The UAE’s growing number of free zones are providing secretive havens for offshore companies to avoid taxes, regulation and accountability at home. Shell companies and money laundering abound. But it is still possible for determined researchers to discover who controls and ultimately benefits from this expanding system.


A glossy brochure advertising company-set-up services within Dubai’s Jebel Ali Free Zone Authority (JAFZA) promises to connect international investors to “the right solution no matter what the need.” JAFZA’s “One Stop Shop” promises to “remove all the barriers that businesses face” and allow them to “enjoy” 100 percent foreign ownership, zero percent corporate or personal tax, no currency restrictions and no restrictions on capital repatriation.1 Even more alluring—and unmentioned in the brochure—is the almost complete confidentiality afforded to the owners of these companies: There is no requirement to publicly disclose the identity of directors, officers or shareholders.

The beneficiaries of this remarkably unregulated and opaque environment are not only the over 7,000 companies incorporated in JAFZA. The free zone, which is adjacent to the Middle East’s busiest seaport Jebel Ali, is a major, and growing, part of the United Arab Emirates’ (UAE) economy. It reportedly accounts for nearly a quarter of the total foreign direct investment in Dubai—the UAE’s most prosperous city—as well as its GDP.2

What then happens when you combine a state’s key strategic asset with corporate secrecy, fast-track set-up and a regulatory regime that the Tax Justice Network describes as an “ask-no-questions, see-no-evil approach to commercial and financial regulation”?3 The answer is hundreds, if not thousands, of shell companies whose physical presence is little more than a post office box.

Shell companies do not actually have any business activities. They exist for the purpose of passively holding assets on someone’s behalf. These assets could be shares in a company, real estate, so-called “vanity assets” such as artwork, or simply cash. They often exist in offshore structures and are incorporated in secrecy jurisdictions— such as JAFZA—with limited disclosure requirements designed to conceal the identity of their ultimate beneficial owner: the person or entity who ultimately owns and controls, is legally responsible for and benefits from a particular shell company.

These anonymous companies form complex layers of ownership that crisscross global networks of tax havens and free zones, which enhances their obscurity. They create purposefully incomprehensible circular structures whereby subsidiaries seemingly own parent companies, which themselves are controlled by nominee directors (appointed by the “real” owners to act on their behalf) and shareholders registered in tax havens such as the British Virgin Islands, Bermuda, Malta, Jersey or increasingly one of the UAE’s dozens of free zones. The greater the number of shell companies that exist between an asset and its ultimate beneficiary, the harder it is to discover who owns what—making it difficult if not impossible to impose taxes or sanctions, levy fines for illegal behavior or award damages from court rulings.

The UAE’s recent inclusion on the EU’s blacklist of “non-cooperative tax jurisdictions” highlights the country’s status as a desirable tax haven, joining a host of Caribbean and Pacific islands that have long been associated with the shadowy world of offshore finance, where financial services, low taxes and secrecy are offered to nonresident businesses, allowing the criminal, wealthy and powerful to hide from accountability.4 These networks are, by their very nature, difficult to trace. Research can involve harassment, threats and murder—the journalist who exposed links between the Panama Papers and Maltese politicians was killed outside her own home by a car bomb.5

The global financial system is always looking for new and more secure warehouses to invest surplus capital.

While there is not one simple tool to unlock the identity of shell companies, a variety of research methods encompassing leaks, luck and tenacious internet searching can shed light on their ultimate beneficiaries and the assets they control. This process may be laborious, time consuming and frustrating, but working out who controls these international networks is fundamental to understanding global capital, who benefits from it and how. Shell companies allow this capital to be anonymous and absolve the beneficiaries from accountability.

Undertaking this research acquires a sense of urgency when considering the potential global impact of the UAE’s evolution as a center of offshore finance. JAFZA’s shell-friendly business model is being exported—with encouragement from multilateral organizations like the Organization for Economic Co-operation and Development (OECD)—across the region and beyond, which raises serious concerns about the effect of this model on economies without sophisticated tax regimes or developed corporate governance rules.

Jebel Ali’s Syrian Shell Game

One controversial figure who has been found to make use of JAFZA’s convenient “One Stop Shop” is Rami Makhlouf, cousin of Syrian President Bashar al-Assad and a widely acknowledged focal point of Syrian regime corruption. Documents revealed by the Panama Papers leaks show an extensive network of Makhlouf-linked front companies incorporated in the British Virgin Islands. A more recent leak of Dubai real estate records indicates that he has further assets concealed in the UAE using JAFZA shell companies.

