Hameed Al Ahmar’s Backdoor Companies

YAFEA NEWS, Sana’a – Three titles best describe Hameed Bin Abdullah Al Ahmar: a tribal leader, a politician, and a businessman.

Until the beginning of Yemen’s latest civil war, in 2015, Al Ahmar managed to get  out of trouble by exploiting local political contradictions. He was also present at every political, tribal and economic event in Yemen.

But ARIJ has uncovered information about his relations with partners and hidden companies, as well as  the story behind movement of his funds in the “SwissLeaks” and the “Panama Papers”.

This  journalist accessed documents from ARIJ’s collaboration with the German Suddeutsche Zeitung and International Consortium for Investigative Journalism. They detail tax evasion cases that haunted Al Ahmar until he left the country at the start of the current conflict.They also show how during the war he manoeuvred among his  political position, his associates, and his commercial dealings,

Al Ahmar belongs to the ruling family of the Hasheds, one of Yemen’s most influential tribes. Their social status opened the way for his political rise ultimately to a  prominent position in Yemen’s Al-Islah Party (the Muslim Brotherhood). Hameed is also a member of the Parliament’s Oil Commission” that oversees, reviews and audits oil contracts and agreements with companies.

This investigation documents that one of Al Ahmar’s partners is behind an offshore company, the Consolidated Contractors Company (CCC), which signed contracts and projects with the Yemeni government.

It  also reveal that another Al Ahmar partners at Sabafon, a telecommunications company, is also a member of the Special Parliamentary Committee on Telecommunications, which decides on telecommunications’ contracts with the government. It also approves or rejects all objections or appeals on taxation. This connection explains why government investigations into Sabafon’s alleged tax evasion, and how it came to win the contract, were closed without justification.

False Statements

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

Yemeni government authorities several times have accused Sabafon of tax evasion. Some cases remain under court review, while prosecutors in charge of combating corruption are looking at other cases. They have asked the company to pay 39 billion Yemeni Riyals ($158 million) in taxes, due from 2007 to 2011. The High Office for Oversight and Anti-Corruption issued a report accusing Sabafon of corruption and tax evasion after it obtained an extension on exemptions without legal justification, thus depriving the state’s treasury of millions 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, from the year 2006, and Article 90 of the Income Tax Law number 12 from 1999. The Commission referred the case to the attorney general to mount a criminal case of tax evasion against the company. Prosecutors say the company issued false statements to the General Investment Commission in order to get the exemptions. They have a case of tax evasion against Sabafon for  $644 million.

Tax attestations given authorities between  2011-2013 show a large difference between what Sabafon presented and the information other telecommunications companies provided. When comparing the presentation of Sabafon in 2013 compared to that of the MTN company, for example, it emerged that each of the two companies, according to the National Center For Statistics, had almost 6 million users. MTN paid $40 million more in tax than Sabafon.

Sabafon and the World of Tax Havens

It is hard to find accurate data about Sabafon and the ownership stake of  each shareholder. The absence of a financial system and lack of transparency when publishing public statements of companies has helped hide important information about corporate activities and partners.  There is no mechanism to update data on companies and that means Yemeni authorities are the last to know about financial operations in any company.

They cannot collect taxes due and that is  exactly what happened in March 2007, when Al Ahmar sold 20 percent of the shares of the Bahraini Telecommunications Company (BATELCO). According to the Yemeni Tax Authority the government found out about the deal reading about it in the press.  The Tax Authority later built a sales tax evasion case against Sabafon.

The story begins on July 5, 2003, when the General Commission for Investment issued decision number (87/H) concerning the approval of amendments to some of Sabafon’s articles of association. The decision modified Article number 8 pertaining to shareholders. The names included shareholders registered with the government, but four were not found on the company’s web site.

Those included the Consolidated Contractors Company , BATELCO, Al Ahmar Group and the Hael Said’s Group and Associates.  A document disclosing all secret shareholders was obtained in the course of this investigation. They included the Iranian Foreign Investment Company, the investment arm of the Iranian Revolutionary Guard and other tribal sheiks close to former Yemeni President Ali Abdullah Saleh.

The following table illustrates details of Sabafon shareholders. This is the first time this information has been published.

	Name	No.of Shares	Value in $	Notes
1	Al Ahmar Group For Trading & Industry.	1,925,000	19,250,000	Owned by Hameed
2	Consolidated Contractors Company	175,000	1,750,000	An international Consolidated Company that owns Contractors  projects in oil and contracting workers in Yemen. An offshore company is tied to its branch in Yemen.
3	Hameed Bin Abdullah Al Ahmar	175,000	1,750,000
4	Hayel Said Ana’am	350,000	3,500,000	A Yemeni commercial house. It controls a big share in the food industry. One group member chairs the communications committee in the Yemeni House of  Representative.
5	Ali Bin Ali Muqasa	350,000	3,500,000	The Sheikh of the Sanhan Tribe, he is related to former Yemeni president Ali Abdullah Saleh.
6	Khahlan Mujahed  Abu Shawareb	70,000	700,000	The former governor of Amran. A leader in the General Popular Congress Party and a close associate of former President Saleh.
7	Iran Foreign Investment  Company	350,000	3,500,000	An Iranian company associated with the Iranian Revolutionary Guard.
8	The Islamic Corporation for the Development of the Private Sector	105,000	1,050,000	An auxiliary corporation of the Islamic Development Bank. It has 56 member countries, including Yemen.
	Total	3,500,000	$35,000,000

Documents on the change to Article 8 that this reporter reviewed show that shareholders paid the full value of the shares and deposited that in the Saba Islamic Bank  Sana’a. Al Ahmar holds the largest share in the bank.

