When three of Africa’s wealthiest people wanted to win favors from the Nigerian oil minister, they didn’t pay cash, according to company filings and court papers describing the alleged transactions.
Instead, the oil tycoons arranged to influence her with shell companies, each one holding a valuable piece of London real estate, according to the documents.
Other shell companies owned by the oilmen provided the minister and her family with a chauffeured car, and they shipped her luxury furnishings worth hundreds of thousands of dollars, U.S. prosecutors later alleged.
While cash may be the traditional means of providing untraceable gifts to politicians, the very wealthy often turn instead to the offshore world to produce an alternative currency: companies registered in secrecy havens and stuffed with valuable assets.
The tycoons who allegedly provided the oil minister with more than $17 million worth of gifts were, according to the court filings and documents, Olajide Omokore and Kolawole Aluko, both previously ranked by Forbes magazine as among the “richest people in Africa,” and Benedict Peters, a man who has been described by Bloomberg and African media as a billionaire.
Peters is identified by name in the Nigerian court filings and as “Co-Conspirator #2” in a forfeiture case by U.S. prosecutors. Through a spokesman, Peters denied dealing in improper benefits and his representatives wrote that one of the key pieces of evidence presented by Nigerian investigators is a “concoction malevolently contrived.” Attorneys for Omokore and Aluko declined to comment.
The world’s wealthiest are among the most avid users of offshore companies, a new cache of documents known as the Pandora Papers shows, and they turn to tax and secrecy havens for a variety of reasons.
The documents obtained by the International Consortium of Journalists (ICIJ) and shared with The Washington Post and journalists in 117 countries and territories around the world shed light on the Nigerian oil dealings and, in more breadth than was previously possible, the extent to which the world’s wealthy use offshore companies to conduct business.
While billionaires constitute a tiny portion of humanity, more than 130 of them who have appeared on the Forbes list of world billionaires turn up as owners or beneficiaries of offshore assets. At least a dozen additional people ranked as billionaires by other media show up as well.
Some previous estimates have suggested that the world’s ultra-wealthy own the bulk of offshore assets, but those projections were based on partial data. The new documents provide broader evidence of the role that the ultrawealthy play in the secretive realm.
The documents come from the firms that helped these billionaires set up the offshore companies, and collectively, they offer glimpses of exceptionally wealthy people, their yachts and jets, their inheritance planning and the other ways companies created in tax or secrecy havens benefit them. The most recent Forbes billionaire list includes more than 2,700 names from around the world.
It is often difficult to know from the records why a billionaire has set up an offshore company. In some instances, the reason may be as simple as privacy. But there are other uses.
A striking number of the billionaires who control offshore companies and trusts that were revealed in the documents — more than a dozen — have faced allegations regarding the sources of their fortunes, and shell companies often figured in the charges. Several billionaires have been charged with using their companies in thefts of money or natural resources; others have faced international sanctions for their ties to autocrats. A handful have been sentenced to prison.
Federal investigators experienced in kleptocracy and money-laundering cases said that they commonly run into offshore shell companies — entities that typically have no offices or employees but hold assets such as real estate or bank accounts.
One Israeli billionaire, for example, was accused of using shell companies to steal hundreds of millions of dollars from Congo, one of the poorest countries in the world. He denied the allegations. A Venezuelan television tycoon used shell companies in what U.S. prosecutors say was a $1 billion bribery scheme. His attorney did not respond to requests for comment. At least seven Russian oligarch billionaires under sanction by the United States have shell companies in the documents, too.
As with the Nigerian oilmen, the Pandora Papers extend what is known of their offshore assets.
Other ways that billionaires use the offshore companies highlight stark inequalities of wealth, especially in emerging economies, where the very wealthy avoid taxation and other obligations while millions of their countrymen live in poverty.
In Indonesia, for example, of the 31 people or families that Forbes lists as the country’s wealthiest — each with a net worth over $1 billion — 10 own offshore companies detailed in the data.
Likewise in Thailand, of the 34 people or families Forbes lists as the country’s wealthiest — again, each with a net worth over $1 billion — eight own offshore companies revealed in the Pandora data. One such family, the heirs of the Red Bull fortune, created three companies registered in the British Virgin Islands to receive millions in Red Bull dividends. An attorney for the family said they comply with the law.
