03/10/2023
Since the establishment of Kuwait, the tradition has been that the ruling family members of Al-Sabah do not engage in business. Constitutional expert Dr. Mohammad Al-Fili provides an explanation as follows, “Those who rule would also control the means of governing commercial or industrial activities.”
The late Kuwaiti Emir Sabah Al-Ahmad Al-Jaber Al-Sabah and his sons
own Kuwait Projects Company Holding (KIPCO), which is one of the
largest economic empires in Kuwait, the Gulf, and perhaps even the
Middle East. The leaked Pandora Papers reveal details about the
unstoppable KIPCO “train,” which is owned by the late Emir and his
sons. A source working closely in business and finance in Kuwait
anonymously commented, “While companies face bureaucratic issues and
their work stops if they do not obtain the necessary approvals,
KIPCO’s projects would sail smoothly because everyone knows who owns
the company. This was a privilege and proved to be advantageous to
the company at the time, but I think this will change now with the
departure of the Emir.”
This investigation is based on leaked documents obtained by the
International Consortium of Investigative Journalists (
) and shared with ARIJ and a large number of publishers around the
world within a project labeled as the Pandora Papers. The leaks mark
the biggest cross-border journalistic collaboration project in
history and include millions of documents from lawyers’ offices
about tax havens. They also uncover assets, secret transactions, and
the hidden fortunes of the rich, including more than 130
billionaires, more than 30 world leaders, a number of fugitives or
convicted people alongside sports stars, judges, tax officials, and
counterintelligence agencies.
KIPCO was founded in 1975, and its operations expand across the
Middle East and North Africa region through a group of holding
companies in sectors such as financial services, media,
manufacturing, and real estate. On its website, KIPCO states that
the group includes more than 60 companies and employs more than
16,000 people in 24 countries.
The signatories to KIPCO’s founding contract include the current
Crown Prince, Sheikh Masha’al Al-Ahmad Al-Jaber Al-Sabah and
Abdullah Yaqoub Bishara who is the director of Sabah Al-Ahmad’s
office at the Ministry of Foreign Affairs. Later, Bishara became the
first president of the North Africa Holding Company, which is owned
by KIPCO. The company is mentioned in the Pandora leaks along with
133 names of the most prominent businessmen in Kuwait, including the
founders of the biggest Kuwaiti companies: Al-Khurafi, Al-Shaye’e,
Al-Ghanim, Al-Sayer and others. The majority of the founders do not
seem to have any relationship with the companies once they were
founded. A stock exchange expert who requested to remain anonymous
believes that they may have sold their shares as the company’s
status changed over the years or that some are still holding shares
that do not entitle them to take over management affairs.
KIPCO was listed on the Kuwait stock exchange market in 1984. Four
years later, its status was modified to include financial services
and lending and borrowing activities. In 1999, the company’s name
was adjusted from an “investment” company to a “holding” company “to
avoid the Central Bank’s strict oversight and to get out of its
control.” The analysis by AlJoman Center for Economic Consultations
of KIPCO’s financial statements in 2004 shows that the company had
run into problems with the bank in approving its financial
statements.
The company’s paid-up capital amounted to 200 million Kuwaiti
Dinars, that is around $665 million, distributed over 2 billion
shares. 44% of the company is owned by Al-Futouh Holding Company
whose board of directors was chaired by the granddaughter of the
late Emir Futouh Nassir Sabah Al-Ahmad, and 22% is held by the
United American Holding Company. On December 20, 2020, the Kuwait
News Agency (KUNA) published a biography of the son of the Grand
Emir Sheikh Nassir after his death and stated that he was the
founder of Al-Futouh Holding Company. That was the first time this
information became public knowledge.
Constitutional expert and professor of public law at Kuwait
University Dr. Mohammed Al-Fili clarifies that one way to prevent
conflict of interest is not to combine business and political work.
He adds: “Those who rule would also control the means of governing
commercial or industrial activities. Using one’s powers as a ruler
to benefit his own business as a trader or manufacturer is wrong.”
