10:09pm , Monday 20th August 2018

Hameed Al Ahmar’s Backdoor Companies

13 November 2016
Mohammed AlKawmani

By Mohammed Al Kawmani

YAFEA NEWS,Sana’a, 13 November, 2016 – Three titles can best describe Hameed Bin Abdullah Al Ahmar a tribal, political and business leader. This man managed to maneuver himself out of trouble using local political contradictions until the start of the latest civil war in 2015. He was present in every political, tribal and economic event in Yemen. But today, we will complete the circle on his relations with his partners, hidden companies, and also the back doors to the movement of his funds according to the revelations of the “Panama Papers” and the “SwissLeaks”, –The documents of Panama Papers collected through ARIJ collaboration with the German Suddeutsche Zeitung and International consortium for investigative journalism ICIJ- which this journalist managed to get hold of. Those documents also illustrate the tax evasion cases which continued to haunt him until he left the country at the start of the current conflict. It also reveals how he worked within the frame of conflicts between his political position, his associates, and his commercial dealings.

Al Ahmar belongs to the ruling family of Hashed tribe, one of Yemen’s most influential tribes. The social status of the House of Al Ahmar opened the way for his gradual political ascension, becoming a key player in Yemen’s Al-Islah Party (Muslim Brotherhood), which is represented in the Yemeni parliament. Also, Hameed, is member in Parliament’s Oil — in charge of deciding on all oil contracts and agreements with companies, in addition to reviewing and auditing these contracts. This investigation documents that one of the business partners Al Ahmar holds an offshore company, the Consolidated Contractors Company (CCC), which signed oil contracts and projects with the Yemeni government. Also, this investigation reveals that another business partner of Al Ahmar in Sabafon, a telecommunications company, is at the same time a member of the Special Parliamentary Committee on Telecommunications, which decides on the Telecommunications’ contracts with the government. It also approves or rejects all the objections or appeals on taxation. This connection explains why all investigations by the government into Sabafon’s alleged tax evasion and how it came to win the contract, were closed without a clear reason.

Declaring False Statements

The name “Sabafon” is associated with Sheikh Hameed Al Ahmar, its CEO and the biggest share-holder. Sabafon has an account in tax havens that could have been used to evade taxes and hide sums of money from other partners in the company.

The Yemeni government authorities, in several cases, have accused Sabafon of tax evasion. Some of these cases are still being reviewed by courts while others are being reviewed by prosecutors in charge of combating corruption. The prosecutors have asked the company to pay 39 billion Yemeni Riyals ($158 million) in taxes due from 2007 to 2011. TheHigh Office for Oversight and Anti-Corruption  issued a report accusing Sabafon of corruption and tax evasion after it obtained an extension on exemptions without any legal justification, thus, depriving the state’s treasury of millions of dollars in income. The Commission described the extension as an act of corruption and tax evasion according to article 30/7 of the Anti-Corruption Law number 39 of the year 2006, and article 90 of the Income Tax Law number 12 of the year 1999. The Commission referred the case to the attorney general to complete procedures for raising a criminal case of tax evasion against the company. The prosecutors in charge of fighting corruption have accused the company of issuing false statements to the General Investment Commission in order to obtain illegal exemptions. Hence it produced a case of tax evasion for 11.158 billion Yemeni Riyals ($ 644 million).

While reviewing the tax attestations presented by the telecommunications company to the tax authorities during the years 2011-2013, a large difference did exist between what Sabafon presented and what was presented by the other telecommunications companies. When comparing the presentation of Sabafon in 2013 compared to that of the MTN company, it emerged that each of the two companies, according to the National Center For Statistics, had almost 6 million users. MTN paid a profit tax of 10 billion Y.R.($40 million more than Sabafon.

Sabafon, and the World of Tax Havens.

