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The implosion of the Paramount subsidiary also casts a shadow on the image of group executive chair Ivor Ichikowitz as a pioneering industrialist with lofty ambitions for Africa.

With Ichikowitz at its helm, Paramount set up a complex offshore structure that, say critics, allowed profits to be creamed off in Cyprus.

Meanwhile, back in South Africa, PCS was left short of working capital, and its management team at odds with Ichikowitz and the Paramount high command.

Paramount, however, claims its critics are “part of a wider misinformation campaign orchestrated by disgruntled former employees attempting to compete with Paramount for international contracts”.

The story begins in 2011, when PCS’s forerunner, Paramount Land Systems, clinched the contract to provide STK with 101 armoured personnel carriers based on the four-wheel Marauder, destined for the Singaporean army.

The project included an additional 186 Marauder hulls to be shipped for further assembly in Singapore.

The way the deal was structured, Paramount Logistics Corp (PLC), an intermediary company in Cyprus, held the contract with STK, subcontracting PCS to deliver the goods.

This meant STK’s payments would be routed through the Cyprus company, which would then inject capital into its South African affiliate for production.

It also meant the bulk of the profits could be extracted in Cyprus, subject to a much lower corporate tax rate.

In the years after the deal was inked, STK made advance payments to PLC — a total of about €45-million by late 2016, a spreadsheet circulated internally suggests.

That in itself is not unusual in the industry: large downpayments allow buyers to benefit from economies of scale and prevent their exposure to multiyear price inflation.

Only, in the case of the STK deal, that seemingly did not happen.

Read

Part one: The hollow man?
FinCEN Files: Planes, boats and tax havens

The spreadsheet suggests Cyprus-based PLC deducted the entire 30% budgeted profit for the deal — more than €27-million.

In other words, the initial tranches for the contract were paid into the Cyprus account, with PLC setting aside the profit it planned to earn over the course of the multiyear contract.

“They were working the wrong way around,” said Andrew Charter, the former head of commercial and programme management for PCS. “It is so evidently irresponsible. How can you in your right mind take profit upfront when you have such a complex long-term contract?”

What it meant, according to Charter and several other PCS sources, is that instead of having the required cash available for Project Marlin, PCS was drip-fed the working capital it needed to meet its contractual obligations. It is not only that PCS was short-changed, Charter argued, but that the payments that did arrive came too late.

The spreadsheet reflecting the €45-million payment shows that by October 27 2016, PLC — by Paramount’s own calculations — had transferred only about €15-million of the €18-million it had earmarked as working capital for Project Marlin. This was nearly five years after the deal had been signed.

Said Charter: “You need the money when you need it. If you get the money over 10 years that you need in one, that doesn’t help. From the outset you’re undermining your subsidiary’s ability to perform.”

The production line was extremely complex and sensitive, and any delays in payments would hold up delivery of parts. If one component was late, the whole production process would grind to a halt, causing further hold-ups and rising cost inflation — precisely what STK’s downpayment was supposed to avoid.

“We were being drip-fed insufficient sums of money at the incorrect time — much less than required and over a staggered timeframe,” said Charter.

“We then got bogged down in micromanaging [local suppliers], saying we know we owe you X amount, can you just release this one part so we can get one vehicle moving and we’ll pay for that.”

In response to a detailed question about the alleged front-loading of profit on the STK contract, lawyers for Paramount told amaBhungane: “There is no truth to the allegation that funds due to Paramount Combat Systems were intentionally withheld.”

In written replies, Paramount’s lawyers said there was a difference between a shareholder deciding that it was no longer willing to fund a loss-making operation and, on the other hand, holding back on paying amounts that were due — something they denied took place.

The lawyers did not directly address the claim that profit of €27m was set aside, stating: “Without the ‘financial records’ on which you rely for your assertions, our clients cannot respond thereto.”

Fallout

Over the years, the deal between STK and PLC was subject to no fewer than five contract variation agreements, including variation four, in 2015, which provided for the contract to be ceded from PLC to PCS.

This, according to Charter and another senior Paramount source, was due to pressure from the Singaporeans, who were aware of the cash flow problems. From then on, STK paid invoices directly to PCS.

But the new arrangement caused its own problems, as PLC still owed its South African affiliate money from STK’s advance payments. As a result, Charter said, the Singaporeans at times withheld payments to PCS, to pressure PLC into meeting its own funding commitments.

STK clearly also had concerns that its payments were subsidising other, unrelated PCS projects.

And so, in November 2016, matters came to a head.

On November 9, STK’s Project Marlin manager wrote to Charter, raising concerns about further slippage: “ST Kinetics has upheld our part of [the] agreement … by completing the payments earlier… As discussed earlier we require the documentary proof to show that the payments made [go] back to Marlin Project only… As before we require this before the next payment can be processed. Please be informed that our confidence slips further when [PCS] does not keep [to] the delivery schedule.”

At that point Ichikowitz got involved, asking: “How can we possibly be slipping again?” — especially given a R43-million loan facility he had made available to PCS.

PCS chief executive Ben Jansen tersely explained how the money had simply gone out the door again to keep long-delayed creditors at bay. “We still owe R65-million today to local creditors and R35-million to overseas [creditors],” he wrote. “We have accelerated the Marlin hull production to meet the schedule — we will meet it but [are] now slowing down due to suppliers on hold. We have only managed to put 12 [Marauder units] in assembly and are awaiting parts being on hold due to [late] payments.”

On November 18, Jansen, trying to calculate how much PLC still owed PCS, wrote to Paramount executive Morris Kotzen.

“We are trying to figure out how the Marlin invoicing to the relevant parties work[s]. Can you please explain?” Jansen asked.

Kotzen replied: “There is no invoicing on the main contract from [PCS] to PLC.”

The spreadsheet he attached showed PLC still owed PCS nearly €3-million of the €18m from STK’s advances.

By the end of November, Jansen had had enough. He wrote to Ichikowitz and Ravinder Singh, the president of STK and a former chief of the Singapore army.

In his e-mail, Jansen said PCS had for a long time found itself between a rock and a hard place due to inadequate project funding from PLC and delayed payments from STK.

“This causes major distress in the business … My appeal is very simple — kindly resolve the funding/payments on an urgent basis so that we can keep the show on the road. Currently the PCS factory is grinding to a stop due to [a] lack of parts.”

Ichikowitz sent an icy response, saying he was “interested to understand your logic in involving a customer in what should be an internal discussion”.

Jansen shot back: “All the contracts that [PCS] holds from PLC are deprived of working capital though it is clearly stipulated in the contracts. The Marlin contract is a very good case in point. It is completely undercapitalised from a cash flow perspective and this is also very well-known but ignored…

“Why involve Ravi — who else must I involve? No-one pays attention. STK are delaying payments because we don’t make progress and so the story goes around and around. I cannot allow my team and the suppliers to be put at risk here any more — enough is enough.”