According to Al-Fili, the Kuwaiti constitution did not regulate this
issue and does include a text prohibiting the Emir from engaging in
business activities. He explains that according to the constitution,
the Emir has two types of competencies, “The first enables him to
issue Emir-like orders to prevent legal disputes against himself by
appointing a representative on his behalf in the litigation. The
second is related to public life: He can exercise his powers only
through his ministers. There are specific exceptions to this in the
constitution, which he implements through an Emir-like order. These
include nominating the Crown Prince, appointing and dismissing the
deputy Emir and appointing the Prime Minister.” According to
Al-Fili, it is assumed then that the Emir is dedicated to the
emirate.
The existence of a large economic entity in Kuwait that belongs to
the Emir and his sons is a clear conflict of interest between
governance and business. Dr. Ghanim Al-Najjar, Professor of
Political Science at Kuwait University says, “The point is that the
sheikhs, the ruling family, and formal officials should not engage
in business.”
The Kuwaiti parliament witnessed an incident that highlighted a
recommendation previously made by an Emir on not combining
governance and trade. On July 18, 2006, and around five months after
Prince Sabah assumed his position, his annual allocations were
raised from 8 million Dinars to 50 million, which is an increase of
around 500 percent. The parliament endorsed the raise without a
discussion apart from a comment by Marzouq Al-Ghanim, the current
Speaker of the National Assembly. He said, “ Even if the parliament
unanimously agrees to raise the allocations of His Royal Highness
the Emir, I hope that at this moment we can recall the words of
Sheikh Abdullah Al-Salem, Kuwait’s eleventh Emir under whose custody
the constitution of Kuwait was established: He recommended that
governance and business not be combined.”
The fifteenth Emir of Kuwait, Sabah Al-Ahmad Al-Sabah, assumed
leadership of the emirate between January 2006 until his death in
September 2020. He has four children: three sons, one of whom died
young, and a daughter who died in her early fifties. His two other
sons managed business matters and developed KIPCO.
Sheikh Hamad Sabah Al-Ahmad does not work in politics nor does he
like being under the spotlight. He is, however, the powerful
businessman behind the KIPCO empire, and he chairs its board of
directors.
As for the late Sheikh Nassir Sabah Al-Ahmad, he is the founder of
Futouh Holding Company and Kuwait Projects Holding Company (KIPCO).
From February 2006 until December 2017, he held the position of
Minister of the Amiri Diwan Affairs. During his tenure, the Amiri
Diwan encroached on the competencies of the Ministries of Public
Works and Health and other institutions by taking over the
implementation of big projects in the state under the pretext of
avoiding the long bureaucratic cycle that may hinder them.
The company was founded by Sabah Abi-Hanna who started his career by
designing palaces for the royal family in 1961, and he implemented
twenty-five projects through the Amiri Diwan for 1.4 billion Dinars.
This was declared by Sheikh Ali Al-Jarrah, the Minister of the Amiri
Diwan Affairs in 2019, and he was relieved of his position in 1921.
Amran Habib Hayat was chairman of the board of directors of the
National Petroleum Services Company Napesco. This is owned by the
Qurain Petrochemical Company, which, in turn, is owned by KIPCO.
According to data from the Kuwait Chamber of Commerce and Industry,
Amran is also the general manager of the United Real Estate Company,
which is the real estate arm of the KIPCO Group. In 2000, the
company constructed the waterfront project known as “Marina Mall and
Hotel” in the Salimiya area. Prior to implementing this project, SSH
had won the primary planning, design and supervision contract in
1997.