It is hard to find accurate data about Sabafon company and the percentage of shares held by each share-holder. The absence of a financial system in Yemen, and the lack of transparency when publishing public statements of companies, has helped to hide important information about the activities of the companies and their partners. In addition, the absence of a mechanism to update data on companies, makes Yemeni governmental authorities the last to know about any financial operations in any company. This deprives the government of collecting due taxes. That is exactly what happened in March 2007, when Sheikh Hameed Al Ahmar sold 20% of the shares of the Bahraini Telecommunication Company (BATELCO). The announcement of the deal in the press was the only way, according to the Yemeni Tax Authority, for the government to get notice of the deal. Later the Tax Authority raised a sales tax evasion case against Sabafon.

The story began on the 5, July 2003, when the General Commission for Investment issued decision number (87/H) for the year 2003 concerning the approval of amendments to some of Sabafon articles of association. The decision modified article number 8 pertaining to the share-holders in the company. The names included share-holders registered with the Yemeni government. But four of the shareholders were not found on the company’s web site. Those included the Consolidated Contractors Company (CCC), BATELCO, Al Ahmar Group and the Hael Said’s Group and Associates. On the other hand, this investigator obtained a document uncovering all the secret names in Sabafon. They included the Iranian Foreign Investment Company,the investment arm of the Iranian Revolutionary Guards and other tribal sheiks close to former Yemeni president, Ali Abdullah Saleh.

The following table, which is published for the first time, illustrates details on share-holders in Sabafon, a company registered with the Yemeni government.

  Name No.of Shares Value in $                 Notes
 1 Al Ahmar Group For Trading & Industry.           1925000 19250000 Owned by Hameed
Consolidated Contractors Company                                                                                             175000 1750000 An international Consolidated Company that own Contractors  projects in oil and contracting working in Yemen. It has an off-shore company tied to its branch in Yemen.
Hameed Bin Abdullah Al Ahmar 175000 1750000  
Hayel Said Ana’am           350000 3500000 Yemeni commercial house. It controls a big share in the food industry in Yemen. One of the group members chairs the communication committee in the Yemeni House of  Representative.
Ali Bin Ali Muqasa 350000 3500000 The Sheikh of the Sanhan Tribe, and related to former Yemeni president Ali Abdullah Saleh.
Khahlan Mujahed  Abu Shawareb 70000 700000 The former governor of Amran. A leader in the General Popular Congress Party and a close Associate of former president Ali Abdullah Saleh.
Iran Foreign Investment  Company 350000 3500000 An Iranian company associated With the Iranian Revolutionary Guard.
The Islamic Corporation for the Development of the Private Sector 105000 1050000 An auxiliary corporate of the Islamic Development Bank which has 56 member countries among them Yemen.               
  Total 3500000 35000000 $  

Documents obtained by this reporter on the change to article 8  showed that share-holders paid the whole value of the shares and deposited the paid amount in the Saba Islamic Bank(SIB) in the capital, Sana’a. Sheikh Hameed Al Ahmar holds the largest share in the Bank. Clause B was added to article 19 thus allowing the bank’s CEO, without the approval or even objections of the bank’s share-holders, to transfer the bank’s shares to a company owned by the bank, or transfer to a company which has the largest share in the bank’s capital.This was carried out in order to have advantages and benefits from these companies when dealing with the offshore companies, as this investigation will reveal.  

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On 20 November 2003, Hameed Al Ahmar registered an offshore company under the name “CINNABAR FINANCE LIMITED” in Tartola Island, the largest island in the Virgin Islands, in the presence of his close friend Tareq Al Haidari (the executive director of Sabafon), and Nidal Al Qaruiti (the financial manager at Sabafon. According to the documents, Hameed Al Ahmar became the Chairman of the Executive Board (CEB), Al Haidari his deputy and al Qaruiti a manager within a list of managers. A lone Certificate of Shares was adopted under the name of The Yemeni Mobile Company Y.S.C.