In early December, STK executive Gan Boon Jin e-mailed Kotzen, expressing concern about the failure to inject sufficient cash, as had been agreed, and inquiring about a €3.5-million injection promised on October 25 “in the presence of Ivor”.

In a whiff of what was to come, the e-mail also read: “Heard rumour that Ben is moving on. Hope it is not true.”

‘Cannibalisation’

On December 16, two weeks after Gan’s e-mail, Ichikowitz flew to Singapore for an urgent meeting with STK. He was the only Paramount executive to attend.

When draft minutes were more widely circulated by STK in early January, they set a cat among the pigeons.

According to the minutes, Ichikowitz pledged that PLC would inject €3-million for PCS’s working capital by February 2017 — but he also requested that STK pay invoices amounting to €3-million to assist with cash flow problems.

Significantly, the minutes also recorded Ichikowitz blaming the problems on Jansen and PCS’s management.

“Ivor deduced that PCS had failed to use the available funds to purchase the required parts [according] to the Marlin production requirement, and that seems to be the cause of the current shortcomings at PCS,” the minutes noted.

It is a line Paramount continues to push.

In written replies to amaBhungane, the company said: “PCS’s management team at the time did not ensure PCS’s on-time performance of its obligations and as a result of their financial mismanagement, the company faced serious cash flow challenges.”

In addition, the December 2016 minutes recorded that “Ivor revealed his intention to replace Ben with John Craig as CEO of PCS”.

Craig, a senior Paramount executive, is a longtime confidant of Ichikowitz.

Charter said PCS’s senior management was furious to learn that Ichikowitz had “thrown them under the bus”.

The minutes were hastily withdrawn, but the damage had been done.

Jansen was removed as chief executive later that month. Charter, who had been working closely with him, claimed he too was effectively pushed out. (He challenged this at the Commission for Conciliation, Mediation & Arbitration, but the matter ground to a halt after PCS was put into liquidation.)

In a memo dated January 10 2017, Charter wrote: “It is clear from the minutes that the poor financial status of [PCS] and the Marlin programme is … being blamed on the executive management of [PCS] by the group chairman and beneficial owner of Paramount group [Ichikowitz].

“This is an inaccurate assertion, as acts of transfer pricing and a cannibalisation of revenue on the part of the group are at the heart of our financial and general operational predicament.”

Another former employee also blamed the opaque structure of the offshore arrangements for the demise of PCS. “When funding comes in, it should go to [PCS], not to Cyprus. There is no way of ensuring that money was properly managed and channelled.”

Charter and two senior PCS sources claimed that Paramount did not simply draw on some of its banked profit to inject cash, but instead provided loans to the ailing company. These would then be used to offset money PLC owed PCS as products were delivered.

Intercompany loans

So what of the roughly R500-million Paramount has claimed was “a matter of public record” PCS’s shareholders had put into it?

In written replies, the company said: “Paramount Industrial Holdings [PIH — a South African holding company for the Paramount Group] has loaned PCS in excess of R446-million over the years and stands to lose this investment.”

That figure has not stood up to scrutiny.

The claim that PIH submitted to PCS’s liquidators was slightly less, about R423.6-million, which it said was advanced to PCS via loans.

After liquidators advised that there was a large error in the PIH claim, Paramount was obliged to admit that R54-million, reflected as owed by PCS to PIH was, in fact, funding that had not only been received by PIH, but was also owing to PCS.

Following the correction of this “unintentional accounting error” the claim was reduced by R108-million, to R315-million.

Other claims against PCS by companies within the Paramount stable were rejected by the liquidators — notably a R97-million claim by a subsidiary in the United Arab Emirates and a R43-million claim by Socintra, an entity incorporated in the British Virgin Islands and owned, confidential banking records suggest, by Ichikowitz and one of his brothers.

Socintra owns the now resurrected Paramount Land Systems — forerunner to PCS — which bought some of PCS’s key assets out of liquidation in a process that is being challenged by Canadian creditor General Kinetics.

Loan accounts contained in annexures to court documents, while incomplete, bolster the allegation that PCS was starved of capital when it needed it most.

The records suggest that, from the beginning of 2016 until around at least September of that year — a critical period when PCS was desperate for cash — PIH does not appear to have advanced more than about R23.3-million.

Sources told amaBhungane that PCS needed roughly that amount each month just to keep production going.

PCS did, however, receive significant loans prior to this.

Over the years, Paramount loaned about R170-million to the companies that would become PCS. But a large portion of that — about R60-million, according to one source — was for acquisitions of other companies.

Only after Jansen’s departure in early 2017 did money start to flow into the company in amounts approaching what was required.

It is unclear why Paramount only started to turn on the taps then. But it was too late: production had ground to a halt and the company had fallen so far behind on deliveries that it could not hope to catch up.

Collapse

It was not just Project Marlin that PCS had fallen behind on. The pattern was repeated across other contracts.

A former longtime employee who worked in production told amaBhungane of how, when clients asked to inspect components for their vehicles, he would have to pass off parts meant for other contracts as their own.

He said resources from one project would be used to plug holes in another. “We had to come up with all kinds of excuses and try and postpone delivery … and steal from Peter to pay Paul.”

PCS was also desperately lagging in its payments to other companies. The former employee said he had doors slammed in his face by increasingly hostile suppliers. “After a while some were just saying: ‘Get lost. You people don’t pay, so get lost!’”

After Craig replaced Jansen as chief executive, the company stumbled on for another year, falling even further behind target.

Tertius Pienaar, who had worked for the Paramount group for eight years and was a supervisor on the production floor at the time, said production ground to an almost total halt after Jansen left.

“For the better part of eight months or so we did absolutely nothing production-wise except for the odd demo,” he said.

The following year, in February 2018, STK applied to have PCS liquidated. Paramount did not oppose the application.

In its application, STK claimed to have channelled about €68-million (of the €90-million contract price) into Project Marlin, yet “received nothing resembling complete performance and the prospect of substantial (let alone complete) performance … is now so remote as to be negligible”.

Paramount told amaBhungane that “the impression that the STK contract was the only or main business of PCS … was not the case”.

It was not the only contract, but it was the largest by a very long way. The next-largest deals after STK’s 101 vehicles and 186 hulls were with Azerbaijan, for 60 vehicles, and Jordan, for 50.

The Azeri and Jordanian contracts, according to sources, were each valued at about $50-million, though neither came close to completion.

According to Charter, the Azeri deal turned sour because of delivery delays and a conflict over licensing rights. “The same problems were replicated — get the deal, get the downpayment, and none of the programmes are delivered as planned.”

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The Jordanian deal collapsed at the end of 2017, when the kingdom experienced severe financial challenges. The Jordanians defaulted on payments, and advised they did not have funds to cover the balance of the order.

