Zimbabwe: The case of the invisible company

Zimbabwe’s leading platinum mining giant, Zimplats Holdings, allegedly set up an offshore company more than a decade ago to pay salaries for its senior managers, leaked documents reveal.

The offshore company was allegedly set up without the knowledge of the Reserve Bank of Zimbabwe.

According to documents, HR Consultancy was set up for the sole purpose of receiving funds and remunerating Zimplats’ senior managers.

Northern Wychwood, the offshore company that registered HR Consultancy in the Isle of Man, sought the services of Mossack Fonseca to facilitate the process.

The leaked records claim that the shareholders and directors at HR Consultancy are foreign corporations, and that the named senior officials are Zimbabwean.

However, neither the names of the recipients nor the payment amounts are given. It is also not clear how the payments were channeled to the offshore company. But the leaks indicate that Northern Wychwood continues to update HR Consultancy’s certificate of incumbency, with the latest filing having been done through Mossack Fonseca last year.

Zimplats denies any relationship with HR Consultancy or Northern Wychwood. This raises the possibility that Zimplats was fraudulently used by Northern Wychwood to set up HR Consultancy as a conduit of Zimplats’ salaries.

HR Consultancy is owned by the British Virgin Islands-registered Hanoverian Ltd. Hanoverian lists Palatinate Ltd as its corporate director. Palatinate Ltd in turn lists Hanoverian Ltd, alongside three Zimbabweans.

A senior corporate lawyer who spoke off-the-record to Voice of America’s (VOA’s) Studio7 said the fact that Northern Wychwood continues to pay consultancy fees to Mossack Fonseca suggests that its relationshiop with HR Consultancy remains intact.

Setting up an offshore firm to pay managers without the knowledge of the central bank, says a banking expert, implicates Zimplats in illegally expropriating money and tax evasion.

“As long as the central bank was not involved in this, Zimplats would be involved in money laundering, externalisation and tax evasion,” says the expert.

In a telephone interview with VOA’s Studio7, central bank governor, Dr John Mangudya (pictured above) who only last December revealed that Zimbabwe had lost $500m to illicit money movements, said: “If proven, this is a blatant violation of the country’s exchange control policy, which is a punishable offence.”

Northern Wychwood, the offshore registering company, declined to comment while both Mossack Fonseca and Zimplats denied any relationship with HR Consultancy.

Implats, the world’s biggest platinum producer, which owns 87% of Zimplats and has significant executive control there, also denied any knowledge of HR Consultancy.

Said Johan Theron, Implats’ head of corporate affairs: “We don’t subscribe to the use of such services at all. In fact, we have prioritised transparency in all our dealings and gone out of our way to transact fairly, openly and as far as possible, to pay taxes in the countries in which we operate.”

But correspondence in 2012 between Northern Wychwood and Mossack Fonseca strongly suggests that HR Consultancy handled the remuneration for the senior managers at Zimplats.

“We receive the funds to cover the total salaries from Zimplats and pay the managers accordingly,” says an HR Consultancy employee in correspondence dated 5 November 2012.

A source of funds or wealth declaration form signed by Palatinate in July last year says it is a director on Northern Wychwood Ltd. It lists Zimbabwe, South Africa, UK and Isle of Man as countries where its activities are conducted.

Former minister of finance between 2009 and 2013, Tendai Biti, says if it is true that Zimplats set up an offshore company to pay salaries for its managers, then the managers at Zimplats also evaded paying taxes since they were being remunerated for work they did on Zimbabwean soil.

A recent central bank report claims Zimbabwe lost three billion dollars through illicit financial flows between 2009 and 2012, while Africa lost many billions of dollars in illicit financial flows during the same period. 

Source: http://newafricanmagazine.com