By Ingi Freyr Vilhjálmsson | 20 November 2019
ICELAND’S largest fishing company, Samherji, transferred more than N$1 billion through a shell company, Cape Cod FS, in the tax haven Marshall Islands from 2011 to 2018.
Part of the money were proceeds from Samherji’s operations in Namibia, where the company bribed officials to secure access to fishing quotas.
The company in the Marshall Islands was used to pay salaries to the crews working on Samherji’s trawlers, which fished horse mackerel in Namibia, Mauritania and Morocco.
Samherji channelled the money through bank accounts in Norway’s largest bank DNB NOR, whose main shareholder is the Norwegian state with a 34% stake.
Samherji got the horse mackerel quotas in Namibia by paying bribes of around N$150 million between 2012 and 2018.
The bribes continued after Cape Cod FS was discarded as a client by DNB NOR in 2018.
N$51 MILLION PAID TO DUBAI
One example of the extent of Samherji bribes is N$51 million paid to Tundavala Investments Limited in Dubai, which is owned by James Hatuikulipi, who last week resigned as managing director of Investec Asset Management Namibia.
The payments were made from Esja Seafood Limited – a Samherji subsidiary company in Cyprus – and one of its main international holding companies.
Esja Seafood has bank accounts in DNB NOR, which were used to make the payments under the guise of ‘consulting fees’.
This company in Cyprus also paid bribes into bank accounts in Namibia, for example to a company owned by Tamson ‘Fitty’ Hatuikulipi, the son-in-law of disgraced former fisheries minister Bernhard Esau.
Other politicians, officials and related parties in Namibia who took bribes from Samherji included the chairman of the board of the state-owned company Fishcor, James Hatuikulipi; disgraced former justice minister Sacky Shanghala; and Fishcor chief executive Mike Nghipunya.
Samherji’s chief executive and biggest shareholder, Thorsteinn Már Baldvinsson, authorised the bribe payments, says Jóhannes Stefánsson, the former general manager of Samherji’s operations in Namibia.
Stefánsson then carried out the bribe payments, he said. Stefánsson is now working with anti-corruption authorities in Namibia, and other countries, which are investigating the Samherji affair.
Stefánsson asserted: “Nothing is paid without his [Már Baldvinsson’s] prior consent.”
Már Baldvinsson has not been willing to grant interviews to Stundin, Kveikur or Al Jazeera.
When asked about the issue by Kveikur´s journalists after a radio interview in Iceland at the end of October, he deflected the question by saying: “The weather out here is beautiful, I think.” He then slipped into a coffee shop.
THE END JUSTIFIES THE BRIBES
Payments referred to as ‘consulting fees’ are common in cases of bribery. Another euphemism sometimes used to hide the fact that bribery is taking place is the description of the transaction as a ‘facilitation fee’.
As the English economist Paul Collier, a professor at Oxford and a specialist in the economics of Africa, says in his book ‘The Plundered Planet: Why We Must – and How We Can – Manage Nature for Global Prosperity’: “Bribes are of course never termed ‘bribes’, they are ‘facilitation payments’, often made by the resource extraction companies to local companies for unspecified services, and whose beneficial owner is opaque.”
Stefánsson says the payments were bribes, although they were couched in other language.
‘Fitty’ Hatuikulipi and James Hatuikulipi had no prior knowledge or experience of the fishing industry in Namibia before they started building up their relationship with the Iceland fishing company.
What they sold to Samherji was access to political power in Namibia, says Stefánsson. Samherji does whatever it takes to get its hands on the natural resources of other nations.
“The company deceives and makes empty promises in order to exploit these resources. They do not hesitate to use bribes and break the law so that they can take as much money as they can out of the country, and leave nothing behind but burnt soil and money in the pockets of a corrupt political elite.”
Stefánsson says during their first meeting, ‘Fitty’ Hatuikulipi showed him a photograph of himself at his own wedding with then fisheries minister Bernhard Esau, who is his father-in-law. ‘Fitty’ Hatukulipi is married to Esau’s daughter, Ndapandula.
In most countries, including Namibia, it is illegal to bribe politicians and official employees. Similarly, it is a punishable offence to pay bribes to politicians and government officials in other countries.
Because Samherji’s operations in Namibia were based on the payment of bribes, an illegal act in the country and in other countries where Samherji operates, the transfer of the revenue generated by the company’s fishing operations in Namibia can possibly be defined as money-laundering.
Taking into account that Samherji siphoned the money to the Marshall Islands, which is a tax haven, and that DNB NOR eventually considered the risk of maintaining Cape Cod FS as a client too high because of the possibility that the company was being used to launder money, a grim picture of what Samherji was doing emerges.
Money-laundering is defined as the act of introducing money, gained from unlawful activities like drug trafficking or the spoils of corruption, into “the normal economic system” says Ólafur Hauksson, the head of the district attorney’s office in Reykjavik, Iceland.
“Money-laundering is a huge problem in society because it is a crime which makes it possible for criminals to use money, which is not rightfully or lawfully theirs, in a legitimate way. If they succeed, then this creates a further incentive for the criminals to continue making money by breaking the law,” Hauksson added.
In May 2018, DNB NOR closed the bank accounts of the Marshall Islands shell company, Cape Cod FS, after a US bank, the Bank of New York Mellon, declined a transaction from the company.
The actions of the US bank resulted in an investigation of the Marshall Islands company, and later ‘off-boarding’, as the Norwegians called it, from Norwegian bank DNB NOR.
Off-boarding a client means a bank closes the accounts of clients and cuts off all business with them.
According to a risk assessment by the Norwegian bank, it was deemed too risky to allow Cape Cod FS to remain a client: “[T]he necessary resources to manage the sanctions risk will be too high.”
The sanctions risk in this case was the possible fine that authorities in the US, mainly the Securities and Exchange Commission (SEC), could levy on DNB NOR because of its lax anti-money laundering controls.
After an internal investigation, DNB NOR concluded that it did not have any information about the beneficial owner of Cape Cod FS. This is against the so-called ‘KYC rules’, which were explicitly enacted to combat money-laundering – that a bank must know the real identity of the clients that transfer money through its systems and the beneficiaries.
Samherji had been using Cape Cod for seven and a half years by the time DNB NOR discovered that it did not know the identity of the beneficial owner, even though it was Samherji which financed Cape Cod through its subsidiaries in Cyprus and Namibia.
‘BUSINESS AS USUAL’
What is remarkable about what happened after DNB NOR closed the accounts of Cape Cod FS is that this had no influence whatsoever on the Norwegian bank’s business relationship with other companies owned by Samherji, and the company was able to continue using its various others bank accounts in DNB NOR.
Among those were the bank accounts of the Esja Seafood company which were used to pay bribes to Namibians, James and Tamson Hatuikulipi, in Dubai and Namibia.
DNB NOR thought that allowing Cape Cod to continue as its client was too risky, but nevertheless the bank allowed Samherji, which according to the bank’s own assessment had controlled the Marshall Island company, to continue as a large client of the bank.
Samherji is still DNB NOR’s client, and the Norwegian bank is the fishing company’s hub abroad, its main business bank.
While Cape Cod FS was active, it transferred N$1 billion in more than 13 000 transfers from 2011 until 2018.
– Edited extracts from an article published by Iceland newspaper Stundin.