November 4, 2021:
The Pandora Papers exposes the prevalence of anonymous shell companies as vehicles for corruption and underlines the need for greater beneficial ownership oversight.
In one of the world’s largest data leaks, the recent Pandora Papers revealed the sheer scale of global corruption facilitated by anonymous offshore companies.
The investigation, led by the International Consortium of Investigative Journalists (ICIJ), revealed almost 12 million documents outlining a global web of shell companies used to launder money in tax havens without any beneficial ownership oversight.
The Pandora Papers also exposed the City of London’s role as a “magnet for dirty money” with oligarchs and politicians accused of using shell companies to launder over $7 billion through real estate across the UK.
It is clear greater beneficial ownership is needed in the global fight against corruption, especially for developing countries whose wealth and natural resources are often exploited by corrupt actors whose identities are hidden by anonymous shell companies.
A prime example of this is the BVI-based shell company Process & Industrial Developments Ltd (P&ID) who has aggressively tried to pursue a sham $10 billion arbitral award against the Federal Republic of Nigeria (FRN) through the London courts.
The FRN is fiercely fighting the scam and the tide is firmly in their favour. In a September 2020 judgment, Nigeria was granted permission to challenge the award, on the basis that prima facie evidence of a massive fraud had been uncovered.
Nevertheless, it remains unclear exactly whose pockets the $10 billion will land in, if this case goes in P&ID’s favour.
While P&ID fronts the dispute, the company is entirely owned by opaque entities.
75% is owned by Lismore Capital, a Cayman Islands-based company, unusually headed by P&ID’s former arbitration lawyer, Seamus Andrew. Andrew’s company purchased the stake in the award only nine months after it was issued in January 2017.
The remaining 25% of P&ID was initially acquired by the ‘vulture fund’, VR Advisory Limited. It has recently emerged, however, that this stake has been transferred to another opaque entity – Process Holdings Limited – which is a wholly-owned subsidiary within VR Capital’s corporate web.
VR Capital Group has a history of exploiting developing countries, after obtaining a $65 billion restructuring agreement with Argentina after the country defaulted on its sovereign debt.
As illustrated by the Pandora Papers, the need for greater beneficial ownership transparency is essential to help developing countries fight back against corrupt actors who intentionally hide their identities through anonymous shell companies.
The FRN remains committed to working with international partners to advocate for greater beneficial ownership oversight in the global fight against corruption.