Mossack Fonseca facilitated identity theft of government inspector

 Source: ICIJ.org

Source: ICIJ.org

Chairman of a large Chinese company Ningbo Menovo Pharmaceutical allegedly provided a faulty passport copy with which Mossack Fonseca's Chinese office registered five companies in the name of a Slovenian government agency inspector.

Anuška Delić

The 2016 Panama Papers revelations shook Slovenian public agency for medicines and medical devices to the core. Its pharmaceutical inspector Janez Obreza was found to have established four companies in offshore jurisdictions, all with pharmaceutically inspired names.

By Slovenian law this was a cause of grave concern, because officials are bound by the country's anti-corruption measures to report any and all shareholdings or business deals that they or their families are involved in.

But Janez Obreza was adamant – his identity was stolen, he explained to Slovenian daily Delo, where the author of this story investigated Panama Papers. He also filed a complaint for identity theft with the local police department in Vrhnika near the Slovenian capital Ljubljana. The police had since brought criminal charges against an unknown perpetrator with the state prosecution, but the investigation is still in progress.

Obreza took medical leave from work and brought home his work computer which later became central to an ongoing court proceeding in front of Ljubljana's labor court. He believes he was unlawfully let go from the agency.

Former inspector Obreza confirmed Oštro's information that his visa to China was arranged by Krka.

The signatures on the inspector’s passport copy and on the registration documents he »signed« did not match, wrote the journalist.

The Chinese source

In November 2011 Janez Obreza travelled to China along with another inspector. They were sent there by their employer to perform an inspection of Zhejiang Menovo Pharmaceutical, because that is where active ingredients are produced for the Slovenian pharmaceutical company Krka.

Those are later used in the company's products that are sold in more than 70 countries around the world, but predominately in Europe, thus, Krka filed a request for inspection with the public agency for medicines and medical devices in the beginning of 2011. In order to sell its products in Europe, the factory needed to acquire a GMP certificate (good manufacturing practice certificate).

Krka is one of the most prized companies in Slovenia. It describes itself as one of »the top of generic pharmaceutical companies in the world«. In more than 60 years of existence it has given thousands of jobs to the community in Novo mesto and contributed substantially to the state budget. It is also a minority owner of Zhejiang Menovo Pharmaceutical, which is controlled by Ningbo Menovo Pharmaceutical with at least a decade long business relationship with Krka.

A trusted client

In September, two months before inspector Obreza got on an airplane to fly to China, the Chinese office of the Panamanian law firm Mossack Fonseca registered one company in the tax haven of Samoa (Replek Pharm LTD), two companies in the British Virgin Islands (Suan Pharma S.A. and Vet-Agro S.A.). The following month it registered a company in Hong Kong (Artemis Biotech Limited). Oštro recently discovered a fifth one – Aceto Pharma Limited in Great Britain.

Former inspector Obreza confirmed Oštro’s information that his visa to China was arranged by Krka.

All these companies were formed using a passport copy of inspector Obreza, thus, he was noted as their beneficial owner in documentation of Mossack Fonseca, which sits at the heart of the global journalists’ collaboration called Panama Papers, organized by the International Consortium of Investigative Journalists (ICIJ).

Obreza’s passport copy was certified by a Mossack Fonseca employee Eric Wu as being identical to the original. But this was disproven by an internal Mossack Fonseca investigation which was prompted by questions sent to its Chinese office by Slovenian daily Delo.

The signatures on the inspector’s passport copy and on the registration documents he »signed« did not match, wrote the journalist Brigite Ferlič Žgajnar who worked with this author on Panama Papers in 2016.

Mossack Fonseca immediately started to investigate, and it soon found that its employee Wu certified Obreza’s passport copy without ever seeing the original identification document. He explained that he bypassed due diligence rules because the passport copy was provided by the secretary of a respected old client – the chairman of Ningbo Menovo Pharmaceutical, Yao Chengzhi. He trusted him.

According to internal correspondence of the law firm, inspector Obreza’s passport copy was sent to Mossack Fonseca by Yao’s secretary. When Yao was faced with these findings he claimed the passport copy was given to him by a promoter that he didn’t name. He mentioned that the real beneficial owner of the companies in question was an ex-employee of Menovo, yet he did not disclose this person’s name.

He also asked Wu to ensure that no one (presumably outside of Mossack Fonseca) is told that he is behind these companies. Besides the five allegedly belonging to inspector Obreza, Mossack Fonseca found another 19 companies connected to Yao. A list of all 24 shows that Yao was paying fees for some of them as far back as 2003.

During this time Yao had business relations with a former longtime member of Krka’s board Janez Poljanec, and his son Gašper Poljanec, as evidenced in the Panama Papers.

A series of denials

»Menovo Pharmaceutical hasn't been informed about any allegations about Mr. Yao. Mossack Fonseca hasn't been in operation from the last 2 years in China«, they wrote in an email exchange. Yao, they explained, »strongly denied all allegations written by you«. They demanded Oštro sends them proof. They emphasized Yao is a »very trustful and respected person« at Menovo Pharmaceutical.

Oštro explained that it cannot send the documents due to its responsibility to protect the source, but it did send in the names of all 24 companies which Mossack Fonseca connected to Yao. And a screen grab of his passport copy.

Again, Yao denied everything, including »contacting Mossack Fonseca personally« or ordering the registration of companies. »His name is misused in this connection and he is personally offended by your / Mossack Fonseca allegations. He ask you to provide him all documentation in this case to be able to defend himself and his good name.«

Oštro sent Menovo’s secretary screen grabs of six internal Mossack Fonseca emails, and they confirmed that they »communicated to Mr. Yao very bad translation of your Spanish emails from 2016 in short time. Mr. Yao noticed poor management of Mossack Fonseca and he assumes his name was misused by them«.

Did Yao deny the validity of his passport copy, Oštro asked. But Menovo’s secretary never responded.

Krka did not respond to a direct question about whether it can still trust Yao; it said that Yao’s chairmanship was confirmed by the board of directors. Krka and Menovo recently announced a new joint company Ningbo Krka Menovo Pharmaceutical, where the Slovenian counterpart will hold a 60 percent stake.

A Mossack Fonseca lawyer Guillermina McDonald never replied to our request for comment.

But inspector Obreza was content to hear that he didn’t register those companies, but that someone else did that by abusing his personal data. »Such a negative experience, only because I was doing my job as a pharmaceutical inspector, is very hard to describe with words.«