Wilderness Safaris secretly stashing millions in tax havens?

A lengthy and yet complex investigation by The Botswana Gazette into financial affairs of the company in the shady tax haven of Bermuda blows the lid off the dealings amounting to P29 million with a mailbox sister company that has no office, employees or any legitimate business activities. Not only is Bermuda extremely secretive about its banking dealings, but also offers legalized tax reduction enticements to a zero percent.

Investigations reveal that around 2009, a subsidiary of The Wilderness Safaris Group, Wilderness Tours Limited moved a sum of P29.5 million to its Bermuda based Wilderness Safaris Limited (registered as company No. EC20720). The transaction, which was labeled ‘loan’, was interest free, with no set repayment terms and unsecured, the paper trail reveals.

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 publicize 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% 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.

Mganga avoids explaining whether the public company is still stashing self-insurance funds amounting to millions in Bermuda today.
The Office of the President (OP) has told this publication that it sees nothing wrong with this issue because Khama’s investment in Wilderness Safaris is his private business.

Former CEO of the Wilderness Group Andy Payne would not comment on the Bermuda establishment, while the company refused to field other questions sent to them.

This publication has learnt that banking in secretive offshore tax havens, although legal, has often been associated with the underground economy and organized crime through tax evasion and money laundering.

The International Monetary Fund (IMF) recently stated that offshore is where most of the world’s drug money, estimated at up to $500 billion a year, is allegedly laundered. A few hundred billion dollars kept at such havens are proceeds of fraud and corruption.

The US based Global Financial Integrity (GFI) stated in its 2013 tax report that Botswana lost P80 billion to tax avoidance between 2002 and 2012 fuelled by lack of exchange control. Some of it included profit shifting through exploitation of legal loopholes, money laundering and outright tax evasion.

Bermuda, the Cayman Islands and the British Virgin Islands are more than just sunny vacation spots; they are three of the most notorious tax havens in the world, according to a report from the Citizens for Tax Justice and the U.S. Public Interest Research Group.

The islands are known to house subsidiaries of powerful multinational giants. Companies can filter their profits through business units on these islands to avoid high corporate taxes back in their home countries.

Bermuda leads the pack; the report shows, booking about $94 billion in profits made from housing these funds, dwarfing its gross domestic product of $6 billion.
Both the Botswana Unified Revenue Service (BURS) and Wilderness avoided responding to questions sent two months ago on the matter.