Paramount claimed the demise of PCS was brought about, in large part, by “the cancellation of certain contracts, the insolvency of certain subsuppliers, market conditions and yes, indeed, failure of the then executive management”.

But the company emphasised that, “as a result of Paramount’s investments in South Africa, there have been significant exports from South Africa, significant foreign exchange inflows into South Afirca and significant job creation in South Africa”.

Charter, however, said the collapse of PCS cost hundreds of quality jobs in South Afica. People who “were on site for 18, 19, 20 hours a day” ended up as “blood sacrifices”.

Several former employees are still furious.

“Paramount is still operating today like nothing happened,” said one, “and people’s livelihoods went down the drain.”

In written answers the company said: “From April 2018, Paramount … hired a number of staff (most of them ex-Paramount Combat Systems employees who were left without employment due to the liquidation of thereof) and started operating a new vehicle business.”

Reckoning

The suspicion that Paramount was able to walk away from the wreckage and continue “like nothing happened” forms the core of General Kinetics’ challenge to the sale of some PCS assets by the liquidators. General Kinetics is unrelated to STK.

In court papers Paramount stated: “Kinetics alleges or at least infers that [PCS] incurred losses building up significant creditors, and when this happened the Paramount group decided to liquidate this company with the intention of diverting its valuable assets to a different Paramount entity…

“This version is, however, patently false and not supported by any factual substantiation; it is denied in toto.”

Paramount may be correct — but a general suspicion about the manner in which the company collapsed has been given further credence by the liquidators’ application for a so-called section 417 inquiry into the affairs of PCS.

The liquidators’ application for the 417 inquiry itself is secret, but in correspondence with amaBhungane the commissioner appointed to conduct the inquiry, advocate Chris Eloff, noted that the liquidators told him they “intend to investigate whether potentially impeachable transactions … were concluded … and whether criminal offences were committed”.

Ichikowitz’s critics say the case of PCS gives the lie to his self-styled image of a benevolent, patriotic industrialist who has taken up the country’s causes as his own.

It remains to be seen whether they will be proved correct.

*Read more of Micah Reddy’s investigations here.

The post Part two: The hollow man? In the wars appeared first on AmaBhungane Centre for Investigative Journalism.

It would be the first in a string of reports Barclays produced on its client around questionable wire transfers.

The Barclays reports are a fraction of a much larger trove of secret financial records obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ), a nonprofit news outlet and global network of investigative reporters of which amaBhungane is a partner.

The leaked documents, known as the FinCEN Files, include more than 2 100 suspicious activity reports (SARs), produced by banks and other financial entities and submitted to the US Treasury’s Financial Crimes Enforcement Network (FinCEN) under anti-money-laundering provisions.

SARs form part of global banking compliance requirements; they are routine measures to help detect potentially illicit financial transactions. The information they contain is not necessarily evidence of wrongdoing and must be treated with caution. In essence, SARs amount to untested allegations, akin to confidential informant tipoffs, albeit based on banks’ privileged access to their clients’ transactions.

According to explanatory narratives attached to its SARs, which set out the motivation for Barclays’ apparent suspicions, the bank filed the April 2015 report “due to USD wire transfers involving Paramount … and its chief executive officer and beneficial owner, Ivor Ichikowitz”.

The narratives say these transfers “appeared to be suspicious” due to concerns that “Ichikowitz may have been involved in a potential bribery and foreign corruption scheme involving South Africa’s president, Jacob Zuma”; because Zuma was “identified in numerous negative news articles [as] previously being indicted on money laundering and corruption charges”; and because South Africa was “a high-risk geography for bribery and corruption”.

Details of the 2015 transactions that prompted Barclays’ initial report are not known, as they were not included in the leaked FinCEN material. But in September 2016, the bank widened its monitoring to include all of Ichikowitz’s outgoing wire transfers citing “concerns about his source of wealth”, and undertook a review of all past wire activity for Paramount.

Ichikowitz’s association with Zuma and the ANC was nothing new. News reports had previously revealed Zuma had flown on Ichikowitz’s private jet free of charge, including to Lebanon and Kazakhstan for ANC “fundraising and business meetings”.

Zuma and several senior ministers flew the same luxury jet to New York for the 69th UN General Assembly in 2014 at a cost to the taxpayer of R3-million to R6-million, by one expert’s estimate.

It was also known that Ichikowitz had partnered with “Oilgate kingpin” Sandi Majali, who ran an alleged ANC front company involved in the oil-for-food programme with Iraq.

Ichikowitz told reporters at the time that there was nothing improper in his support for the ANC: “This was never conditional. Majali was part of the fundraising structures for the ANC and I was helping out. I never hid it.”

In a response to detailed questions, UK lawyers representing Ichikowitz told amaBhungane he was not prepared to comment on “any allegation relating to confidential information that has been unlawfully obtained by the ICIJ…

“He notes only that the Paramount Group of companies act in accordance with the laws of their residence and international law, and so too does our client.”

In response to questions from the ICIJ, Barclays said in a two-page letter that it could not legally comment on particular SARs, their contents, or the individuals and businesses named in them.

The ICIJ documents show the bank continued filing reports on Paramount and Ichikowitz, over time broadening its reporting to include new individuals and entities in the web of Paramount-linked transfers.

Barclays also commissioned a “politically exposed person” review that included an April 2017 “enhanced due diligence level III” (EDD3) report by London-based private intelligence firm Orbis Business Intelligence.

Orbis’s co-founder, former MI6 operative Christopher Steele, authored the famous dossier containing explosive allegations of co-operation between Donald Trump’s campaign and the Russian government during the 2016 US presidential elections.

An EDD3 probes the background of an individual or company, typically through an in-country “boots on the ground” investigation rather than just desktop research.

The SAR narrative contains a claim by Orbis that it interviewed a source who “acknowledged that Ichikowitz benefits from his donations to the ANC by being awarded major contracts”.

“The EDD3 confirmed that Zuma and Ichikowitz have a close relationship and the report states that Zuma … [has] been flying on Ichikowitz’s aircraft. The report alleged that this relationship is due to the role that Zuma holds (eg, the president of South Africa), rather than due to a friendship.”

The SAR does not cite any evidence for these claims, but notes news reports that Ichikowitz had previously provided Zuma with an aircraft, free of charge, for ANC meetings in Lebanon and Kazakhstan.

Questions sent to Zuma, via his lawyer Eric Mabuza, and to ANC spokesperson Pule Mabe went unanswered, despite attempts to follow up.

Bell Pottinger

The Orbis report written for Barclays seems to draw particular attention to Paramount contracts in Malawi — something amaBhungane previously reported on.

Under then president Joyce Banda, Paramount secured a $145-million (almost R2.5-billion now) contract to supply patrol boats destined to operate on Lake Malawi, as well as other military equipment.

