Investigations Without Borders

1 November 2012, 16:19

Paul Radu is the executive director of the Organized Crime and Corruption Reporting Project (OCCRP). It has been investigating organized crime, corruption and money laundering in Eastern Europe for five years. One of its offices in Bucharest looks like that of Millennium from the Girl with the Dragon Tattoo, while the reporters bring Stieg Larsson’s dream to life by investigating the world’s most serious cases. Their network includes investigative journalists from Albania to Russia, from Georgia to Latvia. The project is the only one of its kind in the world. Although several countries have their own investigative journalism centres, OCCRP is the only international project focusing on the discovery of corruption and international crimes. It was through cooperation with OCCRP that Azerbaijani journalist Khatidjha Ismailova discovered the offshore companies owned by Azerbaijani President Ilham Aliyev. While compiling a database of shell company owners, reporters found that the company that renovated the Olympic stadium for Euro 2012 was officially owned by a yoga instructor from Cyprus. Without the support of their colleagues in Bucharest, Cairo reporters would never have managed to investigate the foreign assets of Egypt’s richest oligarch and the right-hand man of President Hosni Mubarak.

UW: Which of your investigations were most significant? What makes OCCRP’s job so important? 

We managed to investigate important deals involving politicians and criminal groups from all over the world. To reveal organized crime or corruption on the government level, you have to know everything that’s going on inside the country. A reporter working just within his own country can hardly figure out a complicated corruption or criminal scheme today, because such things have no borders. It’s so easy for dealers from Ukraine and Romania, or Moldova and Russia to arrange a scam, while local journalists will hardly interact with each other in the same way. It’s even harder for Romanian police to investigate cases with Ukrainian officers because that is already a matter of politics. Earlier, big media, such as The New York Times, AP or Reuters, would be sending their correspondents to do an investigation in several countries at once. But foreign journalists cannot understand a society that is completely foreign to them. Clearly, the language barrier is one cause. Foreign reporters have no access to serious information – I mean data allowing them to trace how cash flows out of the country.And the power of reporting without borders is in the sharing of information among those who know all about the situation in their home countries.  

UW: Who initiated OCCRP?

It was our joint idea with Drew Sullivan, an American journalist. He has been working in Sarajevo for a while now, and set up the Centre for Investigative Reporting in Bosnia. We met by accident and realized that we were working on the same thing.  I was working on a similar investigation on human trafficking for the London-based Institute for War and Peace Reporting. The concept of investigative reporting without borders came from Charles Lewis, the founder of the Washington-based Centre for Public Integrity. He created the first international consortium of investigative reporters attempting to gather the best reporters from all over the world – a super team to do international investigations. I was lucky to be one of them. But we worked on the materials only when we had money for a project, no matter what it was – tobacco or illegal tuna fishing. The consortium coordinated from Washington was not that effective when it was about some big regional or local thing. Moreover, we are now working on an on-going basis, not just when we have the money. If a journalist from say, Ukraine, needs help finding some information about a firm registered in Cyprus, we ask people from our network for it. Our real collaboration is based on the common goal, not money.

UW: Which of your projects would have been impossible without this sort of cooperation?

First of all, we could not have created the databases of proxies operating in Eastern Europe. Proxies are people registered as company owners to hide the real owners. There are several types of proxies in our region. Some of the so-called executives have no idea that their names are on the documents – their passports were stolen. Others sold their identities for a few hundred bucks or a bottle of vodka, allowing someone to make copies of their IDs. We are mostly interested in people who earn money in this business, working on the market and pretending to own dozens of companies all over the world. Without our transnational network we could not have carried out a single investigation about offshore companies. We are constantly updating this database. For instance, if a number of companies are registered in Belize, we look at them and put them on our record. That’s real “business without borders”. But doing the research without reliable people who can analyse all of the complicated documentation of local companies in Russia, Ukraine, Moldova, Romania, Serbia or Hungary would be totally impossible. In some countries, the police can solve such cases. They operate under their own jurisdictions. Even when reporters have access to an opened case, it makes little sense if the criminal network covers all of Eastern Europe and may reach as far as Vanuatu and the U.S. Once, Moldovan journalists helped us find the accounts of some companies in Latvia, Russia, Romania and Delaware State.

UW: Many claim that offshore zones are legal even if they are not really a good thing. A person cannot be arrested simply for using offshore accounts. 

The lack of transparency is the problem. Why would an owner hide his name if his business is perfectly legal? Offshore zones are mostly for criminals and politicians who don’t want their voters to know about it. They may say that offshore business is the only way to evade excessive taxes. But that’s a moral issue. Most banks in the world have to know the names of their clients. How do you find out whose money it is if the documents list the name of a counterfeit owner? It is through schemes like this that Mexican oil cartels launder money in American banks. 

