Written by Khadija Sharife

Everything has a paper trail, a lead that exposes the systemic underwire of a network, company, or person’s illicit or illegal activities. The trick is to find it.

Recently, the African Network of Centers for Investigative Reporting (ANCIR) investigated a global Ponzi scheme controlled by a U.K.-based director, Renwick Haddow. He was the man at the top of an entity called Capital Organisation, which used a network of more than 30 shell companies to sell more than $180 million in fraudulent investments over five years.

It was a global network of interconnected entities, and our organization had a total budget of $500 to investigate and expose it. That budget was entirely invested in our Sierra Leone journalist who was needed to visit a farm related to the scam, meet the locals, and to extract documents from the relevant ministries. That left us with zero budget for other aspects of the story, including the financial trail.

How did we unravel the scam? By finding and following the paper trail, which in this case involved accessing a range of information from databases, corporate brochures, court records and other publicly available sources. All of the evidence we gathered is accessible here, and you can read our full investigation, “Catch and Release”, in the Spring 2015 issue of World Policy Journal.

Anatomy of a scam

The scam used the shell companies to peddle fabricated investments in far-off locations to investors, particularly U.K. pensioners. The purported investments ranged from agricultural (farms producing palm oil, rice, cocoa and wheat) to minerals (gold, platinum, diamonds) as well as properties, water bonds, Voice Over Internet Protocol, and more. High returns were promised, often with guaranteed exit strategies, which assured investors they could recoup their money with a profit.

Shell entities with names such as Agri Firma, Capital Carbon Credits and Voiptel International had no staff, bank accounts, offices or other components of real business. Instead, Haddow and his crew channeled money to financial receiving agents who then deposited it into tax havens such as Cyprus. Then final remittance was made to British Virgin Islands holding companies such as Rusalka and Glenburnie Investment.

The shell entities promoted investment schemes that were unregulated or lightly regulated by the U.K.’s Financial Conduct Authority (FCA). The investments were then promoted through fictitious brokers carrying names such as Capital Alternatives, Velvet Assets, Premier Alternatives, Able Alternatives and others. These entities were based in the U.K. and eventually spread around the world from Gibraltar to Dubai. They often consisted of nothing more than short-term or mailbox offices. Many even shared the same telephone number or address.

On the front line of the scam were often unscrupulous sales agents who were incentivized with commissions of between 25 and 40 percent of what they sold as new investments. The rest would be transferred as “investment arrangement fees” to the private offshore accounts of architects such as Renwick Haddow, Robert McKendrick and other key players.

Following the trail

The most important aspects of any investigation are to dig, listen and ask pertinent questions. But asking questions requires context, and listening to the right sources means finding the core of the story. Data, free or otherwise, can never replace good investigative research. In order to do good investigative research, these days, one must become familiar with how and where knowledge can be found, and how best to access and develop it.

Court documents showed us that this was not the first time that some of the people and entities in this scam had been investigated. Though the court document in question only looked at a seemingly minor question — whether it was a collective or individual scheme — the process often yields evidence and leads that may otherwise not be available.

We gathered corporate brochures that listed financial receiving agents, brokers, auditors, physical offices and other details that detailed connections between seemingly independent companies.

Our work made use of free public databases such as Duedil that allow for individual and corporate director searches. These enable users to identify the number of companies — current, dissolved, etc. — that a director is involved in. It can also provide other important information: Shareholders, registered offices and a timeline of retired and current individuals involved. We also used LinkedIn to probe prior personal and corporate connections.

Some free resources such as Duedil worked well for the U.K.-connected companies in this investigation. We followed up specific aspects with Companies House, Orbis and other corporate data sites, all of which are accessible for free to journalists via the Investigative Dashboard. The Dashboard “links to more than 400 online databases in 120 jurisdictions where you can search for information on persons and businesses of interest.”

The African Network of Centers for Investigative Reporting plays a role in coordinating the Dashboard’s Africa department. Unlike other jurisdictions, African countries often do not have digitized or electronically accessible data. To this end, we train and deploy in-country researchers to physically obtain not just the updated and accurate corporate, land, court and other data, but also to visit critical locations, conduct basic interviews and take relevant photos, among other things.

Along with databases, we used Whois Internet searches where possible to determine the date of creation and ownership information of websites that were connected to the network. We then cross- referenced the contact details of the websites with the information listed in corporate databases for the brokers and shell entities. Using specific search phrases, we were able to draw out mentions of certain names, companies, products etc. from various files on the Internet. We also searched for news articles about the people and companies identified in the network. We soon discovered that their ranks included murderers, money launderers and the like.

As part of the investigation, we also created dummy profiles on social media to enable us to connect with relevant companies and individuals, and to engage in email communication. We posed as potential investors to gain firsthand access to the push and pull of the scam.

A critical aspect of reporting was done in person. Once it was clear that Sierra Leone was a focal point of the story, we invested the $500 allocated from Open Society West Africa (OSIWA) to secure an in- country researcher, Silas Gbandia. He physically double-checked whether land leases were correctly entered, and if not, which sections or aspects were excluded.

Most investors in our story presumed the land leases were legitimate. Yet in all cases, the right to sublease by investors was not legal. Some land leases were not entered into the Sierra Leone official registry and therefore were not legitimate (such as those involving palm oil). At least one land lease was totally fraudulent; others were only partially legitimate. The use of in-country researchers to pull the registered land leases could not have more invaluable.

We used sourceAfrica, a free service by ANCIR, to annotate, redact and publish critical documents, including those sent to us by carefully cultivated and trusted sources.

Finally, with all of our information collected, we connected with Heinrich Böhmke, a South African prosecutor and an in-house expert at ANCIR, to “cross-examine” our evidence. This is a process Böhmke took from the legal world and adapted for investigative journalism. We looked for bias, contradictions, consistency and probability within evidence, resources, interviews and sources. A detailed guide to cross-examination for journalists is available here. (Along with Böhmke, we relied on Giovanni Pellerano, ANCIR’s in-house tech specialist, to help extract metadata from multiple electronic sources and documents.)

In the end, by identifying the broad relations within, and between, people, companies, jurisdictions, receiving agents and products, and by studying the corporate data from Duedil, Companies House and others, we were able to visualize the network’s structure. This told us how the scheme functioned and who was involved.

Much of this work was enabled by the analysis and investigation of publicly accessible information and documents. This data helped map the activity, people and entities in question and gave us the information we needed to further this investigation.

Key Questions

The bottom line is that it doesn’t take a genius to develop a good investigation or to lift the corporate veil — it simply takes curiosity, technique and a commitment to read as much and as far into the issue as possible. Scour as many data sources as possible: Corporate, media, NGO, shipping, sanctions, land... Look for what is not obvious, seems illogical, or that just plain sticks out to you. Follow your instinct. Ask as many questions as possible. For example, when investigating a corporate entity pursue questions such as:

• What does the company do?
  

• How many employees does it have? Who are they?
  

• In which countries does it operate?
  

• In which countries is it incorporated?
  

• What are the names of linked companies in each country of operation?

• Where does it pay taxes?
  

• Where does it report its profits?
  

• What is the extent of transfer pricing among its subsidiaries?
  

• Which companies use this practice and why? (And where?)

Remember, everything has a paper trail.