21 March 2022 in Dossier Tax Havens, Finance


Years ago, if I had been asked about my ideal honeymoon, I would have said: the Seychelles Islands. Beautiful and exotic, far away and yet so close to the war raging in Europe, it is where billionaires Alexei Mordashov and Andrey Kostin hide their wealth. Mordashov is the second richest man in Russia, and his yacht, registered in the Caymans, is wintering in the marina on the island of Mahé[1]. He is joined there by banker Andrey Kostin’s yacht, which sailed from Turkey to safer shores on 18 February. They do not suffer from loneliness: 12 luxury yachts belonging to as many of Moscow’s economic and political leaders are currently moored in the main port of the Seychelles[2].

It is not just the tax benefits, but also the picture-postcard beaches, the enchanting views, the places separated from civilisation: 115 islands, a population of less than one hundred thousand people, 90% of whom live on the island of Mahé[3] . It is not just a tourist attraction, but a strategic location for production and trade between Africa, Europe and Asia, on the vital oil transport routes between the Arabian Peninsula and the Cape of Good Hope. The US naval base at Diego Garcia is not far away: a coup there would have global implications[4]. In the beginning, people lived on agriculture and tourism, but since the development of the offshore services sector, there have been drastic changes[5]. That is when corruption exploded, dividing the citizens into winners (very few) and losers, and catapulting the name of Seychelles into the international money-laundering firmament, especially after the publication of the Paradise Papers, the Panama Papers and the Pandora Papers[6].

The Roaring Years of Adnan Khashoggi

Lory Del Santo on Khashoggi’s yacht in the Seychelles, 1981[7]

The strategic location allowed the local elite to do as they pleased without the big world powers trying to change things: after a few years of leadership by the centrist democratic party[8], after independence was achieved in 1976, and after a coup d’état, Albert René’s socialist party took power[9] and held it without wavering until 1993. His predecessor, James R. Mancham, was anything but a saint: he was discovered taking bribes from South Africa (to break the isolation of the Apartheid years from the Organisation for African Unity), and from the arms dealer Adnan Khashoggi[10] , a Saudi billionaire, related to the Bin Laden family[11], whose luxurious lifestyle made him famous, and then ruined him: famous was the episode in which he gave a diamond to Lory del Santo in gratitude for a sexual relationship[12].

Khashoggi is not only the uncle of Dodi Al Fayed, the Saudi millionaire who died in a car accident in Paris together with Lady Diana[13], but also the protagonist of some scandals of billionaire contracts obtained through corruption (for example with the American aviation industry Lockheed) and above all the Iran Contra scandal of 1986, when some officials of the government led by Ronald Reagan sold arms to Iran bypassing the international embargo[14]. In the same period, his relations were discovered with the Italian secret service agent Francesco Pazienza and the banker Roberto Calvi, who were involved in a colossal scandal that led to the bankruptcy of one of the largest Italian banks, Banco Ambrosiano, the discovery of agreements between the Mafia and the Vatican, and the investigation into a possible plot to kill Pope John Paul I[15]. Khashoggi, in order to help Calvi, was also involved in the Iran Contra scandal in 1986. Khashoggi, to help Calvi, had created a small offshore system in the Seychelles, which has never been fully revealed[16].

The Saudi businessman had chosen the Seychelles for this very reason: because it was a perfect place to make large quantities of arms disappear in large merchant ships and to create a small banking system to protect the proceeds of that traffic[17]. In 1976 he spent $8 million to buy 104 acres of the most beautiful beach property to build a hotel. Through him, Prince Talal, the nephew of Saudi King Khalid, invested $30 million to build a tourist complex in the Seychelles and promised Saudi help in financing infrastructure and housing projects[18]. A year earlier, in 1975, the family of the Shah of Persia had bought the island of D’Arros for $18 million, only to sell half of it to Liliane Bettancourt, heir to the L’Oréal industrial empire, who used the island for scientific experiments[19].

