Mossack fonsecas bag of tricks: Spies, deals hidden in plain sight

              Firm helps CIA operatives and other characters from the world of espionage set up offshore companies to obscure their dealings.. According to a US Senate report written by John Kerry, Adnan Khashoggi (above) played “a central role” with CIA in arms deals with Iran and Saudi Arabia.

One day during his presidential re-election campaign in September 1996, Bill Clinton walked into a room in Westin Crown Centre hotel in Kansas City. At stake was a quarter-million dollars in campaign fundraising. Clinton turned to his generous host, Farhad Azima, and led the guests in song.

“Happy birthday to you, happy birthday to you….”

Azima, an Iranian-born American charter airline executive, had long donated to both Democratic and Republican administrations. He visited the Clinton White House 10 times between October 1995 and December 1996, including private afternoon coffees with the President. Years later, as Hillary Clinton stood for election to the Senate in December 1999, Azima hosted her and 40 guests for a private dinner that raised $2,500 a head.

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Azima’s Democratic fundraising activities provided an interesting twist in the career of a man who has found himself in a media storm of one of America’s major political scandals, the Iran-Contra affair, during the Republican Reagan Administration.

In the mid-1980s, senior Reagan administration officials secretly arranged to sell weapons to Iran to help free seven American hostages then use the sale proceeds to fund right-wing Nicaraguan rebels known as the Contras. On a mission to Tehran in 1985, one of Azima’s Boeing 707 cargo planes delivered 23 tons of military equipment, The New York Times reported.

Azima has always claimed to know nothing about the flight or even if it happened. “I’ve had nothing to do with Iran-Contra,” Azima told ICIJ. “I was investigated by every known agency in the US and they decided there was absolutely nothing there,” he said.

Now, records obtained from Mossack Fonseca (MF) reveal new details about one of America’s most colourful political donors. The records also disclose offshore deals made by another Iran-Contra figure, the Saudi billionaire Adnan Khashoggi.

The documents show how MF built labyrinthine corporate structures that sometimes blur the line between legitimate business and the cloak-and-dagger world of international espionage.

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Spies’ offshore dealings

The documents also pull back the curtain on hundreds of details about how former CIA gun-runners and contractors use offshore companies for personal and private gain. Further, they illuminate the workings of a host of other characters who used offshore companies during or after their work as spy chiefs, secret agents or operatives for the CIA and other intelligence agencies.

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The documents reveal that Mossack Fonseca’s clients included Saudi Arabia’s first intelligence chief who was named by a US Senate committee as the CIA’s “principal liaison for the entire Middle East from the mid-1960s through 1979,” Sheikh Kamal Adham, who controlled offshore companies later involved in a US banking scandal; Colombia’s former chief of air intelligence, ret. Maj. Gen. Ricardo Rubianogroot, who was a shareholder of an aviation and logistics company; and Brig. Gen. Emmanuel Ndahiro, doctor turned spy chief to Rwanda’s President Paul Kagame.

Adham died in 1999. Ndahiro did not respond to requests for comment. Rubianogroot confirmed to ICIJ partner and Colombian investigative journalism organisation, Consejo de Redacción, that he was a small shareholder in West Tech Panama, which was created to buy an American avionics company.

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Men in their flying machines

The secret documents show that Farhad Azima incorporated his first offshore company with Mossack Fonseca in the BVI in 2000. The company was called ALG (Asia & Pacific) Ltd, a branch of his airline Aviation Leasing Group, a US-based private company with a fleet of more than 60 aircraft.

It was not until 2013 when the firm ran a routine background search on the shareholders that MF discovered articles on Azima’s alleged ties to the CIA. Among the allegations found in online articles shared by Mossack Fonseca employees were that he “supplied air and logistical support” to a company owned by former CIA agents who shipped arms to Libya. The files indicate that he remained a client.

In 2014, one year after discovering online reports of his connections to the CIA, Hosshang Hosseinpour, was cited by the US Treasury Department as helping companies move tens of millions of dollars for companies in Iran, which at the time was subject to economic sanctions. Hosseinpour could not be reached for comment.

