(PHOTO CREDITS: YouTube-@Terrence Creative)
By
Tom Odhiambo
The world is one big Pandora’s box. There are just too many secrets in the world, especially around money and wealth such that even the Pandora Papers have barely scratched the surface of illegally acquired wealth by politicians or individuals connected to governments.
On their website, the International Consortium of Investigative Journalists (ICIJ) claims the following about its findings summarized in the Pandora Papers:
“The most expansive leak of tax haven files in history reveals the secret offshore holdings of more than 300 politicians and public officials from more than 90 countries and territories in the Pandora Papers. The trove of more than 11.9 million confidential files shows how presidents, prime ministers, royals, elected officials — and some of their family members and closest associates — stash assets in a covert financial system with the help of firms who establish companies in secrecy jurisdictions. Explore the biggest political names uncovered in the data (the emphasis is theirs).”
ICIJ goes on to state that “The Pandora Papers reveal how 35 current and former world leaders and other powerful political figures, as well as their closest associates and immediate family members, use secrecy jurisdictions around the world.”
Considering the hype that the Pandora Papers received in the media one would have imagined that they would reveal secrets about the ‘money matters’ of more than the 300 plus politicians, their families and associates that they discuss. In other words, the Pandora Papers are a bit underwhelming.
For there are just too many individuals all over the world who have illegitimately made their money – one of the ways being avoiding to pay due taxes – and who have stashed it abroad.
In fact, there are so many ways of laundering proceedings of illegal money that one doesn’t really even need to hire expensive lawyers to hide the owner’s name and those of his or her beneficiaries behind tens of front companies.
Many Kenyans – and Africana, especially West Africans – know about ‘wash wash’ guys. These are definitely con artists, as illustrated in a recent Kenyan comedy Terence Creatives’ “Tunatumia Kemikal” but they are also money launderers.
They promise innocent Kenyans that they will ‘wash’ your money and make it multiply. If you give them 1 million legitimate shillings, they will double it. Of course, in public debates about ‘wash wash’ the victims are laughed at.
They are seen as gullible, as greedy and losers – yet they are also dreaming of making it in life like the recently poor politicians or civil servants who are now stinking rich. Sure enough, they lose a lot of money in these get-rich-quick schemes.
Yet these con artists’ schemes serve other hidden and often darker systems. They more or less provide a near legitimate conduit for ‘washing’ dirty money by tax avoiders back into the system.
It works in a seemingly complex way, but it really isn’t. The ‘wash wash’ guys con some naïve Kenyans of their legitimate earnings. The scammers have a thick protective layer which means that however daring they are, they are unlikely to be arrested and charged in a court of law.
Only a few foolish ones of the fraudsters – those who aren’t willing to share the cake broadly – end up in court.
The more successful ones then lead a ‘flashy’ life of driving expensive flashy cars; wearing designer attire; gregariously eating; drinking in expensive restaurants; sloshing around in pubs; and living in exclusive neighborhoods.
By their lifestyle they establish a network of followers – pretentiously rich, newly rich, and old money. They naturally become ‘influencers’, ‘foreign investors’, ‘budding entrepreneurs’, ‘successful businessman or woman’ and so forth.
And just like that, the scammers set up high end pubs, restaurants, casinos, barber shops, boutiques, and car yards etc. They would naturally have local co-shareholders.
What started off as a scam becomes the source of initial capital for very glamorous looking businesses. Remember that these individuals didn’t pay a cent in taxes after robbing some poor individual of their money by pretending to either double it or make a quick profit for them.
Now that their ‘legitimate’ business has other investors, they will most likely declare loses every other year in order to avoid taxes. In the end, they will receive offers from a foreign investment group. Which is where the Pandora Papers come in.
The foreign investor is most likely a local big man who had stashed his loot in some foreign company. The politician, civil servant or businessman connected or related to government officers, will bring back to the country the illegally acquired wealth in the name of investing in a local company.
She or he may not even be a director of the company that is investing locally. Her or his proxy will earn the dividends from the investment and probably reinvest it locally or send it back abroad. There is a high chance that such an individual will make efforts to avoid paying taxes.
And the cycle continues.
Therefore, what often appears as some simple scam, which the local media advises locals to avoid, ends up as a source of illicit wealth, which is then used to probably create shell corporations that perpetuate the original scheme of tax avoidance.
It may not make sense in the beginning, but a closer look will reveal that for individuals who haven’t made enough money from tax avoidance or evasion or stealing or exploiting their offices to seek bribes, ‘wash wash’ can easily be a conduit to ‘reinvest’ locally and establish a legit business, which may fully, partially, or not pay taxes.
The point that needs to be emphasized is that the initial capital came from illegitimate sources. Shouldn’t such an individual forfeit the entire wealth acquired so far?
Pandora Papers claim to have unearthed the shady dealings of significant public figures and their relatives and associates.
Someone may ask, so what? These are powerful men and women. They can damp down the reporting of the Pandora Papers in their countries. They can control the public debate about the whole report or parts that touch on them.
Indeed, one of them is reported telling the ICIJ when asked to comment, “I don’t know what you are talking about, and I can’t make any reply.”
One imagines that this particular individual isn’t just playing safe; he is also performing his powers as someone who knows that such a report won’t affect his public image or lead to prosecution or damage his moral standing.
He knows that there are enough and more damaging ‘wash wash’ scams in his own society for him to worry about reports of expensive lawyers, shell companies and bank accounts in Switzerland or wherever.
The writer teaches at the University of Nairobi. Tom.odhiambo@uonbi.ac.ke
