The government of Algeria has launched a money-laundering investigation based on information revealed by the International Consortium of Investigative Journalists Panama Papers investigation.
The investigation, which involves the abuse of a government-run milk powder subsidy program and laundering the proceeds from the scheme, was revealed in a decision by Switzerland’s Federal Court. The fraud’s alleged masterminds had bank accounts in Switzerland.
Algerian entrepreneur Zoubir Bererhi, the brother of a former government minister, inflated the price of milk powder imported under a government-run subsidy program, Hallas reported.
Bererhi made millions of dollars in inflated profits from the scheme look legitimate using Swiss bank accounts and offshore companies, Hallas reported using Panama Papers documents.
“Their offshore company, which they claimed not to own, bought the milk powder at the global market price and sold it to their own dairy company sometimes for as much as twice the price,” Hallas reported.
Milk is an important staple in Algeria and benefited from significant government subsidies at the time of the scheme in 2009, Hallas reported. The country has since ended the subsidy program.
Algerian judge Sidi M’hamed contacted Switzerland in April 2017 as part of an investigation into “money laundering within the framework of a criminal organization,” the Swiss court said.
In response, Switzerland ordered local financial institutions to provide copies of financial assets and bank accounts in addition to documents that Bererhi and his family used to open such accounts. Today, ICIJ is also publishing two new documents relating to Berehi.
According to Swiss legal custom, the names of the parties are not reported. Swiss media first reported that Bererhi was the subject of the judgement alongside his son and brother-in-law.
A spokesman for one of the banks involved, Credit Suisse, said it operated in “strict compliance” with the law and does not comment on client relationships “as a matter of principle”.
The news of the Algerian investigation is the latest in a series of probes, convictions and resignations that followed publication of ICIJ’s Panama Papers investigation more than two years ago.
Fraud, money laundering and corruption investigations “take enormous lengths of time and are incredibly complex,” said Ross Delston, a Washington D.C.-based attorney and anti-money laundering specialist.
Government investigators can choose not to release information about ongoing probes out of “fear the individuals will take flight and that the money could disappear in nanoseconds,” he said.
“All of that results in a perception that nothing is going on when, in fact, there could be quite a bit going on that is unseen by the public,” Delston said.
Earlier this year, Switzerland announced a set of anti-money laundering proposals that it claimed would make it harder for would-be criminals to misuse companies, trusts and bank accounts.