Too Wealthy to Hide
Exposing the businesses and assets of politicians is only the first step
In 2016, the Panama Papers brought to light an ugly reality that most knew to be true, but just didn’t have the evidence to prove: Many politicians have business interests, and they don’t want you to know about them. In the years since, one exposé after another has continued to reveal politicians’ massive accumulation of wealth in countries ranging from Vladimir Putin’s Russia to Bashir al-Assad’s Syria, and involving leaders from Teodoro Obiang Nguema Mbasogo in Equatorial Guinea to Nicolas Maduro in Venezuela. The amount of wealth accumulated is staggering, sometimes in the billions of dollars, and assessments often underestimate total values, as parts of the networks remain undiscovered.
More and more, however, the mechanisms that the political elite use to hide their wealth are starting to break at the seams. Tactics and loopholes historically created for tax and privacy purposes are slowly being revealed to the public as leaks to investigative journalists unlock windows into this murky world. Yet these leaks often beg more questions than they answer. A leak may reveal the true beneficial owner of a major company, or it may only provide tiny bits of information about a company in a secrecy jurisdiction. While files may show that a particular company is linked to political elites, there may be no indication of what it does or what it owns. These revelations show that perhaps the bigger blind spot is not the corporate network itself, but whether and how a politician’s family may be using it nefariously. And when politicians write the rules, it can be next to impossible to figure it out if they are playing fairly.
The Aliyev Empire
Take, for example, the holdings of the two daughters of the president and vice president of Azerbaijan, published recently by The Sentry in Aliyev Empire. Leyla and Arzu Aliyeva’s $13 billion corporate empire spans over 100 companies and subsidiaries in 12 countries — and that is only what has been identified so far. The Aliyev family holds stakes in a vast range of industries including mining, banking, hospitality, construction, and more. Their truly global empire brings the family not only wealth, but power; it positions them politically and economically so that they can both shape and take advantage of the game — for instance, by winning government tenders for their own companies. It’s these tactics that require probing.
Even seemingly straightforward companies still require a closer look. The Aliyevs hold interests in restaurants, film production companies, and news outlets. And while all these companies may be engaging in legal business activities, they are also tools that the Aliyevs have used to soften their image and quiet criticism. It’s always worth asking, “Who’s funding this?,” and the public should know the answer when it’s a presidential family.
Then there are holdings in specific industries, such as banking, that can be dangerous when left unchecked. The Aliyev family own stakes in five banks in their native Azerbaijan, accounting for almost half the country’s banking assets. Investigators have seen what can happen when a presidential family maintains control over financial institutions. The Kabila family, in power in the Democratic Republic of the Congo from 2001 to 2019, owned and managed the Congolese branch of the bank Banque Gabonaise et Francaise Internationale (BGFI). Control of a bank gave the Kabilas access to a financial institution where they could have oversight of its compliance and anti-money laundering activities. The Kabilas then used the bank to launder and embezzle money from the government and send those funds abroad to purchase real estate. These activities continued even after the family’s stake in the bank was publicly revealed when whistleblower Jean-Jacques Lumumba exposed suspicious activities at the bank.
The political elite also can also take advantage of banks that they do not directly own but that have few anti-money laundering checks. The Aliyeva sisters were clients of a bank in Malta, Pilatus Bank, that was used to manage the money of politically connected clients. The bank transferred millions of dollars on behalf of the Aliyev family before it was shuttered over systematic failures to comply with anti-money laundering regulations.
Unchecked Risk
The issue is not that politicians own businesses, per se; it’s how far they go to hide their involvement, making it challenging for the public to ensure that they aren’t taking advantage of their positions of power to profit personally. Hiding assets erodes the foundation of trust the public deserves to have in their leaders. But there are standards designed to ensure public oversight and transparency. If they fail to do so, financial institutions should and must continue pressing.
First, there are checks for illicit activity. Financial institutions are required to conduct enhanced due diligence on transactions involving the political elite and their families, due to their unique risk factors for corruption and other illicit financial activities. When opening a bank account, this may come in the form of a literal check box exercise: Is this account linked to a politically exposed person? Time and time again, this box isn’t checked when it should have been, and banks cannot simply take self-disclosure at face value. To ensure that companies with accounts are not politically linked, financial institutions must insist on beneficial ownership information, conduct their own research beyond their customers’ self-disclosures, and request better data from governments and data providers on politically exposed persons and their families. By insisting on proper enhanced due diligence, banks can serve as a solid defensive line, catching and preventing illicit activity by the political elite.
Beyond financial checks, there must also be checks and balances against abuse of power, corruption, and influence peddling. Politicians need to be more transparent about their corporate holdings and assets, and civil society should push hard for this transparency. When self-disclosures fail, beneficial ownership registries can offer the public transparency. Major jurisdictions such as the United States and the European Union, along with dozens of other countries, are starting to implement these registries, but they must ensure that the registries are accurate, publicly accessible, and frequently updated if they are to be used as accountability tools.
Until these practices are standard — and even beyond — protection should be put in place for journalists, civil society members, and whistleblowers. It is often only due to their hard work identifying and unpacking illicit activity that the public is made aware, and a free press and open discourse are vital to holding our politicians to account.
Some political families have become so wealthy that it will be a challenge to counteract the advantages their wealth brings in the fight against corruption. But their vast empires also make them too wealthy to hide from public view, and by tugging on the exposed parts of their networks, it is possible to lift the veil of secrecy. The Sentry and others will continue to reveal these networks and won’t let them hide in the shadows. If a politician wants to be in the limelight, they need to expose their financial dealings to the sunlight.