A shell company “gives people a cloak of invisibility — they’re hidden from tax authorities. They’re hidden from law enforcement. They’re hidden from government authorities of all kinds,” said Tom Cardamone, president of Global Financial Integrity, a research and advocacy organization focused on illicit money, trade and corruption.
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Over the last decade, economists have focused attention on measuring the vastness of the wealth hidden away in offshore accounts and companies. Because of the huge amounts of money that don’t show up in official country statistics, they note, measurements of global inequality may have been understated.
Estimates vary widely about how much money is out there, but loosely speaking, it’s a lot: from $1 trillion to more than $25 trillion. The most common type of estimate is based on national economic figures on investment, and such estimates generally come in the range of $5 trillion to $8 trillion.
Roughly, that corresponds to about 10 percent of global gross domestic product.
Exactly who owns that wealth is more difficult to know. One of the best-known estimates comes from a 2019 study that found that the wealthiest 0.01% of households owned 50% of financial assets held in foreign jurisdictions.
“The evidence shows that the very wealthy have the means and sophisticated legal help to hide money,” said Annette Alstadsaeter, a professor at the Centre for Tax Research at the Norwegian University of Life Sciences, and one of the authors of the study.
She said there is evidence, too, that using tax havens has spread among certain groups.
“It’s a contagion,” she said.
Alstadsaeter and her co-authors did not claim that their findings about offshore wealth apply everywhere, however, because while the study was based on leaks of worldwide financial data, the analysis had to be limited to individuals from Scandinavian countries, where tax authorities cooperated with the researchers.
The cases exposed by the new ICIJ documents buttress the idea that, on a global basis, much of the offshore wealth belongs to the very rich.
The records obtained by the ICIJ come from 14 offshore financial firms operating around the world — including in Seychelles, Cyprus, the British Virgin Islands and Singapore — that provide the administrative services for people forming offshore companies.
The Pandora Papers do not represent all geographical areas equally, however; whether a billionaire appears in the documents seems to depend on where they’re from.
Only a handful of U.S. billionaires show up in the records obtained by the ICIJ. Absent from the Pandora Papers are some of the nation’s wealthiest — Tesla founder Elon Musk; billionaire investor Warren Buffett; and Amazon founder Jeff Bezos, who owns The Washington Post.
In part, this may be because U.S. residents generally do not use the financial services providers whose records were obtained. In part, experts said, it is because U.S. billionaires pay so little in taxes relative to their incomes that hiding money offshore is mostly unnecessary.
Among the U.S. billionaires in the data is Jeffrey Lorberbaum, who helped build the world’s largest flooring company, Mohawk Industries. According to the documents, he was the trustee for a trust created by his father, which in 2008 controlled a British Virgin Islands company that owned a motor yacht.
Using offshore companies to own yachts is common and legal. Lorberbaum did not respond to requests for comment.
Also among the documents obtained by the ICIJ are records relating to some of the offshore companies that U.S. billionaires Robert Brockman and Robert F. Smith used, according to prosecutors, in a massive tax-evasion scheme revealed last year. Brockman was indicted on a charge of allegedly hiding $2 billion in income using a web of shell companies and offshore companies. He entered a plea of not guilty on all counts.
Smith, who had been celebrated for pledging to pay off the student debt of the Morehouse College Class of 2019, signed an agreement with prosecutors admitting he had hidden profits in offshore accounts and filed false tax returns for 10 years. He is cooperating with investigators and faces no charges. Through a spokesman, he declined to comment.
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The reason a billionaire has set up a company in an offshore tax or secrecy haven is rarely stated explicitly in the Pandora Papers.
The authors of correspondence in the files are typically guarded as they complete the paperwork necessary to create the companies. They often avoid the use of client names in favor of initials or the terms “beneficial owner” or “client.”
The documents rarely state explicitly why a billionaire is creating an offshore company or what it will do beyond hold investments.
Quite often, those investments include yachts and jets, some of which are marvels of luxury and ostentation.
