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‘Fish-rot’ scandal stink reaches far beyond Namibia’s shores

November 16th, 2020
topic:Transparency and Corruption
by:Cyril Zenda
located in:Namibia, Iceland, Cyprus
tags:corruption, exploitation, natural resources, overfishing, tax haven

Leaked documents expose how Icelandic seafood giant, Samherji, not only allegedly bribed senior Namibian officials and politicians to get lucrative fishing quotas, but also avoided paying taxes.

Iceland-based multinational fishing firm, Samherji, is trying to extricate itself from a bribery and tax evasion scandal. The firm is alleged to have paid millions of dollars to senior Namibian government officials for unfettered access to the country’s rich fishing grounds, before going further to defraud the impoverished African nation of millions in unpaid taxes. 

Explosive Secrets Leaked

Leaked files from Icelandic seafood giant Samherji – which supplies sardines and horse mackerel to major European supermarkets such as Tesco and Carrefour – were uploaded on the WikiLeaks website late last year by Jóhannes Stefánsson, the former general manager of Samherji’s operations in Namibia who was at one time pivotal in making these payments, as well as the tax evasion schemes. He later regretted his role in the scams and decided to expose the European firm’s activities, which he says are as evil as the plunder of the poor African country’s primary natural resources, and perpetuates poverty. 

“It was a process for me after I left in 2016 to realise what I had been part of” said Stefánsson, who claim to have acted on instructions from his superiors. “I was following what was happening locally, that the corruption just got worse, and I felt that I had to do something for the people in Namibia who were being robbed by greedy public officials and the Icelandic company Samherji.” The whistle-blower says since he decided to come clean, there had been attempts on his life, including poisoning.

Fish-rot

Dubbed the ‘Fishrot’ scandal, the sordid affair – which has been the subject of street protests in both Namibia and Iceland – has resulted in the arrest of seven people in Namibia, including two (now former) Cabinet ministers, as well as some changes to the corporate structure of Samherji.

These leaked documents and an affidavit from an insider-turned-whistleblower have been hailed as providing a rare glimpse into strategies used by some Western multinationals to shift profits around the world to avoid paying taxes in developing countries.

Most of the documents are dated from 2010 to 2016, the period during which Samherji gained its foothold in Namibia. It has now become the biggest single recipient of fishing quotas in Namibia. 

Samherji Denies Wrongdoing

In response to the allegations, Samherji published a statement in which it tried to distance itself from Stefánsson, whom it accused of solely being behind the alleged bribes and that other high-ranking staff members were unaware of his actions. Although Stefánsson has admitted to being part of the bribe scheme, the leaked records showed that he never had control of the company’s bank accounts in Cyprus, where the money flowed through, and that the alleged bribes still continued for three years after he left the company.

False Promises, False Hopes

Samherji raised hopes when it landed in Namibia with lofty promises to build infrastructure, create jobs and generally uplift the standard of life in the impoverished-but-resource-rich African nation, but nearly a decade later, none of these promises have been fulfilled. On the contrary, the company now stands accused of using its convoluted international corporate structure to syphon proceeds from the Namibia operations out of the country, leaving nothing to benefit locals.

Tax Avoidance Scheme

In a comprehensive affidavit to Namibia’s Anti-Corruption Commission, Stefánsson – who has since won an award in Iceland – alleged that Samherji had dexterously moved significant revenues from its Namibian operations to group companies in what he believed to be a tax-avoidance scheme.

An analysis of the leaked files by Finance Uncovered together with Samherji’s financial statements and other public documents concluded that the firm employed creative techniques to minimise its Namibian tax burden by transferring funds to low-tax havens such as Cyprus and Mauritius.

These techniques included sending at least 93 million Namibian dollars (US$8.2 million) in curious “fee” payments to the group’s other companies in low-tax Mauritius and the U.K., as well as selling fish below market prices to sister companies in Cyprus. Samherji also allegedly overcharged its Namibian division for the cost of chartering trawlers, a ploy that worked to shift profits out of the African nation and thereby contribute to the overall reduction of its tax bills there.

Some Jurisdictions Withhold Cooperation

Samherji, which has been fast-growing in the last two decades and boasts of a turnover in excess of $700 million, has operations in Iceland, Germany, Poland, the United Kingdom, the Faroe Islands, Canada, France, Spain, Portugal, Cyprus as well as Namibia.

As part of their investigations, Namibian authorities have sought assistance from their counterparts in nine jurisdictions that include Dubai, Mauritius, Cyprus, Norway, Iceland and others. The inclusion of these countries in the investigations is based on indications that some of Samherji’s units in these jurisdictions could have been used as conduits for the bribe payments. However, according to Namibia’s Anti-Corruption Commission chief investigator, Andreas Kanyangela, only two of these countries – Iceland and Norway – have been co-operating with them while seven others, including neighbouring Angola where bribes were allegedly also paid, have not been co-operative. This raises questions about their commitment to the fight against global corruption and uplifting poor communities that are usually victims of international corruption.

Plunder Not Unexpected

The developments in Namibia were not unexpected to those familiar with the corruption and double-standards employed by some Western multinationals.

“The question that arises concerning this Icelandic company’s fishing practices is whether affluent nations in Europe are guilty of double-standards toward Africa,” wrote prominent Icelandic investigative journalist Ingi Freyr Vilhjálmsson in an opinion piece shortly after Samherji’s suspicious entry into Namibia in 2012. “Every year, affluent European states donate millions of dollars in foreign aid to impoverished countries such as Namibia. They are poor in part because they haven’t been able to benefit from their national resources in the same way as wealthier nations in Europe. In some cases they might lack the technology or money to build the infrastructure that is necessary to create wealth from these resources—the trawlers Samherji uses to fish there are extremely expensive and effective fishing and processing machines. Europe’s foreign aid is meant to help some of the poorer nations in Africa to reach that same level.”

He went on to link Africa’s poverty to exploitation by the same Western multinationals whose home countries appear concerned with lack of development on the continent.

“At the same time, wealthy European nations are making millions of dollars by exploiting African countries’ natural resources while their governments donate money to them… So we Europeans feed poor Africa with aid money with our left hand while draining their natural resources with our right hand. We do this catching their fish, possibly overfishing it and endangering African fishing stock in the process. Mercilessly exploiting African fishing grounds is definitely not the right path towards helping the continent become prosperous. But this is what Samherji, and many other European fishing companies, appear to be doing in Africa at the moment.”

Article written by:
CZ Photo
Cyril Zenda
Author
Namibia Iceland Cyprus
Iceland-based multinational fishing firm, Samherji, is trying to extricate itself from a stinky bribery and tax evasion scandal in which it is alleged to have paid millions of dollars to senior Namibian government officials and politicians.
Leaked files were uploaded on the WikiLeaks website late last year by Jóhannes Stefánsson, the former general manager of Samherji’s operations in Namibia.
“It was a process for me after I left in 2016 to realise what I had been part of,” said Stefánsson