After a change of government, the deal was cancelled amid allegations that it flouted procurement processes and was prohibitively expensive.

According to the SARs, the Orbis report “strengthened” suspicions of corruption by revealing new links to the now infamous public relations firm Bell Pottinger, “which was allegedly introduced to Banda by Ichikowitz in order to assist Joyce Banda to improve her public profile”.

The Telegraph previously reported that Ichikowitz’s family foundation had paid the PR firm to help airbrush Banda’s image. It quoted his brother Eric as saying: “The family foundation believes that President Banda is a force for good in Malawi and that she is striving to improve the lives of all Malawians.”

He added that there was “absolutely no connection between contracts undertaken by [the] Paramount Group and its companies and any charitable work undertaken by the Ichikowitz Family Foundation”.

The SARs, however, appear to contradict that claim, reporting payments to Bell Pottinger around that time coming from the company, not the foundation.

“A review of Paramount’s accounts at the time identified regular non-USD wire payments from Paramount to [Bell Pottinger] in or around and between January 2012 and December 2013, totalling approximately twenty-nine (29) payments aggregating to 500 000 Euro (approximately $585 245.00).”

But the SARs are inconclusive, noting that while invoice numbers were cited on the payments, “without reverting to the client, it was deemed impossible to opine on whether these related to the group’s own activities with [Bell Pottinger] or funding for Joyce Banda per these allegations.”

Opaque offshore world

The FinCEN Files are a window into the architecture of complex financial arrangements and murky tax havens churning with money from questionable sources — a system that allows global elites to conceal wealth and wash dirty money.

Similar architecture was evident when amaBhungane began investigating Ichikowitz’s web of offshore companies and sprawling business interests, which in addition to arms includes mining, toys and teddy bears, and consumer electronics through his family’s interest in the Core Group — the sole distributor of Apple products in South Africa.

Cyprus company PLC sits at the heart of Ichikowitz’s international business empire.

The company features in a separate and ongoing amaBhungane investigation into the collapse of Paramount’s South African armoured vehicle business. (See a new story on that topic next week Thursday at amaBhungane.org.)

At issue in that case are claims, stoutly denied by Paramount, that profits were hoarded offshore to the detriment of the South African operating company.

PLC is a hub through which many of Ichikowitz’s international transactions flow and, as our other reporting shows, it is the contracting party on many of the group’s defence deals.

It also features prominently in the FinCEN Files.

According to documents from the trove, Barclays bank had by January 2017 noted that “one thousand four hundred eighty-four (1 484) wires aggregating to $293 394,991.98 will be reported for Paramount”.

Subsequent reporting pushed up that figure.

All told, Barclays facilitated $500-million (about R8.5-billion now) in transactions across the globe for Ichikowitz and his companies up to late 2017, after which records are not available.

Barclays appears to have been alarmed for a number of reasons, including “the possible layering and commingling of funds between Ichikowitz’s investment vehicles … and his other entities for which the purpose was unknown”.

In financial parlance, “layering” refers to a series of transactions designed to conceal the source of money.

The bank homed in on frequent payments made from PLC to Socintra, a company registered in the opaque tax haven of the British Virgin Islands and co-owned, according to the SARs, by Ichikowitz and one of his brothers.

More than $8-million was transferred from PLC to Socintra, which the bank identified as “a provider of finance and working capital to businesses located in South Africa”.

The SAR narrative goes on to explain: “As Ichikowitz owns Socintra, and Socintra frequently pays for Ichikowitz corporate expenses, there are concerns regarding the ultimate source of funds.”

Socintra is also the owner of another Paramount company that bought assets out of the collapsed Paramount subsidiary in South Africa.

A list of transactions accompanying the SARs shows that Socintra made at least two payments totalling about $260 746 to The World of ResidenSea II Ltd, part of the World group of companies that claims to own “the largest private residential ship on the planet”.

Former Paramount employees have told amaBhungane that Ichikowitz enjoys permanent residence on the vessel — a “floating tax haven” that wanders the globe, offering ultra-luxury to those with the means.

One of the entities that raised eyebrows at Barclays was Mamio Holdings — an “unidentifiable counterparty” located in another tax haven, the Cayman Islands, with a Swiss bank account.

Payments between Socintra and Mamio were cause for suspicion because “no material information was found in the wire payments details as to the purpose of these wires”.

The SAR reports that “the activity appears to be circular in nature” — a possible sign of financial malfeasance.

Paramount’s “same-name” transfers between similarly named entities in different parts of the group, using round dollar amounts and vague payment details, aroused further suspicion.

Though the SARs point to suspicious activities that bear the traits common to money laundering and other illicit financial activity, they are not evidence themselves of criminality.

Barclays, in its letter to the ICIJ, stressed that they instead “simply reflect a snapshot taken at a particular point in time of the information then available”.

Ichikowitz and Menell

In the SARs, the bank also flagged a company called Kemet Global Ltd, which it says “Ichikowitz had masked his ownership of”.

“Though he is not an owner officially by structure, Barclays Corporate believes that Kemet is related to his businesses, which explains why there are transfers relating to his mine deal; therefore, Kemet will be listed as a SAR suspect in this case.”

Barclays eventually terminated its relationship with Kemet because it was not within its “risk appetite”.

South African mining magnate Brian Menell is currently Kemet’s sole director. He has told the ICIJ that the company “was originally conceived as a joint investment vehicle between Mr Ichikowitz and me. The shareholding was split between our respective investment vehicles.”

However, he said, “the purpose for which Kemet Global Ltd was originally conceived did not materialise”, and Kemet “became a business service provider, which I run and [of which I] am the sole owner”.

“I did not at any point give any incorrect information to Barclays bank regarding the ownership of Kemet Global Limited,” said Menell, adding: “I am entirely confident that the compliance processes that we have within Kemet insure [sic] that all of the activities and transactions of the company are fully transparent, in accordance with correct governance, and in all cases are of a nature that would not raise any concerns on the part of any properly informed regulator or financial institution.

“No reasons were ever given to me for Barclays’ discontinuation of its banking relationship with Kemet, and I was never given the opportunity to answer any questions to allay its concerns.”

He pointed to “the lack of recourse against financial institutions which take arbitrary action [on] the basis of incompetent and ill-informed compliance”.

Though the bank dropped Kemet, no such action appears to have been taken against other Ichikowitz companies flagged in its SARs, at least up to late 2017, the period for which records are available.

In response to the ICIJ, Barclays said: “If we conclude we have financial crime concerns, we take appropriate action and have done so in numerous cases over the years. As you will appreciate, terminating client relationships is not something we take lightly.

“Given the filing of a SAR is not [in] itself evidence of any actual wrongdoing, we would only terminate a client relationship after careful and objective investigation and analysis of the evidence, balancing potential financial crime suspicions with the risk of ‘de-banking’ an innocent customer and our obligation to treat customers fairly.”

