#PanamaPapers: Financing chaos in Yemen with 'The Sugar Kings'

#PanamaPapers: Financing chaos in Yemen with 'The Sugar Kings'
Comment: For ordinary Yemeni citizens, information contained in the Panama Papers concerning the business elite and its links with Saleh demonstrates the corruption affecting their lives, says Baraa Shiban
5 min read
11 Apr, 2016
Corruption and cronyism were commonplace under Saleh’s rule [AFP]

As the International Consortium of Investigative Journalism – ICIJ – revealed one of the biggest leaks of inside information in history, known as the Panama Papers, hundreds of Yemenis turned their eyes to the network in search of information related to the long standing dictator Ali Abdullah Saleh.

The leaks have so far exposed offshore holdings of 12 current and former world leaders in addition to associates of heads of state.

Panamanian law firm Mossack Fonseca helped to create offshore companies, assisting heads of state and their associates in moving assets to tax havens.

On 6 April, an investigation carried out by The New Arab based on the Panama Papers revealed information on one of the most prominent business figures in Yemen - Shaher Abdulhak Bishr and his brother Abduljalil, who are known for their close ties to the former president Ali Abdullah Saleh. They have been dubbed "the sugar kings" by media outlets for their involvement in the soft drinks industry.

The investigation showed that the Bishr brothers, of the famous Taj Sheba Hotel in Sanaa, Mercedes Benz Yemen and MTN Yemen - the second provider of mobile phone services - as well as many other companies in Yemen and abroad, own 18 offshore companies in the British Virgin Islands. These offshore holdings help the family tuck away assets far out of the Yemeni authorities' reach.

The Bishr family enjoyed a special relationship with Ali Abdullah Saleh during his rule.

According to one state official who is still serving in Yemen, "in the year 2000, Saleh gave the Bishr family and the tribal and business figure Hameed Al-Ahmar exclusive rights to become the only two providers for mobile services for more than seven years. In exchange, Saleh shared profits in both companies without contributing a single dollar."

The same official said that Bishr Businesses received special treatment from  the Yemeni government. He adds that "when Shaher Abdulhaq was building the Taj Sheba hotel, the Yemeni government paid for the iron and cement under the guise of encouraging investments."

Thirty three years of similar business dealings, corruption and cronyism have created billionaires in one of the world's poorest countries

He adds that "under the same reasoning, many Bishr businesses were exempt from tax, it was all corruption".

Corruption and cronyism were commonplace during Saleh's rule. Government tenders were open exclusively to certain businesses, one of which was the Bishrs'.

One employee at Mercedes Benz Yemen, reports that in 2007, a shipment of 40 brand new Mercedes cars arrived at the company. He says, "we were told that the shipment was going to the president's office". Given that Mercedes makes some of the most expensive cars in Yemen, and that the Yemeni government had imposed stringent cuts on its budget, it is clear that a proper bidding process was completely absent.

Thirty-three years of similar business dealings, corruption and cronyism have created billionaires in one of the world's poorest countries.

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Read more - Murder, tax-evasion, cronyism: Yemen's 'Sugar Kings' implicated in PanamaPapers

Ali Abdullah Saleh stepped down from power after a popular uprising in 2011. He signed an agreement brokered by the UN and the Gulf Cooperation Council granting him immunity from prosecution in exchange of him leaving power.

Not long after a 10-month National Dialogue process in 2013-2014, Ali Abdullah Saleh was preparing for his return. In September 2014 he facilitated a takeover of the capital by the Houthi rebels - an insurgency group in the North that had fought with the government for years. As a result the UN Security Council sanctioned Saleh and two of the Houthi rebel leaders, this however was not enough to stop Saleh from obstructing the transitional process.

In January 2015, Houthi rebels helped by military units loyal to Saleh placed the Yemeni president under house arrest. In March of the same year, Saleh threatened his successor President Hadi, in a televised gathering at his house after an attempt by Hadi to reinstate the government in Yemen’s second capital Aden.

Saleh used the Yemeni air force to bomb Hadi's residence in Aden, triggering an armed conflict, a civil war and a coalition led by Saudi Arabia to back Hadi's government.

In April 2015, the UN sanctioned Saleh's eldest son Ahmed along with the leader of the Houthi rebels Abdulmalik al-Houthi. These sanctions proved to be ineffective, however, as Saleh operates through a network of associates like the Bishr family. Companies such as Mossack Fonseca create shell companies. These corporate structures can be used to hide ownership of assets and are specifically designed to avoid such sanctions.

Media coverage of Yemen over the past year has focused predominantly on the regional rivalry between Saudi Arabia and Iran. The role of the former president has been largely ignored and stories of the Yemeni people are almost nonexistent.

"I always wondered where Saleh would rule after he's destroyed Yemen" ponders Ameen Dabwan. "When I read Al-Araby Al-Jadeed's investigation, it answered a lot of my questions", he adds. The 30-year-old teacher, lost his job after the Houthi-led attempted coup in January of last year.

Offshore companies have contributed to our suffering. For many people that money is just numbers, for us that money is missiles and bombs falling on our heads every day

He and his wife were both chemistry teachers in a public school in Sanaa, each earning the equivalent of US$320 per month.

When the war broke out, he was targeted for being an activist, and escaped to the city of Taiz. He now earns around US$250 per month from photography, and his wife has lost her job.

Ameen, like many his age, participated in the Yemeni uprising in 2011. He says that corruption was one of the main reasons behind the Arab Spring. People were angered by theft of public money.

Today, Taiz is a city under siege as the Houthis and Saleh forces rain missiles over the city every day. Ameen says that "Offshore companies have contributed to our suffering. For many people that money is just numbers, for us that money is missiles and bombs falling on our heads every day."

Baraa Shiban is a Yemeni human rights activist and Yemen's project coorindator for Reprieve. Follow him on Twitter: @BShtwtr

Opinions stated in this article remain those of the author and do not mecessarily reflect those of The New Arab, its editorial board or staff.