Jordanian businessman's web of offshore companies
Some five years ago, a lawyer working for the Panama-based Mossak Fonseca leaked a trove of documents exposing the identity of the owners of a large number of offshore companies registered in Jersey, the British Islands and Luxemburg.
This massive leak led to the German government’s closing three banks it deemed had violated German law and the case stopped there.
But the leaker was not satisfied and decided to make a second effort. Around a year ago, some 11 million documents including e-mails, company registrations and other sensitive documents were leaked to the German newspaper Süddeutche Zeitung.
The Munich-based newspaper realised that to make use of this leak, it needed an international effort.
The International Consortium of Investigative Journalists (ICIJ) was asked to help and the largest journalistic effort was launched: 330 journalists from around the world were contacted and asked to participate in the follow up to this leak with conditions.
Participants included Jordan’s Radio Al Balad/AmmanNet Investigative Unit, which was given information about Jordanians and had to adhere to proper investigative journalistic criteria.
Participants in the Panama Papers, as the project was called, were sworn to secrecy and all agreed on April 3 as the deadline, before which nothing could be published.
The ICIJ’s effort was a huge success. None of the documents was leaked before the deadline and it appears that investigations focused on individuals who have in fact used offshore companies to avoid taxes and break their own government regulations.
Offshore companies are not illegal. However, accounts created in certain countries that protect the identity of the owners, could be.
In Jordan, some 1,700 names of individuals who created some of these companies were made known.
While the initial international publication focused largely on political leaders and officials, the focus by the Jordanian partner in this project went for a much more serious problem.
The only senior Jordanian politician that had set up an offshore company was former prime minister Ali Abul Ragheb.
While Abul Ragheb refused to speak to the editors of the German daily, he did speak after the release of the publication. Speaking to CNN Arabic, he said that the companies he established did not include any illegal action.
The biggest Jordanian name that appeared in the Panama Papers was that of businessman Khaled Shaheen.
A team of journalists worked on the 26 companies set up by Shaheen, which reflected a web of connections that became a problem when one considers that they participated in various large-scale tenders.
The journalistic effort around Shaheen focused on three tenders: the fourth expansion of the Jordanian refinery, the Disi Water Conveyance Project and the establishment of the headquarters of the armed forces.
The Shaheen effort focused on using his contacts to railroad profitable tenders that were then turned over to companies working in Jordan for a hefty fee and possible profit sharing.
Some of the Shaheen efforts were thwarted at the last minute, according to the investigation, but others succeeded.
Shaheen and cohorts were convicted and received jail sentences. Shaheen was able to leave before the end of his three-year term, but due to popular pressure, he was extradited from Germany.
He is now outside Jordan, escaping judicial questioning regarding huge cheques without balance.
The workings of these offshore companies reveal an effort to hide the identity of the foreign companies that participated in major tenders. This obfuscation can easily violate the constitutional checks and balances that bar Cabinet ministers and members of parliament from participating in these lucrative tenders.
It also makes the Law for Illegitimate Profit totally useless. The law stipulates that public officials declare once they are appointed their wealth in a closed envelope that can be opened if there is an allegation of corruption.
But if Jordanian officials can hide behind offshore companies, how can this regulatory mechanism work properly?
Jordanian laws and regulations do not forbid the participation in tenders by offshore companies. Despite statements by the prime minister that there has been no corruption in the past five years in Jordan, the reality is that unless anonymously owned offshore companies are barred from participating in public tenders, it is impossible to avoid conflict of interest and officials benefiting from lucrative government deals.
The digital revolution has allowed for information to be shared at ease and is forcing a much more transparent system to operate around the world.
Hard-working journalists have used the latest leaked information to shed light on the problems inherent in these tax havens, and has added pressure on the government to act.
The parliamentary integrity committee has already said it planned to look into this problem with an eye to remedying this problem through legislation.
Jordan is in need of more strict regulations that prevent conflicts of interest without stifling foreign investment.
A serious look at this problem can save the country much of the revenues that are due to its Treasury. The sooner this loophole is closed the better for the country as a whole.