Written evidence submitted by the Public Health Protection Network (IEF0011)

 

Dirty money under the veil of charity: The case of the Kurdistan Children Hospital

Summary:

●       This submission presents evidence on how a UK charity was used to process and cover up the transfer of dirty money across borders (in this case involving political corruption in the Kurdistan Region of Iraq). The case we present below has similarities and connections to the use of dirty money by Russian oligarchs in the United Kingdom. Russia’s Rosneft owns 60% of the KRG oil pipelines with the rest owned by the Barzani controlled KAR group. Another Russian oil company, Gazprom controls a substantial proportion of oil exploration in the KRG as well. The KRG has been replicating Putin’s Russia’s assasination of dissidents and journalists, corruption, rigging of elections and authoritarianism.

 

●       A UK charity (Kurdistan Children Hospital Foundation) was set up by prominent individuals affiliated with the Kurdistan Regional Government (KRG) and other organisations and companies. The individuals included the MInister of Planning, the head of the health department of the private office of Nechirvan Barzani (then the prime minister and current president of the KRG), the CEO of Oryx Petroleum and others.

 

●       The charity’s bank account was used to transfer money donated by Oryx Petroleum and funds provided by the KRG to build a not-for-profit hospital for the children of Kurdistan in Erbil- The Kurdistan Children Hospital (the hospital).

 

●       After completion, the hospital was taken over by a private university (The University of Kurdistan) which was founded by Nechirvan Barzani (then the Prime Minister and currently the President of the Kurdistan Regional Government). The latter’s son (Edris Barzani), who is in his late 20s, is the chancellor of the University. A former MP and minister in the UK government is currently the president of the University.

●       Kurdistan University contracted the hospital to a private Turkish company that then changed the name to Santelife Hospital and started providing general medical services for rich clients rather than boost the country’s paediatric care system, as per the plan announced by the donors and the charity.

 

About us:

Public Health Protection Network (PHPN) is a network of healthcare workers, civil society activists, journalists, academics and organisations based in The Kurdistan region of Iraq. PHPN advocates health as a human right. Since our founding in 2020, we have been determined to make an impact on the health of the public in Kurdistan. The core of our efforts is to achieve Universal Health Coverage in Kurdistan. Through all of our endeavors we hope to, among other objectives, to end corruption in Kurdistan's health system.

 

 

 

 

 

 

 

 

 

 

Factual Information:

  1. The hospital was built with commitments of over $45m USD from a Canadian/Swiss oil group, Oryx Petroeum/AOG (Figure one). The Board of Investment of Kurdistan Region of Iraq also dedicated money for the project. (Figure two)

Figure One: internal oryx petroleum documents showing the company's donation to the hospital

 

Figure two:  Kurdistan board of investment dedicating US 62,210,000 to the hospital

  1. a UK charity, Kurdistan Children’s Hospital Foundation was founded and was co-guaranteed, among others, by Oryx Petroleum, the Kurdistan Regional Government’s Ministry of Planning, and Heevie Organisation, an NGO in Kurdistan region of Iraq. The charity was also registered at Companies House in the UK. The Board of Directors included among others, Michael Ebsary Oryx CEO, Dr Ali Sindi, then Minister of Planning- KRG, and Dr Rang Shawis, brother of the former KRG Prime Minister Rosh Shaways (and former deputy prime minister of Iraq) (Figure three). Shawis deployed his colleagues in a private consultancy in Sheffield, Pioneer Healthcare, to set up and operate the hospital.

Figure Three: Oryx CEO- Mike Ebasary- with Nechirvan Barzani (then prime minister) and Ranj Shawis (British-Kurdish doctor, CEO of Kurdistan Children Hospital and Trustee of the charity).

  1. Oryx Petroleum presented The Kurdistan Children Hospital as a donation from the company as part of its Corporate Social Responsibility to the children of Kurdistan (Figures four and five) We have seen references to the financial commitments of $40m in the Oryx Petroleum annual reports [it is a publicly listed Alberta company]. They also refer to $5m of additional money from AOG, Geneva, Switzerland: the UK charity directors were the Chairman and CEO of both Oryx and AOG. AOG is a private company which was the main shareholder of Oryx. Oryx/AOG operate in Kurdistan and other corrupt environments, and come up in the Panama Papers.

