Catch and Release is a sample of financial investigative journalism that explores the role of financial and legal secrecy intermediaries or nominees that are used to conceal the character of economic activities, in this case, alternative investments targeting pensioners. The article maps an alleged $180 million siphoned through use of myriad nominees, tax havens, shell companies, financial receiving agents, and conduits, from London to Cyprus and the British Virgin Islands, using African countries such as Sierra Leone, as the place and space where money grows on trees – or as palm oil, rice, and other lucrative agricultural commodities. Forged documents such as land leases hosting the ‘thumbs prints’ of land-owners would be used to swindle pensioners and investors.
Excerpt 1: BRITAIN’S SECOND EMPIRE
London, said George Orwell, is a deeply civilized and useless place. Orwell was speaking of Dickensian London, the center of the earth in the same sense that the belly is the center of the body—a city of consumers. He may just as well have been speaking of London—and the City of London, Britain’s Wall Street circa 2014—a global finance center that, for ten centuries at least, has prided itself on upholding the form and substance of a corporation renowned for legal and financial secrecy. In fact, according to the Serious Fraud Office (SFO), London also acts as head office or central core to a significant network of global tax havens, from the British Virgin Islands and the Cayman Islands, to Bermuda and Gibraltar, while also shaping tax havens that were former colonies, such as Hong Kong and Singapore. These days, over 40 percent of the world’s financial assets are divided among the territories of Britain’s second financial empire, still the one over which the sun never sets. More than 80 percent of international finance activities are conducted through these offshore financial markets, most of them linked directly or indirectly to U.K.-connected tax haven economies.
Part of this dominance is related to the specialization of London, prior to today’s modern technology, and its ties to former colonies from Latin American to Africa and across Asia and the Middle East. London’s commercial entities became the vehicle through which investment in, or about, developing countries, would be realized. The combination of tax havens and technology, from faxes to smartphones, allowed capital to become both secretive and hyper-mobile, aided by the deregulation of financial markets.
In defiance of conventional wisdom, this did not take place on Wall Street, manipulated by the brilliant young quants who flocked to investment banks and trading rooms there in the booming last decades of the 20th century, but rather by virtue of the City of London’s push to create the Eurodollar market—capturing dollar-denominated deposits escaping regulation of the U.S. Federal Reserve Board—in fact, escaping regulation in nearly every sense. In the push to create a pan-European economy and a currency, the Bank of England agreed that non-residents routing transactions through London would not be regulated by Britain, or indeed any other authority, provided the transaction was denominated in a currency other than the British pound sterling, such as the dollar or eventually that artificial construct, the euro, which the United Kingdom declined to adopt. Overseas territories, dependencies and former colonies, allowed Britain to shift the appearance of tax havenry to other locales, perceived as independent, while maintaining control of the process. The decades-old creation of the now clearly deeply flawed Euromarket incentivized the race to the bottom. Governments deregulated domestic economies, resigned to the reality that markets were deregulated anyway. London was subsequently ranked the world’s leading international finance center. Finance could move through a non-regulated parallel market that was perfectly legal. Lo and behold, the offshore was born, but in reality it was onshore—all around us.
Excerpt 2: In Good Standing
Funds invested by dupes in the Capital network’s fictitious projects would often be channeled through financial entities such as Capital Secretarial, MH Trustees, and more recently, Red Leaf, among numerous shells. As the projects never actually existed, funds were always pooled. One investor accidentally received information about weekly movements from Hargous. The dupe discovered that his mining investment was directed to Agri Capital ($43,675), an unrelated farming project, as well as to another Capital-related individual, Robert McKendrick ($50,340). The investor list—detailing weekly transactions from over 65 investors, all Ponzi scheme victims—also reveals payments to Whitemoon of $51,467 for the week. The prior week, $51,282 had been remitted to Whitemoon, with the same sum remitted to McKendrick. This payment refers only to African Land (Agri Capital) investments—estimated at $400,000 per month remitted to the private accounts of both parties. Whitemoon is connected to Pelmet Trustees Ltd, for a time based at 76-80 Sophia House, and held land leases and other properties for Haddow. As with other companies, Whitemoon also had a congruently-named British counterpart, White Moon.
To better understand where investor monies were going, it is important to understand the Cyprus activities. Documents and sources familiar with his operations reveal that Haddow’s first significant move into Nicosia, Cyprus, where White Sun, SME Capital, and other entities are registered, was in 2005. He appeared to ingratiate himself into society with promises to fund the local football team, Omonoia Nicosia. One insider says that Haddow hired a young assistant, Savvas Panagi, who was one of the leaders of the Omonoia fan clubs. Panagi would quickly become general manager of Ask Management, a key company used by Haddow. Its counterpart in the U.K., Ask Management, managed a group of companies, such as Pelmet Trustees—all using the same address.
Haddow became known in Nicosia and Limassol as the rich Brit with pockets full of cash, attracting local celebrities and players. He even won a valuable introduction to Russia, many of whose oligarchs did their offshore banking in Cyprus, thanks to a well-known Cypriot businessman, Kyriakos Karantoki. Panagi would be listed as a director of the Cyprus-based Troff Ltd, which also went by the name of JPM Plantation, whose shareholders included Haddow’s White Sun Ltd, where Panagi was also a director and shareholder. Haddow used Ask Management to administrate and mostly liquidate his own companies in the U.K., apparently moving his wealth from London to an offshore entity in the BVI, according to one insider. The name of this entity, Haddow’s main holding company, was Glenburnie Investment Ltd.
When the time came to invest the funds, he introduced his business partner, Hargous, who was also involved in Capital Mining, says a former associate. Hargous proceeded to work with a dodgy Cypriot in the creation of Haddow’s offshore system. Lambros Christofi had previously been arrested for forgery, fraud, counterfeiting, and money laundering via entities like Edem Management, Ask Management, and others. Haddow’s involvement with Christofi created hesitancy with other associates, except for Karantoki, who was already involved in bringing Haddow and his enterprises to Russia, where some projects would later be based.
Project Information
Grantee:
Silas Gbandia, Investigative Dashboard in-country researcher, Sierra Leone
Budget:
$500 USD
Grantor:
Open Society West Africa
Media Outlet:
World Policy Journal
Release Date:
March 2015
Locations:
London (UK), Sierra Leone, Australia, Dubai, Russia, Anguilla, BVI, Cyprus, Malta
iLab Team:
Khadija Sharife (investigator, writer), Silas Gbandia (ID Africa), Heinrich Bohmke (Cross-Examination), Giovanni Pellerano (Technology)
Data Tools:
Investigative Dashboard (via Lejla Camdzic); Arachnys, Companies House, Windeeds, and others.
Prior Coverage:
Oakland Institute report, We Harvest, You Profit