Barclays said SARs were “a common and required practice”, and that it files thousands of them and similar reports each year globally.

Through his London-based lawyers, Ichikowitz has threatened legal action against amaBhungane in terms of UK data protection and defamation law.

The lawyers did not address our questions, but instead posed a number of questions to us, mostly about how the data was obtained.

They said of Ichikowitz: “Neither he nor any of the companies under the Paramount Group have been subject to an investigation by any relevant authority whether in South Africa (where Paramount has a small presence in the context of its global operations) or elsewhere… Any statement to the contrary is without evidence … and liable to be defamatory.”

The post FinCEN Files: Planes, boats and tax havens appeared first on AmaBhungane Centre for Investigative Journalism.

The founder of Paramount, Africa’s largest private arms group, presents him-self as an industrialist and philanthropist with a passion for the continent — an image buffed by a slick public relations machine.

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But questions have previously been raised about the extent to which Ichikowitz may have benefited from his role as a “favourite courtier of African presidents Jacob Zuma, Ali Bongo and Denis Sassou Nguesso”, as French publication Intelligence Online put it in 2016. And, more recently, critics have honed in on his image as a highly successful entrepreneur.

To many in SA’s armaments industry — Ichikowitz’s former employees and business partners among them — he’s not what he seems to be. They allege that Paramount’s success as an industrial powerhouse is fragile, and hold Ichikowitz responsible for the plight of companies that were the pride of SA’s military industry.

At the heart of these allegations is company subsidiary Paramount Combat Systems (PCS), now under liquidation, which produced a range of armoured vehicles.

A secondary case is the toxic bust-up between Ichikowitz and Aerosud father-son team Paul Potgieter senior and junior, responsible for developing the Ahrlac, a reconnaissance and counterinsurgency aircraft. The joint venture went into business rescue last year amid mutual threats and recriminations between the parties.

AmaBhungane has obtained internal documents and financial records, and spoken to more than a dozen former employees and business partners of Ichikowitz, most of them involved in PCS.

A consistent theme is the apparent unsustainable business practices pursued under Ichikowitz. He’s said to have always been in pursuit of the next deal — even when Paramount companies could scarcely hope to deliver on existing ones.

They claim a pattern of securing major defence contracts with attractive downpayments, which were then routed through opaque offshore companies. It’s thought that large amounts were diverted towards an aggressive acquisition drive, leaving operating companies starved of cash.

As working capital started drying up, they say PCS management was forced to beg Ichikowitz for funds, and use money from newer deals to cover shortfalls in ones they were already behind on.

In early 2018, PCS was put into business rescue. But with prospects of saving the company appearing dim, one of its biggest customers, Singapore Technologies Kinetics (STK), initiated liquidation proceedings.

The collapse of PCS cost nearly 300 local jobs.

The liquidation is now the subject of legal action by another, unrelated creditor, General Kinetics. The Canadian company alleges that Paramount wrested control of valuable assets and intellectual property at fire-sale prices when the liquidator sold these back to another Paramount company.

Paramount stoutly denies any wrongdoing. In response to written questions, it says it has been the target of “industrial espionage and attempted sabotage”.

“It will also appear that you have been provided with various pieces of false information by disgruntled former employees who are engaged in competitive bids against us in many of the self-same countries you have raised issue on, and we would urge caution before placing undue reliance there-on,” the company says.

In court, Paramount has hit back at General Kinetics’ application as “entirely misconceived”.

Paramount says the intellectual property left in PCS was “residual” and of “very limited use to other potential purchasers”. It “offered an amount that [it] could justify as being reasonable in the circumstances, and the liquidators accepted the offer”.

Paramount blames missteps by PCS’s previous local management for the subsidiary’s woes, along with the failure of two important suppliers and a default by the Kingdom of Jordan on a contract to buy 50 armoured vehicles.

In this two-part series amaBhungane delves into the business dealings of PCS to determine whether there is any truth to the allegation that dubious offshore arrangements were at the heart of its collapse. This instalment traces the history of Paramount and the deals in question, while next week’s story will look at how large down payments on contracts were apparently diverted into offshore accounts.

Paramount is important because it is a potential window into the way Ichikowitz does business, mixing commodity trading, arms deals and political ingratiation in the manner pioneered by his close associate, French businessman Jean-Yves Ollivier, the most famous “Monsieur Afrique” of his generation.

An empire built on apartheid’s collapse

By Ichikowitz’s account, he began his career during SA’s political transition in the early 1990s, “working to support Nelson Mandela’s programme of democratisation, national reconciliation, economic and industrial normalisation”.

According to a 2012 profile in the Jewish Chronicle, “he realised there was potential to make large amounts of money from what he calls the peace-keeping industry”.

With the end of apartheid, defence spending in SA was deprioritised, as the highly militarised country began winding down its arms industry. That left large quantities of surplus stock that could be bought cheaply. It’s how Ichikowitz began amassing wealth: procuring hardware such as sought-after mine-resistant armoured vehicles, refurbishing them and on-selling to other countries.

It also nearly landed him in trouble, when two of his early companies were accused in a defence department investigation of violating arms controls and sending their staff into army bases to strip vehicles of parts.

Paramount tells amaBhungane that Ichikowitz had no involvement in the day-to-day running of those businesses, and that a subsequent “investigation was reportedly commissioned by Armscor which cleared the Armscor personnel implicated, hence no steps [have] been taken as to the unsubstantiated allegations”.

(Armscor has told amaBhungane it is unable to trace that report.)

The Marauder, Paramount’s four-wheeled armoured personnel carrier.

In 2006, Ichikowitz established what would become Paramount Land Systems (and later PCS) to design and manufacture armoured vehicles. It operated from Midrand, where it had a production workshop.

By December 2011, the growth of Ichikowitz’s business empire reached a turning point. Paramount bagged a major deal with STK, worth nearly €90m, to supply Singapore’s defence ministry with armoured vehicles.

The deal was ambitious in both scale and technological complexity. Paramount would supply the Singaporeans with 101 highly sophisticated vehicles based on the Marauder, a rugged four-wheeled armoured personnel carrier.

The plan was for some of the production to be gradually migrated to Singapore. To that end, Paramount would also supply 186 hulls, which would be shipped to Singapore and made into complete vehicles.

Twelve variants of the vehicle would have to be developed, tested and delivered as prototypes, before being produced at scale.

The deal, codenamed Project Marlin, would later turn out to be the armoured vehicle division’s undoing. But in the beginning, it meant Paramount received a large upfront payment from its customer.

Buying spree

In the years after the STK deal was sealed, Ichikowitz embarked on an acquisition spree.

