Also, our Pacific team exposes the unexplained wealth of a head of state, and how that may relate to the West vs. China rivalry 

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Greetings From Amsterdam,

Welcome back to OCCRP Weekly. This edition covers three investigations we published this week, which expose a head of state’s unexplained wealth in the Pacific, a possible company takeover by a sanctioned Serbian arms dealer, and signs of fraud that may jeopardize some of Europe’s oldest forests.

But first, we want to share a development in the Panama Papers, the iconic investigative project from 2016 that revealed how the offshore financial industry facilitates global corruption.

Eight years after its publication, a trial of 27 former employees of the Panama-based law firm Mossack Fonseca – which lay at the heart of the project – has finally begun. The firm’s founders, Jürgen Mossack and Ramón Fonseca Mora, are among those facing money laundering charges in a Panama City court.

❓What are the Panama Papers? In 2016, the German daily Süddeutsche Zeitung obtained a massive trove ([link removed]) of leaked documents from Mossack Fonseca and shared it with the International Consortium of Investigative Journalists (ICIJ). The Consortium then organized a reporting team, including OCCRP and its member centers, to look through the records. Together, reporters revealed how politicians around the world and their allies concealed wealth using offshore companies and trusts.

Global outrage over the investigation’s findings pushed the Panamanian government to adopt anti-money laundering rules in 2019. However, the defendants’ alleged crimes occurred before this legislation was enacted, potentially complicating the prosecution’s case against them, according to ICIJ ([link removed]) .

It’s important to remember that Mossack Fonseca is just one high-profile example of a much larger problem that extends well-beyond Panama. In Western countries as well as isolated tax havens, there is no shortage of law firms, accountants, and other unscrupulous actors who specialize in hiding their clients’ wealth.

Fortunately, these offshore industries and their role in enabling corruption worldwide are now part of the public discourse — thanks to investigative endeavors like the Panama Papers.

Now, for the latest in global crime and corruption:


** NEW INVESTIGATIONS
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** The Simple Fraud Undermining Europe’s Most Sophisticated Timber Tracing System
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💁‍♂️ The Background: Romania has long struggled to stop illegal logging in its forests, which are some of the oldest in Europe. To better protect these remaining carbon sinks, Romania implemented SUMAL, a digital timber tracking system that has been billed as the most sophisticated of its kind in the European Union.

Truck drivers play a key role in this tracing process. They’re required to photograph the timber they’re hauling and then upload the images to SUMAL, which is meant to ensure that loggers are not overharvesting. But OCCRP has discovered a serious flaw in the system.

🔦 The Revelation: Reporters found hundreds of fraudulent photos of wood that SUMAL was unable to detect. Some photos were of old shipments of timber, while other images didn't show any wood at all. Instead, truckers submitted pictures of drinking parties, chairs, and truck tires.

🤖 AI Isn’t the Answer to Everything, Yet: In 2023, the environment ministry said it would start leveraging advanced cameras and AI technology to more effectively monitor trucks of timber.

A pilot test found that the AI software could detect blatantly incorrect images –– like photographs of chairs or faces –– but it wasn’t sophisticated enough to detect more subtle frauds, like images of real wood.

🏢 Multinationals Included: A database created by reporters found that Kronospan, one of the world’s largest producers of wood-based panels and a supplier of IKEA, owns a transport firm that submitted what appear to be falsified photos to SUMAL for more than 240 transports.

>> Read the full story ([link removed])
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** Sanctions Haven’t Stopped Notorious Serbian Arms Merchant Slobodan Tešić
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💁‍♂️ The Background: Serbian arms dealer Slobodan Tešić has landed on several blacklists over the years, including a UN sanctions regime imposed after he sold weapons to Liberian warlord Charles Taylor.

Despite these barriers, Tešić has remained a dominant player in Serbia’s weapons trade. How? Our recent investigation may provide part of the answer.

🔦 The Revelation: A WhatsApp chat obtained by reporters suggests that Tešić quietly took over an arms trading company called M.M.P. Consulting, which once answered to his top competitor in the industry, Petar Crnogorac.

Tešić denies buying M.M.P. Consulting from Crnogorac’s business partner, Milorad Pušica. And indeed, Pušica never formally sold the firm, which remains registered in his name. But reporters uncovered additional evidence to back up the claim that Tešić secretly took control.

