Saturday, 9 April 2016

How the Seychelles saved Syria

Against the backdrop of recent territorial gains, the cessation of hostilities and a peace process in Geneva that is rumbling along, President Bashar al-Assad seems more secure than ever after five years of conflict in Syria.
When people ask how he managed to stay in power despite the country having its economy collapse in half, hundreds of thousands killed, one in two Syrians being forced from their homes and the conflict dragging in four of the five UN P5 members of the Security Council, you wouldn't necessarily think about the Seychelles.
Yet as the Panama Papers, the biggest leak in global history, has shown, the idyllic archipelago of 115 islands in the Indian Ocean off East Africa has played its part in keeping Assad in the Presidential Palace in Damascus.

What this demonstrates is that what appears from a distance to be an insular, authoritarian regime far more proficient in the tools of medieval warfare than modern capitalism, has actually used the levers of globalisation well to protect its interests.

Evasion of sanctions 

What the 11.5 million leaked documents reveal is that three Syrian companies close to the government - Maxima Middle East Trading, Morgan Additives Manufacturing and Pangates International - used the already infamous Panama-based law firm Mossack Fonseca to create shadow or shell companies in the Seychelles to avoid the increasing pressure of global sanctions.
Considering how near the regime was to collapse before the Russian intervention, this evasion of sanctions is fairly significant. The Panama Papers suggest it paid for fuel that kept Syria's Air Force helicopters and airplanes in the air.
Modern tactics of moving money through tax havens, loopholes and front companies allowed for pre-modern tactics of dropping barrels filled with explosives on urban areas.

Another way of looking at it is that tax-dodging has cost lives.
The state and nature of Syria's economy was among the triggers of the conflict back in 2011. David Butter's major Chatham House report into the Syrian economy outlined how "economic grievances were an important factor underlying the uprising against the Assad regime".
Aron Lund, from Carnegie, explained that "for decades, the Syrian regime has been mired in corruption, benefiting from the exploitation of state regulations, bribery, and organised crime at every level of the system".
Bashar al-Assad's presidency saw an opening up of the Syrian economy with the introduction of private banking and a stock exchange among a huge raft of changes.
Yet as the renowned Syria scholar Raymond Hinnebusch wrote back, in 2012 the pressures of privatisation led the Syrian leadership to appropriate public sector assets for themselves, to enrich presidential families and ministers and private investors allied with them in "networks of privilege".

Nowhere is this network of privilege more apparent than in Assad's maternal cousins Rami and Hafez Makhlouf. Some estimates put their worth at $5bn before the war, with control of up to 60 percent of the Syrian economy.
They have been the target of international sanctions, including US sanctions, since 2008 and 2007 respectively, and the EU since 2011, suspected of controlling key gateways to Syria's oil and telecoms business.
Yet via a firm in Panama, the Makhloufs were able to continue to operate.
Frederik Obermaier, co-author of the Panama Papers story and an investigative reporter at the German newspaper Suddeutsche Zeitung, told Democracy Now: "they [Mossack Fonseca] realised that he [Makhlouf] was the cousin, and they realised that he was sanctioned, and they realised that he's allegedly one of the financiers of the Syrian regime. And they said, 'Oh, there is this bank who still does business with him, so we should still keep with him, as well'."

A focus on the traditional attributes of the economy of the state (ie, its industries, export and imports, etc) needs to be complemented by an understanding of the economy of the regime and the networks of privilege and corruption that comprise its core.

What has happened in Syria is that a corrupt economy became a corrupt war economy that was able to take advantage of a system blown open by the Panama Papers.
It's worth remembering that this is not the first leak to embarrass the regime. Another set of leaks, emails from 2011, showed Minister of Presidential Affairs Mansour Azzam sending Assad potential options for Russian private jets among rumours of an exit strategy being put together.
It would appear that Assad is no longer in urgent need of an exit strategy. However, he could use the private jet to visit the Seychelles or Panama to thank those who have helped him to remain in power.
The Panama Papers have shone a light on the economic activities of the regime that have stayed for too long in the shadows and, with the amount of information leaked, we know that there is lots more to come.

Wednesday, 6 April 2016

The Beginning of the End of Evil in the World?

Just two weeks ago, following the terror attacks on Brussels, the Daily Observer published an editorial titled "Terrorism May Be Too Lucrative to End".

In that editorial, we argued that ending terrorism was as easy as following and drying up the money; but that because there is a whole value chain involved where too many power players would have too much to lose, the political will has been missing in action.