When Clause B was added to Article 19 it allowed the bank’s CEO, without the approval of bank shareholders, to transfer the bank’s shares to a company owned by the bank, or to transfer to a company with the largest share in the bank’s capital. This was done to get preferential treatment from these companies when dealing with the offshore firms

On Nov. 20 2003, Al Ahmar registered an offshore company under the name Cinnabar Finance Limited in Tartola Island, the largest of the Virgin Islands, in the presence of his close friend Tareq Al Haidari (the executive director of Sabafon), and Nidal Al Qaruiti (Sabafon financial manager). According to the documents, Al Ahmar became chairman of the Executive Board (CEB), Al Haidari his deputy, and Al Qaruiti one of the 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.

No Sabafon shareholder signed the registration of the offshore company except the Hameed Al Ahmar Group. Hameed backed off on making Sabafon — The Yemeni Mobile Company Y.S.C. — the owner of the new offshore firm during his first meeting with Mossack Fonseca, a law firm which, according to the Panama Papers,  facilitated the establishment of offshore companies for its customers, and helped with money laundering and tax evasion.

The company sent a letter from its branch in Geneva to the Arab bank in Dubai demanding clarification on the new company’s Share Certificates. The Arab Bank was asked on March 14, 2004, to issue a single Certificate of Shares under the name the Yemeni Mobile Company Y.S.C. Consequently the company’s board issued other certificates.

The Arab Bank re-sent the letter to the Hameed Al Ahmar Group at Sabafon company. The end of  the letter read: “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?

On June 30, 2004, the financial manager of Sabafon, Nidal Al Qaruiti, responded to the questions 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 said the new offshore company was  equally owned by Hameed Al Ahmar and Tareq Al Haidari.

On March 14, 2004, documents show that Al Ahmar adopted his signature on all transactions, thus withdrawing the prerogatives of other partners. 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 Saba Islamic Bank account,  when the offshore company was founded Hameed Al Ahmar, Tareq Al Haidari and Nidal Qaruiti decided to open an account at the Arab Bank in Geneva, Switzerland, where all the new company’s financial transactions were to be carried out.

“According to what I have seen in the documents,” says economics professor Abdulwahed Ismail, “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 shareholders are entitled to examine and review, and based on which profits are distributed among the shareholders, according to their percentage of shares.

Asked how this is done, Ismail said that once Sabafon funds are deposited in the SIB, they can be transferred from Sabafon to the Arab Bank in Yemen. The latter transfers the money electronically to be deposited in the company’s pseudo account at a branch in Switzerland without any trace record of the transfers that preceded it.

This reporter tried several times to get answers from Sabafon and Al Ahmar, to no avail. Emails sent directly to Al Ahmar and Tareq Al Haidari, in September went unanswered. In October, the investigator went to the main office 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 chairman of the board of directors and the CEO were outside Yemen. Razaz said he had no response and asked that questions be emailed directly to him. No answers were received.

The Yemeni Tax Authority (YTA) says  that methods to defraud are subject to legal questioning. This applies to accounts of offshore companies bound by activities inside the country, as is the case of Sabafon.

A  YTA source – who asked not to be identified – added that what concerned “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 challenge Al Ahmar.  

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 adopt modern methods for 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, using his position and ties to Jordanian businessmen in other firms.

In June 2004 – the same time he sent the letter to the Arab Bank  informing them of who owned Cinnabar, Nidal Qaruiti began negotiating with HSBC Bank to obtain a $20 million loan. HSBC was convicted of providing services and tax evasion services for its customers. At the start of 2005, Sabafon announced that it had 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.

In 2005,  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 equipment than that specified in the import license. This equipment was not covered by the profit tax exemption scheme. The ACC said that the 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 company information presented to the government or on Sabafon’s website. The firm used back doors to company evade taxes, such as other offshore companies owned by persons connected to Sabafon. One example is the CHELSEY SERVICES CORPORATION, registered Dec. 4, 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 former  development director at CCC founded an offshore company in the Seychelles under the name MIDDLE EAST UNITED PETROLEUM GROUP HOLDING COMPANY LIMITED through a Hong Kong services company. The registration papers state that the new firm is run by a Chinese front. It had invalid postal and email addresses –All correspondence between ARIJ and the company bounced back. 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. The new company wasn’t registered as a company owned by Jihad Abbas, but rather was a front for CCC.

The tentacle-like connections of Sabafon and its offshore network were extensive  . A bank account for Al Haidari came up in “SwissLeaks”. It exposed where the bank had facilitated tax evasion and money laundering services to its customers. It also was able to hide the money from inspectors in their countries.

Al Haidari opened a bank account at HSBC on the 16 July, 1999. He registered his address in Hidda Street, Sana’a. Over different periods,  $831,000 was transferred from and into the bank account. Another bank account was found. This one 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 account held more than $536,000.

In Openness and in Secrecy

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

He also has international contracting agencies.

But the secretive companies in the British Virgin Islands that appeared in the Panama Papers reveal  investments that allowed him to hide or to show when necessary, his role as a businessman, a politician and a member of a powerful tribe.