One of the richest people in the world, Bernard Arnault, the French chairman and chief executive of LVMH, the luxury goods firm, owned Symphony Yachting Ltd., a British Virgin Islands company, according to the Pandora Papers. The company owned a $50 million yacht, according to the documents, a vessel that fits the description of the Amadeus, a 230-foot vessel described as having a hot tub, gym and cinema. Arnault reportedly later moved on to another, even more luxurious yacht, the Symphony, a six-deck 300-footer with a glass-bottom swimming pool. Representatives of LVMH did not respond to requests for comment.
Billionaires in the documents also have a taste for Gulfstream G550s, a 19-passenger jet that, according to its maker, “continues to impress with the iconic beauty and uncompromising performance that helped define modern business aviation.” List price is about $60 million.
The family of billionaire María Asunción Aramburuzabala, reportedly the wealthiest woman in Mexico, arranged a trust in New Zealand, Sky Chariot, which in turn owned a Delaware company, Sky Chariot LLC, which according to public sources owned a Gulfstream G550. Indonesian billionaire Chairul Tanjung owned one through an offshore company as well, the documents indicate. Aramburuzabala did not respond to messages left at her companies. A spokesperson for Tanjung said the plane had been sold.
August von Finck, a German billionaire and heir to an industrial fortune, owned an offshore company whose purpose was “to own a pleasure yacht” in the Cayman Islands, according to the documents, and its value was estimated at $12 million. Von Finck could not be reached for comment.
Registering companies in the British Virgin Islands and other havens to own yachts and jets has several advantages, according to the advertisements of the many consultants who help sell yachts and create such companies: enhanced privacy provisions, and legal protections from creditors and seizure orders.
The companies that provide the administrative services for offshore companies say they abide by financial regulations and refuse to provide services for people who are eluding the law.
“Investing in a yacht is an esteemed milestone in any successful businessperson’s life, no matter how successful they were previously: a yacht purchase signifies the ability to invest into more than just a business, combining traveling and leisure time in the best way possible,” according to an online brochure from the Dubai-based corporate formation firm Europe Emirates Group. “Countries such as the United States have imposed a large number of regulations and taxes related to yacht registration and ownership, some of which can make you feel like you are wasting your money. “
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Many of the companies that appear in the data allow billionaires to avoid laws in their home countries, and once in a while, a billionaire will announce such intentions.
For example, Binod Chaudhary, Nepal’s first Forbes billionaire, explained the advantages of a foreign company in his 2016 autobiography, “Making It Big.”
Nepal, he explained, has laws against investing outside national borders.
To invest in an instant noodle factory in India’s Sikkim state, Chaudhary relied on a foreign company he created called Cinnovation, he wrote. He described Cinnovation as “Singapore-based,” and its headquarters is there, but the records obtained by the ICIJ indicate that the company was registered in the British Virgin Islands and that its main shareholder was another company, registered in Panama.
As he recounts in his autobiography: “This was probably the first instance of a huge investment by a Nepali entrepreneur outside the country.”
“The establishment of the Wai Wai plant in Sikkim created great astonishment across Nepal,” Chaudhary wrote. “How could the Chaudhary Group invest in India in a blatant breach of the Act that prohibits a Nepali citizen from investing outside the country? However, I had not flouted any law.”
In an email to The Post, Chaudhary said that the “Chaudhary Group has and continues to comply with all laws applicable to it, including Nepalese laws applicable to foreign investment.”
Regardless of whether the purpose of an offshore company is stated, the tax savings are often obvious.
Take, for example, the members of the Yoovidhya family in Thailand, the co-owners of the Red Bull energy drink empire.
The family’s offshore companies were first exposed in 2016 by the Panama Papers leak, which revealed company documents created for clients of Mossack Fonseca, a now-defunct Panamanian law firm.
After that disclosure, the Yoovidhyas left that firm and hired another — Trident Trust, a company with offices around the world. But now Trident Trust documents have been acquired by the ICIJ, too, and they reveal more details on the family holdings.
The family’s interests included a trust created in Jersey, an island in the English Channel; the trust in turn held three companies registered in the British Virgin Islands, according to documents in the Pandora Papers.
One of the three, Karnforth Investments, held about $110 million in “Jewellery, Artwork, Property, Boat, Car and Monies.” Another, JK Fly Ltd., held a Cessna Citation X jet with a book value of $17 million. The third, Jerrard Co. Ltd., held 75% of the issued shares of RedBull UK Ltd., and was expected to earn about $12 million annually in dividends.