We quoted the late Harry Greaves, who in his Let's Lecture series explained that the U.S. Government is able to closely monitor the financial dealings of Politically Exposed Persons (PEPs) and their associates.
"Many officials in government are of the mistaken notion that if they steal public money and salt it away in a bank outside of the country, they are home free. Not quite...," Greaves wrote.
"...if you transfer money through the international financial system, you create a paper trail.
"Every US dollar transaction, no matter where it originates or terminates, passes through New York and the Federal Reserve system. And don't think you can conceal your deception by putting the money in an account of a relative or close friend... There is a legal principal called tracing. If ill-gotten gains can be traced to you, they can be confiscated..."

Two weeks later, we are pleasantly surprised to see the findings of what has become known as "the Panama Papers". The papers comprise 11.5 million documents leaked from Mosseck Fonseca, a Panamanian law firm that allegedly helped the world's wealthy hide their cash in order to avoid paying taxes for the last 40 years. The findings were published by International Consortium of Investigative Journalists (ICIJ).
According to the ICIJ, the firm’s clients include "dozens blacklisted by U.S. authorities because of evidence they’d been involved in wrongdoing, such as doing business with drug lords, terrorist organizations or rogue nations like Syria and North Korea...

"Based on a trove of more than 11 million leaked files, the investigation exposes a cast of characters who use offshore companies to facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking."
There is sure to be political fallout from this in nations whose leaders (present and former) and their associates have been named in the papers.

But two things are important here. One is that this sets an excellent precedent as the beginning of the end of organized evil in the world. This is not just about political leaders hiding oil money. This casts a much wider net to include the drug trade, terrorism and human trafficking, to name some of the major problems destabilizing our world today. It shows that following the money is entirely possible.
What is also important to note is that Panama is not the only tax haven in the world. Others include Ireland, the Cayman Islands and the Seychelles, to name a few. As such, we hope to see the Ireland, Seychelles, Cayman Island and other papers emerge.

We also hope to see the banning of tax havens all around the world so that criminals have no place to hide their loot.

We as members of the fourth estate congratulate the ICIJ, Süddeutsche Zeitung (the German publication to which the papers were leaked) and other participating media partners in the investigation, for a groundbreaking investigation that is not just another scandal, but one that could have a very tangible
impact on ending corruption of all kinds in the world.

As it turns out, the Bible was spot on when it said "The love of money is the root of all evil."
That means that if we follow the money, we can uproot all evil. Not just some -- ALL evil.

Wednesday, 17 February 2016

Batelco Draws First Blood

MUMBAI/CHENNAI: In a relief to Batelco Group, Bahrain based global telecoms company, the Madras High Court has directed serial investor Chinnakannan Sivasankaran, his relatives and his flagship company Siva Ltd not to sell or to create any third party rights on some of their Indian assets until February 22. The values of these movable and immovable assets are around Rs 500 crore (about $74 million).

The case was filed by the BMIC, a wholly owned subsidiary of Batelco as per the ruling - decree in legal parlance - of the UK court of June 2014, which had directed Sivasankaran popularly known as Siva and his affiliates to pay up around $212 million. According to Batelco, that UK Judgment made it mandatory for Siva to payback the entire outstanding sum by 26 June 2014 but till date he has have failed to comply.

"Batelco Group...has successfully obtained today Indian freezing orders from the Madras High Court against certain Indian assets of Sivasankaran and his relatives including former wife Jayalakshmi Sivasankaran, his parents RCK Vallal and Chinnakannan Chandrammal and his associates Baskaran, Nithyavathi Venkatesan and his related company, Siva Limited," said a released issued by Batelco.

The genesis of the disputes lies in the cancellation of telecom licenses by the Supreme Court in 2012. BMIC had originally acquired 42.7% stake in S Tel in 2009, a year after the company won a 2G licence. Siva was the other principal shareholder in the company. Following the cancellation of 2G licenses of the company along with other 121 operators by the Apex Court, BMIC sought to implement a put option under the agreement to get his investment back. As per the agreement between the two parties, it was decided that if there are circumstances like cancellation of S Tel's licenses or failure to secure debt finance, Siva will have to buy back the shares acquired by BMIC at the original paid price. However, Siva failed to do so, which led Batelco launching legal proceedings.

"We fully expect all of the respondents to honour the Indian Court Orders and pay to BMIC the monies owing to it under the UK judgement," said Ihab Hannawi, Group CEO of Batelco in a release. "We will pursue all legal avenues available to us against such parties to secure this outstanding payment."

However, sources close to Siva says Batelco has no locus standi to file a case against him in Madras High Court as he is not an Indian citizen. C Sivasankaran's relatives will contest the case in the Madras High Court when the case comes up for hearing next, according to those aware of the plan.