A 2018 report published by the Center for Advanced Defense Studies (C4ADS) a Washington, DC-based think tank run by retired US military officers and former government officials, used these leaked documents to connect Rami Makhlouf, along with his brother and mother-in-law, to millions of dollars worth of luxury properties on Dubai’s Palm Jumeriah.6 These leaks shed light not only on how the powerful and corrupt use JAFZA-incorporated shell companies to purchase property, but also the particulars of connecting shell companies, and the assets they hold, with their ultimate beneficial owner.

The leaked real estate records linked Makhlouf to a JAFZA-registered company called Ladessa Gulf Holding FZCO. Because Ladessa is incorporated in JAFZA, the only official open source information available about the company consists of a phone number and a generic email address from a business set-up service. These details at first glance yield nothing more than a few dozen entries in online corporate directories. A closer look, however, shows that the same phone number is used by another JAFZA company, Medtrade FZE. Returning to the official database confirms that the two companies have identical contact details. Further searches of online business directories show that a different contact email address listed for both companies links to yet a third company via a Facebook profile. All three share the tell-tale signs of shell companies—no evidence of any genuine business activities such as offices, workers, products or services.

Medtrade opens up a further line of inquiry. The limited information provided by the official online database, Dubai Trade, notes that the company’s “country of origin” is Lebanon. While the Lebanese Ministry of Justice’s online Commercial Register does generally provide more detail than JAFZA’s, this is often out of date or inaccurate. Moreover, Lebanon is itself a notorious secrecy jurisdiction with an extensive offshore corporate regime. The Commercial Register does include a similarly-named offshore company, but here the online trail goes cold. None of the directors or shareholders of the company listed have a discernible online profile. Understanding any connection between Makhlouf and the Lebanese company would likely involve time consuming and expensive on-the-ground research to confirm (or rule out) suspicions that they are acting as frontmen for Makhlouf.

But only a few hours of online research on leads from the Dubai real estate leaks opens up an international network of shell companies linked to the Syrian regime. Not only are they connected to Dubai, but also to Lebanon and, through the Panama Papers, to Makhlouf’s British Virgin Islands companies. Makhlouf has made use of both the traditional tax havens of former British Caribbean colonies and one of the UAE’s own emerging offshore centers. The same research, however, demonstrates the limitations of tracing networks of shell companies. Corporate secrecy rules in JAFZA put official documentary evidence of Makhlouf’s ownership of Ladessa or Medtrade out of reach for journalists and activists, leaving any formal sanctioning or prosecution to the initiative of under-staffed and under-resourced public court systems. Even when courts are motivated to pursue financial violations, their reach is limited. Only a few hundred million of Makhlouf’s estimated $6 billion fortune has been identified and subjected to sanctions.

Publicly linking Makhlouf to Ladessa and Medtrade is likely of little concern to him. With JAFZA’s seamless company formation service, Makhlouf’s advisors can simply set up another group of shell companies and transfer the assets at the slightest hint of legal trouble. Such companies form a small part of a labyrinthine international network of shell companies and special purpose vehicles employed by Makhlouf and the Syrian regime, as well as hundreds of other dictators and billionaires.

Detective Work

There is no single methodology for establishing the identity of the ultimate beneficial owner of a shell company. As with discovering the ultimate beneficiary of Ladessa and Medtrade, this research often involves a combination of leaks, luck and connecting the dots on internet search engines. Even with the aid of hackers and whistleblowers willing to leak information, open source research into shell companies is tedious work and involves trawling through thousands of pages (the Panama Papers alone includes 11.5 million documents).

Crucial information can come from a variety of sources: a related party transaction buried deep in a financial report, a passing reference to a shareholder in a legal judgment, an address or phone number that links different companies across online business directories, a comment in a local newspaper article tucked away on page 35 of Google’s search results or a resident’s name listed on a planning application to dig a new basement in a property owned by an offshore entity. Tracing Gulf-based shell companies is challenging work given the paucity of online records, but it is rare to come up empty handed once work gets started.

