The Art of Secrecy
Locked in the files of a Panama law firm are the answers to mysteries involving Van Goghs, Picassos, Rembrandts and other masterworks
By Jake Bernstein
Apr 7, 2016
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Panama Papers provides unprecedented look at connection between international art trade and offshore secrecy
Billionaire art dealers use offshore company to shield painting allegedly looted by Nazis
Identity revealed of the man secretly behind the 20th century’s most important modern art auction
After a chance discovery, the grandson of a Jewish art dealer learned that a valuable painting he believed the Nazis had looted from his grandfather might now be in the hands of one of the art world’s most influential families. Proving it has been another matter.
The work, by Italian artist Amedeo Modigliani, is known as “Seated Man with a Cane.” Modigliani, a young, impoverished alcoholic, died of tuberculosis almost a century ago; his paintings today sell for as much as $170 million. The portrait of a dapper man with a mustache perched on a chair, hands resting upon his walking stick, may be worth $25 million.
Investigators traced the painting to a clan of billionaires that bought the work at auction in 1996. Lawyers working for the grandson sent a letter to the Nahmad Gallery in New York, stating that the painting belonged to the grandson, who was entitled to its return. They requested a meeting to discuss the matter. The gallery failed to respond, according to court documents. The grandson sued. Four years later, the two sides’ lawyers are still fighting it out.
The Nahmads have insisted in federal and state court in New York that the family does not possess the Modigliani. An offshore company called International Art Center, registered by a little-known Panamanian law firm, does.
But secret records obtained by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and other media partners suggests that the statement is a legal sleight of hand designed to obscure the true owners of the painting.
The records, more than 11 million documents in all, come from the internal files of Mossack Fonseca, a Panamanian law firm that specializes in building corporate structures that can be used to conceal assets. Dating from 1977 through 2015, the files include the biggest known cache of inside information on the connections between the international trade in art and offshore secrecy jurisdictions. The records paint a picture of a thinly regulated industry where anonymity is regularly used to shield all kinds of questionable behavior.
The Nahmad family has controlled the Panama-based company, International Art Center, for more than 20 years, the records show. It is an important part of the family’s art business. David Nahmad, the family leader, has been the company’s sole owner since January 2014.
When confronted with documentatation that showed the Nahmads owned International Art Center, David Nahmad’s lawyer, Richard Golub, said “whoever owns IAC is irrelevant. The main thing is what are the issues in the case, and can the plaintiff prove them?”
The central question, Golub said, was whether the grandson can demonstrate this specific painting was stolen from his grandfather. Despite years of battling in court, it’s an issue that has received scant attention from a judge, since both sides have been fighting over who currently owns the painting.
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Seated Man (Leaning on a Cane) by Amedeo Modigliani. Photo: Christie's Images / Corbis
Mossack Fonseca not only helped the Nahmads establish International Art Center in 1995, it provided many of its other clients with the tools to secretly carry out high-end art transactions worldwide for works by artists such as Van Gogh, Rembrandt, Chagall, Matisse, Basquiat and Warhol.
Other well-known art collectors with companies registered through Mossack Fonseca include Spain’s Thyssen-Bornemisza clan, Chinese entertainment magnate Wang Zhongjun and Picasso’s granddaughter, Marina Ruiz-Picasso.
Zhongjun did not respond to a request for comment. Ruiz-Picasso declined to comment. Brojia Thyssen, through a lawyer, acknowledged having an offshore company but said it was fully declared with Spanish tax authorities.
The firm’s records mention enough art to fill a small museum. Along with crucial new evidence in the legal battle over the Modigliani, there are clues in Mossack Fonseca’s files to the mystery of the missing masterpieces of a Greek shipping magnate and previously unknown details behind one of the 20th century’s most famous modern art auctions.
The documents reveal sellers and buyers of art using the same dark corners of the global financial system as dictators, politicians, fraudsters and others who benefit from the anonymity these secrecy zones offer.
In recent years, as art prices have grown dramatically, transactions are often obscured by the use of offshore companies, front men, free trade zones, manipulated auctions and private sales. While secrecy may be exploited legally to avoid publicity, limit legal exposure or ease operations across borders, it can also be employed for nefarious purposes, such as evading taxes and hiding shady ownership histories. Since art is easily transportable, expensive and poorly regulated, authorities fear that it is often used for money laundering.
Boom times
The current art market boom — and its connection to the secrecy zones within the global financial system — offers more evidence of the spectacular rise of the super rich. Art has become a valuable asset for a global elite eager to stash their money in safe and secluded harbors. In 2015, sales of art exceeded $63.8 billion, according to the trade publication Art Market Report, with top-dollar art experiencing the greatest growth.
Total billionaire wealth allocated to art was estimated to be $32.6 billion in 2013.
“The single best driver of the art market is accumulated wealth,” says Michael Moses of Beautiful Asset Advisors, which tracks art sales. “If high-end wealth is increasing at a faster rate than any other kind of wealth — which it is — these people have excess money to spend on art.”
Roughly half of art transactions are private, strictly between sellers and buyers, Art Market Report estimates. There is little public information about these sales. The rest are done through public auctions, which provide some transparency in regards to price but usually still allow buyers and sellers to remain a mystery, Moses says.
When high-dollar art changes hands, it often lands in a free trade zone known as a freeport. As long as art is housed in the freeport, owners pay no import taxes or duties. Critics worry the freeport system can be used to dodge tax or launder money since precise inventories and transactions are not tracked. According to the international professional services firm Deloitte, 42 percent of art collectors it surveyed said they would likely use a freeport. The oldest freeport, with the most art, is in Geneva. Its complex of storage facilities is said to contain enough treasure to rival any museum in the world.
Natural Le Coultre, a company owned by Yves Bouvier, rents almost a quarter of the space in the Geneva freeport. Bouvier is also a primary owner of other freeports in Luxembourg and Singapore and a consultant to a facility under construction in Beijing. These interests have earned him the title “the King of the Freeports.”
But it is Bouvier’s activities as a middleman in private deals that have made him the talk of the art world and a target for civil suits. Russian billionaire Dmitry Rybolovlev has filed complaints against Bouvier in Monaco, Paris, Hong Kong and Singapore, accusing him of fraudulently marking up the prices of paintings before selling them. After reviewing the claims, a judge in Singapore lifted a freeze on Bouvier’s assets and a judge in Hong Kong followed suit. Bouvier has strongly denied the charges.
Not surprisingly, given the number of billionaires and art dealers who use Mossack Fonseca’s services, both men are clients of the firm.
The law firm’s records show at least five companies connected to Bouvier, although none appear to be related to the Rybolovlev case.
His antagonist, Rybolovlev, has two.
Rybolovlev declined to comment. A representative for Bouvier said his client used offshore companies for well-established legal purposes.
The auction game
Many trace the art market’s wild enthusiasm for modern art to a sale on a Monday evening in November 1997. Held at Christie’s in New York, the auction of the Victor and Sally Ganz collection produced record valuations for paintings and proved a milestone in the transformation of art into a global commodity.
“All of a sudden the game was afoot with the Ganz sale in a way that hadn’t happened before,” says Todd Levin, director of Levin Art Group, a New York-based art advisory firm. “It was like a steroid injection to the market.”
The full story behind the Ganz auction has never been revealed. The leaked documents show it involved hidden interests and one of the art world’s favorite offshore middlemen, Mossack Fonseca.
The Ganzes were collectors of works by Pablo Picasso, early champions of Frank Stella and friends and patrons of Jasper Johns, Robert Rauschenberg and Eva Hesse. After the couple died, their children were forced to sell a collection that had adorned the walls of their childhood home.
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Victor and Sally Ganz. Photo: Youtube
It had cost the Ganzes about $2 million over 50 years to assemble. In one evening, the collection sold for a record $206.5 million.
Unknown until now is that the Ganz heirs appear to have sold the collection months before the auction. The key player in the transaction was a corporation based on Niue, a speck of an island in the South Pacific. The company was named Simsbury International Corp.
Simsbury International appears to have been created solely for the Ganz transaction. It was incorporated in April 1997. A month later it purchased the collection. Simsbury’s registered agent was Mossack Fonseca. Employees of the Panamanian law firm served as Simsbury International’s “nominee” directors, stand-ins who controlled the company on paper but who exercised no real authority over its activities. These paper directors signed agreements on the company’s behalf with a bank, an auction house and an art shipping company.
Ownership of the company was held through “bearer shares.” These are simply certificates that allow whoever holds the paper to anonymously transfer or claim their value. Today, they are banned in many countries because of their usefulness to those who want to engage in tax evasion and money laundering.
In a deal struck on May 2, 1997, Simsbury International bought the most valuable of the Ganz paintings for $168 million from Spink & Son, the London auction house then owned by Christie’s, according to the leaked documents.
A representative of the Ganz family declined to answer questions from ICIJ about the specific details of the auction transaction.
The sale came with a side-deal. If the auction for the works brought a higher price, the owner of Simsbury International and Spink & Son would share in the difference.
The man who had power of attorney for Simsbury, and thus exercised control over the company and its bank account, was British billionaire Joseph Lewis. Then the richest man in England, Lewis made his fortune betting on currency movements. He was also Christie’s largest shareholder.
The Ganz catalog stated “Christie’s has a direct financial interest in all property in this sale,” but the terms of that interest were never explained.
Lewis had made a bet that would pay off in multiple ways.
The Ganz auction would help turn 1997 into one of Christie’s biggest years for sales up until then. The auctioneer raked in more than $2 billion that year.
Lewis did not respond to a request for comment.
One of the most expensive paintings sold at the Ganz auction was Picasso’s “Women of Algiers, version O.” It’s one of a celebrated series of fifteen paintings Picasso made in the mid-1950s. In addition to “O,” the Ganz auction featured versions “M,” “H,” and “K.”