Batelco also claimed that the Indian businessman had conveniently timed his divorce property settlement with his former wife in Seychelles just before the UK court passed an order and he transferred properties of around $100 million for no consideration on his wife's name. The same properties are under dispute.

BMIC also argued in the court that Siva had petitioned the Supreme Court of Seychelles for an order that he be declared 'bankrupt', in July 2014; soon after the UK Judgment went against him. They argued that Siva had created an extensive network of companies in India and is currently operating through them, with the active aid and support of his related associates, so as to avoid making payment of significant monies owed to his outstanding creditors, in particular BMIC. On 26 August 2014, the Supreme Court of Seychelles declared Mr Siva as an Insolvent/Bankrupt and permitted him to be released from such bankruptcy, despite protests from BMIC to do otherwise.

Thursday, 21 January 2016

Tensions in the Seychelles after neck and neck elections

Although everyday life in the Seychelles remains as peaceful as ever – living up to the islands’ paradisiacal tourist image – there have been tensions brewing below the surface ever since disputed elections last month.

In the presidential election on 16–18 December, President James Michel was officially re-elected, beating his closest rival by a mere 193 votes – a razor sharp margin even in a country with a population of just 90,000 people. The opposition, led by Wavel Ramkalawan, immediately called for a review, intimating that there had been vote rigging and irregularities.

The Supreme Court is currently scrutinising the electoral process following petitions from the opposition and will eventually decide whether the poll will be re-run later this year.

In the meantime, accusations are being thrown in both directions. There are rumours, gleefully disseminated by the opposition Seychelles Weekly, that poor people were paid up to Rs5,000 ($380) to give up their identity cards until after the election. Meanwhile, the government-friendly Times of Seychelles has reported that attempts to set fire to a local party office and primary school have been discovered, alleging that supporters of the opposition may have been behind them.

The ruling party accuses the opposition of being sore losers, while the latter accuse the president and his supporters of being cheats.

How popular is Michel?
There are genuine ideological differences between Michel and Ramkalawan. Whereas Michel continues the moderate socialist policies of his predecessor, Ramkalawan runs on a liberal-conservative platform. And while the ruling SPPF accuses the opposition of incompetence and opportunism, intimating that only they have the skills to run the country, the SNP alleges that its rivals rule through cronyism and have been unable to instigate necessary reforms in the Seychellois economy. They have now also added electoral fraud to their list of accusations.

Among the electorate, it is difficult to say how popular the long-serving James Michel really is. “Yes, he is competent, honest and wants the best for his people,” say some. However, others claim that the “people are fed up with him” and that “if he had been popular, he would have got 55, or 60, or even 70% of the vote”.

Supporters of the government say that if there were a change of power, welfare would decline and inequality would increase, while those sympathetic to the opposition insist the country can do better and point to recent statistics that suggest 40% of the population lives below the poverty line.
Some others simply complain that there is a lack of choice. One small businessman, exasperated with the rules and regulations of what he sees as “still in many ways a one-party state”, jokes that even the road network doesn’t give people alternatives. “There’s just one road to Victoria [the capital] – there is too little choice in this country!”

It’s a small world
Perhaps the most characteristic aspect of Seychellois politics and economics is its tiny scale. With only 90,000 citizens, anonymity is difficult to achieve and developing a state bureaucracy without drawing on personal networks is virtually impossible. People in the political class know each other either personally or through common acquaintances, and they know who they can trust and who to avoid.

One example of this attitude can be seen in the rumours that spread at one point that Etihad Airlines would pull out of Seychelles if Ramkalawan won the presidential election. Clearly unfounded, this far-fetched idea is indicative of the widespread faith here that personal networks are the key to everything.

The significance of personal networks cannot be spirited away since it concerns the very fabric of small-scale Seychellois society. Moreover, the stark dualism of Seychellois politics encourages polarisation rather than compromise.

This is unlikely to change unless there is electoral reform that could incorporate strong proportionality. This might in turn enable party pluralism, dampening the dualism which is currently creating an unproductive tension in Seychellois society.

Without this, we are likely to see similar conflicts arise later this year when parliamentary elections – and perhaps re-run presidential polls depending on how the court rules – will see the same two rival parties pitted against each other once again.

 Posted on

Monday, 18 January 2016

Seychelles Suspends United Nations Council Seat In Unexplained Rationale

Seychelles, has finally broken its silence about ditching its interest in a non-permanent member seat in the United Nations Security Council (UNSC) during 2017-2018.