The legacy of Albert René

The powerful Valabhji family before the explosion of the scandal that landed their top executives in jail[20]

Throughout the decades, and even after he resigned (2004), Renė remained ‘the boss’, despite accusations of corruption and human rights violations. And in spite of attacks, such as the one known as Operation Angela (1981), led by the British mercenary Mad Mike Hoare and Colonel Jerry Puren, which ended in a six-hour firefight and the victory of the regular army[21]. Growing old, the despot decided to quit, promulgated a new democratic constitution, and handed over power to his vice-president, James Michel[22] . Since then there have been years of corrupt and incompetent presidents who, in the last elections, gave way to Wavel Ramkalawan, an Anglican priest whose campaign was based on a promise to recover $50 million that had disappeared from government coffers in 2002[23].

The money had been donated by the United Arab Emirates to build the offshore centre (the STC Seychelles Trading Company) and to pay for food imports needed because of an economic crisis ignored by local politicians: and indeed the judiciary in November 2021 arrested Mukesh Valabhji, a businessman allied to President René. Valabhji, and his wife Laura[24] , guilty of hiding money in a numbered account at the Baroda Bank in England[25] . With that money Valabhji bought the state-owned company COSPROH[26] (Compagnie Seychelloise de Promotion Hôtelière[27]), a chain of hotels that made René and his partner masters of national tourism – without paying anything, because the money was not paid into the coffers of the State, but stolen a second time[28] and then scattered on the offshore accounts of the former president and his accomplice[29] . In the course of the investigation, the Victoria Public Prosecutor’s Office demonstrates the complicity of René’s closest circle of friends: his son, Colonel Leslie Benoiton, the head of the pension agency Lekha Nair, the former finance minister Maurice Loustau-Lalanne[30] and the president’s wife, Sarah René[31] .

Ramkalawan’s victory was due to his moralistic attitude and his economic programme: although Seychelles’ GDP per capita is one of the highest in Africa[32] ($16,575 in 2018[33]), 40% of Seychellois live in poverty: Seychelles depends on imports for a wide range of primary products, which raises the cost of living. But the biggest problem is drug addiction: almost 10% of the working age population is addicted to heroin – on a per capita basis, the country has the highest rate of heroin use in the world, and Ramkalawan has pledged to tackle this serious problem and combat drug smuggling[34].

The drugs arrive in Seychelles with desperate ease from Central Asia, particularly Afghanistan[35]. The domestic cannabis industry covers part of the local demand, but cannabis is also imported from Madagascar: although the criminal market is still small, flakka, cocaine and crack cocaine are very popular. According to data on seizures at ports and airports, the dealers are of Seychelles, Brazilian, Kenyan, Tanzanian or South African origin – and this is where the new government wants to make an impact, by combating police corruption[36].

Another delicate subject: the geopolitical tensions between India and China are increasing due to Beijing’s attempt to expand its influence in the Indian Ocean, at a time when New Delhi hopes to use the island of Assumption – an island in the Seychelles to the north of Madagascar – as a defence against the Chinese military base in Djibouti: a hope that has been extinguished due to the opposition of the Seychelles people and the Ramkalawan government, who are instead counting on the rivalry between the two countries to obtain economic support to get out of poverty[37].

The financial centre

Advertising for the Seychelles offshore centre[38]

The end of the roaring years has left the Seychelles with an intact client portfolio and the expertise to transform what was previously a vassalage to the billionaire of the day into a functional system – a tax haven. Drawing on the experience of Panama and other established offshore centres, the state created a private company in 1994 to coordinate the trustees’ activities, set the rules and protect their interests: the IBC International Business Companies[39]. As soon as the first positive results arrived, in order to avoid problems with international regulatory agencies, the government founded a supervisory agency, SIBA (Seychelles International Business Authority[40]), which introduced tax harmonisation: companies operating abroad pay no tax in Seychelles[41].

Conrad Benoiton has long been president of SIBA and CEO of the Seychelles Petroleum Company (Seypec), which was formed in 1985 following the nationalisation of Shell’s platforms[42], which was involved in a scandal and accused of selling bad fuel[43]. Benoiton was also ousted by the new government: for irregularities in the sale of one of the company’s tankers[44], and in any case, since 2012, Seypec has been replaced by a new company, PetroSeychelles, to allow it to start again without the weight of decades of corruption[45]. Seypec is now just a Russian oil trader, buying in Indian ports and selling in Europe[46] .