Owning Entity
The Amiri Diwan
Project Start Date
2015
Opening
Oct-16
Cost in Dollars
775 million
Cost in Kuwaiti Dinars
233 million
Owning Entity
The Amiri Diwan
Project Start Date
2014
Opening
Feb-18
Cost in Dollars
389 million
Cost in Kuwaiti Dinars
117 million
Owning Entity
The Amiri Diwan
Project Start Date
2013
Opening
Apr-19
Cost in Dollars
confidential
Cost in Kuwaiti Dinars
-
SSHIC is also the leading consultant in the implementation of a
five-star resort with an undisclosed name in Morocco. Its cost and
the identity of the owner are confidential. A Google search and
examining the photos posted on the company’s website show that the
name of the resort is St. Regis Marrakech, and it is expected to
open in 2024.
The resort is part of the ASOFED project, which is one of KIPCO’s
investments in Morocco while the two Moroccan companies, Tiglio SARL
and Pacato SARL own villas (108) and (101) in ASOFED Marrakech in
Morocco. Both companies were founded by two offshore companies in
the British Virgin Islands: These are Tolland Consultants Ltd. and
Niteshade Corporation, and both are mentioned in the Pandora Papers’
leaked emails.
Al Seef Hospital is a subsidiary of the United Medical Services
Company. It is a Kuwaiti shareholding company founded in 2003 with
the aim of investing in the health care sector in Kuwait and the
region, as the website announces.
The company’s registration data at the Kuwait Chamber of Commerce
and Industry lists the name of Sa’adoun Abdullah Hussein Ali as the
company’s authorized representative through an official letter. He
is second in place after Mahdi Mahmoud Haydar who is the owner of
the hospital. Sa’adoun Abdullah Hussein Ali is the vice chairman of
the board of directors and the CEO of Qurain Petrochemical
Industries Company. Qurain was established in 2004, with a capital
of 110 million Kuwaiti Dinars, that is approximately $365 million.
It is one of the KIPCO group companies and is headed by Sheikh Hamad
Sabah Al-Ahmad, the son of the late prince.
Al Seef Hospital was formerly known as Al-Maidan Clinic. Its
construction was marked by violations and encroachments on state
property to the point that the issue was raised in the National
Assembly and the judiciary system. Rulings to remove the stories and
buildings in violation of the license were issued. On April 29,
2010, the National Assembly requested that the Audit Bureau examine
the project of Al-Maidan Hospital, currently known as Al Seef. The
examination concluded that the Ministry of Finance did not take the
necessary measures to protect state property from the executing
company’s ten violations.
According to the company’s 2020 financial report, KIPCO established
fifteen companies in the British Virgin Islands, the Cayman Islands
and in the Isle of Man in addition to Tolland and Niteshade, which
are the main source of the Pandora Papers leaks.
According to KIPCO’s 2020 governance report, the two offshore
companies of Tolland and Nitishade in the British Virgin Islands are
100% owned by KIPCO. They are both investment holding companies. One
of the leaked documents includes a structural plan of the
subsidiaries of the North Africa Holding Company which is owned by
KIPCO by 75%. It includes twelve 100% fully owned companies in North
Africa and Cyprus, in addition to the Tolland and Niteshade
companies in the British Virgin Islands.
Kuwait is not a country that imposes high taxes on business
companies. What, then, would drive a large Kuwaiti corporation to
establish companies abroad in places that can be described as tax
evasion havens?
We posed the question to two of the most prominent economic experts
in Kuwait in the field of investment and offshore companies. They
both requested to remain anonymous and both agreed that the action
is legal, but that what matters more is the motivating factor.
One of the experts says, “Gulf nationals can use these companies to
launch new investments in international markets without drawing
attention to themselves or to their nationalities and can hide their
identities from curious people. It could also facilitate the resale
of assets without complex or costly procedures and without
subjecting them to tax reports.” He added, “Sometimes, it can be
used to avoid paying inheritance taxes.”
The expert in the investments of transcontinental companies Doctor
Mohammad Sameh sees that the most important motive is to hide the
financial transactions that take place through these companies. He
wondered, “Why does a large company hide its financial transactions
from the financial control and tax agencies? Yes, the companies are
legal, but what is their purpose?”
At the time this investigation was published, KIPCO had not responded to our inquiries.