Sometimes the best results come from sheer luck, or rather sloppiness on behalf of the army of incorporation agents and nominee directors that are tasked with maintaining company records. For example, it is difficult to obtain audited financial statements for UAE companies, particularly those incorporated in free zones. If the company has an Indian subsidiary, however, there is a chance these could have been uploaded to the Indian corporate registry’s online database. Although chaotic, the same impetus that drives the wealthy and powerful to hide their assets in multiple layers across many jurisdictions also means more opportunities to stumble across relevant information.

Human sources also play a key role in understanding the ownership structures of shell companies. This information can come in the form of leaks such as the Paradise and Panama Papers, those published in WikiLeaks or from insiders willing to have off-the-record conversations with researchers. Finding links between open source research and an ultimate beneficiary is often impossible without leads from these whistleblowers. Investigative journalists have contributed significantly to tracing networks of shell companies. Organizations like the Organized Crime and Corruption Reporting Project (OCCRP) and the International Consortium of Investigative Journalists (ICIJ) have dedicated thousands of hours to analyzing documents and collating resources for other researchers. In Great Britain the satirical magazine Private Eye has built a public database of every single property in London owned through an offshore company.

Yet, unravelling networks of shell companies is so complex and costly that much of this information remains buried. Law and consultancy firms in the United States and Great Britain, however, undertake extensive and largely unpublished research into such structures. These private firms conduct investigations on behalf of potential investors as well as former business partners engaged in disputes. Because they can afford to access costly subscription-only databases and employ project teams of multilingual analysts, forensic accountants and technical specialists to build a picture of corporate networks, their information is often the most comprehensive. But unlike journalists and researchers, their end result is a proprietary product sold only to those willing to pay, not a free report meant to galvanize public outrage or elicit a legislative response.

Looking into these complex corporate structures can also be dangerous work. Many researchers hunting through corporate paper trails have found themselves subject to state surveillance and hacking. The Bahraini activist Ala’a Shehabi is an illustrative example of not only states’ willingness to target researchers, but also the role of a British company in providing the technical tools for this surveillance. Shehabi found evidence of an extensive network of front companies linked to Bahrain’s royal family profiting from corrupt land reclamation deals in the country.7 She also discovered that her computer was targeted by surveillance software made by a British company and cleared for export to Bahrain by the British government. The murder of Jamal Khashoggi, a fierce critic of Saudi government corruption, has been linked to the hacking of his WhatsApp conversations with fellow activists and investigative journalists. In this case, the software used to monitor Khashoggi’s communications has been linked to the NSO Group, an Israeli company.8

“The World’s Biggest Washing Machine”

The presence of a shell company within a corporate structure does not by itself indicate wrongdoing. The anonymity afforded by such structures—particularly in the case of secrecy jurisdictions like JAFZA—does, however, provide an opportunity for nefarious use. Makhlouf’s employment of JAFZA shell companies to purchase Dubai real estate provides an example of perhaps the most egregious of these—money laundering and concealing the proceeds of corruption. Dubai’s shell companies are playing an increasingly important role in these money laundering networks. Transparency International describes the emirate as a “money laundering paradise, where the corrupt and other criminals can go to buy luxurious property with no restrictions.” Misha Glenny, the investigative journalist whose book McMafia, about global networks of criminal finance, was adapted into a hit BBC drama series, has dubbed Dubai “the world’s biggest washing machine.”

A Dubai-based model of urban development centered on Jebel Ali-style free zones is being exported globally.

Shell companies have other more banal but no less insidious uses. They are well suited to the avoidance of labor laws, taxation and disclosure rules. JAFZA offshore companies are commonly used to purchase property in Dubai’s extensive real estate developments. For this, JAFZA offers an extra layer of secrecy, promising that its offshore structures “give your business increased confidentiality over its financial affairs and reduces intrusion.” Incorporating a company offshore allows it to be physically, but not legally, present in the jurisdiction.

Governments and royal families across the GCC also take advantage of these anonymous structures to obscure their ownership and investment in businesses in the Middle East and beyond. As Ala’a Shehabi discovered, they are prepared to go to great lengths to maintain this confidentiality. Likewise, shell companies are used to mask the flow of public funds into ostensibly private ventures that benefit royal families and their close associates. The structure of these investments through front companies and special purpose vehicles makes what Adam Hanieh calls the “fuzzy line between the state and the capitalist class” harder still to demarcate.9 Shell companies blur the boundaries between public and private capital, making it impossible to tell who is benefiting or who is footing the bill. These structures obfuscate state accountability and contribute to the unrest and resentment found in politics throughout the region.