The withdrawal information on Seychelles’ bid was made public on Wednesday January 13, 2016 by the country’s Principal Secretary for Foreign Affairs Maurice Loustau-Lalanne. The Seychelles official confirmed to the Seychelles News Agency (SNA), “The official announcement of Seychelles’ withdrawing in favour of Ethiopia will be done at the next African Union summit for heads of state,” which would convene at the end of this month in Addis Abeba.

Seychelles’ rationale as unconvincing as it is, it states that it took this action: “For solidarity reasons we have decided to support Ethiopia.”

While that has come out loud and clear, Principal Foreign Secretary Maurice Loustau-Lalanne also knows full well that his country’s withdrawal justification: “For solidarity reasons” would be hard put to convince the diplomatic world and UN observers, especially aware that Victoria started its for membership in UNSC campaign in earnest and in 2012

The SADC body provided its support and endorsement twice to Seychelles: in March 2015 at ministerial level and in July from the candidature committee. SADC at the time reported that it had conducted discussions on Seychelles’ request in an informed manner and “on a wide array of matters which are of interest to the archipelago and the region, especially in line with the maintenance of peace and stability within the SADC, and the development of an even more secure and integrated region.”

The Ethiopia Observatory (TEO) on January 8, 2016 boldly linked its suspicion of the then alleged withdrawal, as announced by Ethiopia'a Foreign Minister to “a mysterious horse trading” between the two countries.
TEO’s view, which has now been corroborated, is predicated on the fact of, firstly, Seychelles’ decision became sudden, after a prolonged campaign – in the words of its President James Michel – basing it in 2012 on the theme of: “We have values that we can share with and impart to the rest of the world. These values are solidly anchored in our abiding faith in the inherent goodness of humanity.”

Secondly, withdrawal of Seychelles announcement was made at the new year broke by Ethiopia that announced, instead of the Seychelles – even for reasons of deference and believability; and, thirdly, the claim by the Seychelles that it was doing this out of a sense of solidarity seemed out of place, when there is no record of an appeal at any official forum to them from the Ethiopian side or the East African intermediaries.

TEO continues to maintain that Ethiopia’s bargaining chip is the weekly flights by the Ethiopian Airlines to the island nation, for which the two countries have ample experiences in that regard.
Note that the Seychelles has two major islands as tourist attraction with airports: Mahé, it being the largest about 155 sqkm and 79,000 residents and home to the capital city Victoria. The other is Praslin island and 38 sqkm, home for about 6,500 people is known as “a wicked seductress”, because of its attraction to tourists – serviced through chartered flights by Air Seychelles (AS) only.
Ethiopian airlines makes three weekly flights to Mahé, the largest island, using Boeing 737-800 jests, with carrying capacity of 154 persons.

As discussed in the above-mentioned TEO article, Ethiopian resumed its flight in October 2014, after a six-month interruption, sending Victoria delegations to scramble in every direction. Even during the interruption of Ethiopian flights to Seychelles, the island nation had made it public that its tourism business was severly affected, tourists from the Americas, China and Europe totally cut off, according to Transport and Home Affairs Minister Joel Morgan.

We are also aware that since December 1, 2015, there have been fresh terms and conditions Ethiopian Airlines has imposed on the Seychelles concerning “discounted fare and other privileges”.
While there are a number of internationally known names of airlines companies flying to Seychelles, because of its widespread reach in five continents, it is possible that there is a covert blackmail to which the island nation has been subjected by the TPLF regime. In fact, an Ethiopian official in December 2015 told the Seychelles Tourism Academy, “I would like to affirm the Ethiopian Airlines commitment to offer convenient and seamless connections to and from our more than 92 international destinations across five continents using modern and youngest fleet in Africa.”

At the moment, Ethiopian flies four times a week to Mahé as of September 2015, revising the October 2014 agreement of three weekly connections between the two countries.

Who would tell the international community – Ethiopia or the Seychelles – the truth of what transactions took place between the TPLF regime in Addis Abeba and the Seychelles’ officials for the latter to hold back its aspirations for which it had spent several man hours and hard won resources fishing the goodwill of nations dispatching delegations to capitals to secure their support?

Thursday, 14 January 2016

Breaking News - Ophir pulls out of farm-out agreement in Seychelles

Ophir Energy has chosen to exit a farm-out agreement of a number of blocks in the Seychelles.
According to Australian energy company WHL Energy, the move will see blocks 5B/1, 5B2 and 5B3 reverted back to the Seychelles Government.

PetroSeychelles has formally notified PQI that the petroleum agreement which was struck in 2014 has now been terminated.

WHL Energy said it is currently in discussions with the Seychelles government to continue its participation in the blocks and will update the market in due course following these discussions.