The documents do not say why the family placed these valuable assets in companies in the British Virgin Islands or why those companies are held in turn by a trust in Jersey.
But the source of funds for all three companies is described as “income arising from dividends received from RedBulI UK Limited.” Under Thai law, those profits are not taxed if they remain outside the country for a year, said experts including Peerapong Pornpipatkul, an attorney at Tilleke & Gibbins, a firm in Southeast Asia. Taxes on personal income otherwise range up to 35%.
In response, an attorney for the family said that “Red Bull UK and any other entities and members of the Yoovidhya family all comply with the reporting and tax obligations in their various jurisdictions.”
The benefit of holding profits offshore may help explain why so many Thai billionaires have such companies.
A similar situation holds in Indonesia, although billionaires there have adopted other ways of avoiding taxes, according to the documents.
Given the magnitude of the nation’s economy, the Indonesian government collects an extraordinarily low amount of tax revenue, according to research by economists with the Organization for Economic Cooperation and Development, the intergovernmental group.
Tax evasion is one of the key reasons for the shortfall.
“Fighting tax evasion by wealthy individuals remains a priority,” according to a 2019 OECD report on ways to raise revenue for the government.
Of the 31 people or families that Forbes lists as the country’s wealthiest, each with a net worth over $1 billion, 10 control companies or trusts that appear in the Pandora Papers.
While the documents are largely silent on what motivated the billionaires to create such companies, they do show two ways prominent billionaires may have been able to skirt Indonesia’s taxes, which can range up to 30% of an individual’s income.
Three of the Indonesian billionaires, for example, held significant offshore assets for many years, amounting to hundreds of millions of dollars. They, or companies they controlled, then applied for a 2016 tax amnesty from the government, according to Indonesian media; those deals would have cleared them from any potential prosecution and allowed them to declare any undisclosed wealth with a tax of as low as 2%. Critics at the time said the amnesty allowed people who had avoided taxes for years to suffer only a small penalty.
Anthoni Salim, head of the Salim Group conglomerate in banking, telecommunications and instant noodles, had three companies registered in the British Virgin Islands, one with $50 million in authorized capital, according to the documents. Salim did not respond to messages left at his companies.
Peter Sondakh, head of Rajawali Corpora, an investment firm, had at least 34 offshore companies, many of them held through another company in Seychelles, the documents indicate. Through a spokesman, he declined to comment.
The family of Ciputra, a real estate developer who died in 2019 and went by one name, held several companies registered in the British Virgin Islands, according to the documents. One had $65 million in assets. Two of the offshore firms owned by the “Ciputra family” were intended to trade in shares and receive dividends in the family’s own company PT Ciputra Development, according to the documents. The Ciputras did not respond to messages left at family companies.
The government never disclosed how much offshore money, if any, was brought back by any individual. Many of those who applied for the tax amnesty did so knowing they might soon be caught, critics say: That same year, governments were beginning to share financial information under a new agreement, and their cooperation would have revealed offshore holdings.
Two other billionaires were able to avoid Indonesian taxes because, according to the documents, they took up residence in Singapore, even though most of their business is in Indonesia.
Putera Sampoerna, heir of a clove cigarette fortune and founder of Sampoerna Strategic Group, has his business in Indonesia, had an Indonesian passport and has derived his wealth from Indonesia. But for tax purposes, according to the documents, he was a resident of Singapore, which boasts low taxes. Sampoerna did not respond to messages left at his company.
Similarly, Ciliandra Fangiono is chief executive of First Resources, his family’s palm oil company. Fangiono was born in Indonesia, the family firm he leads has plantations across Indonesia and, like Sampoerna, he was listed by Forbes among the richest Indonesians. But Fangiono, according to the documents, lives in Singapore and has become a citizen of that country. Reached for comment, a spokesman for First Resources did not reply.
“Unfortunately, it is very common practice for wealthy businessmen to avoid taxes,” said Adnan Topan Husodo of Indonesia Corruption Watch, a public interest group that says corruption worsens the nation’s poverty and inequality. “Most of the wealthy businessmen have close associations with the government. They’re an untouchable group.”
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Collectively, the documents also raise questions about how some billion-dollar fortunes have been earned.