One of the companies Paramount swept up was Industrial & Automotive Design (IAD). Its acquisition in 2013 heralded another turning point, because the company, renamed PIAD, greatly enhanced the technological capability of the group.

PIAD specialised in the development of mine-resistant armoured vehicles — a forté of SA military engineering. As such, it was key to the development and re-engineering of Paramount’s flagship armoured vehicles, like the Mbombe range of eight, six and four-wheeled vehicles.

In the same year, Ichikowitz bought aerospace company Advanced Technologies & Engineering out of business rescue, adding to his stable a firm that, as an article at the time put it, would give Paramount “unprecedented access to some of the most advanced weaponry in the world”.

Another important acquisition in 2013 was a majority stake in Cape Town-based shipbuilder Nautic Africa, which later went into voluntary business rescue.

That business survived (though creditors suffered), but the rescue practitioner raised the concern that, at the time Nautic was struggling, significant assets were distributed to its shareholders, including Paramount.

In 2014 Paramount acquired the military business of aeronautical design and manufacturing company Aerosud and, at around this time, invested in a low-cost airline, FlyAfrica. The latter proved short-lived, ceasing operations in 2015.

Paramount also got involved in Ahrlac through a joint venture with Aerosud. It went into business rescue in 2019.

In 2015 Paramount Land Systems moved production to a large new facility at Isando, Joburg, augmenting the company’s industrial muscle enormously. Paramount could now produce armoured vehicles at scale, with the vehicles for Project Marlin, as well as for other contracts, to be rolled off the Isando production line.

Ichikowitz had turned his company from one that traded primarily in hardware and was little more than a “military vehicle start-up” into what was, on paper at least, an industrial all-rounder with the capability to produce military hardware for land, air and sea, and with lucrative deals around the world.

But the company’s beefed-up industrial might in SA wouldn’t last.

Overreach

Former Paramount sources, including four former senior employees in the group, speculate that advance payments from the STK contract were used for unrelated purposes.

It’s a charge Paramount firmly denies, suggesting it doesn’t make sense. “It is a matter of public record that [Paramount’s] shareholders injected approximately R500m into the company, including substantial amounts by way of loan funding.”

The company also says that, by the time PCS was put in provisional liquidation in early 2018, “in line with the design and manufacturing milestones of the [STK] contract, 77% of the total contract value was delivered … Your superficial analysis of what took place is denied and is patently false.”

That figure of 77% completion is hard to square with the picture painted by others — including STK, when it applied to have PCS liquidated.

But at the time PCS was formed in mid-2016 — when PIAD absorbed Paramount Land Systems — the cracks in the armour division of the company were already showing.

Paramount had clinched contracts to supply vehicles to governments across the world, including in Mali, Azerbaijan, Jordan and Kazakhstan, where Paramount set up a joint venture to manufacture armour.

But the land division was falling behind on deliveries.

According to former senior employees, including a former financial executive, PCS inherited a financial mess from Paramount Land Systems. Several former employees say there was chaos on the production floor as a result of constant cash flow problems.

Internal correspondence bears this out. Submitted as part of labour dispute hearings, the documents obtained by amaBhungane show PCS management’s growing alarm at falling behind target on Project Marlin, and frustration at the lack of available cash and the dire situation.

In one e-mail from late 2016, then PCS C EO Ben Jansen, who co-founded IAD, writes to Paramount senior executive and longtime Ichikowitz associate John Craig, copying in Ichikowitz and Morris Kotzen, another executive who was instrumental in Project Marlin.

“It is not surprising that we are struggling,” writes Jansen. “It is very difficult to build vehicles on beg and borrow. I get hundreds of phone calls a day from irate sup-pliers and the staff can’t take it any more. It’s on a knife edge so we will see.”

Paramount denies ever withholding cash from PCS, saying: “We are not sure we understand the suggestion that funds were withheld, which is illogical, and you provide no suggested motivation for any such action, or any facts on which your allegation is based.”

Paramount also points to “various other external reasons for the liquidation of [PCS], which were outside of PCS’s control, such as defaults in payment by debtors”.

Paramount blames PCS’s former executive team for “mismanagement”, noting that it has launched an investigation into former employees, but refusing to provide further details.

However, minutes of meetings, internal correspondence and records, and sources amaBhungane has spoken to, suggest a different story.

Opaque offshore deal

The funding problem appears to be linked to the complex and opaque structure of the STK deal.

Early on in amaBhungane’s investigation, several sources claimed the Singaporeans had paid a large chunk of the roughly €90m upfront.

Advance payments are not uncommon in large defence contracts and, according to former senior employee Andrew Charter, the downpayment made commercial sense for the Singaporeans.

“The Singaporeans, out of their pragmatism, paid a very large downpayment because they wanted Paramount to buy large volumes of components upfront, so they wouldn’t be exposed to multiyear price inflation, and because we could get better deals through economies of scale.”

As was the norm for Paramount deals, the STK contract was structured offshore. Paramount Logistics Corp (PLC), a Paramount company registered in the off-shore haven of Cyprus, actually held the contract with STK.

PLC, in turn, subcontracted its SA associate to deliver the armoured vehicles, effectively at cost, with most of the anticipated profit accruing to PLC in the low-tax jurisdiction.

Paramount rejects “allegations of ‘co mp lex and opaque’ financial structuring or any breach of any legal, regulatory, statutory or taxation requirement regarding Paramount Logistics Corp (or indeed any other entity)”.

The company points to the “more than 200,000 companies incorporated in Cyprus which cannot surely all be engaged in underhand matters”.

“To the contrary, the Cypriot system com-plies with EU standards and is not a tax haven as you allege.”

In recent years Cyprus has taken steps to improve anti-money-laundering measures and introduced regulations to bring it in line with other EU countries. It’s also hiked its corporate tax rate from 4.5% to a still low 12.5%, though companies can still effectively be taxed less.

However, the island’s regulations remain weakly enforced and it is still attractively opaque to those who want to keep money and transactions hidden — as the wash of hot Russian money through its banking system has demonstrated.

Moreover, documents filed in the Cyprus company registry show that PLC was owned by another Cyprus company, Fivemiletown Holdings.

Fivemiletown, according to 2016 filings, was 70% owned by Navarino Trust 2006, registered with a secretarial company in Cyprus, and 30% by Nermosia, a British Virgin Islands company. More recent filings, from 2018, show Nermosia to be the 100% shareholder of Fivemiletown.

Ichikowitz himself, according to company filings in the UK, was described as an Australian resident in 2015 and as a Cypriot resident and national in 2016.

Paramount’s lawyers say: “There is absolutely no evidence that our clients are not tax compliant.”

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Separately, Paramount director of group communications Nico de Klerk says: “Mr Ichikowitz runs a global business that has generated many billions of rands of exports for SA over several decades. He emigrated from SA many years ago and we do not propose to comment further on his personal affairs, save to confirm that I understand he is fully tax compliant in all relevant jurisdictions.