Bidding on the works were members of the billionaire Nahmad clan. David Nahmad went home with version “H,” adding it to what is considered one of the largest collections of Picassos in private hands.
An art dynasty
The Nahmads began as a banking dynasty of Sephardic Jews from Aleppo, Syria. In 1948, Hillel Nahmad relocated his wife and eight children to Beirut.
Three of his sons — Giuseppe, David and Ezra — eventually moved to Milan and, by the early 1960s, had become active art dealers. Giuseppe, the patriarch of the family, had a taste for expensive sports cars and, according to his brother David, once dated Rita Hayworth. He also pioneered treating the art business like a stock market, buying and holding paintings until exactly the right time to sell to maximize profit.
He died in 2012. David assumed the mantel of family leader. He and his older brother Ezra both named their sons Hillel after their grandfather. The two sons both go by Helly. Together the four continue the family business.
The two surviving brothers are worth a combined $3.3 billion, according to Forbes. They live in Monaco, among other locales. In addition to currency trading and art dealing, David Nahmad is also a championship backgammon player. Each son has a namesake gallery. Ezra’s son has the Helly Nahmad Gallery in London and David’s offspring, an identically named one in New York.
The Mossack Fonseca records indicate the Nahmads were early adopters of the benefits of offshoring art.
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Fine art dealer and billionaire David Nahmad. Photo: AP Photo / Lionel Cironneau
Giuseppe Nahmad registered International Art Center S.A. in 1995 through the Swiss bank UBS and the Geneva office of Mossack Fonseca. It may have existed in another form prior to that date. A document in the Mossack Fonseca files mentions International Art Center acquiring the pastel “Danseuses” by Edgar Degas in October 1989.
The Nahmads’ business, which stretches across jurisdictions and blood ties, is tailor-made for offshoring. With the Nahmad principals based in three countries, galleries on opposite sides of the Atlantic Ocean and most of the paintings stashed in Switzerland, the family requires the kind of legal siloing made possible by offshore companies.
International Art Center is not the family’s only corporate entity with Mossack Fonseca. Giuseppe Nahmad also created Swinton International Ltd., which was registered in the British Virgin Islands in August 1992.
The offshore entities are interconnected, their use a family affair. Giuseppe Nahmad had power of attorney over International Art Center’s UBS bank account as early as 1995. David and Ezra could also sign for the company’s bank account at UBS. For a company bank account with Citibank two years later, Giuseppe co-signed with his brother Ezra Nahmad, the documents show.
In 1995, Swinton International authorized David Nahmad to negotiate the sale of five paintings it owned — an oil on panel by Picasso, “Danseuses” by Degas, two oils on canvas by Henri Matisse and an oil on canvas by Raoul Dufy. Some of the paintings subsequently went on auction at Sotheby’s, identified as being from a “private collection.” Two of the paintings had been the property of International Art Center.
International Art Center’s ownership was initially held in bearer shares, making it impossible to tell who actually owned it. In 2001, a board resolution by Mossack Fonseca nominee directors created 100 shares in the company and granted them to Guiseppe. In 2008, those hundred shares were reassigned in equal portions to David and Ezra Nahmad. A year later, Ezra split his shares with his son Hillel. David did not do the same with his son.
A hint of tension between David and his son surfaced in 2007, in a rare profile of the family in Forbes. The article described David as “frowning” as he remarked, “My son likes publicity a lot. I don’t like publicity.”
His son Helly’s extracurricular activities could have made him an unsuitable shareholder of International Art Center. Like his uncle Giuseppe, Helly had big appetites. The tabloids charted his exploits: models for girlfriends, a floor of multi-million dollar apartments in Trump Tower, movie star pals and high-stakes gambling. Given the family history, none of that was likely a problem until the U.S. Attorney for the Southern District of New York secured an indictment against him in April 2013 for his leadership role in an alleged $100 million gambling and money-laundering ring with ties to Russian gangsters.
Wiretaps in the case caught him discussing how his family art business could be used to hide money. “[S]ometimes a bank needs a justification for a wire, right?” he said, according to a conversation from March 2012, quoted in the government’s sentencing memorandum. “We can just say, Ohh, you are buying a painting. If they need justification, you know what I mean? You just be like, Oh yeah, I bought a, you know, Picasso drawing or something.”
It was never proven in court that the behavior discussed took place. The conversation did not factor into the ultimate charge and the Nahmads’ lawyer said in an interview it has nothing to do with the Modigliani case.
Helly Nahmad pleaded guilty to operating an illegal gambling business in November 2013. A judge sentenced him to a year and a day in prison. He also agreed to forfeit $6.4 million and relinquish rights to a painting by Raoul Dufy. He served five months.
Missing art
The Nahmads are not the only prominent art collecting clan that has found their offshore holdings embroiled in legal actions.
The Mossack Fonseca data provides new insight into a legal dispute involving the Goulandris family, a Greek shipping dynasty that is in the middle of a fight over what happened to 83 missing art masterpieces.
“All told this is about $3 billion worth of paintings,” Ezra Chowaiki, a gallery owner who is helping to bankroll one of the legal claims, told ICIJ in an interview. “It could be the largest collection of missing paintings in history.”
Two lawsuits and a criminal investigation are underway in Lausanne, Switzerland, to try to determine the whereabouts and ownership of the art collection. The cases feature a sprawling and wealthy family at war with itself, shell companies based in Panama, allegations of a forged document and paintings by the likes of Van Gogh, Matisse and Picasso.
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The Goulandris clan with Chagall's 'Le violoniste bleu' in the background.
Some of the paintings have been sold. The seller did not want the history known. In a $20 million sales agreement found in the Mossack Fonseca files for one of the Goulandris paintings, Van Gogh’s “Nature Morte aux Oranges,” there is a section about confidentiality. It forbids revealing “the identity of the parties to this Agreement (including the identity of the Seller’s sole shareholder)” and “any information or documentation pertaining to the Provenance of the Work and the chain of title.”
The art once belonged to Greek shipping tycoon Basil Goulandris. In 1994, Goulandris died of Parkinson’s disease. After his widow, Elise, died in 2000, her heirs learned the couple’s massive art collection had changed hands years earlier. A Panamanian company called Wilton Trading S.A. owned the paintings.
In 1985, according to Basil’s nephew Peter J. Goulandris, Basil sold the entire collection of 83 paintings for the extraordinarily low price of $31.7 million dollars to Wilton Trading. Despite the sale, the paintings never left the couple’s possession. During this period, Basil and Elise Goulandris lent the artwork to museums and sold pieces to dealers with the provenance listed as if the pieces belonged to them.
Much of what is known about Wilton Trading comes from the court cases in Switzerland. It was created in 1981 but didn’t have directors until 1995, ten years after the sales agreement was supposedly signed. According to a Swiss prosecutor, the paper on which the sales agreement is inked didn’t exist in 1985, and no one has been able to prove that any money changed hands.
Peter J. Goulandris told a Swiss court that his late mother, Basil’s sister-in-law Maria Goulandris, was the owner of Wilton Trading.
Through his lawyer, Peter Goulandris declined to comment.
Elise died without offspring. Her niece Aspasia Zaimis believes she deserves a share of the 83 paintings and is suing the executor of Elise’s will.
In November 2004, anonymous companies set up by Mossack Fonseca started the process of selling some of the Goulandris paintings that Wilton Trading had kept.
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Bonnard's 'Dans le cabinet de toilette'. Photo: Sotheby's
Early the next year, at a Sotheby’s auction in London, a company called Tricornio Holdings sold a painting by Pierre Bonnard called “Dans le cabinet de toilette.” Another company, Heredia Holdings, signed an agreement with Sotheby’s to sell a painting by Marc Chagall, “Les Comédiens.” A third company, Talara Holdings, put up for auction a Chagall painting called “Le Violoniste Bleu.” Around the same time, the 1888 Van Gogh depiction of a basket of oranges went to California direct marketing tycoon Greg Renker and his wife Stacey in a private sale. The seller was a company called Jacob Portfolio Incorporated.
Renker did not respond to a request for comment.
All four companies were registered just before the transactions and shuttered shortly afterwards, leaving no public trace of who was behind them. The documents now reveal that all four shared a mysterious owner: Marie Voridis.
One of the transactions provides a clue to the identity of Marie Voridis. On October 22, 2004, Voridis transferred all rights to an oil painting by Pierre-Auguste Renoir known in English as “the Seamstress” to Talara Holdings. A few weeks later, Talara Holdings transferred the painting back to Voridis.
In September 2005, a Greek fashion magazine featured the opulent New York apartment of a Greek socialite, Doda Voridis, the sister of Basil Goulandris. Masterpieces by well-known artists decorated the Upper East Side apartment of Voridis, who died in December 2015. In the gossip columns she was always known as Doda but her real name is Marie. Hanging above a handsome armoire in one photo was Renoir’s “the Seamstress.”
War and treasure
The controversy over Modigliani’s “Seated Man with a Cane” began in a time when the fog of war provided the kind of concealment the offshore world offers today. Oscar Stettiner, the Jewish dealer who is alleged to have been the original owner of the painting, fled Paris in 1939, in advance of the Nazis, leaving behind his art collection.
After the city fell, the Germans seized the collection and appointed a French “temporary administrator,” who auctioned off the painting for the benefit of the Nazis, according to legal filings. In October 1944, a U.S. military officer bought the Modigliani in a café for 25,000 francs, according to court documents.
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Oscar Stettiner.
In 1946, Stettiner filed a claim in France to begin the process of recovering the painting, court documents filed on behalf of his grandson say. He died two years later, with his petition still pending.
The Nahmad’s lawyer Richard Golub disputes this narrative. He questions whether Stettiner ever owned the painting.