Two signatures of any of the three executives were enough to run the company

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No Sabafon share-holder signed the registration of the offshore company except Hameed Al Ahmar Group. Hameed backed off on making Sabafon — The Yemeni Mobile Company Y.S.C. — the owner of the new offshore company during his first meeting with Mossack Fonseca – a law firm which according to the Panama Papers proved to have provided services to its customers, facilitated the establishment of offshore companies, and helped in money laundering and tax evasion. The company sent a letter from its branch in Geneva to the Arab bank (AB) in Dubai demanding clarification on the new company’s Share Certificates. The Arab Bank was asked on the 14 March, 2004, to issue a lone Certificate of Shares under the name, the Yemeni Mobile Company Y.S.C. Consequently the company’s board decided to issue other certificates.

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The Arab Bank re-sent the letter to Hameed AlAhmar Group at Sabafon company. The following was included at the end of the letter: “Please confirm what you want. How many shares? For whom are they? Are they for Sabafon, for Hameed Al Ahmar or for Tareq Al Haidari?

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The financial manager of Sabafon, Nidal Al Qaruiti, answered on the 30 June, 2004, the inquiries of Mossack Fonseca and the Arab Bank in a letter addressed to Mahdi Al Alawi, the regional manager of the Arab Bank in Yemen. He stated that the new offshore company is equally owned by both Hameed Al Ahmar and Tareq Al Haidari.

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On 14 March, 2004, Hameed Al Ahmar adopted his signature on all transactions, thus withdrawing the prerogatives of other partners, as revealed by the documents. This included selling, buying, issuing authorizations to open and close bank accounts, financial matters, loans, making deposits …. etc. Though all earnings of Sabafon were deposited in its account at Saba Islamic Bank (SIB), yet Hameed Al Ahmar, Tareq Al Haidari and Nidal Qaruiti decided, when the offshore company was founded, to open an account at the Arab Bank in Geneva, Switzerland, where all the new company’s financial transactions were to be carried out. The question is how do transactions between SIB and AB through the branches of the AB in Yemen, the United Arab Emirates (UAE) and Switzerland?

Economics professor Abdulwahed Ismail commented: according to what I have seen in the documents, I must say that establishing a back door company, controlling it completely, and opening new bank accounts tied to the bank accounts of the original company without the knowledge of the other partners is equivalent to establishing a new financial order that does not relate to the real financial records of the original company which the share holders are entitled to examine and review, and based on which profits are distributed among the share holders according to their percentage of shares.  When asked how this is done, he answered that since earnings of Sabafon are deposited in SIB, they can be transferred from Sabafon to the AB in Yemen. The latter will transfer the money electronically to be deposited in the company’s pseudo account at AB branch in Switzerland without any trace record of the transfer from SIB to AB, or, in that matter, without any trace record of any transfer of money from AB in Yemen to AB in Switzerland.

This reporter tried several times to get answers from Sabafon and Hameed Al Ahmar to no avail. In September, the reporter  sent emails directly to Hameed Al Ahmar and Tareq Al Haidari but he received no answers. In October, the investigator went to the main office building of Sabafon in Sana’a to meet any authorized personnel at the company. He was referred to the public relations manager, Suliaman Razaz, because the CEB and the ED of the company were outside Yemen. Mr. Razaz said he had no answers for this reporter. He asked him to email his questions directly to him. (The e-mails sent are proof that the reporter sent the questions which in turn should have been sent to Hameed and Tareq. As soon as he receives the answers he will forward them to this reporter. The deadline for receiving the Sabafone answers expired.

The Yemeni Tax Authority (YTA) considers that any methods to defraud will be subject to legal questioning. This applies to accounts of offshore companies bound by activities inside the country, as, in the case, of Sabafon.

A source at the YTA,who asked not to be  identified, added that what concerns “us at YTA about Sabafon are the illegal things it did after 2007, since Sabafon enjoyed a profit tax exemption (2001 – 2007). YTA was in constant struggle with Sabafon because no one dared to challenge Sheikh Hameed Al Ahmar at the peak of his power and influence. The YTA always received directives to turn a blind eye on Sabafon’s tax declarations in spite of the large differences in the numbers presented by Sabafon and those presented by the other telecommunication companies”.