“Mr Ichikowitz’s passion for SA, its people and the African continent is not dependent upon where he spends his time.”

Also read: UK charity with ANC heavyweights on board accused of laundering Congo autocrat’s reputation

*Read more of Micah Reddy’s investigations here.

The post Part one: The hollow man? appeared first on AmaBhungane Centre for Investigative Journalism.

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The findings of a Finance Uncovered investigation for amaBhungane centre on the City of London-registered Brazzaville Foundation, fronted by the Queen’s controversial cousin, Prince Michael of Kent, as its patron.

Former president Kgalema Motlanthe and ex-ANC treasurer-general Matthews Phosa are both members of the advisory board, while major South African arms manufacturer Ivor Ichikowitz via his family foundation has partnered with the charity and its chairman on a political documentary.

The Brazzaville Foundation was established in 2014 to tackle environmental challenges, broker peace in Libya and raise awareness about the scourge of fake medicines in Africa – all causes about which its trustees appear to be sincere and passionate.

Some Congolese experts and opposition activists exiled in Europe have viewed the charity with suspicion, believing some of its activities to be reputation-laundering vehicles for their country’s authoritarian president, Denis Sassou-Nguesso. Indeed, early versions of the charity’s website — since removed — described him as its “inspiration”.

These accusations are strongly denied by the charity, which says any suggestion it is “a tool to promote President Sassou-Nguesso’s interests is factually wrong and completely unfounded”.

Motlanthe said: “Unfortunately as a new member of the Brazzaville Foundation I am not in a position to shed light on your questions. Thanks for your understanding.”

Motlanthe was appointed to the foundation’s advisory board in March last year.

Phosa, who has been an advisor since 2015, referred amaBhungane to the Foundation’s chief executive officer.

1st row: Amama Mbabazi, Kgalema Motlanthe, Prince Michael of Kent. 2nd row: Dr Mathews Phosa, President Olusegun Obasanjo, Jean-Yves Ollivier. Advisory Board Meeting, 4 April 2019 (Brazzaville Foundation website)

But Finance Uncovered’s investigation into the charity’s origins have not dispelled concerns.

• It was set up by Jean-Yves Ollivier, a wealthy French commodities trader who has been a friend of Sassou-Nguesso for more than 30 years;
• He established it shortly after his company received a $60m windfall from an oil deal he brokered with Sassou-Nguesso;
• Ollivier and his company provided the bulk of the charity’s initial funding, largely through invoice offsets from his personal and company expenses;
• He set it up with the help of one of Britain’s most controversial PR gurus, Lord Tim Bell, who became a trustee;
• Bell’s now disgraced and defunct PR firm Bell Pottinger also advised Sassou-Nguesso on how to win a constitutional referendum the following year that extended his grip on power;
• Ollivier once boasted that the charity would be attractive to its members as a networking platform with other business and political figures.

Duncan Hames, policy director of Transparency International UK, said: “There is a risk that charities could be used or recruited to help give an air of legitimacy to those who have abused their power. That charities might be used to burnish the credentials of kleptocratic regimes is particularly galling to those who are impoverished because of their crimes.”

The charity says its trustees have “complied with their legal obligations and the guidance of the [UK] Charity Commission”.

The alleged plundering of Congo

Under his 35-year rule, Sassou-Nguesso’s inner circle is alleged to have siphoned off hundreds of millions of dollars from the country.

As recently as last month, it was reported that Sassou-Nguesso’s daughter used millions of dollars of Congolese state funds to buy a $7m luxury apartment at the Trump International Hotel & Tower in New York City.

Yet the country is in an economic tailspin and trying to persuade the International Monetary Fund to bail out its stricken economy.

Jean-Yves Ollivier, 74, has had a long friendship with Sassou-Nguesso. It stems from the signing of the Brazzaville Protocol in Congo’s capital, a 1988 peace treaty in which both men played a part and which some regard as having paved the way for the release of Nelson Mandela.

Phosa, Ollivier and Ichikowitz attended a celebration of the 25th anniversary of the Brazzaville Protocol in February 2014, prior to the foundation’s August 2014 incorporation.

According to the Ichikowitz Family Foundation’s website, Phosa was at the event in his capacity “as a participant in Plot for Peace” a documentary … shown at the Anniversary Celebrations.”

The Ichikowitz Family Foundation confirmed it funded and produced Plot for Peace, which focuses on Ollivier’s claimed role in bringing an end to apartheid in South Africa.

The website says the documentary, “exclusively uncovers one of the behind-the-scenes stories around the release of Nelson Mandela, and the role of the mysterious French businessman [Ollivier], who utilized his networks to drive key meetings amongst heads of state and influencers to broker peace between South Africa and its neighboring “front-line states” – thus paving the way for the dramatic fall of apartheid.”

In 2014, Ollivier named the charity in recognition of the Brazzaville treaty. His decision came within a year of cashing in a $60m share windfall earned from helping his old friend Sassou-Nguesso negotiate the sale of a Congo oil block called Marine XII in 2011. There is no suggestion of any wrongdoing by Ollivier or Sassou-Nguesso in that oil deal.

But from leaked documents, including financial statements, Finance Uncovered has discovered the windfall was booked in Ollivier’s company, Fort Consultancy and Development Corporation (Offshore) SAL, based in the secretive financial jurisdiction of Lebanon.

• Click on the evidence docket to access the documents used to investigate this story.

And according to the Brazzaville Foundation’s first set of published accounts, it was the now cash-rich Fort Consultancy and Ollivier which provided the new charity with all its early funding.

In total, Fort and Ollivier have provided the charity with two-thirds of its entire £1.45m income since it was formed.

Fort also incurred almost $1m in once-off “advertising and publicity” costs in 2014, according to its financial statements.

Ollivier would not confirm or deny whether this outlay was to promote the documentary, Plot for Peace.

First he told Finance Uncovered: “None of this money was spent on advertising or publicity for the Foundation’s work.” When asked again, he replied: “No money spent by Fort on advertising and publicity has compromised the integrity of the documentary Plot for Peace.”

There is no suggestion of any accounting wrongdoing and the charity told Finance Uncovered it had carried out proper due diligence on the donations it has received from Ollivier.

Enter Margaret Thatcher’s former PR guru

As well as being the charity’s dominant donor and founder, Ollivier is also chair of its board of trustees. In short, he is the main figure at the foundation with significant influence over its policy and purpose.

And it was Ollivier who set about recruiting similarly powerful men to his cause. In an interview with Bloomberg in 2015, he said an “added bonus” of the charity would be its networking opportunities, linking its members to business people and politicians.

Among those are Phosa and Motlanthe, although neither would provide further details on how they came to be on the foundation’s advisory board.

