Panama Papers reveal dubious wealth of dictators, cronies

Syria's President Bashar al-Assad, right, meets with Algerian Minister of Maghreb Affairs, African Union and Arab League Abdelkader Messahel in Damascus, Syria.(Provided by Syrian Arab News Agency on April 25) © Reuters

CAIRO -- The litany of secrets that has been exposed by the Panama Papers includes sordid stories about people close to dictators who are subject to international economic sanctions.
These revelations show how tax havens have shielded strongmen from international financial regulations, hiding their assets and helping them launder ill-gotten wealth.
The millions of documents leaked from a boutique Panamanian law firm, Mossack Fonseca, include the name of a man who epitomizes the corruption and excesses of the Syrian leadership.
Rami Makhlouf, the most powerful figure in Syria's business community and a confidant and cousin of President Bashar al-Assad, has been a target of sanctions imposed by the U.S. Treasury Department, which in 2008 called him "a powerful Syrian businessman and regime insider who improperly benefits from and aids the public corruption of Syrian regime officials."
Using intimidation, and exploiting his close ties to the Assad regime, Makhlouf has amassed assets estimated at $5 billion, nearly 10% of Syria's gross domestic product immediately before civil war, which stood around $60 billion in 2010.
Paper trail
Makhlouf first gained international notice for his business dealings a decade ago. A 2006 State Department diplomatic cable that came to light through Wikileaks, referred to him as a person who had "benefited from the system of corruption most egregiously." The cable described how he used his status as a member of Assad's inner circle to gain illicit profits by hampering rival businesses, for example.

The Panama Papers have shed fresh light on the activities of Rami Makhlouf, a confidant and cousin of Syrian President Bashar al-Assad, accused of using his ties to the government to squash competitors. © AP

Makhlouf is said to control a wide range of sectors in Syria, including real estate, telecommunications, construction, oil, trade and airport operations. The latest Panama Papers revelations show that Mossack Fonseca was aware of allegations that Makhouf's family was involved in corruption. The law firm was warned by authorities in the British Virgin Islands, another tax haven, about the possibility that a firm linked to Makhlouf might be involved in money laundering.
The Panama Papers have also exposed illegal profiteering by another dictator -- Azerbaijan's President Ilham Aliyev, the son of Heydar Aliyev, who was president from 1993 to 2003. Aliyev's daughters have lucrative interests in several gold mines, the papers show.
Azerbaijan has been hit hard by the collapse of commodity prices, which has forced the government to devalue the currency. While public discontent over the government's economic management is growing, Aliyev has scrapped the constitutional ban on a third presidential term and opened the door to becoming president for life.

Aliyev has also intensified a military crackdown on Nagorno-Karabakh, an autonomous territory seeking independence. Fighting between Azerbaijan and Armenian-backed separatists in the territory resulted in another death on Wednesday, according to Reuters. Azerbaijan and Armenia, two ex-Soviet states, fought a war over the territory in the early 1990s, killing thousands on both sides.
The history of the Middle East and the Caucasus is littered with undemocratic leaders recklessly accumulating power and wealth, thereby fueling bloody conflicts and terrorism. Examining the role tax havens play in shoring up strongmen, and minimizing it, is key to restoring peace and stability in these regions.