnet (BVI) Ltd, which provides ‘customised corporate, trustee and fund administration and management services to private individuals,’ incorporated the company Hanseatic Ltd in the British Virgin Islands.
On that same day, Portcullis Trustnet appointed Kazi Zafarullah, at that time an Awami League lawmaker in a Faridpur constituency, along with his wife Nilufer, to be the first directors of the company.
The two directors then signed a resolution which made themselves joint shareholders and allowed them to set up a bank account at the Singaporean branch of the Swiss bank UBS AG. ‘The account be operated either by Zafarullah Kazi or Zafarullah Nilufer signing singly for an unlimited amount,’ the resolution stated.
In a Trustnet ‘due diligence’ form, seen by New Age, the two directors wrote that the ‘nature of business’ of the new company was for ‘investment purposes.’ A copy of Zafarullah’s passport which was provided with the form stated that his profession was ‘member of parliament.’
On the very same day, the two family members also became directors and shareholders of another British Virgin Islands company Pathfinder Finance Ltd, which had also been set up a month earlier by Portcullis Trustnet.
The information provided to the ICIJ suggests that this second company may have been dissolved before 2010.
On July 16 and 17, 2006, just 10 days before the married couple established these two offshore accounts, Zafarullah, according to charges drafted two years later by the Anti-Corruption Commission, withdrew a total of Tk 4.3 crore ($551,800) from the Banani branch of Premier Bank.
The charges, which were later quashed by the High Court, do not state what Zafarullah is alleged to have done with this money and the commission was unaware at the time that he owned any offshore companies.
At the end of 2008, in her disclosure to the Election Commission of her financial income and assets, Nilufer did not mention her ownership of either of these two companies or the holding of any foreign bank accounts.
On January 11, 2007, a state of emergency was announced and two years of caretaker government ensued which resulted in significant attention on Zafarullah’s financial affairs.
In April, the politician was detained and then shown arrested in relation to an extortion case and the Anti-Corruption Commission started investigating his financial affairs.
On July 26, 2007, Abdullah Erman Yousuf and Abdullah Ahsan Yousuf, the two sons of the politician’s sister Sabiha Mahboob and Abdullah Ahmed Yousuf, the sister’s husband, all of them living in New Zealand, became directors and joint shareholders of the British Virgin Island offshore company Assets Connexion Ltd. In September, Sabiha became a director.
With Zafarullah out on bail, but with cases proceeding against him, on April 15, 2008, Kazi Raihan Zafar, the younger son of Kazi Zafarullah, bought another offshore company, Elderstar Ltd, becoming its director and sole shareholder. One month later, on May 12, his mother Nilufer also became director of the company and on June 5, Raihan’s wife Fahra Murad, registering with an address in Toronto Canada, was also appointed.
Zafarullah told New Age that his son and his son’s wife live in Canada.
By now, Zafarullah was in effect absconding from court and not present to hear a special court sentence him to two years’ imprisonment for failing to submit a wealth statement. However, on November 27, 2008, the former lawmaker found time to become the sole director and shareholder of yet another British Virgin Island offshore company, Majestic Success Ltd.
Notes made by Portcullis Trustnet suggest that the offshore service agency may by then have become aware that Kazi Zafarullah was subject to allegations of corruption. On December 10, 2008, two weeks after Majestic Success was set up, Portcullis wrote a note on the account stating, ‘This case will now be handled as ENHANCED DUE DILIGENCE which means that every single event or transaction involving the transfer of funds in excess of US$10,000 must be notified to Compliance for their records. (If Compliance consider it necessary further enquiries may be made.)’
A similar note was made on the same date on the records of Hanseatic Ltd, set up two and a half years earlier.
In the charge sheet that subsequently alleged that Kazi Zafarullah was involved in money laundering, it was alleged that in 2005 he had distributed Tk 5 crore amongst 10 accounts belonging to some of the same family members, including his wife and his sister, who subsequently become directors of offshore companies.

1 comment:

  1. Actually, Awami League has committed more corruption than ever. I think the amount of embezzled money by Awami League leaders have already exceeded all the previous records.

    But due to naked support of the media, their irregularities are often being concealed. But gradually truths are being revealed. Thanks for very informative article