The Modigliani stayed hidden within a private collection until 1996, when International Art Center bought it at Christie’s in London for $3.2 million, according to documents filed in New York courts. The Helly Nahmad Gallery exhibited the painting in London in 1998 and at the Musee d’Art Moderne in Paris in 1999. Six years later it was part of a Modigliani exhibit at the Helly Nahmad Gallery in New York.
Toronto-based Mondex Corp., a firm that specializes in recovering Nazi-looted art, discovered the painting’s alleged provenance by accident while looking through files in a French ministry. The company helped initiate the legal battle to return it to Philippe Maestracci, Oscar Stettiner’s grandson. Mondex does not disclose its fee for this service.
On Feb. 11, 2015, the Nahmad’s lawyer in the Maestracci case in New York, Nehemiah Glanc, wrote an email to International Art Center’s attorney in Geneva. Glanc was on record as the lawyer for IAC, but he needed some key facts about the company before he could proceed, the leaked records obtained by ICIJ show.
“Please advise as soon as possible as to who is authorized to sign on behalf of IAC,” he wrote in an email.
If the Nahmads had signed the documents as the owners of International Art Center, they would have likely lost the legal protection the company provided.
The attorney in Geneva put Glanc in touch with Anaïs Di Nardo Di Maio in Mossack Fonseca’s Geneva office. Di Nardo could get the signatures of the Mossack Fonseca nominee directors in Panama as long as Glanc’s clients would pay for it. He agreed.
One document signed by Mossack Fonseca’s nominee directors cost $32.10.
As the case progressed, emails flew back and forth between Glanc and Mossack Fonseca, the leaked documents show. Every time a motion came from International Art Center, the stand-in directors had to sign.
In September 2015, in an austere courtroom in New York, state Supreme Court Judge Eileen Bransten dismissed the Maestracci case. Among her findings, the plaintiffs had failed to properly serve the complaint on International Art Center because they had served papers at the Nahmad Gallery in New York instead of going to Panama. She also ruled that a court-appointed administrator, not Maestracci, was the proper plaintiff. Two months later, the administrator re-filed the case in state Supreme Court in New York as plaintiff.
The new complaint against the Nahmads made another effort to link the family to ownership of International Art Center, which it described as an alter ego of the family enterprise “in a manner so as to confuse and conceal their identities, and hide revenues generated” from the Nahmad family’s art dealing business.
As the case continues on, Modigliani’s 1918 portrait, “Seated Man with a Cane,” is tucked away in the Geneva freeport in Switzerland, another treasure hidden from view.
Contributors to this story: Alexandre Haederli, Juliette Garside, Frederik Obermaier and Bastian Obermayer
Friday, 8 April 2016
POLITBURO-CHINA BURSTED.
Leaked Files Offer Many Clues To Offshore Dealings by Top Chinese
Eight current and former members of the Politburo Standing Committee, the country's top decision makers, have relatives with secret offshore companies
By Alexa Olesen
Apr 6, 2016
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Relatives of at least eight members of the top leadership of China’s Communist Party have offshore holdings
So do China’s super wealthy business executives and kung fu star Jackie Chan
Offshore companies incorporated in offices in China and Hong Kong account for 29 percent of Mossack Fonseca’s active companies worldwide
For months, Gu Kailai worried about a secret that threatened to upend her comfortable life and stop her husband’s climb to the top rungs of China’s political leadership. So she took action.
In a hotel room in the southern Chinese megacity of Chongqing, she mixed tea and rat poison in a small container as Neil Heywood, a British business associate, lay drunken and dazed on the hotel bed.
Then she dripped the mixture into Heywood’s mouth.
Hotel staff found his body two days later.
Gu eventually confessed to the 2011 crime. She had been driven to murder, she said, by Heywood’s threats to expose a dark secret: millions of dollars in real estate held in an offshore account on the other side of the world.
If Heywood revealed that she had used a company in the British Virgin Islands to hide her ownership in a villa in the south of France, she figured, the scandal would jeopardize the accession of her husband, Bo Xilai, to the Politburo Standing Committee, a body of fewer than 10 men that stands at the apex of political power in China.
Just over two weeks after the murder — in a previously unknown postscript — the ownership structure of Gu’s offshore company suddenly changed. Her shares in the company were transferred to another business associate, perhaps in an effort to further obscure her ties to the company or to make it easier for the trusted associate to act swiftly as events unfolded, a trove of secret records shows.
In the end, nothing could hide Gu’s secrets. Her pursuit of offshore anonymity ended in death for Heywood and prison for her and her husband — and added more fuel to longstanding concerns about how members of China’s elite use tax-haven hideaways to conceal their wealth.
The leaked documents that provide fresh details about Gu’s overseas dealings also reveal a wealth of new information about the offshore holdings of the families of other powerful Chinese. The documents reveal that Xi Jinping, China’s “Chairman of Everything,” — his titles include president, Communist Party chief and military chief — has a brother-in-law who has had companies in tax havens. Relatives of at least seven other men who have served on the tiny Standing Committee — including two members currently serving with Xi — also have offshore holdings, the records show.
One of these relatives is a grandson-in-law of the late Chairman Mao Zedong, the founding father of the People’s Republic of China.
It is no secret that many of the children and grandchildren of China’s revolutionary heroes have found success in the business world. China has the world’s second largest economy and has hundreds of billionaires. But the extent to which some of the country’s most politically connected have tapped offshore networks to keep their assets hidden from the public eye is not well known. And the mechanics of how they do it is little understood.
The cache of documents was obtained by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and other media partners. The records — more than 11 million documents in all — come from the files of Mossack Fonseca, a Panamanian law firm that sells shell companies and other offshore structures to customers who want to keep their finances private.
Among the law firm’s high-flying Chinese customers is Deng Jiagui, the brother in law of China’s paramount leader Xi Jinping, who has made anti-corruption a hallmark of his rule. Deng Jiagui acquired one offshore firm via Mossack Fonseca in 2004 and two more in 2009.
The companies were called Supreme Victory Enterprises Ltd., Best Effect Enterprises Ltd. and Wealth Ming International Ltd. It is unclear what the companies were used for. Supreme Victory was dissolved in 2007, and the other two companies had become dormant by the time Xi became Communist Party chief in 2012. Deng Jiagui did not respond to ICIJ’s requests for comment.
Another prominent client is the daughter of Li Peng, China’s premier from 1987 to 1998. Li is best known internationally for overseeing the bloody military crackdown on the 1989 Tiananmen Square pro-democracy protests.
His daughter, Li Xiaolin, and her husband own Cofic Investments, a British Virgin Islands company incorporated in 1994. In internal emails, Li’s lawyers say the firm’s funds came from helping facilitate the export of industrial equipment from Europe to China. The files show that ownership was cloaked for many years by use of so-called bearer shares, which are registered without names — if the bearer certificates for a company are in your hands, you own the company. Bearer shares have long been considered a vehicle for money laundering and other wrongdoing, and have been gradually disappearing worldwide as jurisdictions toughen regulations aimed at stopping the flow of dirty money.
The new generation of so-called red nobility seems to have learned about the offshore world at a young age. The granddaughter of Jia Qinglin, who served as the No. 4 member of the Politburo Standing Committee until 2012, has offshore assets. Jasmine Li Zidan became the owner of an offshore company called Harvest Sun Trading Ltd. in 2010 — when she was a freshman at Stanford University.
Since then, Jasmine Li has built a surprisingly large business for someone still in her 20s: her two British Virgin Islands shell entities were used to set up two companies in Beijing with total registered capital of $300,000. By having the two BVI companies own Li’s shares in the Beijing companies, she was able to keep her family name off the public registration documents.
The five other current and former Standing Committee members whose relatives are connected to offshore dealings are:
Zhang Gaoli, a current Standing Committee member, has a son-in-law named Lee Shing Put, who was a shareholder of three companies incorporated in the British Virgin Islands: Zennon Capital Management, Sino Reliance Networks Corporation and Glory Top Investments Ltd.
Liu Yunshan, a current Politburo Standing Committee member, has a daughter-in-law named Jia Liqing who was the director and shareholder of Ultra Time Investments Ltd., a company incorporated in the British Virgin Islands in 2009.
Zeng Qinghong, who was vice president of China from 2002 to 2007, has a brother named Zeng Qinghuai, who was the director of a company, China Cultural Exchange Association Ltd., that was incorporated first in Niue and then re-domiciled in 2006 in Samoa.
The late Hu Yaobang, who served as head of the Chinese Communist Party from 1982 to 1987, has a son named Hu Dehua who was shareholder, director and beneficial owner of Fortalent International Holdings Ltd., a company incorporated in the British Virgin Islands in 2003. Hu Dehua registered the company using his home address — the traditional courtyard home where his father lived while party chief.
Mao Zedong, who led Communist China from 1949 to his death in 1976, has a grandson-in-law who incorporated Keen Best International Limited in the British Virgin Islands in 2011. Chen Dongsheng is the head of a life insurance company and an art auction house and was the sole director and shareholder of Keen Best.
China’s Foreign Ministry did not respond to a faxed request for comment by ICIJ. Asked whether China plans to investigate any of the China-related companies or holdings revealed in the leaked documents, ministry spokesman Hong Lei told a regular press briefing in Beijing on Tuesday that he had no comment on the “groundless accusations.”
Communism meets capitalism
The leaked records shine light on how some Chinese political elites use the offshore world to keep their finances discrete.
Not all offshore dealings are illegal, but incorporations in the BVI and elsewhere can be used to obscure financial relationships between political elites and wealthy patrons, to hide assets, evade tax and enable anonymous stock purchases. They also allow high-profile individuals to set up an onshore business in the name of their offshore shell company without anyone knowing it’s theirs. These are but a few of the techniques greasing the wheels of modern Chinese capitalism with communist characteristics.