Benoiton is also managing director of Appleby, a Bermuda company[47], which has come under the spotlight following the publication of the Paradise Papers[48], which list more than 150 politicians and businessmen from all over the world who, through Appleby, have defrauded the tax authorities or paid and received bribes[49]. The list includes some of the most important financial institutions in the world: Barclays, Citibank, Credit Suisse, Goldman Sachs, HSBC, JPMorgan, KPMG, Lloyds, PwC, Royal Bank of Scotland, Santander and Standard Chartered[50]. In Seychelles, in addition to the absolute poverty of the vast majority of the population, there is a small elite that holds all the key political and economic positions and does not care about the laws.

The offshore sector has grown from 650 companies in 1996 to 140,000 in 2016, plus 1,000 trusts and over 300 foundations – almost all linked to international offshore networks, such as those uncovered by ICIJ with the revelations about the illegal activities of Mossack y Fonseca in Panama[51], which, as soon as the scandal became known, ‘relocated’ all its major clients to photocopy companies registered in Victoria[52]. The most sensitive ones, as shown by the Panama Papers (an example: the Pangates International Corporation Ltd.), after stopping over in the Seychelles, moved from the small island of Niue, in the middle of the Pacific Ocean, to the Saoma, then back to the Seychelles – pursued by the arrows of the US authorities, who claim that this company, together with two other entities registered in Victoria (Maxima Middle East Trading and Abdulkarim Group), provided “material support, goods and services to the Syrian government” in violation of the international embargo[53].

Among the traders who love the Seychelles the most are the aristocrats of the United Arab Emirates, whose 35 richest families each have at least one holding in the archipelago: Sheik Hazza, his successor as national security advisor, his brother (Sheik Tahnoon bin Zayed), the prime minister and ruler of Dubai, Sheik Mohammed bin Rashid Al Maktoum[54]. Sheikh Tahnoon has been implicated in investigations into the illicit activities of Donald Trump’s election committee, headed by billionaire Thomas Barrack, who allegedly acted as an intermediary between Trump and Tahnoon, who financed his campaign for the presidency of the United States[55].

Arthur Hayes[56], the creator of the cryptocurrency BitMEX, who is hiding in Victoria[57]

Indians also love the Seychelles: the Jaidev brothers and Vikram Shroff, sons of the founder of the pesticide giant UPL (United Phosphorus Ltd), have bought properties and yachts, registering them in myriad companies in the British Virgin Islands, Cyprus and the United Arab Emirates, but have taken their holdings (Vector Projects Ltd and Trenkore Investments Limited) to the warmth guaranteed by the IBC centre in Victoria[58]. The most powerful clan in the diamond trade, the Rosy Blue family, from India has created a galaxy of 24 offshore companies, depositing in their accounts at the Geneva branch of HSBC $56.63 million in tax evasion, also with their holding in the Seychelles[59]. The money stays in western countries, but the companies beached in this natural paradise – or they remain in the cyber universe, like the cryptocurrency BitMEX, an excellent system for laundering illegal money, created by the American trader Arthur Hayes, based in the Seychelles islands[60] .  Also pursued by US authorities, he surrendered on 6 April 2021 and was released on $10 million bail [61].

In 2020, Seychelles joined the EU’s list of non-cooperative jurisdictions in the fight against tax evasion and market transparency[62] . Although this hurts local banks and their ability to act in the international market, companies and individuals can move funds in and out of the country without restrictions or having to declare their source[63]. Last October, the EU changed its mind, but investigations into the Seychelles trustees continue – an enquiry initiated by ICIJ and involving more than 90 countries over a 25-year period from 1996 to 2020[64]. EU ministers have decided to move Victoria to a grey list in return for promises of tax reform – which has led Chiara Putaturo, an expert with the NGO Oxfam, to describe the EU blacklist as “a joke”[65] .

According to Putaturo, while the super-rich continue to use tax havens to avoid paying taxes, ordinary people are being asked to foot the bill for post-pandemic economic recovery[66]. As did Arouna Nikièma, the owner of a bodyguard company in Burkina Faso who, when his government announced the introduction of a tax to help Covid victims, moved (retroactively) all his activities to the Seychelles[67]. So did Hugo Yassir Zenagui, a former Moroccan minister, who used his French passport to move his money to Victoria[68].

