Africa’s richest man, Aliko Dangote, is the latest figure to be outed by the Paradise Papers, a leaked database of 13.4 million documents revealing how the world’s elite stash their wealth in tax havens.
Having already been linked to at at least 13 shell companies in the Seychelles, the influential Nigerian industrialist has equity worth $5.8 billion in Greenview International Corp, a company based in the Cayman islands.
Dangote, whose wealth is valued at $12.1 billion, is named in papers leaked from the offshore law firm Appleby as its sole director and shareholder.
Nigeria’s Premium Times, one of 96 media organisations coordinated by the International Consortium of International Journalists (ICIJ) to examine the Paradise Papers, also reveals that Joseph Arumemi-Ikhide, the founder of Nigeria’s biggest commercial airline, Arik Air, is one of the country’s most prolific user of offshore entities.
Arumemi-Ikhide, alongside his wife, Mary, owns and maintains an intricate network of shell companies scattered across tax havens like the British Virgin Islands and the Isle of Man, all managed on his behalf by Appleby.
Appleby, established in 1898 in the then British colony of Bermuda, assists companies and individuals to hide their money in secret jurisdictions commonly referred to as tax havens. “Some of Appleby’s customers are politicians for whom avoiding unwanted attention is crucial,” Premium Times said last week in a report. The secretive nature of offshore entities also means they can easily hide criminal activity like bribery and money laundering.
Although it is not illegal to use tax havens, a report by Appleby in 2015 considered Arumemi-Ikhide to be a “high risk” politically exposed person, or PEP, following investigations by Nigeria’s Economic and Financial Crimes Commission (EFCC) into his business affairs in 2006.
According to Premium Times, the EFCC conducted the probe after claims that former Rivers State governor Peter Odili had laundered his state’s funds through Arumeni-Ikhide and that it was the laundered money that was used to set up the airline that year. However, no charges were brought against Arumeni-Ikhide.
Although Arumeni-Ikhide defended his use of shell companies because of the “ease of doing business”, many consider it immoral for the rich and powerful to hide their wealth in this way in order to avoid paying tax avoid in countries in which they made their money.
In another revelation, Namibia’s ambassador to Germany, Andreas Guibeb, served as a director of two companies registered in Malta by Appleby. Guibeb said he resigned from the two companies last year, and that the companies have been inactive since registration.
“The companies in question never started trading,” he told the ICIJ’s partner in Nambia, The Namibian.
An investigation by BBC domestic radio last week demonstrates the damage done to developing economies like Namibia through tax avoidance. Focussing on the country’s fishing industry, Radio Four’s Paradise Papers: Profits from the Poor reported how 20 years ago the Namibian government invited the Hong Kong-based Pacific Andes to work with local fisheries – it would provide the money and expertise and the government would provide the fishing rights.
“It wasn’t a good deal from the beginning,” one local investor told the programme. “People offered a lot of promises but not much in return.”
The problem was that a management company was appointed to run the joint venture based 4,000 km away in the tiny tax haven of Mauritius where tax rates are ultra low.
As a result of the erosion of its tax income, Nambia is now in the process of renegotiating this and other deals.
“They are not equitable, they are skewed in favour of those countries that invest here,” said Carl Schlettwein, Nambia’s minister of finance.
“We have fabulously stocked waters yet we can hardly earn any money from it. It is absolutely untenable that we continue year in and year out giving resources away, seeing wealth built up in the countries where the investors come from but where the resource comes from there is perpetual poverty.”
Appleby actively helps multinational companies like Pacific Andes invest in the developing world, said Radio Four. This included one Singapore company looking to invest in Mozambique which was advised that it could make a $1.2m saving if it structured its operations via Mauritius.
Once a major producer of sugar cane, Mauritius is now effectively “farming money”, hosting brass plate foreign companies worth $600 billion, more than 50 times the size of its economy. Whether the people of Mauritius benefit from all this is a moot point.