It does not take long to find numerous Emirati businesses that illustrate the problem of discerning state from private investments when shell companies are involved. In the case of so-called “Dubai Inc.”—the group of majority state-owned enterprises that manage Dubai’s political economy—a portion of stock in several of these companies is publicly traded and some of this in turn is held by anonymous shell companies. The identity of the owner(s) of “Capital Assets LLC,” which holds just over 5 percent of Emirates NBD bank, for example, is not publicly disclosed despite being the bank’s second biggest shareholder after the government’s nearly 56 percent stake. Official material published by the bank and the Dubai Financial Market stock exchange provides no official information as to the company’s ultimate beneficial owner.

That owner is in fact Juma al-Majid, one of the Emirates’ wealthiest businessmen and owner of a diversified conglomerate comprised of over 40 companies. Uncovering this shell company’s ultimate beneficiary required first finding a post office box listed in an online corporate directory—using extremely common names like “Capital Assets LLC” ensures additional trouble in trying to locate the correct entity—then searching for other entities also registered at that address. In this case there were only a dozen or so entries listed at that post office box, but in other cases as many as 2,000 registered businesses can occupy a single street address. Many of the entities were named as Majid subsidiaries in separate corporate listings. Since his son Khalid Juma al-Majid spent several years on the board of Emirates NBD it is safe to assume we have identified the beneficial owner. It is unclear why Majid’s parent company fails to list Capital Assets anywhere on its website alongside its many subsidiaries.10 Perhaps this absence is meant to obscure the benefits that have accrued to the Majid family from its relationship with the bank, as when it offered special financing (2.5 percent) for all new purchases of Hyundai cars, which are distributed in the UAE exclusively by Majid.11

The Sharjah-based airline Air Arabia provides another useful case study of state and private capital knotted together through shell companies. A significant percentage of the company, which is also listed on the Dubai Financial Market stock exchange, is owned by Sharjah state bodies, including its sovereign wealth fund. Copies of an abridged initial public offering (IPO) prospectus available online includes a list of founding shareholders naming dozens of members of Sharjah’s ruling al-Qasimi family. But because many of the company’s shares are freely traded on the Dubai stock exchange, it is impossible to confirm how much of its stock continues to be owned by individuals linked to the state. Like Emirates NBD, at least one major shareholder is also a likely shell company. Al Maha Holding Company FZE, which owns nearly 10 percent of the company, is a special purpose vehicle incorporated in the Sharjah International Airport Free Zone, another of the UAE’s secrecy jurisdictions. Unravelling what proportion of the company is actually owned by the state or members of the ruling family becomes an almost impossible task.

The Panama Papers reveal that the GCC’s ruling families have made extensive use of offshore structures and shell companies for their personal enrichment. Analysis by Süddeutsche Zeitung, the German newspaper that originally received much of the leaked material, shows that at least 73 members of ruling families from all six GCC states had incorporated companies with the Panamanian firm Mossack Fonseca, which is just one such offshore services company in a field of thousands.12 Documents show that at one point President Khalifa bin Zayed al-Nahyan of the UAE and ruler of Abu Dhabi, owned 20 shell companies registered in the British Virgin Islands alone. Several of these companies were used to build his London property portfolio, again pointing to the central role of London’s real estate market in global offshore finance.

There may be a number of reasons a company wishes to take advantage of a corporate governance regime like JAFZA’s. The problem, however, is that the same light-touch regulation and lack of transparency that provides banks, private equity houses and sovereign wealth funds with the required level of confidentiality, also creates hiding places for the world’s criminals and money launderers. Oliver Bullough, an investigative journalist who has written extensively on corruption in post-Soviet states aptly sums up this dynamic: “the old problem at the heart of [this is] that the same things that attract the naughty money—privacy, security, deniability—also attract the evil money.”13

A Hazardous Export

The global financial system is always looking for new and more secure warehouses to invest surplus capital. The vast and intricate network of offshore tax havens, shell companies and financial advisory firms that cater to the ultra-rich ensures that this capital can cross borders where legislation and public accountability cannot follow. The emergence of new offshore centers and free zones such as JAFZA and the decline of others points to the enduring appeal of these structures, to capital’s impulse to create ever more complex and opaque hiding places and to geographic shifts in the global epicenter of financial power. In the wake of international crackdowns on Swiss banking in the last decade, investors have quietly moved assets to emerging centers like Singapore and the UAE, which continue to gain popularity as depots of international offshore finance.