UW: Which of your investigations concerned Ukraine?

The story of Lana Zamba, the yoga instructor from Cyprus, registered as the owner of one of the biggest companies that built Euro 2012 objects. We found her while working on our offshore project. It is cases like this that feed corruption at top levels. Once we get rid of offshore companies, we can break most of the world’s corruption scams. And the links are much deeper than they seem to be. Lana Zamba is involved in Ukrainian companies and the Magnitsky case in Russia.

UW: Where is it safer to hide money now?

There are too many places. In the US, for instance, especially Delaware and Nevada. Austria, Switzerland, Italy, France, and Spain often come up in scandals about banks hiding money. There was this HBSC case – it was accepting money from Mexican drug cartels. Another big bank Wachovia also dealt with dirty money. We’re talking hundreds of billions of dollars. Latvia is a good place for money laundering in our region.

UW: Why Latvia?

It wants to create an image of an Eastern European Switzerland; convince all others that doing business there is as comfortable and easy; and they know how to keep bank privacy. The only thing the Latvians missed is that the lack of transparency has brought quite a few crooks to their country. Moreover, many Russian oligarchs have transferred their business to Latvia. They can influence politics there, and money has no smell, as you know.  

UW: Why do European countries and the USA tolerate scams on their territories?

We asked Delaware State officials why they allow money laundering. We have proof that many Eastern European companies use their banks. Local authorities told us that they were not going to change a great system because of a few rotten apples. But in fact, offshore companies fill half of the state’s budget. Look at Cyprus, Gibraltar – these countries have limited resources, but they earn their money on those who store their money in their treasuries. Even the UK does.

UW: What are your most successful investigations?  

One of the latest investigations was related to gold mining in Azerbaijan. A consortium was set up to develop so-called gold fields. The Azerbaijani government owned a share in it. The rest was owned by a few little-known companies. One was registered in the UK but the tracks led to Panama. Our Azerbaijani colleague Khatidjha Ismailova conducted the investigation. Earlier, the Investigation Dashboard showed us that the family of President Ilham Aliyev was running its own business through companies registered in Panama. This time, we decided to take a closer look, researched the materials, and found that there are three companies in Panama owned by Aliyev’s wife and daughters. They are linked to the development of these gold fields. Later, Khatidjha received documents signed by Ilham Aliyev himself transferring the territory to the consortium – hence, to his own family.

Another example comes from Egypt. Last year, my colleague Drew Sullivan and I held a media training in Cairo. Beforehand, we got the list of all the companies owned by Egyptian citizens in Switzerland and the UK. Thousands of names, hundreds of pages. Personally, I never heard all those names. I handed the data over to Cairo reporters. They were surprised to see the name of Hussein Salem among those who owned companies in Switzerland: “Hussein Salem is a very well-known figure; he’s the right-hand man of Mubarak and the founding father of Sharm-el-Sheikh resorts.”  Our Cairo reporters began to dig deeper and found that in addition to those in Switzerland, Salem also owned companies in Panama and Spain. That was in May 2011. The next month, he was arrested in Spain. The investigation got a lot of attention. But that didn’t end the case. Six months later, we met with those reporters in Amman. Our Egyptian colleague told us that Hussein Salem owned a few companies in Romania. Yet, it took a lot of time to confirm that Egypt’s major oligarch – arrested at that point – owned a huge luxury shopping mall in Bucharest. We launched an investigation, found out which Romanian businessmen owned the business jointly with the Egyptian oligarch, and even found a photo of Romania’s ex-prime minister cutting the ribbon at the shopping mall opening ceremony. And that was not all. I continued to research the documents of Salem’s Panama companies and found that his son and daughter charged with money fraud and corruption transferred their companies to three Azerbaijani citizens the day before they were arrested. Later, Khatidjha continued the research in Baku. She noticed some names and told me that those people were well-known in Azerbaijan. They own shopping malls, car factories and more plants. Then we found out that one of these people was close to Aliyev, Azerbaijan’s president. He was arrested in Spain but he remained out of jail somehow, and now he is on the Interpol wanted list. Still, we proved the links between these companies. The main thing was that we showed how millions of dollars were taken out of Egypt. Several conversations and documents revealed deals in Spain and Switzerland that involved influential people in Egypt, Romania and Azerbaijan.

UW: What have you discovered in your native country of Romania?