Phosa was one of those at the very first advisory board meeting, held in London at the Royal Automobile Club, where the lunch was served afterwards, according to an October 2015 press statement on the foundation’s website.

Finance Uncovered has established that it was Ollivier who asked Bell Pottinger and Lord Bell to play an important role.

Best known as Margaret Thatcher’s favourite spin doctor, Bell founded Bell Pottinger in 1987. As well as corporate clients, it engaged in political work for the likes of the Pinochet Foundation, Syria’s first lady, Asma al-Assad, and the repressive governments of Bahrain and Egypt.

The firm collapsed in disgrace in 2017 after it devised a potentially racially divisive campaign for the Guptas, a politically-connected business family in South Africa.

After Bell left the firm, he became involved with another controversial South African family, this time with interests in Zimbabwe.

Bell’s new PR firm, Sans Frontières, advised the Moti Group, owned by businessman Zunaid Moti, after Robert Mugabe was toppled in a semi-coup in late 2017.

In an invitation sent to international journalists to attend a launch at Moti’s Zimbabwean mining operation a week before the country’s general election last year, Sans Frontières offered journalists access to senior government officials, including President Emmerson Mnangagwa.

As Lord Bell became a Brazzaville Foundation trustee in 2014, Bell Pottinger was also forging a business relationship with Sassou-Nguesso.

Bell Pottinger provided polling and messaging advice to him in the run-up to a crucial referendum in 2015, which paved the way for the long-standing president to extend his grip on power.

The charity’s chief executive is Sir David Richmond, a former top British diplomat who is also an ex-Bell Pottinger consultant.

The charity confirmed that Bell Pottinger had “provided initial advice to Mr Ollivier on the options for setting up a Foundation” but said it could not comment on “other matters which have no connection to its affairs”.

Ollivier said: “The only services for which I commissioned and paid Bell Pottinger relate to the setting up of the Foundation.”

Lord Bell, who stepped down as a trustee late last year for health reasons, was unable to comment on why he joined the charity.

The Royal Connection

Separately in 2014, Ollivier also secured the services of Prince Michael as patron to give the charity added cachet. And in 2017, the charity consolidated its links with the prince by appointing his former private secretary Nicholas Chance as a trustee.

The Queen’s controversial cousin, who separately runs his own consultancy business, would not comment on why he became patron.

Lord Tim Bell, Prince Michael, Jean-Yves Ollivier. Screening of Plot for Peace documentary: New York, 25 September 2014 (Plot for Peace: Facebook)

But he has been active. In 2015, he and his wife, Princess Michael, were the VIPs at a successful fundraising auction in Hong Kong attended by an array of business figures — some with interests in the Congo region.

Attended by several famous local actresses and movie directors, an auction on the night raised almost £500,000 for the charity – including one of Nelson Mandela’s signature ‘Madiba shirts’ which fetched £39,000.

And in 2017, Prince Michael even made the difficult journey to Sassou-Nguesso’s hometown of Oyo, 250 miles from the capital Brazzaville, to help launch a new project for the charity. This was despite warnings a month before from human rights organisations, including Amnesty International, about the government’s crackdown on opposition activists.

Finance Uncovered asked Prince Michael why he travelled to Oyo, who paid his bills for the trip and whether he has ever had any business dealings in Congo as a result of his work with the charity. But his spokesman said: “There will not be any further comment.”

Finance Uncovered asked the same questions of the charity’s trustees and chief executive, who, via their lawyer, then declined to “expend further resources answering questions”.

The event in Oyo was to launch the Congo Basin Blue Fund, an environmental fundraising initiative that aims to attract massive investment into the Congo Basin. At the launch, the charity described the project as a “partnership” with Sassou-Nguesso.

It is not the only initiative in which the charity’s activities overlap with the Congo ruler’s interests. Four out of five of the Foundation’s projects in Africa involve him or his country.

Our work is ‘thoroughly worthwhile’

The Foundation’s chief executive Sir David Richmond, speaking through the charity’s lawyer on behalf of all its trustees, said: “All our work is aimed at meeting some of the key challenges facing the African continent. These are thoroughly worthwhile initiatives which have the potential to bring real benefit to people whether regionally or indeed throughout Africa.

“Neither [Sassou-Nguesso], his government nor any Congolese citizen has any involvement in the running of the Foundation. They are not represented on its advisory board and have never given money to the Foundation.

“The Foundation’s various initiatives are its own. Some have involved or been supported by President Sassou-Nguesso and the Republic of the Congo, alongside many other African countries; some, like our work on migration in West Africa, have not.

“The Foundation and all of its trustees have always been and are committed to pursuing and maintaining the highest standards in all that it does.

“The trustees have acted prudently in all respects and have complied with their legal obligations and the guidance of the [UK] Charity Commission.”

Charlin Kinouani, a leading Congolese civil rights activist, said: “This foundation’s contribution to peace is unknown to us here in the Congo.”

Ollivier responded: “[Our] role is to keep channels of communication open rather than close them with overt criticism … to influence by quiet and persuasive dialogue not to dictate via the imposition of our own values.”

A final letter from the charity’s lawyer to Finance Uncovered warned that the “Foundation will not tolerate any harm done its reputation by irresponsible journalism”.

A Congolese government spokesperson did not respond to repeated requests for comment.

The Republic of Congo is currently offering 18 new oil exploration licences. Ollivier would not comment on whether he is involved in any bidding for any of them.

Brett L Carter, assistant professor in the School of International Relations at the University of Southern California, and an expert on autocratic governments, said: “Sassou-Nguesso is emblematic of Africa’s kleptocrats. Congo has been among Africa’s leading oil producers for decades, yet nearly half of its citizens [are estimated to] live below the poverty line.

“Image laundering efforts help sustain Sassou Nguesso’s rule, with all the corruption and human rights violations it entails. Sassou-Nguesso has now had his two chief opponents in the 2016 presidential election sentenced to 20 years of forced labour.

To be clear: Bell Pottinger is implicated in this, for it was the October 2015 referendum that subjected Congolese citizens to Sassou Nguesso’s March 2016 reelection. “It’s a particular outrage to see the British royal family so implicated.”

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In a response to amaBhungane’s queries, the Ichikowitz Family Foundation stated:

“One of the key focus areas of the Ichikowitz Foundation is its African Oral History Archive (AOHA) which has collected and developed extensive archive materials from which it has produced and supported the production of many documentaries, short films and TV programmes, featuring thought-provoking stories of the African continent. Plot for Peace is one such project based on archive materials that the AOHA collected over many years. The Ichikowitz Family Foundation funded and produced Plot for Peace. The Ichikowitz Family Foundation, its Chairman and any associated companies have never received any remuneration from the Brazzaville Foundation.”

* Finance Uncovered is a London-based investigative journalism training and reporting project: www.financeuncovered.org

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