Dubai’s rise in this field is a return of sorts to its long history as a trading entrepôt. Today, while JAFZA’s physical warehouses store commodities from across the world, its shell companies, special purpose vehicles and offshore structures house financial assets linked to Hong Kong, Singapore, the Caribbean and the Channel Islands. Although the real money to be made today comes from attracting and safeguarding financial capital rather than dyes, spices and textiles, the UAE’s unique position as a node in global shipping and trade routes with its sophisticated financial infrastructure ensures the state’s durable integration into global economic networks.

The implications of the UAE’s evolving role in international networks of trade and finance extend far beyond the immediate region. A Dubai-based model of urban development centered on Jebel Ali-style free zones is being exported globally, encouraged by institutions such as the OECD, as well as the Emirati state’s own investments. In a report discussing best practices for the construction of special economic zones across the Middle East and North Africa in order to attract foreign direct investment, the MENA-OECD Competitiveness Programme notes, “[t]he success of JAFZA has been such that its operating company is now selling know-how to, or is otherwise involved in the development of, several of the other zones in MENA.”14

The report lists free zone projects in Egypt, Jordan, Libya and Morocco being developed “in co-operation” with JAFZA, which is now consolidated under DP World, a state-owned holding company whose 2007 IPO was the largest in the region’s history. DP World is a major power in global trade: Through both expansion and acquisitions of existing operators their portfolio now includes 78 maritime and inland ports around the world representing 9 percent of the market share of world container traffic. Notably, a significant proportion of the company’s volume (75 percent according to a May 2019 investor presentation) is generated from “emerging or frontier markets” such as those in the Horn of Africa.15

What effect will JAFZA’s hazardous model for export have on accountability? This question is particularly important to answer when it comes to countries that lack sophisticated tax regimes or developed corporate governance rules—the very places DP World is targeting for some of its most aggressive expansion. Given that shell companies allow capital to lie outside frameworks of public scrutiny, shield its beneficiaries from tax and labor regulation and even facilitate corruption and money laundering, experience suggests the answer is unlikely to be positive.    ■



1 Jebel Ali Free Zone, Dubai, JAFZA Brochure, “Connecting You to a World of Opportunity,” 2018.

2 DP World, “Our Portfolio: Jebel Ali Free Zone,” 2019.

3 Financial Secrecy Index, “Narrative Report on the United Arab Emirates (Dubai),” 2018.

4 European Commission—Fact Sheet, “Questions and Answers on the EU list of Non-Cooperative Tax Jurisdictions,” March 12, 2019.

5 Juliette Garside, “Malta Car Bomb Kills Panama Papers Journalist,” The Guardian, October 16, 2017.

6 C4ADS, “Sandcastles,” 2018.

7 Ala’a Shehabi, “Bahrain’s Flashy Crony Capitalism Cannot Last,” The Guardian, May 20, 2012.

8 David D. Kirkpatrick, “Israeli Software Helped Saudis Spy on Khashoggi, Lawsuit Says,” New York Times, December 2, 2019.

9 Adam Hanieh, Capitalism and Class in the Gulf Arab States (New York: Palgrave Macmillan, 2011), p. 132.

10 Juma Al Majid Group, “Group Companies,” 2019.

11 Thanks to MERIP editorial committee member Shana Marshall for uncovering this ownership case.

12 Hannes Munzinger and Frederik Obermaier, “The Kings of the Offshore Business,” Süddeutsche Zeitung, n.d..

13 Oliver Bullough, Moneyland: Why Thieves and Crooks Now Rule the World and How to Take it Back, (London: Profile Books, 2019), p. 83.

14 MENA-OECD Investment Programme, “Towards Best Practice Guidelines for the Development of Economic Zones,” 2009.

15 DP World Plc, “Investor Presentation,” May 2019.

How to cite this article:

Florence Wolstenholme "The Secret Lives of UAE Shell Companies," Middle East Report 291 (Summer 2019).

For 50 years, MERIP has published critical analysis of Middle Eastern politics, history, and social justice not available in other publications. Our articles have debunked pernicious myths, exposed the human costs of war and conflict, and highlighted the suppression of basic human rights. After many years behind a paywall, our content is now open-access and free to anyone, anywhere in the world. Your donation ensures that MERIP can continue to remain an invaluable resource for everyone.


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