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Jackie Chan. Photo: Gage Skidmore (CC BY-SA 2.0)
Along with politically connected princelings, Mossack Fonseca’s customers from China include the super wealthy such as Shen Guojun, who founded the Chinese shopping mall chain Intime. Shen was a shareholder, together with the kung fu star Jackie Chan and others, of a company called Dragon Stream Limited that was incorporated in the British Virgin Islands in 2008.
Another billionaire, Kelly Zong Fuli, the daughter of billionaire soft drink magnate Zong Qinghou, acquired a BVI company called Purple Mystery Investments with help from Mossack Fonseca in February 2015. Correspondence shows the purpose of the company was “investment in China.”
Shen Guojun, Jackie Chan and Kelly Zong Fuli did not respond to ICIJ’s requests for comment.
The Panamanian law firm — considered one of the top five incorporators of offshore companies in the world — set up Mossack Fonseca Secretaries Limited in Hong Kong in August 1989 and, in its early days, operated out of an office in the Kowloon Centre in Tsim Sha Tsui, a bustling, neon-lit neighborhood known for its museums and shopping. It established its first office in mainland China in 2000. Today, according to its website, it has offices in eight mainland cities: Shenzhen, Ningbo, Qingdao, Dalian, Shanghai, Hangzhou, Nanjing and Jinan.
An analysis of the leaked records by ICIJ shows that by the end of 2015 Mossack Fonseca was collecting fees for more than 16,300 offshore companies incorporated through offices in Hong Kong and China. Those companies represented 29 percent of Mossack Fonseca’s active companies worldwide and made greater China the law firm’s single leading market. Its busiest office in Asia — and globally — is Hong Kong.
International rules on money laundering require middlemen like Mossack Fonseca to give extra scrutiny to government officials and their families to make sure their money was not accumulated through graft. Some clients, such as Shi Youzhen, the wife of Zong Qinghou, the Wahaha beverage company magnate, were subject to “enhanced due diligence,” including queries about the assets held by her offshore companies.
An examination of the files shows the firm signed up other Chinese clients, however, without determining whether they had family ties to top political figures.
The documents show, for example, that no one at the firm acknowledged or identified Deng Jiagui as Xi Jinping’s brother-in-law when it helped Deng incorporate offshore companies in the British Virgin Islands in 2004 and 2009.
Mossack Fonseca also appears for years to have not acknowledged or not realized the family ties of Li Xiaolin, former Chinese Premier Li Peng’s only daughter.
Mossack Fonseca didn’t object to the use of bearer shares to control the company Li Xiaolin and her husband owned, Cofic Investments, until 2009, when the British Virgin Islands introduced tougher anti-money laundering standards that forbid their use. The leaked files show the law firm didn’t dig into the backgrounds of the real shareholders of the company even as the ownership structure was transferred in 2010 from bearer shares to another secretive arrangement, a foundation in the tiny Central European principality of Lichtenstein.
By this time, Li Xiaolin had established herself in China as more than just the daughter of a famed political leader. She had become a top executive in the Chinese energy sector — earning the nickname “China’s Power Queen” — and had become a delegate to the Chinese People’s Political Consultative Conference, an advisory body to the Chinese legislature.
Emails show that Mossack Fonseca finally learned that Li Xiaolin and her husband were the real owners of Cofic Investments in 2014, in response to a query from British Virgin Islands financial regulators.
It is not clear from the files what the query was about but even then, at least some of the law firm’s employees appear not to have made the connection that Li Xiaolin was a prominent player in Chinese politics and business.
Geneva-based lawyer Charles-Andre Junod, who was a director of Cofic Investments, declined to comment but said he has always respected relevant laws.
Li Xiaolin did not respond to repeated requests for comment.
In a letter to ICIJ, Mossack Fonseca said the firm has “duly established policies and procedures” to identify and handle cases involving politicians or people associated with them. It said the company considers those kinds of cases to be “high risk” and conducts more intense checks and periodic follow ups. “We conduct thorough due diligence on all new and prospective clients that often exceeds in stringency the existing rules and standards to which we and others are bound.”
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Identity documents from the Panama Papers. Clockwise from top left: Patrick Henri Devillers, Jia Liqing, Hu Dehua, Deng Jiagui and Li Xiaolin.
A company worth $1
Another princeling who slipped though Mossack Fonseca’s vetting process without much attention was Jasmine Li, the granddaughter of a former Standing Committee member. Li was a Stanford student when she entered the offshore world.
There is no evidence in the leaked Mossack Fonseca documents that the law firm ever secured a copy of her photo ID even though that was supposed to be standard procedure. Had Mossack Fonseca employees checked more closely, they might have discovered a financial relationship between her and another of their customers, Zhang Yuping, the chairman and founder of Hengdeli, a Chinese luxury watch distributor.
Zhang was the sole shareholder of a British Virgin Islands company called Harvest Sun Trading Limited.
Public records show that Harvest Sun was used to buy shares in a publicly listed company in Hong Kong called China Strategic Holdings in April 2010. A few months later, in August, Harvest Sun sold some of the shares, and it then offloaded its remaining stake in September, according to filings with the Hong Kong Exchange.
In December 2010, the law firm’s records show, Zhang transferred ownership of the now empty shell company to Jasmine Li, who was a freshman at Stanford University at the time, according to her LinkedIn page.
The selling price: $1.
The Mossack Fonseca records show that Li also has a second BVI company called Xin Sheng Investments Limited. Li used Harvest Sun and Xin Sheng to set up two similarly named Beijing companies with interests in entertainment and real estate. The offshore companies acted as shields to her identity. Li did not respond to ICIJ’s request for comment.
Zhang’s lawyer, Victor Lee, confirmed via email that Harvest Sun was transferred from Zhang to Li in 2010. The lawyer said there were no assets in Harvest Sun at the time of the transfer and that Zhang considered the transfer “reasonable” because the company was “only a shell company with no assets inside.”
“Our client had no relationship with Ms. Li, who was introduced to our client by some business partners,” the lawyer wrote, without providing details. He said the transfer meant that Jasmine Li could have the company “without the need to set up another shell company herself.”
Business people in China often attempt to curry favor with top leaders by helping their spouses, children, grandchildren and other close family relatives. The nature of these symbiotic but secretive ties were laid bare during the trials of Gu Kailai and her husband Bo Xilai, who depended heavily on a deep-pocketed plastics tycoon from far northeast China called Xu Ming. As Bo said during his corruption trial in August 2013: “Xu Ming has provided a vast amount of financial assistance to my family… I have helped him achieve ‘rapid advances,’ and he helped me to look after my son.”
White gloves
For more than a decade, Gu Kailai had managed to keep her stake in her offshore company in the Caribbean secret, which in turned allowed her to keep her villa on the Mediterranean under wraps.
She and her husband, Bo, had all the ingredients of a Chinese power couple.
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The luxury French villa of Bo Xilai. Photo: Fine and Country
Gu, the daughter of a former People’s Liberation Army general, worked as a butcher’s assistant during the Cultural Revolution but went on to become a successful lawyer.
Bo, the son of one of the powerful “Eight Elders” of the Communist Party, ran the sprawling metropolis of Chongqing and, by 2011, was a leading candidate for the Politburo Standing Committee and possibly the nation’s next domestic security czar.
As her husband’s star rose, Gu acquired the six-bedroom villa in Cannes along the French Riviera. The home was bought in 2001 with funds from Xu Ming. Xu got around China’s strict capital controls by faking the purchase of a steel workshop in order to transfer the $3.2 million offshore.
The company selling the nonexistent steel workshop took a small cut and then transferred the rest to Russell Properties S.A., a British Virgin Islands company secretly co-owned by Gu and a business associate, French architect Patrick Henri Devillers. Russell Properties S.A transferred money to a company in France that purchased and managed the villa.
On paper, nothing linked Russell Properties to Gu or her powerful husband.
Gu used the Villa Fontaine St. Georges as an investment in the hope that it would generate rental income. She later testified that she hid her ownership of the company and the villa because she wanted to “minimize” her tax. And, she said, “I did not want others to know I had overseas assets.”
To manage the villa, she turned to Heywood, a family friend who exuded equal parts flash and mystery. He was known to drive around Beijing in a Jaguar with the numerals “007” in the license plate. The Guardian reported that he referred to Gu as an unforgiving “empress.”
By helping Gu, Heywood became part of a cottage industry of operatives who serve as fronts for wealthy Chinese who want to keep their overseas assets secret. These proxies — known in China as “white gloves” — often hold the real owners’ stakes in real estate and other investments.
Acting as a white glove for the corporate and Party elite has become a lucrative business in China. For Heywood, it would also turn out to be deadly.
The unraveling
Mossack Fonseca “inherited” Russell Properties S.A. as part of a batch of offshore companies that were transferred from another registered agent in mid-2011.
At the time, the company’s shares were held by IFG Trust and IFG Secretaries, proxies located in Jersey in the Channel Islands. The registers of directors and shareholders didn’t mention Devillers or Gu, and there was no obvious link to China.
Then things began to unravel.
Gu had promised Heywood, who was managing the French villa, a cut of a real estate deal in Chongqing. Heywood believed he wasn’t getting his fair share. In early 2011, Gu later testified, Heywood approached her son, Bo Guagua, to press him to ask his family for more money. Heywood threatened to reveal Gu’s ownership of the villa, Gu claimed.
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Gu Kailai, the wife of disgraced politician Bo Xilai, listens to the verdict during her trial. Photo: AP Photo / CCTV via APTN
According to reports of her trial, Gu and Heywood met on Nov. 13, 2011, in the Lucky Holiday Hotel in Chongqing to discuss the dispute. They had dinner, then went to his room for drinks. He drank half a bottle of Royal Salute whiskey and vomited before being dragged to his bed by a Bo family assistant named Zhang Xiaojun. Heywood asked Gu for water.
