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Paradise Papers: Saraki, Emefiele and how Africa’s elite move wealth through offshore havens

According to the papers, public officials such as Saraki and Emefiele created shell companies in Bermuda and the Isle of Man to avoid tax and potentially stash wealth.

For the second time in two years, Senate President Bukola Saraki is among a list of names revealed to have stored wealth, avoided tax and acquired property in secretive offshore arrangements, according to a batch of leaked papers now known as the Paradise Papers.

He is not alone; his name appears alongside numerous personalities, politicians and world leaders, and none other than Godwin Emefiele, who currently sits as the governor of the Central Bank of Nigeria, and Jim Ovia, a serial entrepreneur, mostly known as Founder and Chairman of Zenith Bank.

Their names, along with hundreds, including the Queen of England and Lewis Hamilton, were disclosed in a compendium of 13.4 million documents leaked from the offshore law firm Appleby, the corporate services providers Estera and Asiaciti Trust, and business registries in 19 tax jurisdictions around the world.

The documents were leaked by the German newspaper Süddeutsche Zeitung, which then shared them with the International Council of Investigative Journalists, a coalition made up of peers from news publications from around the world. After rigorous poring and analysis, the so-called Paradise Papers were released on November 5, 2017.

In the papers, Bukola Saraki is listed as a shareholder and director in TENIA Limited, described as a “holding company” in Appleby’s records and established in the Cayman Islands in April 2001. The company’s registered office is listed as Clifton House, 75 Fort Street, Grand Cayman KY1–1108: Cayman Islands.

A company’s registered office address determines its jurisdiction and taxability so, for the term of its existence, TENIA Limited would only pay tax in the Cayman Islands.

According to the papers, in August 2013, Appleby had recorded the company’s mailing address as 30 Saka Tinubu Street, Victoria Island, Lagos. As of 2015, when the records were last updated, Tenia Limited was listed as still active.

Saraki is no stranger to questions about hidden wealth. You may recall that in 2016, the Economic and Financial Crimes Commission (EFCC) obtained a search warrant to enter the property as part of investigations into Saraki’s alleged false declaration of assets.

His trial for the aforementioned at the Code of Conduct Tribunal has since been dismissed.

These revelations pose a bit of a conundrum in that case. Saraki didn’t declare Tenia Limited among his assets when he was elected Governor of Kwara State in 2003.

ALSO READ: Senate President imlicated in Paradise Papers scandal, could face criminal charges

In the spirit of secluded islands and hidden transactions, Godwin Emefiele and Jim Ovia have also been fingered, if you will, in a series of transactions involving private jets, shell companies and a tax haven near England.

The Isle of Man is a self-governing, British crown-dependency tucked neatly between Great Britain and Ireland.

The island is notorious for its lenient tax treatment of the world’s super-rich and has become a sweet spot for offshore tax gurus looking to help the wealthy avoid taxes on the purchase and sale of jets and yachts.

Correspondence and transaction records from the papers indicate that Emefiele and Ovia created three companies, Vitesse Asset Management SA, incorporated in Switzerland in 2007; Ovation Asset Management Limited, established in Bermuda in 2009 and Ovation Limited, incorporated in the Isle of Man in 2012.

In 2013, the bankers procured a Gulfstream 350 jet for 30 million dollars which they imported to the Isle of Man, transferring ownership to their shell company there, Ovation Limited which made tax payable in the Isle of Man. The Jets were then leased to Zenith Bank.

The same cyclic method was called upon again in November 2015, when they acquired a Gulfstream 550 Jet for 51 million dollars.

Premium Times reports that with the help of Ernst and Young, a financial services firm in London, Messrs Emefiele and Ovia applied for VAT in the Isle of Man. Using a deferment account (which extends the point at which customs duty and import tax become payable), the duo were able to pay a much lower amount and demand an excess tax refund — £10,892,166 in total.

Since the contents of the Paradise Papers have become public, the individuals named have responded through their legal advisers.

There is nothing unlawful in the ownership of offshore companies” Saraki’s lawyers told journalists working under the purview of the ICIJ.

They added that Tenia Ltd. was incorporated two years before Saraki was elected as governor of Kwara State and the company has never held assets nor conducted business. They also stated that Saraki rented the property at 30, Saka Tinubu Street, Victoria Island, listed as the company’s mailing address.

In response to inquiries by the Guardian UK, on behalf of the ICIJ, Emefiele has also responded through his legal advisers, New Media LLP.

 

During the relevant period, our client and other senior executives utilized aircraft for business purposes”, his representatives said, “Our client understands that the leasing structures adopted were commonly and widely used in the aviation sector.

Independent professional advice was sought at the relevant time, both on selection of appropriate aircraft register and, with respect to tax and importation issues, from Ernst & Young, a world-leading audit and tax advisory service provider. Our client understands that all importations were carried out in accordance with that advice and the rules and laws applicable to the relevant jurisdictions at the time.”, they added.

It should be noted that while tax avoidance, the use of legal loopholes to avoid the payment of tax is legal, it is different from tax evasion, deliberating misrepresenting the state of one’s financial affairs to evade paying tax.