About the Russians

Oligarch Andrey Kostin’s yacht is available for hire for $660,000 per week[69]

Over the last 20 years, the Russians have discovered the Seychelles. The main companies are Alpha Consulting Ltd. and All About Offshore Ltd (AABOL). Founded in 2008 by Victoria Valkovskaya, Alpha also has offices in Dubai and Belize, and has almost exclusively Russian clients, such as billionaire Roman Avdeev, one of Vladimir Putin’s best friends[70]. AABOL is so well known that it has caused trouble for the banks it works with – such as the Latvian Rietumu Banka, which was fined $91 million in France and suspended for five years for complicity in tax evasion and money laundering[71]. The fact remains that, through these trust companies, almost 20% of Russia’s wealth is hidden in the Seychelles or related tax havens[72] .

The Russians have brought their African allies to the islands, such as Aires Ali , the former prime minister of Mozambique, who has a company in the Seychelles and a bank account in Portugal; Isabel dos Santos, daughter of former president José Eduardo dos Santos; Martin Rushwaya, a Zimbabwean general, smuggled diamonds to Victoria; Zakaria Deby Itno, brother of the President of Chad, has a company with an arms dealer; Delyan Peevski, a Bulgarian politician accused of corruption, had $100,000 of illicit profits frozen in his Seychelles account; Shaukat Fayaz Ahmad Tarin, Pakistan’s finance minister, set up a company here to invest in a bank[73].

The agreements with African countries have also created a massive slave trade, which began with the need for almost free labour (20% of the employed workforce), and then developed into a clearing house for slaves sold for sex or labour – a market often linked to arms smuggling[74]. In this sector, as China entered into competition with Russia’s arms industries, Russian trustees in the Seychelles also began selling Beijing’s arms in Zimbabwe, Mozambique, Namibia, Seychelles, Tanzania and Zambia[75].

Now the war with Ukraine and the consequent economic sanctions are scaring the government in Victoria: almost a third of the tourists came from Russia or Ukraine, and some Russian companies are about to close, wiping out hundreds of jobs in hotels controlled by the Moscow oligarchs, such as the Savoy and the Coral Strand[76], owned by Yuri Gushchin[77], a man who made his money as a smuggler during the Soviet Union years[78].

But the central problem remains another. While tax havens such as the Bahamas, the Virgin Islands or Malta have brought general prosperity, the people of Seychelles are hostage to a cynical and ferocious financial centre, for whom the beauty of the islands is simply an excuse to invest in tourism that often conceals much more: arms, drugs and slave trafficking. For this reason, after changing my mind about my honeymoon, I also advise you readers: you cannot become accomplices of such an inhuman regime. President Ramkalawan has an almost superhuman task ahead of him – one that rightly starts with punishing those responsible, to be followed by a new democratic system that promotes equality and prosperity.


                        [1]  https://www.tag43.it/ucraina-mordashov-chie-sanzioni-ue-severstal-acciaierie-lucchini-yacht-rossyia-bank/

                        [2] https://www.bloombergquint.com/onweb/russian-oligarchs-yachts-head-for-maldives-as-sanctions-levied

                        [3] https://bbcincorp.com/resources/offshore-investments-in-seychelles-tax-haven

                        [4]  https://www.csmonitor.com/1982/0120/012044.html

                        [5]  https://bbcincorp.com/resources/offshore-investments-in-seychelles-tax-haven

                        [6] https://www.icij.org/

                        [7] https://www.pressreader.com/italy/oggi/20170615/282595967898137

                        [8]  https://www.bbc.com/news/world-africa-14094191

                        [9] https://www.lowyinstitute.org/the-interpreter/seychelles-life-after-boss

                        [10]  https://www.csmonitor.com/1982/0120/012044.html

                        [11]  https://www.theguardian.com/world/2017/jun/07/adnan-khashoggi-obituary

                        [12]  https://www.supereva.it/morto-kashoggi-offri-diamante-del-santo-per-fare-amore-39429

                        [13] https://www.repubblica.it/esteri/2017/06/06/news/londra_morto_sceicco_adnan_khashoggi-167408084/

                        [14]  https://www.theguardian.com/world/2017/jun/07/adnan-khashoggi-obituary

                        [15]  Charles Raw, “La grande truffa – il caso Calvi ed il crack del banco Ambrosiano”, Mondadori, Milano 1993; Giuseppe Ferrara, “I banchieri di Dio”, Sistina Cinematografica, Roma 2002