Fifteen of the billionaires who own offshore companies described in the data have drawn international sanctions for corruption or criminal charges.
In most of these cases, the billionaires’ offshore shell companies enabled them to engage in government corruption of one kind or another — special deals, often involving oil or mineral rights.
Seven of the billionaires with offshore companies in the data, for example, are Russians who are under sanction by the United States for allegedly profiting from corruption or aiding senior Russian officials.
Raúl Gorrín Belisario, the Venezuelan owner of the television network Globovisión, used three Panamanian shell companies to pay the Venezuelan national treasurer and other officials for a contract to handle foreign currency transactions, according to U.S. prosecutors. The treasurer has admitted in a guilty plea to receiving $1 billion in bribes from Gorrín and others. Some of Gorrín’s offshore companies are mentioned in the data: Bellsite Overseas, registered in Panama, and Korinth Estates Ltd. and Settingsun Group Ltd., registered in the British Virgin Islands. Asked for comment, his attorney did not respond.
Several of the billionaires who turn up in the documents are people who built their fortunes on the extraction of natural resources — diamonds, oil, iron ore and the like — and have faced sanctions or criminal charges related to those businesses.
The family of Israeli diamond trader Beny Steinmetz, for example, appears in the documents, with administrators discussing two foundations registered in Liechtenstein with about $1.2 billion in assets. Steinmetz and two others were convicted in a Swiss court in January, with prosecutors alleging he paid $10 million in bribes to obtain the rights to iron ore in Guinea. Steinmetz forged documents, they said, and used a web of shell companies as a cover-up. He described his conviction as “a big injustice.” Messages sent to a Tel Aviv public relations firm that has represented Steinmetz were not returned.
Eike Batista, a Brazilian oil and mining tycoon, was convicted in a Brazilian court in 2018 of paying $16 million in bribes for public contracts, with prosecutors accusing Batista and others of hiding funds in offshore shell companies. Batista also appears in the Pandora Papers with a charitable trust which owned “a number of underlying BVI companies,” according to the document.
“All his patrimony, including the corporate structures, are duly declared, audited and known by the competent authorities,” Batista’s attorney said.
Perhaps the most audacious of the alleged billionaire schemes, however, concerns Dan Gertler, an Israeli businessman with copper and other mining interests. In imposing sanctions on him, Treasury officials alleged in 2018 that he had “amassed his fortune through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals in the Democratic Republic of the Congo.”
Between 2010 and 2012 alone, the country reportedly lost more than $1.3 billion from the underpricing of mining assets, Treasury said, and those underpriced assets were sold to offshore companies linked to Gertler. The records for some of Gertler’s offshore companies appear in the documents obtained by the ICIJ as well.
A spokesman said Gertler “disputes any and all allegations of wrongdoing in his dealings in the DRC.”
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The case of the oil tycoons exemplifies how shell companies can both enable corruption and impoverish poorer countries.
The wealth generated by the government of Nigeria’s oil and gas company, which has produced over a million barrels of oil per day, is critical to funding the nation’s government. For years, however, much of that oil wealth has been squandered.
Numerous previous reports have documented Nigeria’s “dismal legacy of lost revenues, inefficiency and corruption in eye-watering detail,” according to a report from the Natural Resource Governance Institute, an independent nonprofit organization.
The tenure of Diezani Alison-Maduke as oil minister, critics say, is a perfect example of such losses. Alison-Madueke was charged with corruption in 2017 but has left for London and has fought off attempts to bring her back to Nigeria. Attorneys for her did not respond to requests for comment. She has previously denied wrongdoing.
None of the oil tycoons — Peters, Aluko or Omokore — has been convicted in the alleged exchange of real estate in London or elsewhere for government influence.
But prosecutors in Nigeria and the United States have sought the forfeiture of some of the related properties, and their filings describe the use of shell companies to give gifts. The Pandora Papers document the shell companies and fill in some of the gaps in the court filings.
Within a year of the appointment of Alison-Madueke as oil minister in 2010, each of the oil men purchased luxury London real estate through shell companies, according to court filings in Nigeria and the United States, as well as the Pandora Papers.
Those shell companies and the properties they held were for the benefit of the oil minister, according to prosecutors filings in Nigeria and the United States.