She mixed rat poison and tea in a soy sauce container and fed it to him in sips. Gu waited until she couldn’t feel Heywood’s pulse any longer, then went to her own room in the hotel and went to bed.
Little more than two weeks later, the leaked files show, Mossack Fonseca helped transfer ownership shares of Russell Properties S.A., the shell company that controlled the villa, from the IFG proxies to Patrick Henri Devillers, the French architect who had assisted Gu in setting up the company in 2000.
Devillers used the address of Gu’s former law partner in Beijing on the transfer paperwork. According to court documents, Russell Properties had initially been held 50/50 by Gu and Devillers via the two Channel Islands proxies.
It’s not clear why the transfer was made so soon after the crime or why Gu’s share was transferred to Devillers. Indeed, it seems strange that Devillers would choose to put the company in his real name and use Gu’s former business address on the paperwork, essentially leaving his and her fingerprints on the company.
By removing IFG as a middleman, Devillers was able to establish direct contact with Mossack Fonseca, giving him greater immediate control of the company.
By early 2012, Devillers was often in the news in China, Britain, France, Australia, and the United States for his links to Gu’s murder trial and Bo Xilai’s corruption scandal. Yet, according to the leaked files, for several months in early 2012, Mossack Fonseca appeared to remain oblivious to the case. During this time, Devillers emailed Mossack Fonseca to request that they allow him to transfer Russell Properties to another offshore agent called Morgan & Morgan Trust.
Then, on June 7, 2012, British Virgin Islands regulators launched an investigation into Russell Properties S.A., requesting information from Mossack Fonseca about its owners, directors and other details. Four days later, a Mossack Fonseca compliance officer alerted her colleagues in an internal email that Devillers appeared to be linked to an investigation in China.
On June 12 and 13, Mossack Fonseca emailed Devillers directly, sending him increasingly anxious notes that included links to news stories about the Bo Xilai-Gu Kailai scandal and his alleged role in it. “The articles mentioned a person with your name and nationality,” the law firm wrote. “Please advise us whether the person in question and you are the same person.” He appears not to have replied.
In its response to the British Virgin Islands authority, the law firm stated that a man named Patrick Henri Devillers was the sole shareholder and director of Russell Properties, and “our last contact regarding this company.” It made no mention of the company’s apparent links to the scandal unfolding in China though it promised to dig deeper and provide more information later about Devillers and the company.
Home for sale
Devillers now lives in Cambodia. His testimony was used in both the trials of Gu and Bo but he was never charged with any crime. He did not answer ICIJ’s repeated requests for comment.
Bo is serving a life sentence for bribery, embezzlement and abuse of power. He says that someday he will be vindicated.
Gu was sentenced to death for murdering Heywood. In December 2015, Chinese authorities reduced her punishment to life in prison.
The court judgment against Bo ordered the villa be confiscated by the Chinese government. Chinese state media reported in 2014 that it was up for sale.
Suggested price: $8.5 million.
Eight current and former members of the Politburo Standing Committee, the country's top decision makers, have relatives with secret offshore companies
By Alexa Olesen
Apr 6, 2016
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In this story
Relatives of at least eight members of the top leadership of China’s Communist Party have offshore holdings
So do China’s super wealthy business executives and kung fu star Jackie Chan
Offshore companies incorporated in offices in China and Hong Kong account for 29 percent of Mossack Fonseca’s active companies worldwide
For months, Gu Kailai worried about a secret that threatened to upend her comfortable life and stop her husband’s climb to the top rungs of China’s political leadership. So she took action.
In a hotel room in the southern Chinese megacity of Chongqing, she mixed tea and rat poison in a small container as Neil Heywood, a British business associate, lay drunken and dazed on the hotel bed.
Then she dripped the mixture into Heywood’s mouth.
Hotel staff found his body two days later.
Gu eventually confessed to the 2011 crime. She had been driven to murder, she said, by Heywood’s threats to expose a dark secret: millions of dollars in real estate held in an offshore account on the other side of the world.
If Heywood revealed that she had used a company in the British Virgin Islands to hide her ownership in a villa in the south of France, she figured, the scandal would jeopardize the accession of her husband, Bo Xilai, to the Politburo Standing Committee, a body of fewer than 10 men that stands at the apex of political power in China.
Just over two weeks after the murder — in a previously unknown postscript — the ownership structure of Gu’s offshore company suddenly changed. Her shares in the company were transferred to another business associate, perhaps in an effort to further obscure her ties to the company or to make it easier for the trusted associate to act swiftly as events unfolded, a trove of secret records shows.
In the end, nothing could hide Gu’s secrets. Her pursuit of offshore anonymity ended in death for Heywood and prison for her and her husband — and added more fuel to longstanding concerns about how members of China’s elite use tax-haven hideaways to conceal their wealth.
The leaked documents that provide fresh details about Gu’s overseas dealings also reveal a wealth of new information about the offshore holdings of the families of other powerful Chinese. The documents reveal that Xi Jinping, China’s “Chairman of Everything,” — his titles include president, Communist Party chief and military chief — has a brother-in-law who has had companies in tax havens. Relatives of at least seven other men who have served on the tiny Standing Committee — including two members currently serving with Xi — also have offshore holdings, the records show.
One of these relatives is a grandson-in-law of the late Chairman Mao Zedong, the founding father of the People’s Republic of China.
It is no secret that many of the children and grandchildren of China’s revolutionary heroes have found success in the business world. China has the world’s second largest economy and has hundreds of billionaires. But the extent to which some of the country’s most politically connected have tapped offshore networks to keep their assets hidden from the public eye is not well known. And the mechanics of how they do it is little understood.
The cache of documents was obtained by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and other media partners. The records — more than 11 million documents in all — come from the files of Mossack Fonseca, a Panamanian law firm that sells shell companies and other offshore structures to customers who want to keep their finances private.
Among the law firm’s high-flying Chinese customers is Deng Jiagui, the brother in law of China’s paramount leader Xi Jinping, who has made anti-corruption a hallmark of his rule. Deng Jiagui acquired one offshore firm via Mossack Fonseca in 2004 and two more in 2009.
The companies were called Supreme Victory Enterprises Ltd., Best Effect Enterprises Ltd. and Wealth Ming International Ltd. It is unclear what the companies were used for. Supreme Victory was dissolved in 2007, and the other two companies had become dormant by the time Xi became Communist Party chief in 2012. Deng Jiagui did not respond to ICIJ’s requests for comment.
Another prominent client is the daughter of Li Peng, China’s premier from 1987 to 1998. Li is best known internationally for overseeing the bloody military crackdown on the 1989 Tiananmen Square pro-democracy protests.
His daughter, Li Xiaolin, and her husband own Cofic Investments, a British Virgin Islands company incorporated in 1994. In internal emails, Li’s lawyers say the firm’s funds came from helping facilitate the export of industrial equipment from Europe to China. The files show that ownership was cloaked for many years by use of so-called bearer shares, which are registered without names — if the bearer certificates for a company are in your hands, you own the company. Bearer shares have long been considered a vehicle for money laundering and other wrongdoing, and have been gradually disappearing worldwide as jurisdictions toughen regulations aimed at stopping the flow of dirty money.
The new generation of so-called red nobility seems to have learned about the offshore world at a young age. The granddaughter of Jia Qinglin, who served as the No. 4 member of the Politburo Standing Committee until 2012, has offshore assets. Jasmine Li Zidan became the owner of an offshore company called Harvest Sun Trading Ltd. in 2010 — when she was a freshman at Stanford University.
Since then, Jasmine Li has built a surprisingly large business for someone still in her 20s: her two British Virgin Islands shell entities were used to set up two companies in Beijing with total registered capital of $300,000. By having the two BVI companies own Li’s shares in the Beijing companies, she was able to keep her family name off the public registration documents.
The five other current and former Standing Committee members whose relatives are connected to offshore dealings are:
Zhang Gaoli, a current Standing Committee member, has a son-in-law named Lee Shing Put, who was a shareholder of three companies incorporated in the British Virgin Islands: Zennon Capital Management, Sino Reliance Networks Corporation and Glory Top Investments Ltd.
Liu Yunshan, a current Politburo Standing Committee member, has a daughter-in-law named Jia Liqing who was the director and shareholder of Ultra Time Investments Ltd., a company incorporated in the British Virgin Islands in 2009.
Zeng Qinghong, who was vice president of China from 2002 to 2007, has a brother named Zeng Qinghuai, who was the director of a company, China Cultural Exchange Association Ltd., that was incorporated first in Niue and then re-domiciled in 2006 in Samoa.
The late Hu Yaobang, who served as head of the Chinese Communist Party from 1982 to 1987, has a son named Hu Dehua who was shareholder, director and beneficial owner of Fortalent International Holdings Ltd., a company incorporated in the British Virgin Islands in 2003. Hu Dehua registered the company using his home address — the traditional courtyard home where his father lived while party chief.
Mao Zedong, who led Communist China from 1949 to his death in 1976, has a grandson-in-law who incorporated Keen Best International Limited in the British Virgin Islands in 2011. Chen Dongsheng is the head of a life insurance company and an art auction house and was the sole director and shareholder of Keen Best.
China’s Foreign Ministry did not respond to a faxed request for comment by ICIJ. Asked whether China plans to investigate any of the China-related companies or holdings revealed in the leaked documents, ministry spokesman Hong Lei told a regular press briefing in Beijing on Tuesday that he had no comment on the “groundless accusations.”
Communism meets capitalism
The leaked records shine light on how some Chinese political elites use the offshore world to keep their finances discrete.
Not all offshore dealings are illegal, but incorporations in the BVI and elsewhere can be used to obscure financial relationships between political elites and wealthy patrons, to hide assets, evade tax and enable anonymous stock purchases. They also allow high-profile individuals to set up an onshore business in the name of their offshore shell company without anyone knowing it’s theirs. These are but a few of the techniques greasing the wheels of modern Chinese capitalism with communist characteristics.