Figure four: Oryx petroleum document explaining the characteristics of the hospital

Figure five: Oryx petroleum document detailing assistance including board membership in the UK based charity

  1. After the completion of the hospital around 2015, the directors of the charity from the oil company resigned - as did the minister for planning. This left the health director in Nechirvan’s private office, Fakhry Hussein Mahmood, and another Erbil-based associate, Dr Bewar Nawdary, in control. They handed the hospital management/ownership to Daax-Santelife, a Turkish-UAE oil-construction-healthcare company. Daax-Santelife has repurposed the building so it is no longer a paediatric and maternity hospital, in complete disregard of the millions of dollars in public money, in charity and in corporate social responsibility contributions that were explicitly for the hospital to serve the public health system. Though the Children’s Hospital was explicitly to be run on a non-profit basis, charging low fees to make it accessible, it started charging over $1500 a night for bed only, and patients were not admitted without first paying a $10,000 down payment. The charity documents state that Oryx failed to produce funding and management, for which there has been no explanation. Medical students in Erbil were promised to be able to undertake their paediatric clinical education at the hospital, and this too has been denied.

 

  1. There is evidence to suggest that there was financial mismanagement of the funds by the Kurdistan Children Hospital Charity during the construction process (Figure six)

Figure six: financial audit by Deloitte showing financial misconduct by the charity

 

  1. The Public Health Protection Network (PHPN) started a campaign demanding the return of the hospital to public ownership and for it to provide services to the children of Kurdistan. As part of this campaign , PHPN contacted UK-based insitutations, organisations and politicians. We present below the Charity Commission’s response to our request for investigations: the charity commission's response:

 

“I apologise that we have not been in contact with you sooner. We have completed our regulatory involvement with Kurdistan Children's Hospital and closed our case with a determination that the charity should be removed from our register. We have taken the necessary steps to authorise this removal, and the charity is no longer registered with us as a charitable organisation.

We are satisfied that this action sufficiently addresses the concerns that had been raised with us. If you have any further questions about this case, please let us know.

 

Thank you

 

 

  1. However, we do not believe that removing the charity from the commission’s register alone addresses the potential wrongdoing and misuse of public funds both in the UK and Kurdistan. We argue that, by this response, the Charity Commission has failed to address the serious concerns raised with regards to the Kurdistan Children Hospital Foundation. In fact, the decision to remove the charity from its register might have helped the charity get away with the suspected money laundering and bribery that it has engaged in.

 

  1. We also contacted the FCDO through the Right Honorable Tommy Shepard MP. The FCDO gave assurances about taking this matter into serious consideration as it is shown in this copy of their letter with regards to this case:

Figure seven: FCDO response to an enquiry by UK MP

However, we are still waiting for concrete evidence to suggest that meaningful action has been taken to address the concerns raised by PHPN.

 

 

Recommendations:

  1. This case shows how easily corporate and state or para-state actors can use the protected status of a British charity to funnel tens of millions of dollars of money on false pretenses of charitable purpose into private pockets. We recommend that the dirty money commission address the risks posed where corporate and political actors use the UK charity system to pass money between themselves with almost no oversight.

 

  1. This case shows the Charity Commission making decisions which result in the protection of those actors, and the failure to pursue acts of corruption facilitated by a UK charity. We recommend that a transparent system be put in place to address large payments involving private corporations, public bodies and non-governmental actors which can be misappropriated with insufficient accountability.

 

  1. These risks can be seen from this case to continue at all stages of the delivery of a charity’s stated purposes. We recommend that transparency and accountability be established throughout the course of a charity’s existence, with transparent procedures allowing anti-corruption initiatives and civil society to be able to help to ensure accountable expenditure throughout.

 

  1. This case shows one of the largest UK accountancy firms flagging up the breach of their standards for the accounting of tens of millions of dollars, in spite of this being a charity whose probity was to be secured by ministers of the KRG and by international corporations, without it leading to action on the part of the Charity Commission, and without it triggering the interest of fraud investigators. We recommend the commission identify this among the signs of a complete lack of the kind of accountability that could guarantee that UK charitable funds are used for the purposes intended.

 

 

 

14 March 2022

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