However, most of the practices and transactions disclosed in the Paradise Papers are unethical and may point to aggressive tax avoidance practices that will incite backlash and some attempts at exerting justice.

It begs the question; how do public officials hiding wealth in offshore tax havens affect the average Nigerian?

The challenge here will be if they took the money out without paying taxes on it”, says Feyi Fawehinmi, an Investment Accountant at Canada Life, an Insurance firm based in Toronto, Canada, “Or perhaps, they should have brought it into Nigeria but diverted it to a tax haven to avoid taxes.

In both cases, the challenge is the lost tax revenues for Nigeria…”, he continues, “… It’s important to point out that having wealth is not a crime and having wealth in a tax haven is also not a crime. In fact, the vast majority of the wealth there shown in the Paradise Papers has already been taxed and nothing illegal has been done

Emefiele’s lawyer has admitted that the banker remained co-owner of Ovation Asset Management Limited until July this year, a company which maintained an account with UBS.

If he did hold such interest, it would be in violation of Nigeria’s Code of Conduct for Public Officials, which provides that public officers “shall not maintain or operate a bank account in any country outside Nigeria”.

ALSO READ: I have no property to hide, Saraki says

The conversation around the Paradise Papers has grown loud enough that Zenith Bank’s chairman, Jim Ovia, has offered through his law firm, Clifford Chance LLP, to repay whatever he allegedly avoided.

Oviation Limited has no reason to doubt the original advice….”, the firm’s representative said of the financial advice gotten from the UK firm, Ernst & Young, “… but if that advice were ever to change, we are instructed that Oviation Limited would repay the relevant VAT. This illustrates the good faith at all times of Mr Ovia

The Isle of Man is already launching investigations into the practice of importing jets and yachts into the country.

Following a series of inquiries about the arrangements, the Isle of Man’s Chief Editor minister, Howard Quayle, called a  press conference on October 23. There, he announced that he had invited the Queen’s treasury to investigate the island’s jet-importing business.

He added, “The Isle of Man is not a place that welcomes those seeking to evade or abusively avoid taxes.

 

Besides Nigeria, individuals from 32 countries are named in the Paradise Papers. Those linked to African countries, such as Angola’s Jean-Claude Bastos and Dan Gertler in the Democratic Republic of Congo exhibit the depth to which private manoeuvring, foreign interests and cronyism have eaten into the continent’s wealth.

In Congo, the papers reveal how Dan Gertler, an Isreali middleman close to President Joseph Kabila, got a 45 million dollar loan from the Swiss-British mining behemoth, Glencore.

In return, he was to successfully reach new terms on a mine with the Congolese government. After the deal was approved, Gertler then used the loan to acquire a stake in the mine.

Angola’s oil wealth has led to impressive growth forecasts and the creation of a five-billion-dollar sovereign wealth fund to invest the windfall in profits for the country’s benefit.

According to the Paradise Papers and investigations by the Guardian UK, Jean-Claude Bastos, a Swiss-Angolan entrepreneur who manages most of the fund, is using the money to re-invest in his own business.

Bastos’s company, Quantum Capital, won the deal to manage the fund without any opposing tenders from other capital managers. The fund’s chairperson, Jose Filomeno dos Santos, is a friend of Bastos and the son of Angola’s Jose Eduardo dos Santos, accused of running one of the most corrupt regimes in contemporary African history.

ALSO READ: President Buhari should investigate Saraki, Emefiele

For all the gloom that this inspires, Fawehinmi, who is also the CEO of the financial consultancy firm, Faye & Fraser says that offshore tax havens and the services that they render can be beneficial to African economies.

For example, a lot of investment will not be able to come into Nigeria, if not for Mauritius”, he says, “… because Nigeria’s laws are so antiquated and the legal system is so uncertain, investors bring in their money through Mauritius to be on the safe side. That way, if anything happens, they know they have recourse to the superior legal system of Mauritius”.

 

“In some cases, however, it is a way for people to take money out of African countries without paying tax on it (especially when they have a home country that will tax the money)”, he continues, “This should not be possible without the connivance of African countries themselves. It is quite difficult to take money out of Nigeria, for instance. Sometimes, Africans want to be able to do business on a global scale and cannot do it from their home country so they have to use it as a tax haven

By providing an opportunity for individuals and companies to use money beyond the restrictions of the home country’s laws and policies – like a VPN for wealth, offshore tax havens are open doors for a considerable flow of wealth through the countries where they are situated.

Ultimately, African countries should ask themselves – what is good about these tax havens that we can copy to attract money like they do?”, Fawehinmi adds.

The ICIJ is expected to release the full text of the Paradise Papers in the coming days.

The myriad of names that will be uncovered between the finance-speak will dominate the news, but perhaps more interesting will be the reaction to the disclosures.

People the world over, and Nigerians more so, will be curious to see if governments and legal systems can serve justice on the perpetrators of a practice that is not illegal but has implications that reach farther than that tag will allow.

Curated: Meets Media.ng

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Local AFP is a Reporter at Meets Media, a digital journalist who reports on News and some other section of our website.

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