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Jackie Chan. Photo: Gage Skidmore (CC BY-SA 2.0)
Along with politically connected princelings, Mossack Fonseca’s customers from China include the super wealthy such as Shen Guojun, who founded the Chinese shopping mall chain Intime. Shen was a shareholder, together with the kung fu star Jackie Chan and others, of a company called Dragon Stream Limited that was incorporated in the British Virgin Islands in 2008.
Another billionaire, Kelly Zong Fuli, the daughter of billionaire soft drink magnate Zong Qinghou, acquired a BVI company called Purple Mystery Investments with help from Mossack Fonseca in February 2015. Correspondence shows the purpose of the company was “investment in China.”
Shen Guojun, Jackie Chan and Kelly Zong Fuli did not respond to ICIJ’s requests for comment.
The Panamanian law firm — considered one of the top five incorporators of offshore companies in the world — set up Mossack Fonseca Secretaries Limited in Hong Kong in August 1989 and, in its early days, operated out of an office in the Kowloon Centre in Tsim Sha Tsui, a bustling, neon-lit neighborhood known for its museums and shopping. It established its first office in mainland China in 2000. Today, according to its website, it has offices in eight mainland cities: Shenzhen, Ningbo, Qingdao, Dalian, Shanghai, Hangzhou, Nanjing and Jinan.
An analysis of the leaked records by ICIJ shows that by the end of 2015 Mossack Fonseca was collecting fees for more than 16,300 offshore companies incorporated through offices in Hong Kong and China. Those companies represented 29 percent of Mossack Fonseca’s active companies worldwide and made greater China the law firm’s single leading market. Its busiest office in Asia — and globally — is Hong Kong.
International rules on money laundering require middlemen like Mossack Fonseca to give extra scrutiny to government officials and their families to make sure their money was not accumulated through graft. Some clients, such as Shi Youzhen, the wife of Zong Qinghou, the Wahaha beverage company magnate, were subject to “enhanced due diligence,” including queries about the assets held by her offshore companies.
An examination of the files shows the firm signed up other Chinese clients, however, without determining whether they had family ties to top political figures.
The documents show, for example, that no one at the firm acknowledged or identified Deng Jiagui as Xi Jinping’s brother-in-law when it helped Deng incorporate offshore companies in the British Virgin Islands in 2004 and 2009.
Mossack Fonseca also appears for years to have not acknowledged or not realized the family ties of Li Xiaolin, former Chinese Premier Li Peng’s only daughter.
Mossack Fonseca didn’t object to the use of bearer shares to control the company Li Xiaolin and her husband owned, Cofic Investments, until 2009, when the British Virgin Islands introduced tougher anti-money laundering standards that forbid their use. The leaked files show the law firm didn’t dig into the backgrounds of the real shareholders of the company even as the ownership structure was transferred in 2010 from bearer shares to another secretive arrangement, a foundation in the tiny Central European principality of Lichtenstein.
By this time, Li Xiaolin had established herself in China as more than just the daughter of a famed political leader. She had become a top executive in the Chinese energy sector — earning the nickname “China’s Power Queen” — and had become a delegate to the Chinese People’s Political Consultative Conference, an advisory body to the Chinese legislature.
Emails show that Mossack Fonseca finally learned that Li Xiaolin and her husband were the real owners of Cofic Investments in 2014, in response to a query from British Virgin Islands financial regulators.
It is not clear from the files what the query was about but even then, at least some of the law firm’s employees appear not to have made the connection that Li Xiaolin was a prominent player in Chinese politics and business.
Geneva-based lawyer Charles-Andre Junod, who was a director of Cofic Investments, declined to comment but said he has always respected relevant laws.
Li Xiaolin did not respond to repeated requests for comment.
In a letter to ICIJ, Mossack Fonseca said the firm has “duly established policies and procedures” to identify and handle cases involving politicians or people associated with them. It said the company considers those kinds of cases to be “high risk” and conducts more intense checks and periodic follow ups. “We conduct thorough due diligence on all new and prospective clients that often exceeds in stringency the existing rules and standards to which we and others are bound.”
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Identity documents from the Panama Papers. Clockwise from top left: Patrick Henri Devillers, Jia Liqing, Hu Dehua, Deng Jiagui and Li Xiaolin.
A company worth $1
Another princeling who slipped though Mossack Fonseca’s vetting process without much attention was Jasmine Li, the granddaughter of a former Standing Committee member. Li was a Stanford student when she entered the offshore world.
There is no evidence in the leaked Mossack Fonseca documents that the law firm ever secured a copy of her photo ID even though that was supposed to be standard procedure. Had Mossack Fonseca employees checked more closely, they might have discovered a financial relationship between her and another of their customers, Zhang Yuping, the chairman and founder of Hengdeli, a Chinese luxury watch distributor.
Zhang was the sole shareholder of a British Virgin Islands company called Harvest Sun Trading Limited.
Public records show that Harvest Sun was used to buy shares in a publicly listed company in Hong Kong called China Strategic Holdings in April 2010. A few months later, in August, Harvest Sun sold some of the shares, and it then offloaded its remaining stake in September, according to filings with the Hong Kong Exchange.
In December 2010, the law firm’s records show, Zhang transferred ownership of the now empty shell company to Jasmine Li, who was a freshman at Stanford University at the time, according to her LinkedIn page.
The selling price: $1.
The Mossack Fonseca records show that Li also has a second BVI company called Xin Sheng Investments Limited. Li used Harvest Sun and Xin Sheng to set up two similarly named Beijing companies with interests in entertainment and real estate. The offshore companies acted as shields to her identity. Li did not respond to ICIJ’s request for comment.
Zhang’s lawyer, Victor Lee, confirmed via email that Harvest Sun was transferred from Zhang to Li in 2010. The lawyer said there were no assets in Harvest Sun at the time of the transfer and that Zhang considered the transfer “reasonable” because the company was “only a shell company with no assets inside.”
“Our client had no relationship with Ms. Li, who was introduced to our client by some business partners,” the lawyer wrote, without providing details. He said the transfer meant that Jasmine Li could have the company “without the need to set up another shell company herself.”
Business people in China often attempt to curry favor with top leaders by helping their spouses, children, grandchildren and other close family relatives. The nature of these symbiotic but secretive ties were laid bare during the trials of Gu Kailai and her husband Bo Xilai, who depended heavily on a deep-pocketed plastics tycoon from far northeast China called Xu Ming. As Bo said during his corruption trial in August 2013: “Xu Ming has provided a vast amount of financial assistance to my family… I have helped him achieve ‘rapid advances,’ and he helped me to look after my son.”
White gloves
For more than a decade, Gu Kailai had managed to keep her stake in her offshore company in the Caribbean secret, which in turned allowed her to keep her villa on the Mediterranean under wraps.
She and her husband, Bo, had all the ingredients of a Chinese power couple.
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The luxury French villa of Bo Xilai. Photo: Fine and Country
Gu, the daughter of a former People’s Liberation Army general, worked as a butcher’s assistant during the Cultural Revolution but went on to become a successful lawyer.
Bo, the son of one of the powerful “Eight Elders” of the Communist Party, ran the sprawling metropolis of Chongqing and, by 2011, was a leading candidate for the Politburo Standing Committee and possibly the nation’s next domestic security czar.
As her husband’s star rose, Gu acquired the six-bedroom villa in Cannes along the French Riviera. The home was bought in 2001 with funds from Xu Ming. Xu got around China’s strict capital controls by faking the purchase of a steel workshop in order to transfer the $3.2 million offshore.
The company selling the nonexistent steel workshop took a small cut and then transferred the rest to Russell Properties S.A., a British Virgin Islands company secretly co-owned by Gu and a business associate, French architect Patrick Henri Devillers. Russell Properties S.A transferred money to a company in France that purchased and managed the villa.
On paper, nothing linked Russell Properties to Gu or her powerful husband.
Gu used the Villa Fontaine St. Georges as an investment in the hope that it would generate rental income. She later testified that she hid her ownership of the company and the villa because she wanted to “minimize” her tax. And, she said, “I did not want others to know I had overseas assets.”
To manage the villa, she turned to Heywood, a family friend who exuded equal parts flash and mystery. He was known to drive around Beijing in a Jaguar with the numerals “007” in the license plate. The Guardian reported that he referred to Gu as an unforgiving “empress.”
By helping Gu, Heywood became part of a cottage industry of operatives who serve as fronts for wealthy Chinese who want to keep their overseas assets secret. These proxies — known in China as “white gloves” — often hold the real owners’ stakes in real estate and other investments.
Acting as a white glove for the corporate and Party elite has become a lucrative business in China. For Heywood, it would also turn out to be deadly.
The unraveling
Mossack Fonseca “inherited” Russell Properties S.A. as part of a batch of offshore companies that were transferred from another registered agent in mid-2011.
At the time, the company’s shares were held by IFG Trust and IFG Secretaries, proxies located in Jersey in the Channel Islands. The registers of directors and shareholders didn’t mention Devillers or Gu, and there was no obvious link to China.
Then things began to unravel.
Gu had promised Heywood, who was managing the French villa, a cut of a real estate deal in Chongqing. Heywood believed he wasn’t getting his fair share. In early 2011, Gu later testified, Heywood approached her son, Bo Guagua, to press him to ask his family for more money. Heywood threatened to reveal Gu’s ownership of the villa, Gu claimed.
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Gu Kailai, the wife of disgraced politician Bo Xilai, listens to the verdict during her trial. Photo: AP Photo / CCTV via APTN
According to reports of her trial, Gu and Heywood met on Nov. 13, 2011, in the Lucky Holiday Hotel in Chongqing to discuss the dispute. They had dinner, then went to his room for drinks. He drank half a bottle of Royal Salute whiskey and vomited before being dragged to his bed by a Bo family assistant named Zhang Xiaojun. Heywood asked Gu for water.