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Agent Rocco and 008: license to incorporate

Another connection to the Iran-Contra scandal is Adnan Khashoggi. The Saudi billionaire, once thought to be the world’s most extravagant spender, negotiated billions of dollars in weapons sales to Saudi Arabia in the 1970s and played “a central role for the US government” with CIA operatives in selling guns to Iran, according to a 1992 US Senate report co-written by then-Sen. John Kerry, the now US Secretary of State.

Khashoggi appears in the Mossack Fonseca files as early as 1978, when he became president of the Panamanian company ISIS Overseas SA.

There is no indication that Mossack Fonseca investigated Khashoggi’s past even though the firm processed payments from the Adnan Khashoggi Group.

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The Mossack Fonseca files indicated the company did not discriminate between Cold War foes.

Another customer was Sokratis Kokkalis, now a 76-year-old Greek billionaire once accused of spying for the East German Stasi under the alias “Agent Rocco.” A German parliamentary investigation found that in the early 1960s Kokkalis regularly informed on acquaintances and contacts during his time living in Germany and Russia. Until 2010, Kokkalis owned the Greek soccer club Olympiakos, and he now owns Greece’s largest telecommunications company.

Mossack Fonseca discovered Kokkalis’s connections to espionage in February 2015 as part of routine background checks of one of his companies. Kokkalis “was accused by East German officials of espionage, fraud, and money laundering in the early sixties, but the case was acquitted,” an employee wrote colleagues after an Internet search.

Khashoggi could not be reached for comment.

In 2005, Mossack Fonseca employees learned with some alarm that someone on their books went by the name of Francisco P Sánchez, who Mossack Fonseca employees assumed to be Francisco Paesa Sánchez, one of Spain’s most infamous secret agents. “The story. was really scary,” wrote the person who first discovered Paesa’s background. Mossack Fonseca had incorporated seven companies of which Sanchez was a director.

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Born in Madrid before the outbreak of World War II, Paesa amassed a fortune hunting down separatists and a corrupt police chief before fleeing Spain with millions of dollars. In 1998, Paesa faked his own death; his family issued a death certificate that testified to a heart attack in Thailand. But in 2004, investigators tracked him down in Luxembourg. Paesa himself later explained that reports of his death had been a “misunderstanding.” In December 2005, a Spanish magazine reported on what it called Paesa’s “business network” that built and owned hotels, casinos and a golf course in Morocco. Without mentioning Mossack Fonseca, the article listed the same seven companies incorporated in the BVI.

In October 2005, Mossack Fonseca had decided to distance itself from the companies of which P Sanchez was a director. “We are concern of the impact it may have in Mossfon’s image if any scandal arises,” the firm wrote to an administrator to explain its decision to cut ties with P Sanchez’s firms.

“We believe in principle that when a client is not upfront with us about any facts that are relevant for his or her dealings with us, especially their true identity and background, that this is sufficient reason to terminate our relationship with them,” wrote a senior employee.

Paesa could not be reached for comment.

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Two Names, Nine Fingers

Another Internet search, this time in March 2015, alerted the firm that another of its clients — a “Claus Mollner” — had been a customer for nearly 30 years. Among unrelated results from Facebook, a family tree or two and an academic linguistic review, there was one article from the University of Delaware. “Claus Möllner (the name that Werner Mauss always used to identify himself),” said the article.

Mollner or Mauss, also known as Agent 008 and “The Man of Nine Fingers,” thanks to the lost tip of an index finger, claims to be “Germany’s first undercover agent.” Now retired, Mauss’s website boasts of his role in “smashing 100 criminal groups.” While Mauss’s real name never appears in Mossack Fonseca’s files, hundreds of documents detail his network of companies in Panama.

Mauss’s lawyer confirmed that some companies that appear in Mossack Fonseca’s files were used for “humanitarian operations” in peace and hostage negotiations “for forwarding of humanitarian goods such as hospitals, surgical instruments, large amounts of antibiotics etc.,” in order to “neutralise” extortion.

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