                        [16] https://www.jstor.org/stable/723700 ; https://www.nytimes.com/1985/09/12/world/italian-ex-agent-ordered-extradited-from-us.html

                        [17]  https://www.csmonitor.com/1982/0120/012044.html

                        [18]  https://www.lexpress.mu/node/402539

                        [19] http://www.privateislandnews.com/seychelles-conservancy-founder-buys-darros-island-from-loreal-heiress/ ; https://www.parismatch.com/Actu/Politique/Affaire-Bettencourt-voici-D-Arros-l-ile-mysterieuse-151980 ; https://www.larepubliquedespyrenees.fr/pyrenees-atlantiques/arros-de-nay/affaire-bettencourt-les-attaches-bearnaises-de-l-ile-d-arros-5365288.php

                        [20] https://www.nation.sc/archive/256671/businessman-abhaye-valabhji-dies

                        [21]  https://www.csmonitor.com/1982/0120/012044.html

                        [22]  https://www.reuters.com/article/us-seychelles-rene-death-idUSKCN1QG18T

                        [23]  https://www.bbc.com/news/world-africa-59866693

                        [24]  https://www.lexpress.mu/node/402539

                        [25] http://www.seychellesnewsagency.com/articles/16101/Missing+m+case+Seychelles+Supreme+Court+rejects+former+First+Lady%27s+plea+for+lower+bail%2C+orders+better+treatment+of+female+detainee

                        [26] https://www.lexpress.mu/node/402539

                        [27] https://www-nation-sc.translate.goog/articles/3726/commission-of-inquiry-into-cosproh-resumes-hearings?_x_tr_sl=en&_x_tr_tl=it&_x_tr_hl=it&_x_tr_pto=sc

                        [28]  https://www.lexpress.mu/node/402539

                        [29] https://www-nation-sc.translate.goog/articles/3726/commission-of-inquiry-into-cosproh-resumes-hearings?_x_tr_sl=en&_x_tr_tl=it&_x_tr_hl=it&_x_tr_pto=sc

                        [30] http://www.seychellesnewsagency.com/articles/16101/Missing+m+case+Seychelles+Supreme+Court+rejects+former+First+Lady%27s+plea+for+lower+bail%2C+orders+better+treatment+of+female+detaine

                        [31]  https://www.nation.sc/articles/11812/six-suspects-in-us-50-million-case-formally-charged

                        [32] https://www.worldpoliticsreview.com/trend-lines/29206/after-the-historic-seychelles-elections-new-president-faces-daunting-challenges

                        [33]  https://bbcincorp.com/resources/offshore-investments-in-seychelles-tax-haven

                        [34] https://www.worldpoliticsreview.com/trend-lines/29206/after-the-historic-seychelles-elections-new-president-faces-daunting-challenges

                        [35]  https://www.bbc.com/news/world-africa-50488877

                        [36] https://ocindex.net/country/seychelles

                        [37] https://www.worldpoliticsreview.com/trend-lines/29206/after-the-historic-seychelles-elections-new-president-faces-daunting-challenges

                        [38] https://bbcincorp.com/resources/seychelles-international-business-companies

                        [39] https://www.seychellesoffshore.com/seychelles-ibc-company.php

                        [40] https://www.egov.sc/Business/ForeignBusiness.aspx

                        [41] https://bbcincorp.com/resources/offshore-investments-in-seychelles-tax-haven

                        [42]  https://www.seypec.com/

                        [43] https://www.nation.sc/articles/3915/seypec-rejects-allegation-that-it-is-selling-substandard-fuel

                        [44] http://www.seychellesnewsagency.com/articles/16157/Le+DG+de+la+compagnie+Seypec%2C+suspendu+pour+irrgularits+dans+la+vente+du+ptrolier+Seychelles+Pride.

