Shining a light on dark money

Hello everyone,

Hope you’ve had a lovely week! I’m starting to wind down for the holidays – I’ll tell you a bit more at the end on what to expect for the next few weeks! But for now, I want to dive into a subject close to my heart: dark money.

There are always bad things happening around the world, from the destruction of rainforests to the financing of war crimes and the laundering of illicit funds. But what’s less obvious is how these events can be tied together by the secretive flow of money through shadowy networks. These hidden systems enable and sustain a significant proportion of crimes and unethical actions. Without these dark labyrinths, much of this wrongdoing would come to a halt.

Investigative journalists work hard to follow the money and uncover who is ultimately responsible for the wrongs we see in the world. But the dark money structures are designed to protect secrecy, making it difficult to break through. 

For this reason, leaks like the Panama Papers are gold dust for journalists – 11.5 million documents from Mossack Fonseca revealed how the wealthy used offshore tax havens to hide assets, evade taxes, and enable corruption. But leaks of this magnitude are rare.

That’s why the work of The Gecko Project on its shadow companies and deforestation investigation is so impressive. The team managed to pierce through the secrecy and unearth exactly who had been clearing vast swathes of the rainforest in Borneo for more than a decade. 

It was, they revealed, a company called First Resources, one of the leading palm oil producers in the region. Despite its public commitment to deforestation-free supply chains, First Resources was the controlling hand behind a sprawling network of so-called shadow companies.

These shadow companies have left a massive footprint. Over the past five years, while First Resources maintained the guise of sustainability, they cleared more forest for palm oil than any other company in southeast Asia.

The investigation turned heads and changed minds. Just a few months later, in March this year, several major multinationals stopped sourcing their palm oil from First Resources. These included Beiersdorf, Procter & Gamble, FrieslandCampina, Danone, Vandemoortele, Henkel, Lipsa, and BASF. Another 17 companies are said to be considering following suit.

I spoke to Tom Walker, one of the journalists who worked on the investigation, about how he unmasked First Resources. He told me: “The major change in the deforestation landscape has been the ability to conduct highly accurate and effective satellite imagery analysis. This technology clearly pinpointed a handful of companies as the primary drivers of deforestation over several years.” (If you read the story on The Gecko Project’s website, you can see these satellite images for yourself.)

“But,” Tom added, “we didn’t know who actually owned them because if you follow the trail, it ends up in a secrecy jurisdiction like the British Virgin Islands.

“One thing about the British Virgin Islands that people don’t always know is that you can now get a little bit of information from the company registers. We managed to obtain the list of directors of the companies chopping down the rainforest. We found someone listed who had the same name as the nephew of the patriarch of First Resources.”

To corroborate these findings, Tom spoke to sources and obtained internal documents. While he didn’t share details of these investigative methods, the insider testimony and corporate records provide compelling evidence that First Resources oversaw the shadow companies’ operations as they razed swathes of Indonesian Borneo.

It’s worth noting that First Resources has consistently denied owning or controlling the shadow companies. It said the group Tom had identified “is not a subsidiary, an associated company, nor a related party of First Resources”.

It’s not the first time the Gecko Project has dug into deforestation. The project has also looked into Royal Golden Eagle, one of the world’s largest producers of pulp and paper. The team has uncovered evidence that Royal Golden Eagle seems to control a network of secretive companies – and that those businesses are responsible for clearing significant areas of orangutan habitat in Borneo.

Tom hinted that change may be on the horizon there as well after the investigation. I’ll share updates as soon as I know more – watch this space!

“Growing up in Guernsey, an offshore secrecy haven, I was familiar with the financial services industry – many friends worked in banks in Guernsey. As I traveled and got older, I began to understand the role offshore jurisdictions like the Channel Islands, the British Virgin Islands, and Cayman play in harms I wanted to investigate.

At OCCRP back in 2016, I ran the news desk but started doing investigations on the side. When the Panama Papers leak emerged, the editor asked if I’d join the team. I didn’t realize the scale of it at first. I was asked to look into companies linked to the Azerbaijani president’s family. On the surface, the tasks seemed mundane - logging document details into spreadsheets, reading attachments, building timelines, and drawing company structures. 

We uncovered that the president of Azerbaijani’s daughter, Leyla Aliyeva, was secretly an owner of a company which held a stake in a controversial gold mine where the worker’s hadn’t been paid for months.

I interviewed mining experts to understand how the gold was mined and where it went when operations stopped. Tracking ownership across jurisdictions like BVI was tough even with the Panama Papers cache – these structures are incredibly complex and designed to obscure.

~Eleanor was quick to stress that her role was a small one, and the real credit belongs to the courageous people in Azerbaijan who risked everything to help uncover the truth, despite the serious reprisals they could have faced if discovered.~

The Aliyevs remain in power, but the story made an impact. For people in Azerbaijan, knowing their struggles weren’t ignored meant a lot.

Globally, the Panama Papers led to $1.36bn being recouped by authorities. Ultimately, the cover-up is sometimes easier to uncover than the crime. Secrecy lets stolen money be hidden and used. Exposing this is vital to accountability.”

I hope you’ve enjoyed this issue and learning how journalists unpick complex corporate structures. It’s a tricky task and can take months if not years. But it’s so important this work was done so people know exactly what’s going on and who is responsible. 

It’s starting to feel very Christmas-y at the Bureau and I’m fully into the festive spirit so I’m going to wrap it up here and go and eat yet another mince pie. 

The next couple of editions are going to look a little different, so I can take a proper holiday. I’ll still see you next week where I’ll look back at some of my favourite stories I’ve covered this year. Then I’ll be back in the new year with a look at what’s to come!

Until then, have a great week,

Lucy