She mixed rat poison and tea in a soy sauce container and fed it to him in sips. Gu waited until she couldn’t feel Heywood’s pulse any longer, then went to her own room in the hotel and went to bed.
Little more than two weeks later, the leaked files show, Mossack Fonseca helped transfer ownership shares of Russell Properties S.A., the shell company that controlled the villa, from the IFG proxies to Patrick Henri Devillers, the French architect who had assisted Gu in setting up the company in 2000.
Devillers used the address of Gu’s former law partner in Beijing on the transfer paperwork. According to court documents, Russell Properties had initially been held 50/50 by Gu and Devillers via the two Channel Islands proxies.
It’s not clear why the transfer was made so soon after the crime or why Gu’s share was transferred to Devillers. Indeed, it seems strange that Devillers would choose to put the company in his real name and use Gu’s former business address on the paperwork, essentially leaving his and her fingerprints on the company.
By removing IFG as a middleman, Devillers was able to establish direct contact with Mossack Fonseca, giving him greater immediate control of the company.
By early 2012, Devillers was often in the news in China, Britain, France, Australia, and the United States for his links to Gu’s murder trial and Bo Xilai’s corruption scandal. Yet, according to the leaked files, for several months in early 2012, Mossack Fonseca appeared to remain oblivious to the case. During this time, Devillers emailed Mossack Fonseca to request that they allow him to transfer Russell Properties to another offshore agent called Morgan & Morgan Trust.
Then, on June 7, 2012, British Virgin Islands regulators launched an investigation into Russell Properties S.A., requesting information from Mossack Fonseca about its owners, directors and other details. Four days later, a Mossack Fonseca compliance officer alerted her colleagues in an internal email that Devillers appeared to be linked to an investigation in China.
On June 12 and 13, Mossack Fonseca emailed Devillers directly, sending him increasingly anxious notes that included links to news stories about the Bo Xilai-Gu Kailai scandal and his alleged role in it. “The articles mentioned a person with your name and nationality,” the law firm wrote. “Please advise us whether the person in question and you are the same person.” He appears not to have replied.
In its response to the British Virgin Islands authority, the law firm stated that a man named Patrick Henri Devillers was the sole shareholder and director of Russell Properties, and “our last contact regarding this company.” It made no mention of the company’s apparent links to the scandal unfolding in China though it promised to dig deeper and provide more information later about Devillers and the company.
Home for sale
Devillers now lives in Cambodia. His testimony was used in both the trials of Gu and Bo but he was never charged with any crime. He did not answer ICIJ’s repeated requests for comment.
Bo is serving a life sentence for bribery, embezzlement and abuse of power. He says that someday he will be vindicated.
Gu was sentenced to death for murdering Heywood. In December 2015, Chinese authorities reduced her punishment to life in prison.
The court judgment against Bo ordered the villa be confiscated by the Chinese government. Chinese state media reported in 2014 that it was up for sale.
Suggested price: $8.5 million.
ABOUT BUHARI
POLITICS
SECRET DOCUMENTS: Shocking Revelations About Buhari
1 year ago
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A Special Adviser on Media and Publicity to President, Reuben Abati, published an abstract from secret documents in his Twitter, exposing the information from Wikileaks about Buhari’s 1983-84 governing years.
The information is provided by the Public Library of United States Diplomacy through Wikileaks. The exposed classified letter is dated September 20, 2002. It reads in part:
BuhariWikileaks2
Like President Obasanjo before the 1999 election, General Buhari’s political experience is limited to that of military Head of State. Buhari came to power as a result of a 1983 New Year’s Eve coup against the democratically elected Shehu Shagari. The eviction of Shagari came as a welcome relief as did Buhari’s promise to root out corruption. That relief, however, was short-lived as Nigerians watched despairingly as the Buhari regime’s promises to revive the economy and wipe out rampant corruption withered during 20 months of heavy-handed, largely ineffective rule.
In May 1984, Buhari ordered the brutal expulsion of 700,000 illegal immigrants from neighboring African states, jailed hundreds of political opponents and muzzled a once aggressive press. His loyalty to the military also came into question as he dismissed 30,000 soldiers as a cost-cutting measure. Buhari also soured Nigeria’s relations with Britain, when he was accused of masterminding a clumsy and unsuccessful attempt in July 1984 to kidnap President Shagari’s brother-in-law, former Transport Minister Umaru Dikko. Moreover, Buhari undermined traditional rulers throughout Nigeria, slashing their benefits and questioning their authority.
WikiLeaks is an international, online, non-profit, journalistic organisation which publishes secret information, news leaks and classified media from anonymous sources. Its website, initiated in 2006 in Iceland by the organization Sunshine Press, claimed a database of more than 1.2 million documents within a year of its launch.
SECRET DOCUMENTS: Shocking Revelations About Buhari
1 year ago
SHARE THIS NEWS!
Facebook Twitter WhatsApp Email
A Special Adviser on Media and Publicity to President, Reuben Abati, published an abstract from secret documents in his Twitter, exposing the information from Wikileaks about Buhari’s 1983-84 governing years.
The information is provided by the Public Library of United States Diplomacy through Wikileaks. The exposed classified letter is dated September 20, 2002. It reads in part:
BuhariWikileaks2
Like President Obasanjo before the 1999 election, General Buhari’s political experience is limited to that of military Head of State. Buhari came to power as a result of a 1983 New Year’s Eve coup against the democratically elected Shehu Shagari. The eviction of Shagari came as a welcome relief as did Buhari’s promise to root out corruption. That relief, however, was short-lived as Nigerians watched despairingly as the Buhari regime’s promises to revive the economy and wipe out rampant corruption withered during 20 months of heavy-handed, largely ineffective rule.
In May 1984, Buhari ordered the brutal expulsion of 700,000 illegal immigrants from neighboring African states, jailed hundreds of political opponents and muzzled a once aggressive press. His loyalty to the military also came into question as he dismissed 30,000 soldiers as a cost-cutting measure. Buhari also soured Nigeria’s relations with Britain, when he was accused of masterminding a clumsy and unsuccessful attempt in July 1984 to kidnap President Shagari’s brother-in-law, former Transport Minister Umaru Dikko. Moreover, Buhari undermined traditional rulers throughout Nigeria, slashing their benefits and questioning their authority.
WikiLeaks is an international, online, non-profit, journalistic organisation which publishes secret information, news leaks and classified media from anonymous sources. Its website, initiated in 2006 in Iceland by the organization Sunshine Press, claimed a database of more than 1.2 million documents within a year of its launch.
VATICANO
Pope Francis dismisses "passing fads" on marriage
0
AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
Play VIDEO
Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
0
AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
Play VIDEO
Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
VATICANO
Pope Francis dismisses "passing fads" on marriage
0
AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
Play VIDEO
Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
0
AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
Play VIDEO
Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
VATICANO
Pope Francis dismisses "passing fads" on marriage
0
AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
Play VIDEO
Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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AP
Oct 4, 2015 11:31 AM EDT
info
REUTERS/Alessandro Bianchi
VATICAN CITY - Pope Francis opened a divisive meeting of the world's bishops on family issues Sunday by forcefully asserting that marriage is an indissoluble bond between man and woman. But he said the church doesn't judge and must "seek out and care for hurting couples with the balm of acceptance and mercy."
Francis dove head-on into the most pressing issue confronting the meeting of 270 bishops during a solemn Mass in St. Peter's Basilica: How to better minister to Catholic families experiencing separation, divorce and other problems when the church's teaching holds that marriage is forever.
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Pope Francis addresses values of marriage
He insisted that the church cannot be "swayed by passing fads or popular opinion." But in an acknowledgment that marriages fail, he said the church is also a mother, who doesn't point fingers or judge her children.
"The church must search out these persons, welcome and accompany them, for a church with closed doors betrays herself and her mission and instead of being a bridge, becomes a roadblock," he said.
One of the major debates at the synod is whether divorced and civilly remarried Catholics can receive Communion.
Francis launched the synod process two years ago by sending out a 39-point questionnaire to bishops, parishes and ordinary Catholic families around the world asking about their understanding of and adherence to church teaching on family matters. Their responses showed a widespread rift between official Catholic teaching and practice, particularly on sex, marriage and homosexuality.
A first meeting of bishops ended last October with no consensus on how to better welcome gays and divorced and civilly remarried Catholics in the church. Conservatives insisted that Catholic doctrine is clear and unchanging. Progressives acknowledged the doctrine but sought wiggle room in pastoral practice.
29 PHOTOS
Rock star pope - the "Pope Francis effect"
In the ensuing 12 months, both sides have dug in and sparks are expected to fly in Round 2. In fact, few Vatican meetings have enjoyed as controversial a run-up as this one. There have been allegations of manipulation and coercion; secret caucuses to plot strategy; de-facto laws passed to take the wind out of the debate.
And on the eve of the synod, a Vatican monsignor outed himself as gay and denounced widespread homophobia in the church.
"We are happy if there is turbulence," said Cardinal Lorenzo Baldisseri, the Italian running the synod. "We are in the sea, and so there has to be some turbulence."
Cardinal George Pell, the Vatican's finance manager who is firmly in the conservative camp, predicted little more than a reaffirmation of the status quo would emerge in Round 2, albeit with perhaps better explanation as to why the status quo exists.
"It's quite impossible for there to be any change in the church's teaching on Communion for the divorced and remarried," Pell said on the sidelines of a conference last week about helping gays overcome their homosexual tendencies.
The conference was one of many initiatives launched by conservatives in the run-up to the synod aimed at reasserting traditional Catholic teaching on homosexuality, which holds that gays are to be respected but that homosexual acts are "intrinsically disordered."