                        [45] https://www.geoexpro.com/articles/2014/10/eddy-belle-promoting-the-seychelles

                        [46]  https://allafrica.com/stories/202008210017.html

                        [47]  https://www.thelawyer.com/appleby/

                        [48] https://www.icij.org/investigations/paradise-papers/

                        [49] https://www.bbc.com/news/business-41878881

                        [50] https://www.thelawyer.com/appleby-defends-business-model/

                        [51] http://www.seychellesnewsagency.com/articles/4928/Panama+Papers+Seychelles%27+authorities+%27concerned%2C%27+plan+to+investigate+allegations+of+IBC+misconduct

                        [52] https://www.sueddeutsche.de/politik/mossack-fonseca-neues-datenleck-offenbart-die-letzten-geheimnisse-der-skandal-kanzlei-1.4025000-2

                        [53]  https://panamapapers.sueddeutsche.de/articles/570fc0c6a1bb8d3c3495bb47/

                        [54] https://www.icij.org/investigations/pandora-papers/pandora-papers-reveal-emirati-royal-families-role-in-secret-money-flows/

                        [55]  https://www.siasat.com/pandora-papers-reveal-emirati-royal-families-role-in-offshore-havens-2227550/

                        [56] https://steemit.com/tr/@emrah67/bitcoin-to-hit-usd50-000-by-year-end-bitmex-ceo-arthur-hayes-or-cnbc

                        [57] https://it.cointelegraph.com/news/bitmex-s-arthur-hayes-surrenders-in-hawaii-released-on-10m-bond

                        [58] https://indianexpress.com/article/express-exclusive/pandora-papers-part-15-for-yacht-overseas-real-estate-upls-shroff-brothers-go-offshore-7592462/

                        [59]  https://indianexpress.com/article/express-exclusive/pandora-papers-dilip-mehta-rosy-blue-7554457/

                        [60]  https://www.nytimes.com/2021/07/23/us/politics/crypto-billionaires.html

                        [61] https://it.cryptonews.com/news/bitmex-s-arthur-hayes-surrendered-and-released-as-planned-9820-it.htm

                        [62]  https://ocindex.net/country/seychelles

                        [63]  http://www.taxhavens.biz/other_tax_havens/tax_haven_seychelles/

                        [64] https://www.internazionale.it/notizie/2021/10/06/pandora-papers-inchiesta

                        [65]  https://www.oxfam.org/fr/node/9274

                        [66] https://apnews.com/article/business-european-union-europe-anguilla-4ab6219491bab1201fa34794fd96b6c2

                        [67]  https://www.icij.org/investigations/pandora-papers/pandora-papers-reporting-from-across-africa/

                        [68] https://www.icij.org/investigations/pandora-papers/pandora-papers-reporting-from-the-middle-east-and-north-africa/

                        [69] https://nypost.com/2022/03/05/russian-oligarch-yachts-scrambling-for-safe-havens-amid-seizures/

                        [70] https://www.icij.org/inside-icij/2022/03/how-a-network-of-enablers-have-helped-russias-oligarchs-hide-their-wealth-abroad/

                        [71]  https://www.icij.org/investigations/pandora-papers/secrecy-brokers/

                        [72] https://www.icij.org/inside-icij/2022/03/how-a-network-of-enablers-have-helped-russias-oligarchs-hide-their-wealth-abroad/

                        [73] https://www.icij.org/investigations/pandora-papers/massive-money-laundering-probe-heartens-anti-corruption-activists-but-fails-to-lift-pandora-papers-pall-over-seychelles/

                        [74]   https://ocindex.net/country/seychelles

                        [75] https://www.piie.com/blogs/realtime-economic-issues-watch/arms-and-influence-chinese-arms-transfers-africa-context

                        [76] http://www.seychellesnewsagency.com/articles/16407/Seychelles+foresees+worse+economic+crisis+as+Russia-Ukraine+conflict+affects+tourism+markets

                        [77]  https://www.forbes.com/profile/yuri-gushchin/?sh=1a17cf715052

                        [78] http://www.seychellesnewsagency.com/articles/13735/Next+chapter+in+long-running+Savoy+Hotel+court+case+to+be+heard+Nov.++in+Seychelles%27+Constitutional+court ; https://littlesis.org/person/187967-Yuri_Gushchin ; https://rusletter.com/articles/group_guta_is_suing_for_its_hotel_in_seychelles

Leave a Reply

Your email address will not be published. Required fields are marked *

By browsing this website, you agree to our privacy policy.
I Agree