According to 2008 confidential emails, the lawyer representing Shawkat and his son, Ali, asked Appleby to hold in escrow about $140 million, the proceeds of the sale of the Shawkats’ shares in a joint venture with a Kuwaiti telecommunications company. The law firm refused that request but accepted them as clients later in 2008.
Appleby set up the Passion Group Trust for the benefit of Mudhar Shawkat’s family members and registered three affiliated companies in the British Virgin Islands in 2008 and 2011, according to the files. Shawkat was identified in the Appleby documents as an “additional settlor” (a person who creates and funds a trust) of the Passion Group Trust and as a shareholder of Passion Investment Ltd., the trust’s investment arm.
However, upon the incorporation of a not-for-profit entity, which was also a beneficiary of the trust, concerns about the Iraqi family’s reported association with Chalabi emerged at the law firm. “It is suspicious,” an Appleby employee wrote in an email, “that they are setting up a charitable company offshore [Passion for Change S.A.] for funds coming out of Iraq – there does not seem any benefit other than lack of accountability in doing so.” But Appleby continued to provide services to Shawkat and his family after the firm’s managers noted that, other than accusations of favoritism in the award of government contracts, there were no allegations against Shawkat.
In the following months, in 2009, the leaked files show that the Shawkats transferred more than $30 million to the family trust and one of its affiliated companies, some of which was converted into shares. Board meeting minutes of Passion Investment Ltd. chaired by Shawkat’s son show that from 2013 to 2016, the company has invested in two medical companies and in an Iraqi dealership for Peugeot cars.
The trust and its affiliates were still active as of February 2016, according to Appleby’s internal emails.
Through a lawyer, Shawkat told ICIJ that he has no legal or beneficial interest in any of the four entities of the Passion Group, nor does he have control over or involvement in their business activities. He added that he has never had any commercial or business ventures or dealings with Chalabi.
In a response sent to ICIJ on November 15, Shawkat’s lawyer explained that, although Appleby initially declined to hold the sum specified – about $140 million – “it was in fact willing to accept those funds.” Its initial refusal had “nothing to do with either the identity of Dr. Shawkat, or the source of the funds,” he wrote. The lawyer also added that Shawkat was not an “additional settlor,” as indicated in Appleby records, because “he did not perform that function whether in fact or in law.” The Passion Group Trust was set up following his son’s instructions and Mudhar Shawkat's “only involvement was prior to the Trust being formed, and temporary,” the lawyer wrote. “For three weeks between 28 November and 18 December 2008 he held one share in Passion Investments Ltd., the Trustees holding 20,000 shares.”
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