THE furore over local high net worth individuals who were recently outed by leaks from the Panama Papers – a cache of over 11,5 million documents detailing financial and attorney client information covering more than 200 000 companies doing business in tax havens such as Panama and the British Virgin Islands – could amount to nothing more than a storm in a teacup if authorities fail to prove culpability in alleged financial crimes.
Revelations of individuals and companies that are involved in these jurisdictions that are mainly famed for money laundering and tax evasion are being made by the International Consortium of Investigative Journalists, a global network of 190 investigative journalists from 65 countries from around the world.
Some of the prominent businessmen and corporate executives that stand out from a list of more than 180 individuals are Mr Happymore Mapara, former CEO of the Cotton Company of Zimbabwe; Mr Conrad Rautenbach, son of business magnate Mr Billy Rautenbach; and businessman Mr Kenneth Radyon Sharpe.
It also names executives such as Mr Alex Mhembere, the group CEO of Australian Stock Exchange-listed platinum producer Zimplats.
He is being linked as a beneficiary of a company called HR Consultancy Services, which is registered in the British Virgin Islands.
Curiously, there are also former executives of the country’s biggest platinum producer such as former chief executive officer Mr Gregory Sebborn, who left Zimplats in 2007.
In December 2013, the businessman was appointed independent non-executive chairman of Masimba Holdings.
He is understood to be a shareholder in two companies – West End Quay Limited and Westmead Property Holdings – that are also registered in the British Virgin Islands. Mr Patrick Maseva-Shayawabaya, a former executive in Zimplats, who has since joined Shanta Gold – listed on the Alternative Investment Market of the London Stock Exchange – as chief finance officer, is cited as a shareholder of Westmead Property together with Mr Sebborn. Executives from industrial business behemoth Innscor Africa Zinona, Zed Koudounaris and Michael Fowler, are some of top executives that are part of list. The executives are said to have opened companies such as Federated Properties (BVI), Skyfox, Acia Aero Limited and Acia Aero Holdings. On May 7, 2016, RBZ Governor Dr John Mangudya told The Sunday Mail Business monetary authorities had launched an investigation into some of the parties named in the Panama Papers.
If investigations reveal that the individuals and companies involved contravened exchange control regulations outlawing transfer of funds earned in Zimbabwe to other jurisdictions without the apex bank’s consent, there could be prosecutions. Most of the parties, however, claim their actions were above board.
Mr Tendai Mavima, MD of consultancy firm Tax Managing Services, said last week: “Well, it’s a delicate matter. Tax avoidance is not a crime, but tax evasion is.
“The Reserve Bank has to strengthen its supervisory arm to ensure whether the money that was invested in these jurisdictions was earned in Zimbabwe and determine also if these funds have generated returns.
“If they did, it must also examine whether they paid tax and at what rate.
“It is also important to establish – if these investments vanished – how this happened.
“But it must be remembered that Zimbabwe has bilateral agreements with various countries on how the investments are taxed in order to avoid double taxation.”
He also noted that it might be convenient for the country to adopt a income-based tax system, which taxes locals irrespective of their jurisdictions, as opposed to the source-based tax system that only focuses on money earned in Zimbabwe.
Although the British Virgin Islands touts itself as a lucrative offshore finance centre, it is largely viewed as a tax haven where companies do not pay capital gains, sales, value added and inheritance taxes.
Last year, the Financial Secrecy Index published by the Tax Justice Network – a UK-based advocacy group – ranked Panama and BVI 13 and 21, respectively, out of 92 economies examined as providing safe havens for tax evaders.
A history of failed convictions
ZIMBABWE’s economic history is littered with cases of botched cases of individuals who were accused of externalisation.
Suffice to say, most of the accused persons, who were arrested on charges of breaching the Exchange Control Act were acquitted.
Some of the prominent personalities who have had a brush with the law in this regard include Dr Chris Kuruneri, who served as the country’s Finance Minister from 2004 to 2007; Mr Nicholas Vingirai, the founder of Intermarket Holdings, which has since morphed into ZB Holdings; Professor Mthuli Ncube, former chief economist and vice-president of the African Development Bank; and Telecel Zimbabwe board chairman Dr James Makamba.
Dr Kuruneri was arrested in April 2004.
Charges against him allegedly arose between March 2000 and April 2004 when he was alleged to have externalised US$582 000, 37 371 000 British pounds, 30 000 euros and R1,2 million to South Africa.
It was alleged the funds were used to buy and develop properties.
Police launched investigations into Dr Kuruneri after reports emerged that he was building a seaside mansion in Cape Town, South Africa worth a staggering R30 million.
Dr Kuruneri disputed the figure and said on completion, the house would be worth R7 million.
Police wanted to know how he obtained money to fund the project and establish if exchange regulations were not flouted.
The High Court threw out all seven charges against Dr Kuruneri on July 27, 2007. Justice Susan Mavangira said the State had failed to prove a prima facie case.
Mr Vingirayi, who had built an impressive empire in the financial sector, was arrested on two allegations of exporting US$300 000 and R1,5 million between April and September 2003.
In August 2003, Mr Vingirayi allegedly issued a cheque valued at Z$570 million which was drawn from Intermarket Bank and paid to First Banking Corporation for the purchase of US$100 000.
The money was allegedly externalised to Citibank London through Intermarket Corporation in Zambia without RBZ clearance.
In another transaction, US$100 000 was transferred into his bank account, while a further US$100 000 was moved to Mr Vingirayi’s UK bank account.
Mr Vingirayi fled Zimbabwe in late 2003, but was arrested in November 2011 when he returned home.
He was acquitted on July 2, 2012 after the State failed to produce original documents central to his trial.
Former Mbire House of Assembly member Mr David Butau similarly fled the country in December 2007 after police summoned him for questioning in connection with charges of externalising 350 000 British pounds.
He returned and was acquitted in 2009.
Telecel board chairman Dr Makamba slipped out of the country in 2005 after being arrested for violating the Exchange Control Act amid allegations he externalised 3,7 million British pounds, US$2,1 million and R15 million.
Other business executives who skipped the border fearing arrests are Mr Julius Makoni, Mr James Mushore, Mr Otto Chekeche and Mr Francis Zimuto (all NMBZ); and Mr Gilbert Muponda of ENG Capital.
Most of the executives returned home but were later set free.
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