More Evidence of a Tešić Takeover:
* Two other sources in the Serbian weapons industry independently confirmed to reporters that Tešić had indeed taken over M.M.P. Consulting.
* M.M.P. Consulting experienced a surge in business after the alleged takeover. Shortly after the WhatsApp chat in March 2020, the firm raked in roughly $36 million of income from ammunition sales in 2020 and 2021, compared to zero income the year prior. In 2022, it earned $3.1 million.
* After inking ammunition deals with Saudi and Turkish authorities, M.M.P. Consulting hired several firms to handle the deliveries. Reporters contacted the owner of one of them, who indicated that he dealt with Tešić during discussions.
* Reporters found additional clues of a Tešić takeover, which you can find in the story

🌐 Why This Matters: Tešić was blacklisted by the United Nations and barred from international travel for years after he sold weapons to Charles Taylor in the early 2000’s. Today he faces U.S. and U.K. sanctions. This investigation shows how he may have avoided the obstacles of being a global pariah.

>>Read the full story ([link removed])


** Solomon Islands PM Has Millions in Property, Raising Questions Around Wealth
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💁‍♂️ The Background: Houses in Solomon Islands are usually built slowly, in fits and starts. So when four-time Prime Minister Manasseh Sogavare and his wife built eight homes in five years, neighbors were surprised. The cost of construction — at least $1.7 million — also raises questions given the prime minister’s modest salary.

🔦 The Revelation: Reporters found that a portion of the construction costs were likely financed in part by about $900,000 in loans they got in 2018 from the French-owned BRED Bank.

Financial experts say the couple wouldn't have been able to afford to repay the loans on their known income at the time — unless the bank gave them a very favorable deal, or if a third party somewhere was also guaranteeing their loan.

🌎 The Geopolitical Dimension: Local lawmakers have previously accused Sogarve of exploiting his relationship with a foreign government for personal gain. In 2007, the prime minister and his wife bought one of their properties with the help of a ~$350,000 mortgage from an Australian bank, which was backed by a loan guarantee from the Embassy of Taiwan. Sogarve was a staunch supporter of Taiwan at the time.

But in 2019, Sogarve dramatically changed his geopolitical stance, when he switched Solomon Islands’ diplomatic recognition from Taiwan to China, sparking riots in the country and consternation in the West. On April 17, he will be running to secure his fifth term in key elections.

>> Read the full story ([link removed])
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** THE OCCRP NETWORK
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🇧🇾 Belarusian Investigative Center: In 2022, OCCRP and partners revealed ([link removed]) how multiple firms exported Belarusian timber into the European Union by falsely claiming it was from Central Asian countries that aren’t under Western sanctions. Our Belarusian member center decided to revisit this story and found that the problem persists ([link removed]) .

🇭🇺 Atlatszo: Our Hungarian member center reports on how Foreign Minister Péter Szijjártó, one of the most prominent figures in Viktor Orban’s government, flies in private jets with little oversight ([link removed]) . Under Hungarian law, government officials must fly commercial unless authorized by the head of their agency. Since Szijjártó leads the foreign ministry, he may have the ability to approve his own use of charter flights.

🇳🇱 Follow The Money: Our Dutch partner revealed a hidden business relationship ([link removed]) between former Austrian Prime Minister Sebastian Kurz and the United Arab Emirates. Before leaving office amidst corruption allegations, Kurz’s government pledged to collaborate with the UAE on hydrogen energy projects. Eight months later, he quietly joined the Dutch subsidiary of Masdar, an Emirati state-owned renewable energy firm that wants to ship hydrogen to Europe.


** GLOBAL CRIME NEWS
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🇲🇪 Montenegro: Local media reports that authorities have detained the lawyer of Radoje Zvicer ([link removed]) , a fugitive leader of the Kavač, one of the country’s largest drug-trafficking gangs. You can read more about the Kavač and its gang war with the Škaljari, in this 2020 OCCRP investigation. ([link removed])

🇪🇸 Spain: Authorities recovered ([link removed]) 191 trafficked archaeological pieces that were being sold on social media sites. Among them were prehistoric, medieval, and modern pieces, as well as pre-Roman and Roman artifacts.

🇺🇸 United States: Two men pleaded guilty last week to securities fraud ([link removed]) in an insider trading scheme involving a company that merged with former U.S. President Donald Trump’s media group.
P.S. Thank you for reading the OCCRP newsletter. Feel free to reply with any feedback.

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