Peters bought a company called Rosewood Investments Ltd. The company was registered in Seychelles, where laws offer secrecy to the owners of companies registered there. Peters shortly afterward took control of another Seychelles entity called Colinwood Ltd.
In March 2011, Rosewood Investments bought a $3.8 million London home. The next day, Colinwood bought another one for $5.1 million.
Omokore similarly arranged for offshore companies to purchase valuable properties, according to the Pandora Papers and court filings in Nigeria and the United States. Miranda International Ltd., registered in Seychelles, purchased one for $4.4 million, according to U.S. prosecutors. Hampstead Corporate, a British Virgin Islands company held by Omokore according to the Pandora Papers, bought another.
All four of those companies were to be turned over to the oil minister, according to a document Nigerian investigators seized from Alison-Madueke’s attorney.
The document was written to Alison-Madueke by her attorney, according to Nigerian investigators. It refers to the men by their initials.
Rosewood Investments, the attorney wrote, is “currently in BP name and the papers transferring ownership of this company to you have been prepared and are on file but yet unsigned by BP,” according to the document. “Once you give the instructions I will have it signed.” Similar preparations were made for Colinwood.
Miranda International and Hampstead Corporate, the shell companies owned by Omokore, need “to be transferred to a Special Purpose Vehicle [SPV] controlled by you,” Alison-Madueke’s attorney wrote in the document seized from his office.
A fifth company, this one registered in the British Virgin Islands and controlled by the third oil man, Kolawole Aluko, purchased a London property worth $2.3 million about the same time, and U.S. prosecutors said this was intended for Alison-Madueke as well.
The forfeiture complaint filed by U.S. prosecutors details other connections between the oil men and the oil minister.
The complaint identifies Aluko and Omokore by name, and while it does not name Peters, he is identifiable as the person prosecutors refer to as “Co-conspirator #2.″ As described in the U.S. complaint, “Co-conspirator #2” owned the two offshore companies, Rosewood Investments Ltd. and Colinwood Ltd.; in the Nigerian court papers, Peters has acknowledged owning both.
The men helped furnish the homes, according to U.S. prosecutors. Peters, for example, spent $106,000 for a “Luigi XVI Sideboard” and other items from a Houston furniture store that were shipped by container to London. Alison-Madueke reviewed design plans for the properties that had been held by Peters, according to the forfeiture complaint filed by U.S. prosecutors.
The furniture deliveries from Peters and the other oil barons, according to U.S. prosecutors, were “for the corrupt purpose of inducing Alison-Madueke to use her influence, or rewarding her for having used her influence, within the Nigerian Ministry for Petroleum Resources.”
All three of the men got value business with the Nigerian oil company during Alison-Madueke’s tenure, prosecutors said.
Peters has left Nigeria, his spokesman said. In denying allegations by investigators from Nigeria’s Economic and Financial Crimes Commission, he has acknowledged owning the two companies — Rosewood and Colinwood — but insisted they had not been transferred to Alison-Madueke. He has not been charged with a crime.
“Mr. Peters did not give any of his properties to anyone, including Diezani Alison-Madueke, and has no intention to give any of those properties to any person,” his attorney wrote in a letter to The Post. “There is no truth in any of those allegations.”
In court papers, however, U.S. prosecutors cited evidence that the homes seem to have been intended for Alison-Madueke. The design plans for one of the properties had been forwarded to her; the design plans for the second were found at her mother’s home.
A spokesman for Peters said he was being set up for political reasons.
The cases against the oil tycoons are expected to go on, and the government continues to try to recover what has been lost.
At the midpoint of Alison-Madueke’s time in office, the governor of the Central Bank of Nigeria, Lamido Sanusi, estimated that billions in oil revenue had gone missing. Such losses are keenly felt in a country where 47 percent of people live in what the World Bank calls “multidimensional poverty” and the nation’s political stability sometimes seems at risk.
The missing billions in oil wealth are “a crime against the people of Nigeria,” said Olanrewaju Suraj, chairman of Human and Environmental Development Agenda, a Nigerian human rights group supported by the MacArthur Foundation that has cataloged governmental corruption. “That money would have gone a long way to educating the uneducated, who are turning into bandits. It would have provided security for people who are subjected to daily kidnappings. It would have provided jobs for young people clamoring for secession.”