There was an interesting case related to the assets of Prime Minister Victor Ponta. It turned out that he was linked to a business group related to President Traian Băsescu. Romania’s president and prime minister are enemies and diehard political opponents. But, if you look closer, they turn out to have common business interests. Sometimes, the impression is that there is some ideological difference between the politicians – left or right – but when it comes to business, all differences fade. Everyone earns money, regardless of their political preferences. There are wealthy people in Romania who support all parties financially because they seek preferences regardless of which party comes to power. This lays the foundation for corruption. These business owners will get the most profitable public contracts. In fact, the most important thing in the work of a reporter is to note the links between politics and big business. They have to dig deeper and notice all the threads, especially at the regional and international scales. We expect machinations between Russia and Ukraine. When we started to work on the proxy database, it turned out that they spread to Serbia, Romania, Moldova, and up to Switzerland. It’s huge money, and it goes right to the people who rule these countries.  

UW: Are these influential people trying to exert pressure or sue you?

OCCPR is the only organization in Eastern Europe insured against libel suits. We received letters from oligarchs for several years before they realized that we have the best lawyers in London and money to pay for their legal support. This insurance covers publishers whose reporters prepare the investigation under our project framework provided that the article is published after we edit it. We work under strict fact check rules. At first, our reporters were annoyed about the amount of time the editing takes. They got annoyed when, after they spent months working on the article, the editor asked them, how can you prove that the person you mention is 24 years old? All the material we get from reporters should come with references to documents, quotes from interviews, audio or video files accompanying every single fact mentioned. For instance, when a reporter writes that Mr. A works at company B, he should send us a copy of the document to confirm this. The next sentence says that Mr. B is linked to company D. Again, we want a reference document. And that’s true for each line. Sometimes, even I got annoyed by how scrupulous our fact checkers were. But it won’t work any other way. That’s what makes our materials so unique and valuable.

UW: How much effect does your work have? Whenever allegations that a French president, for instance, is involved in financial fraud surfaces on the cover of a tabloid, the main thing is that it will draw the attention of the police. Here, however, investigations often remain in newspapers even if the crimes of top officials are much more serious.

Important investigations tackle people in power. They control law enforcement authorities that decide whether they should open a criminal case or not. Therefore, it’s not easy to have an impact on public opinion in Eastern Europe. Once the publication goes international, such as with the offshore network in Eastern Europe, it is harder to hush it up. Dozens of companies were closed down in New Zealand after our investigations revealed that Latvian banks were using companies there. Mostly, they operated in Eastern Europe. If one country fails to do act because of its corrupt police, impact is still possible – even if indirect. There is another level of influence. Google is our biggest help. When we publish materials on the website, we always give the right index of names, trial protocols and the documents for the search system to offer the right records. If someone is offered a stake in a joint business, it makes sense to do some research on the potential partner and check what the Internet has to say about this person. And the first entry says that he is a crook. Of course, you shouldn’t trust the first article you see, but our materials contain references to documents confirming that the potential partner used to own a business with criminals. That is how we can limit opportunities for crooks. We are often asked to remove some names from articles printed years before. People beg us to do that. Otherwise, their business and reputation are ruined. Scandalous revelations are fine, but we appreciate the long-term effect most of all.

UW: You are working on a project to investigate media owners in Eastern Europe. Why do you think this is important?

A lot of media in Eastern Europe have ended up in the hands of people who have political and financial interests. This is the best way to blackmail political and business competitors. Moreover, media in Romania and all over Eastern Europe are owned by people who have faced criminal charges, including financial fraud. Some wealthy people bought TV studios after criminal cases had been opened against them. It was a good instrument of pressure on the court and protection from their opponents. In fact, that is one of the reasons why our region barely has any media that offer good quality journalism. So, we want to list the 50 most influential media tycoons in Eastern Europe, check their connections with companies in Cyprus and Panama, and examine their offshore accounts. And we would like to find out their real owners since many politicians prefer to keep their connection to the media a secret to make them appear independent.  

UW: Who is funding OCCRP?

Our biggest donors are OpenSociety and USAID. However, we have a small staff. Most journalists are paid by the publications where they work.

UW: There is plenty of discussion on whether it is appropriate to work for money from the West. Critics say that a good quality publication should be a commercial success.

Our work speaks for itself. Yes, we get foreign funding, but read our reports. If you’re honest and publish documents and evidence openly, any charges are invalid. Still, we are forced to live on grants. We run another Romanian project and could easily get financial support from local business owners. But if our investigation tackles our donors, it will fuel a conflict of interests. In fact, you can’t earn much on these kinds of investigations that sometimes take years to complete. Their main value is their significance for society. A perfect scenario would be for people to support us. For example, there is a website in California; whenever the local authorities in San Francisco raise bus fares, the website’s reporters appeal to the public, asking people to fund their investigation if they want to know why the price is going up. People are ready to pay: some donate $5, others give more. But that’s already possible there. I don’t think we’ll have anything similar in Eastern Europe, but that could be a model for the future. 

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