Bermuda link in Botswana president tax row
Bermuda has been linked to a tax row in Botswana involving Ian Khama, the country's president.
It is claimed that the multi-national Wilderness Safaris Group, which operates across southern Africa and includes Mr Khama as an investor, has used a subsidiary in Bermuda to cut its tax bill in Botswana.
Figures show that a Wilderness Safaris company, Wilderness Tours Ltd, moved more than $2.7 million, P29.5 million in the Botswana currency, the pula, to the Bermuda-based Wilderness Safaris Ltd in 2009, which was described as an interest-free loan, with no set repayment terms and unsecured to exploit a legal tax loophole.
Mr Khama, his lawyer Parks Tafa and the director general of Botswana's Directorate of Intelligence and Security (DIS) Isaac Kgosi are all connected to the Wilderness Safaris Group, one of the richest firms listed on the Botswana Stock Exchange, according to the Botswana Gazette.
The newspaper said: “Within subsidiaries, an interest free, inter-company loan keeps the taxman away since tax is deducted from profit of interests made at repayment. The thing about this loan is that it can also not be repaid since it has no security bond to it. An analyst says this could provide a loophole which could be used to hide untaxed profits.
“Not only was the paper trail limited, but also the complexities of accessing information in both jurisdictions proved to be an impenetrable process.
“Botswana has no access to information and declaration of assets laws — while the Bermuda tax haven secrecy gives no legislative requirement to publicise company information.
“Although publicly listed, information availed by Wilderness Safaris in its annual reports does not detail the nature of its dealings in Bermuda except for the disclosure that they operate 100 per cent of the financial and asset management ‘mailbox' company domiciled there.
“Statements gathered for the years 2010-2015 after the disbursement of P29.5 million stash to its low-tax jurisdiction arm — do not shed any light on the current status of the loan and whether it was repaid, written off or if it had accumulated interest in Bermuda and the accruals due by the holding company.
“There is also no information declaring what the loan to the subsidiary was for since the company has little or no genuine business operations in Bermuda.
“Only when quizzed, does Wilderness Safaris company secretary, Sydney Mganga, state that Bermuda was the group's overall holding company before restructuring and is being operated as the group's self insurance fund. Self insurance is where an entity or an individual sets aside cash for future use in case of a rainy day.
“However, at the time of moving the P29.5 million, the company stated that it was an interest free, unsecured loan and only upon inquiry, it is now referred to as a self-insurance fund and remains unaccounted for in the latest financial statements on the public stock exchange.”
The newspaper said that, according to the US-based International Consortium of Investigative Journalists, Cox Hallett Wilkinson lawyers Ernest Morrison and David Cooper are both nominee directors of the Bermuda-based Wilderness Safaris Ltd, which was set up in 1995 and is listed on the Bermuda Register of Companies.
The Botswana Gazette, which described Bermuda, along with the Caymans and British Virgin Islands as “three of the most notorious tax havens in the world”, said that it is estimated that Botswana lost about $7.3 billion in money moved overseas between 2002 and 2012, fuelled by the lack of exchange control, according to a 2013 report by the US-based Global Financial Integrity.