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0 The glass-and-steel office towers and luxury hotels along Sheikh Zayed Road are glittering reminders of Dubai’s rise from a cluster of settlements to what’s been called “one of the urban miracles of the modern world” — “a futuristic city rising in the middle of a desert.”
Today, this major traffic artery, named after the United Arab Emirates’ first president, is home to the regional headquarters of General Motors, Shell and other global giants attracted by the Persian Gulf nation’s reputation for stability and its open-for-business attitude.
At the prestigious address of 1 Sheikh Zayed Road, on the 16th floor of the H Hotel Office Tower, is an office that was the birthplace of a constellation of lesser-known firms — scores of offshore companies sold to clients who prefer to keep their identities undercover.
The Pandora Papers, a trove of secret records obtained by the International Consortium of Investigative Journalists, reveal that the real owners of these companies include a raft of shady players in the offshore world.
Among them: A Belgian tycoon accused of profiting from the smuggling of “conflict gold” ripped from violence-torn regions of the Democratic Republic of Congo. An internet mogul from Quebec convicted in the United States of money laundering that authorities said shifted $250 million for fraudsters, child porn traffickers and other criminals. A 26-year-old crime kingpin whose “dark web” internet site peddled guns, stolen financial information, counterfeit documents, toxic chemicals and huge quantities of illegal drugs — including heroin and fentanyl linked to overdose deaths across the U.S.
The story of the offshore companies created within Dubai’s corporate enclave casts fresh light on Dubai’s rise as one of the world’s financial capitals— and on the UAE’s role as a nexus for money laundering and other financial crimes.
The UAE is home to a thriving trade in financial secrecy. It offers shell companies that mask their real owners’ identities; dozens of internal free-trade zones that provide even more shadows for them to hide in; and a regulatory system known for what anti-corruption advocates call its “ask-no-questions, see-no-evil approach” to dealing with money tied to gold smuggling, arms trafficking and other crimes.
“The UAE provides secrecy, complexity and control,” Graham Barrow, a money-laundering expert and co-host of The Dark Money Files podcast, told ICIJ. “It’s a perfect storm. An invitation to criminals to make the most of it.”
The UAE is a confederation of seven sheikdoms — emirates — that gained independence from Britain and joined together half a century ago under the leadership of its first president and the namesake of Sheikh Zayed Road, the late Sheikh Zayed bin Sultan Al Nahyan.
Members of the six royal families that govern the seven emirates have a hand in almost every business activity in the UAE — as landlords of office towers and other properties, as owners of major corporations, as silent partners who take a share of the profits in other enterprises and as public officials overseeing sovereign funds and government-owned businesses. And, in turn, the emirates’ rulers decide who will serve as regulators overseeing businesses that they and their families may profit from.
The more than 11.9 million files in the Pandora Papers include some 190,000 confidential files from SFM Corporate Services, a UAE-based firm that has billed itself as “the World’s #1 Offshore Company Formation Provider.” SFM is one of the thousands of firms in the Emirates that help clients incorporate companies, including hard-to-track companies for people living and doing business outside of the UAE. These company formation providers are part of a global web of lawyers, accountants and other operatives who make the offshore financial system possible.
ICIJ’s review identified the owners of at least 2,977 companies in the UAE, the British Virgin Islands and other offshore financial centres that were incorporated with SFM’s help or received other services from SFM. The owners of these companies include the Belgian gold tycoon, the internet mogul, the dark web impresario and more than 20 other people accused of financial crimes and other wrongdoing around the world, ICIJ research found.
SFM said in a statement that it operates in a manner that is “absolutely legal in every aspect. SFM abides by the applicable laws and regulations in every jurisdiction it operates in.”
For several years, SFM operated out of an office on 16th floor of the H Hotel tower at 1 Sheikh Zayed Road, a building that ICIJ research indicates is owned by Sheikh Hazza bin Zayed Al Nahyan, the UAE’s former national security adviser and brother of Sheikh Mohammed bin Zayed, the crown prince of the emirate of Abu Dhabi and next in line to become UAE president.
Sheikh Hazza did not reply to questions that ICIJ sent to him via the UAE Embassy in Washington and the Abu Dhabi Executive Council media office.
Along with internal records from SFM, the Pandora Papers include tens of thousands of additional files related to the UAE, including documents from Seychelles and other jurisdictions that reveal offshore holdings of at least 35 members of the UAE’s ruling families.
Heavyweight Emirati royals with offshore holdings revealed in the data include Sheikh Hazza; his successor as national security adviser, his brother Sheikh Tahnoon bin Zayed; and the UAE’s prime minister and ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum.
The files show that the prime minister is connected — via two companies in the British Virgin Islands — to the founder of Dark Matter, a UAE-based cybersecurity firm that has been accused of spying on human rights activists and government officials in multiple countries.
In September, three former senior managers at Dark Matter, all former American military and intelligence personnel admitted in a deferred-prosecution agreement with U.S. authorities that they had helped hack mobile phones and computers around the world. Dark Matter has not been charged. It has acknowledged working closely with the UAE government but denies it has engaged in hacking.
The leaked records also show that Sheikh Tahnoon, the UAE security adviser, owned a British Virgin Islands company using unregistered “bearer shares,” which provide deep levels of secrecy because they are owned by whoever physically holds the share certificates. Long associated with financial misconduct, bearer shares have been banned in many jurisdictions.
Sheikh Tahnoon became embroiled this year in a U.S. political scandal involving the chairman of President Donald Trump’s 2016 inaugural committee, the American billionaire Thomas Barrack. A U.S. indictment charges that Barrack acted as an unregistered agent for the UAE by providing help to high-level Emiratis — including an Emirati official widely understood to be Sheikh Tahnoon — as they sought to covertly sway Trump administration policies. Barrack has pleaded not guilty.