Play VIDEO
Pope Francis reforms annulment process
In a clear challenge to that teaching, a mid-level official in the Vatican's orthodoxy office, Monsignor Krzysztof Charamsa, announced Saturday that that he was a proud gay priest (with a boyfriend), called for the synod to take up the plight of gays, and denounced homophobia throughout the church.
The Vatican summarily fired him.
Gay rights activists, who were in Rome to try to influence the synod from the sidelines, came to his defense and urged the synod fathers to assert that there is no place for homophobia in the church.
Former Irish President Mary McAleese, a practicing Catholic with a gay son, said she hoped that more transparency would help "kill for once and all this terrible lie" that everyone was born heterosexual.
But there is little sense the synod will show any new great opening to gays after the first round pulled back on a ground-breaking welcome initiated mid-way through. In that mid-way report, the bishops said gay unions could provide "precious" support for partners.
In a new book "The Rigging of a Vatican Synod?" author Edward Pentin asserts that the mid-way report was essentially manipulated by the Vatican's synod organizers, using heavy-handed, coercive tactics that didn't reflect the synod membership.
More movement may emerge on the other hot-button issue, whether divorced and civilly-remarried Catholics can receive Communion.
Catholics who divorce and want to remarry in the church must first obtain an annulment, a ruling from a church tribunal that their first marriage was invalid. Without the annulment, these civilly remarried Catholics are considered to be living in sin and cannot receive Communion, a condition that has lead generations of Catholics to feel shunned by their church.
Francis has sought a more merciful approach, insisting that these remarried Catholics be fully part of the life of the church. Progressive prelates led by German Cardinal Walter Kasper have called for a process by which a bishop could accompany these remarried Catholics on a path of penance that, over time and on a case-by-case basis, could lead to them receiving the sacraments.
Earlier this year, a handful of progressive German, Swiss and French bishops met in secret at Rome's Pontifical Gregorian University to plot strategy ahead of the synod, allowing in only a handful of friendly progressive media in behind closed doors.
In the meantime, Francis pulled the rug out from under the debate to some degree by radically reforming the annulment process to make the decrees easier to obtain. Canon lawyers and conservatives have balked at the new law, asserting that it amounts to "Catholic divorce" - a charge Francis has vigorously denied.
Like it or not, however, the new law will make it easier for Catholics to get annulments, which may lessen the urgency of coming up with a definitive solution for the divorce/remarried issue at the synod.
© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Thursday, 7 April 2016
AS THE DEBATE RAGES ON
Retired general Michael Hayden told the BBC the union was "not a natural contributor to national security".
Home Secretary Theresa May has said there are "good reasons" on the security front to stay in the EU.
An in-out referendum on UK membership of the EU takes place on 23 June.
Security has been a key argument in the debate so far, with In campaigners saying being in the EU makes the UK safer, and Out campaigners arguing the opposite.
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Is Britain safer in or out of the EU?
It has intensified following Tuesday's terror attacks on Brussels, which claimed 31 lives.
Former MI6 head Sir Richard Dearlove said EU-based security bodies were of "little consequence" and that leaving the EU could boost Britain's security.
But the former head of GCHQ, Sir David Omand, has said the UK enjoys the best of both worlds by staying in - remaining part of an established information-sharing network while still retaining control of the border.
Prime Minister David Cameron has warned that leaving Europe would be a "threat to national security" and, after Brussels was bombed, Mrs May called for the UK and its allies to work with "greater urgency and joint resolve" to defeat terrorism.
Michael HaydenImage copyrightGetty Images
Image caption
Michael Hayden says European security services are often keener to work with the CIA than their European counterparts
Speaking on BBC Radio 4's Today programme, Mr Hayden said the standard of security services across Europe was "very uneven".
France and Britain had "very good" services, he said, while in Scandinavia, they were "good but smaller".
The rest of Europe had "small" services and Belgium's, in particular, was "small, under-resourced and legally limited - and frankly working for a government that has its own challenges in overall governance".
'American panic'
He said he agreed with Sir Richard that leaving the EU could boost Britain's security.
Mr Hayden said: "I don't mean to be arguing against the European Union, but the union is not a natural contributor to national security to each of the entity states.
"In fact in some ways [it] gets in the way of the state providing security for its own citizens."
He rejected a suggestion that the UK leaving the EU would affect the US's ability to co-operate with national security services, adding that European security services were "more forthcoming with us than they are with one another".
"We are a huge security service and each sees their national interests as being well served by having a productive relationship with us and, frankly, the same math does not apply to other services on the continent," he said.
Asked about US President Obama watching baseball in Cuba as the Brussels attacks unfolded, he said he thought the president wanted to deny the enemy the "image of victory of American panic" over their attack. Later, a US official said at least two of the dead were US citizens.
'Mistrust'
Philippe De Backer, a member of the European Parliament with a particular interest in intelligence services, said he strongly disagreed with Mr Hayden's comments over the EU.
"If he were faced in the US with separate services... he would be the first to call for a centralised agency," Mr De Backer, of the Belgian Group of the Alliance of Liberals and Democrats for Europe, told the Today programme.
There is currently no EU-wide intelligence-sharing arrangement.
However, the European Parliament had long called for closer co-operation on intelligence, but "mistrust" between member states had stifled that, Mr De Backer said.
He suggested that if the UK left the EU, it would be hard for it to keep up with Europe-wide policing and security services.
"I think we are now at a turning point. Because of this fragmentation in 28 different intelligent services, we have seen the information services have not always been up to speed," he said.
'Nationalist rise'
He said it was time to give greater strength and more resources to Europol and Eurojust, because a "helicopter view" was the only way to dismantle the terrorist networks.
He said member states must now move on from the "old concept of sovereignty" towards a "shared sovereignty where we understand that we are better off when we share information and pool resources".
Dominique Moisi, who helped to found the French Institute of International Relations, said there was a "dramatic lack of collaboration and exchange of information" across European intelligence agencies.
This was partly due to a "pecking order" in which France and Britain rated each other but no-one else, "sometimes rightly, sometimes wrongly", he told the BBC's World At One.
Europe had to rediscover the "dimension of security to regain some of its hard power", he added, but there was a kind of "protective, emotional, nationalist rise which is a stumbling block to rationality."
Home Secretary Theresa May has said there are "good reasons" on the security front to stay in the EU.
An in-out referendum on UK membership of the EU takes place on 23 June.
Security has been a key argument in the debate so far, with In campaigners saying being in the EU makes the UK safer, and Out campaigners arguing the opposite.
ADVERTISEMENT
Is Britain safer in or out of the EU?
It has intensified following Tuesday's terror attacks on Brussels, which claimed 31 lives.
Former MI6 head Sir Richard Dearlove said EU-based security bodies were of "little consequence" and that leaving the EU could boost Britain's security.
But the former head of GCHQ, Sir David Omand, has said the UK enjoys the best of both worlds by staying in - remaining part of an established information-sharing network while still retaining control of the border.
Prime Minister David Cameron has warned that leaving Europe would be a "threat to national security" and, after Brussels was bombed, Mrs May called for the UK and its allies to work with "greater urgency and joint resolve" to defeat terrorism.
Michael HaydenImage copyrightGetty Images
Image caption
Michael Hayden says European security services are often keener to work with the CIA than their European counterparts
Speaking on BBC Radio 4's Today programme, Mr Hayden said the standard of security services across Europe was "very uneven".
France and Britain had "very good" services, he said, while in Scandinavia, they were "good but smaller".
The rest of Europe had "small" services and Belgium's, in particular, was "small, under-resourced and legally limited - and frankly working for a government that has its own challenges in overall governance".
'American panic'
He said he agreed with Sir Richard that leaving the EU could boost Britain's security.
Mr Hayden said: "I don't mean to be arguing against the European Union, but the union is not a natural contributor to national security to each of the entity states.
"In fact in some ways [it] gets in the way of the state providing security for its own citizens."
He rejected a suggestion that the UK leaving the EU would affect the US's ability to co-operate with national security services, adding that European security services were "more forthcoming with us than they are with one another".
"We are a huge security service and each sees their national interests as being well served by having a productive relationship with us and, frankly, the same math does not apply to other services on the continent," he said.
Asked about US President Obama watching baseball in Cuba as the Brussels attacks unfolded, he said he thought the president wanted to deny the enemy the "image of victory of American panic" over their attack. Later, a US official said at least two of the dead were US citizens.
'Mistrust'
Philippe De Backer, a member of the European Parliament with a particular interest in intelligence services, said he strongly disagreed with Mr Hayden's comments over the EU.
"If he were faced in the US with separate services... he would be the first to call for a centralised agency," Mr De Backer, of the Belgian Group of the Alliance of Liberals and Democrats for Europe, told the Today programme.
There is currently no EU-wide intelligence-sharing arrangement.
However, the European Parliament had long called for closer co-operation on intelligence, but "mistrust" between member states had stifled that, Mr De Backer said.
He suggested that if the UK left the EU, it would be hard for it to keep up with Europe-wide policing and security services.
"I think we are now at a turning point. Because of this fragmentation in 28 different intelligent services, we have seen the information services have not always been up to speed," he said.
'Nationalist rise'
He said it was time to give greater strength and more resources to Europol and Eurojust, because a "helicopter view" was the only way to dismantle the terrorist networks.
He said member states must now move on from the "old concept of sovereignty" towards a "shared sovereignty where we understand that we are better off when we share information and pool resources".
Dominique Moisi, who helped to found the French Institute of International Relations, said there was a "dramatic lack of collaboration and exchange of information" across European intelligence agencies.
This was partly due to a "pecking order" in which France and Britain rated each other but no-one else, "sometimes rightly, sometimes wrongly", he told the BBC's World At One.
Europe had to rediscover the "dimension of security to regain some of its hard power", he added, but there was a kind of "protective, emotional, nationalist rise which is a stumbling block to rationality."
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