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Mauritian bank, offshore company cited in $200 million tax evasion probe

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Mauritian bank, offshore company cited in $200 million tax evasion probe

Mauritius has been cited in a murky $200 million (almost Rs8.8billion) affair involving a Kenyan a real estate firm with ties to a Chinese construction giant.

The International Consortium of Investigative Journalists (ICIJ) has revealed that the Kenyan evaded tens of millions of dollars in taxes by making fake loans and “fictional” imports to businesses in Mauritius.

In an article published on June 9, entitled “Kenyan firm fined for elaborate tax evasion scheme routed through Mauritius”, the ICIJ referred to Mauritius as “one of Africa’s most notorious tax havens”.

According to the article, the Kenya Revenue Authority found in the 2021 audit that Afrigo Development Co. Ltd allegedly disguised more than $200 million with the help of bankers and other professionals.

“Money is made in Kenya and routed through a series of phantom entities and transactions,” the tax office was citing as writing, accusing Afrigo Development Co. Ltd. of making payments through Mauritius “with the hope that the money will be bleached white.”

In total, the tax office fined Afrigo more than $24 million in taxes and penalties.

The ICIJ, which in 2019 published the Mauritius Leaks investigation, said it obtained audit and other records revealing “how the island nation of 1.2 million people spent years attracting corporations with business in Africa that want to pay fewer taxes to some of the poorest countries in the world.”

“The case illustrates clearly that Mauritius has set up itself as a hub for the flow of illicit money from African countries,” alleged Alvin Mosioma, executive director of Tax Justice Network Africa.

Afrigo reportedly did not respond to ICIJ’s requests for comment. As of May, the company had reportedly not paid the taxes and penalties.

In 2017, Afrigo obtained permission to build a business and dining complex on the outskirts of Kenya’s capital, Nairobi. The development, which sits next to a donkey sanctuary, includes a conference hall, basketball court and green spaces, according to the environmental impact assessment.

In 2018, a local neighborhood association failed to stop the development in court, arguing Kenya’s environmental agency approved the project in secret. The development went ahead despite a separate judge in 2021 finding the development and others nearby “adversely affected the environment.”

Last December, according to the ICIJ, the KRA completed its probe of Afrigo, identifying four suspicious companies in Mauritius without any apparent employees or permanent office address. One company, the tax office said, was promptly closed “after achieving its intention of siphoning money out of Kenya.”

The four companies identified by the Kenyan tax office list Beijing resident Guo Quing as a director. Someone with that name is the deputy general manager of a major railway project in Kenya being built by China Communications Constructions Company, one of the world’s largest construction firms and owned by the government of China.

Over years, the Kenya Revenue Authority found that CCCC paid more than $205 million to Afrigo Development Co Ltd. and other related Mauritius companies in “sham or circuitous transactions” and “fictional” imports.

Individual invoices claimed to have been seen by ICIJ show CCCC paid more than $8 million between 2018 and 2020 to “shell companies” tied to Afrigo. The companies, which the KRA alleges had no “physical presence other than a mailing address” in Mauritius, received millions of dollars for royalties and to produce studies on train tunnels and concrete, invoices show.

ICIJ claimed CCCC, Guo Quing and representatives of the Mauritius companies did not respond to requests for comment.

In its audit, Kenya’s tax office also targeted bankers and enablers who helped Afrigo and other companies create and profit from a legal façade. Afrigo “orchestrated a scheme of tax avoidance by having opaque corporate structures facilitated and or promoted by unsavory professionals, financial institutions and other surrogates by creating complex webs of legal structures,” the KRA wrote.

One enabler reportedly identified by the KRA was Standard Chartered Bank in Mauritius, which operated bank accounts for the “shell companies.” Another was the managing director of a Mauritius offshore specialist firm that served as the local representative of Afrigo and other companies.

Standard Chartered and the offshore company did not respond to questions.

The ICIJ claimed that following its Mauritius Leaks investigation in 2019, Zambia, Senegal and Lesotho “tore up treaties with Mauritius”, arguing the agreements allowed corporations to avoid paying taxes where the money was made, benefitting from Mauritius low tax rate.

Senegal alone estimated it lost $257 million over 17 years due to tax avoidance through the treaty with Mauritius.

Original article at International Consortium of Investigative Journalists

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The information and opinions expressed in our published works are those of authors/sources believed to be reliable. NewsMoris makes no representations as to accuracy, completeness, suitability, or validity of any information expressed.