A lawyer specializing in commercial cases, Mohammad Salem Bambarak, said: “Frankly we in Yemen do not have experience in these kinds of cases. But any concealing of profits of any company, whether it is Sabafon or another, by using financial tricks, is in conflict with the law and with the credibility and integrity of dealings between the company and the government represented by the YTA”. He added: “In my opinion everybody, whether the legislature, the Anti-Corruption Commission, the Tax Authority and inspectors, should benefit from the experiences of other countries in this field. They should also get hold of modern methods in controlling tax evasion, and should organize educational workshops for their staff, lawyers and activists involved in commercial cases.

More was concealed

Nidal Qaruiti, a Jordanian national whose name appeared as a front for Jordanian businessmen in other offshore companies, masterminded most of the complicated financial dealings for Sabafon company as a result of his position in the company and his ties to other Jordanian businessmen in other companies.

In June 2004 – the same time in which Nidal Qaruiti sent the letter to the AB in Yemen informing them of who owns the newly formed offshore company, CINNABAR FINANCE LIMITED, he began negotiating with HSBC Bank to obtain a $20 million loan. The latter was convicted of providing services and tax evasion services for its customers.  At the start of 2005, Sabafon announced that it has managed to get a loan from HSBC Bank that was guaranteed by the Export Credit Guarantee (ECG) {HERMES} of the German Federal Government, to finance importing telecommunications equipment from SIEMENS company. During 2005, Hameed Al Ahmar signed a contract to establish and build Ma’arib Gas Station to generate electrical power with SIEMENS at a cost of $159 million. As a result, the Anti-Corruption Commission (ACC) accused Sabafon of tax evasion because it admitted more equipments than the equipment specified in the import license. This equipment was not covered by the profit tax exemption scheme. The ACC said that those extra equipment had a tax value of billions of Yemeni Riyals when compared with the equipment that was licensed to be imported.

The Panama Papers have revealed what wasn’t mentioned in the details of the company that were presented to the government or shown on its website. Sabafon had back doors that helped the company evade taxes, such as other offshore companies owned by persons connected to Sabafon. An example: CHELSEY  SERVICES CORPORATION, registered on 4 December, 2012 under the name of Tareq Al Haidari, and located in Geneva.

Another company belonged to the development manager at CCC and had shares in Sabafon.

In December 2008, Jihad Abbas, the ED and development manager at CCC founded an offshore company in the Seychelles under the name MIDDLE EAST UNITED PETROLEUM GROUP HOLDING COMPANY LIMITED through a Honk Kong services company. The registration papers state that the new company is run by a Chinese front company. It had an invalid postal address and an e-mail address. Hence, all correspondence between this reporter and the company kept bouncing back to the sender. Jihad Abbas registered the offshore company without a complete address in Yemen, but a post office box was mentioned in the registration papers. It turned out to belong to CCC in Sana’a. This meant that the new company wasn’t registered as a company owned by Jihad Abbas but rather as a front for CCC.

The branched relations of Sabafon and its offshore world did not end here. A bank account for Tareq Al Haidari came up in the SwissLeaks. It exposed where the bank had facilitated tax evasion and money laundering services to its customers. It also was able to hidethe money from inspectors in their countries.

Tareq Al Haidari opened a bank account at HSBC on the 16 July, 1999. He registered his address in Hidda Street, Sana’a. During different periods, money movement amounting to $831,000 from and into the bank account had occurred. Another bank account was found. It was opened in the name of Tareq’s father, Jaafar Al Haidari. The address for this account was Al Ahmar Group, Al Salam Corps. The amount in this account was $536,000.

In Openess and In Secrecy

In public, Al Ahmar owns 200 companies and investment projects in Yemen, such as, banks, telecommunications companies, construction firms, motor and perfume agencies.

He also has international contracting agencies.

The backdoor companies that have appeared in the Panama Papers and in the British Virgin Islands, reveal the secret ring of his investment movements that have allowed him to hide or to show when necessary, his role as a businessman, politician and a member of a powerful tribe.

This investigation was completed with the support of Arab Reporters for Investigative Journalism (ARIJ) – www.arij.net


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