Nelson Mandela and the 'Purple Witch' of East Germany

According to reports on Thursday, the Paradise Papers bizarre revelations about the financial webs of the world's elite has uncovered a connection even more mysterious than why Bono is the part owner of a shopping mall in Lithuania: It's the strange story of a secret trust fund, South African freedom fighter Nelson Mandela, and East Germany's Margot Honecker – a ruthless Stalinist known as the "Purple Witch" of the German Democratic Republic (GDR), a reference to her strangely colored hair dye.

German daily Süddeutsche Zeitung, a key player in the team that published the Paradise Papers, were the first to uncover the connection between the late South African president and the ex-First Lady of the former communist GDR whose legacy recalls forced adoptions and a "concentration camp" for the children of jailed dissidents.

"Mandela felt sorry for her," the president's former lawyer and financial advisor, Ismael Ayob, told Süddeutsche Zeitung.

Ayob claims that Mandela came to him in the 90s and asked him in writing to send some money to Honecker, who was then a widow living without a pension in exile in Chile. Although there are no documents left that prove the transaction took place, Ayob said he remembered it clearly because it was such an unusual request.

East German support for the ANC

While the request may have been unusual, Mandela thinking of Honecker's plight was not. While history has remembered her as an "evil, obstinate woman to the end," as one former GDR official put it, her legacy to Mandela's African National Congress (ANC), was a bit more nuanced.

For decades while the West was tacitly supporting the racist Apartheid regime in South Africa, the government of the GDR repeatedly received representatives of the ANC, and allegedly trained thousands of fighters in the militant wing of the party at a military base in Germany's north.

"I sometimes think of Margot Honecker, who now lives in Chile, as I hear it, in dire circumstances," Mandela told the German newspaper Kölner Stadt-Anzeiger in 2013.

As Ayob tells it, he created a trust fund – called the Mad Trust, in a play on Mandela's clan name Madiba – in Mandela's name, and located it on the tax haven Isle of Man, "because it was difficult to move money out of South Africa then."

The point of the trust, Ayob said, was to provide funds for initiatives or people supporting "educational or charitable causes." When asked where the money came from, Ayob named donors as diverse as Oprah Winfrey or the former Libyan dictator Moammar Gadhafi.

Existence of Mad Trust questioned

But whether or not this trust actually exists is a matter of debate. The reason the story surrounding the Mad Trust popped up in the Paradise Papers in the first place is because of a recent lawsuit in which Mandela's heirs sued Ayob to gain control of the trust.

And although the trust appears to be registered under Nelson Mandela's name, a 2003 audit by the consulting firm Deloitte found that the fund was set up improperly, and thus did not really exist.

"The owner of the account is listed as Mr. N.R. Mandela. But there is no Mad Trust as such, it's just a name that has been used," the audit said. In his interview with Süddeutsche Zeitung, Ayob disputed this.

But Ayob is far from an objective source of information. At one time he was one of Mandela's most trusted confidantes, and was one of the few people allowed to visit him during his 27 years in prison. However, the pair fell out over some financial disputes in 2004 and Ayob was dismissed as both a lawyer and financial advisor.

Despite the existence of the fund being in question, a court in South Africa ruled in 2015 that whatever remained of the so-called Mad Trust belonged to Mandela's heirs, and ordered Ayob to hand over control.

Ayob said that whatever money was given to Margot Honecker was merely a "symbolic" sum meant as a gesture of support, rather than a large gift.

Whether or not this transaction really took place both leaders will take to the grave, as Mandela passed away in 2013 and Honecker died in Chile in 2016, defending the repressive regime of the GDR to her last breath.