Sheikh Mohammed and Sheikh Tahnoon did not respond to questions for this story. Other Emirati royals, the UAE embassy in Washington and media offices for the Dubai and Abu Dhabi governments also did not respond to ICIJ’s questions.
The Emirati government has previously said: “The UAE takes its role in protecting the integrity of the global financial system extremely seriously.
Concerns about the UAE’s role as a centre for financial crime have been around for decades. In the 1990s, the Bank of Credit and Commerce International — a global institution that was majority-owned by the Abu Dhabi royal family and the Abu Dhabi government — was implicated in bribery, money laundering, sex trafficking and terrorism financing, earning it the derisive moniker “Bank of Crooks and Criminals International.”
The UAE’s status within the world’s offshore financial secrecy system has grown markedly over the past decade. In 2009, Tax Justice Network, an anti-corruption research and advocacy group, listed Dubai at No. 31 in its ranking of the most important offshore jurisdictions — based on their levels of financial secrecy and the scale of their offshore financial activities. By 2020, the UAE ranked No. 10 on the group’s Financial Secrecy Index.
One thing that sets the Emirates apart from other secrecy havens is that the U.S considers the UAE a critical military ally and a bulwark against terrorism in the Middle East.
Because of the role the UAE plays in American national security and economic interests in the region, the U.S. hasn’t put the kind of pressure on the Emirates that it has on Switzerland, the British Virgin Islands and other offshore havens, according to Jodi Vittori, an expert on terrorism financing and a nonresident fellow with the Carnegie Endowment for International Peace.
Vittori said the U.S. has at times, such as after the 9/11 attacks, pressed the Emirates to work harder to stem the flow of money that finances terrorism. But, she said, “by and large, the U.S. seems to have turned a blind eye to their role in the facilitation of illicit finance, conflict minerals and organized crime.”
SFM was founded in 2006 by a former banker, Reza Afshar. Its headquarters, at first, were in Switzerland. It later moved its main offices to Dubai, while keeping a presence in Switzerland.
SFM markets itself robustly: A financial plan obtained by ICIJ noted that SFM was “one of Google’s biggest clients in Switzerland, spending more than two million dollars per year on pay per click” and other campaigns.
In 2013, a French legislative commission probing the role of banks and other financial actors in tax evasion highlighted some of the services SFM advertised online. Those services included the practice — common in the offshore industry — of supplying a stand-in director or shareholder “whose function is explicitly to conceal the true manager or owner of the company.”
The French commission called SFM’s online promotions an “incitement to evade taxes and commit tax fraud.”
The attorney for SFM, when asked about the commission’s allegation, said the firm “does not believe that the statement is the least bit accurate,” adding that there is “nothing inherently wrong with the goal of minimizing taxes.”
Offshore services firms like SFM are supposed to check not only their clients’ backgrounds, but also the sources of their money.
A check of publicly available information in 2017, when SFM set up a company for Firoz Patel, would have indicated that he was a high-risk client.
In 2012, federal authorities in Tennessee unsealed an indictment charging him with two counts of money laundering. The next year, Kentucky financial regulators accused Payza, one of the payment-processing firms that Patel ran, of “making fraudulent statements and misrepresentations” and engaging in “unlicensed money transmission activities.”
And in 2016, Payza was publicly linked to ZeekRewards, a fraudulent online business, run out of a small town in North Carolina, that promised big returns to small investors around the world. Attorneys appointed by a bankruptcy judge to probe the ZeekRewards scam reported that Payza had lined its pockets by enabling a $900 million Ponzi scheme. News articles reporting the allegation were available on the internet more than a year before SFM set up the UAE company for Patel.
SFM’s attorney said the firm conducts “the required due diligence” when it incorporates a new company for clients, but is “naturally not in a position to scour worldwide news.”
Five former SFM employees in Dubai and Europe told ICIJ that the firm’s drive to grow its business led it to ignore red flags and take on clients with questionable backgrounds.
Even if workers sensed something suspicious, one ex-employee said, they’d usually take the clients’ word about the clients’ backgrounds and financial activities.
“The client can say anything about their business,” the ex-employee said. “It’s easy to play dumb and say, ‘This is what the client told us.’ ”
The former employees spoke on the condition of anonymity because of legal concerns.
Two of the former employees said SFM took on clients from Iran and other countries that had been put under economic sanctions by the U.S. or other Western powers, despite the risk that those clients might be connected to people or companies on sanctions lists.
ICIJ’s review of SFM’s internal records found that the firm incorporated two companies for an Iranian-born citizen of Germany named Abdolhadi Tabibi. One of them was a UAE company called Mehr Trade Ltd. Public records show that Tabibi is the director of GIC International, listed by Iran’s national corporate registry as a subsidiary of Ghadir Investment, which in turn is part of a multibillion-dollar foundation under the direct control of Ayatollah Ali Khamenei, Iran’s supreme spiritual and political leader, who steers the country’s national and foreign policies.
Both Khamenei’s foundation and its investment arm are under U.S. sanctions. The sanctions — which have been lifted and reimposed over the years — have targeted Iran’s ability to develop nuclear weapons. Iran has used long-standing economic ties to the UAE to get access to international markets.
Tabibi and his company didn’t respond to questions from ICIJ about the purpose of the companies set up by SFM and whether they are linked to Iran’s supreme leader.
Other SFM clients identified by ICIJ through the Pandora Papers include Samir Traboulsi, a Lebanese financier who was convicted and fined in 1993 for his participation in what at the time was called the largest insider-trading scandal ever in France. They also include Ajaz Saddique, who was barred in 2014 from acting as a company director in the United Kingdom for 15 years after an investigation into what authorities said was multimillion-dollar tax fraud.
