West Africa Leaks: A Summary

West Africa Leaks: A Summary

On Tuesday, May 22nd, the International Consortium of Investigative Journalists (ICIJ), in collaboration with the Norbert Zongo Cell for Investigative Journalism (Cenozo) and thirteen journalists in eleven West African nations, released the West Africa Leaks, a series of articles detailing the financial secrets of banks, multinational corporations and political figureheads in the region.
 
According to ICIJ’s Will Fitzgibbon, the West Africa Leaks “explores the impact of offshore secrecy in the 15 countries that make up Africa’s westernmost region,” an area that includes “some of the most disadvantaged in the world, and its position as the tax-avoidance center of Africa means those people are being hit harder still.”
 
Fitzgibbon and the journalists involved “pored over 27.5million files from [the ICIJ’s] recent offshore investigations, including Offshore Leaks, Swiss Leaks, Panama Papers and Paradise Papers, to hold some of West Africa’s most powerful people to account.”
 
Here are some of the main highlights of the collaborative West Africa Leaks investigation.


Canadian Company SNC-Lavalin Avoided Taxes in Senegal

As revealed in the West Africa Leaks, Canadian engineering firm SNC-Lavalin used offshore companies based in Mauritius to circumvent its tax obligations in Senegal, one of the world’s poorest countries.
 
Fitzgibbon explains that a somewhat unfair treaty worked out between Mauritius and Senegal allowed SNC-Lavalin to avoid taxes worth close to $8.9 million on the construction of a processing plant for a mineral sands mine. 
According to the investigation, the company in charge of setting up the plant was SNC Lavalin-Mauritius Ltd, a local arm of the Canadian firm. However, the Mauritian company had no involvement in the project, as “it was a shell, created for the specific purpose of helping the engineering giant avoid tax payments.”
 
Fitzgibbon explains that SNC Lavalin-Mauritius Ltd., “had no construction equipment and no office of its own,” and was run “from inside the Mauritius office of the offshoring law firm Appleby, which helped SNC-Lavalin create the shell company.”
 
He continues, “Under the treaty, companies like SNC-Lavalin with a subsidiary company in Mauritius can avoid Senegal’s usual 20 percent tax on the kind of technical service fees paid to SNC-Lavalin. The final tax rate in some cases can be reduced to zero.”
 
Alexander Ezenagu, a tax researcher at McGill University, sa
id that by approving these kinds of unbalanced double tax treaties, “you are legalizing the earning stripping-out of the country.” 

Honorary Consuls in West Africa & Tax Avoidance

Several honorary consults in the region were also caught in the crosshairs of the West Africa Leaks investigation.
 
Long-time Benin resident, Marcel Tchifteyan, who opened the Erevan supermarket chain in the country and serves as Armenia’s honorary consul there, has allegedly avoided paying his fair share in taxes.
 
As reported by ICIJ’s Fitzgibbon, “the Tchifteyan’s Erevan superstore routed payments from suppliers through a Panamanian company and to a bank account in Monaco for years,” payments which should have been taxed in Benin.
 
According to an email disclosed as part of the Panama Papers, Tchifteyan’s son Jean-Luc “will use Wagner Corporation, of which he is the sole beneficial owner, to collect commissions” amounting to $150 thousand per year.
 
David Sables, CEO of Sentinel Management Consultants, told Fitzgibbon that the payment of commissions by suppliers is standard industry practice but these are rarely, if ever, channeled via an offshore company.
 
In the end, this set-up greatly benefitted Tchifteyan’s business as, according to African tax expert Reine Flore Tamo, these sources of income are essentially tax free in Panama.
 
Besides Armenia’s honorary consul in Benin, “a soft drink baron representing Panama in Nigeria, a Portuguese executive representing Burkina Faso and a Belgian diamond cutter representing Liberia” were also implicated in using offshore structures to avoid taxes in West Africa.


Shady Oil Deal in Nigeria Between Chevron & MRS Holdings Ltd

Nigerian millionaire Sayyu Dantata and his company MRS Holdings Ltd., have allegedly entered a shady $1 billion deal with international oil superpower Chevron.
 
As explained by Premium Times’ Bassim Al-Hussaini, Dantata set up an elaborate offshore structure to avoid paying taxes in Nigeria and other neighboring countries.
 
According to Al-Hussaini, MRS Holdings LTd., alongside Ivory Coast’s Petroci Holdings, established Corlay Global SA, a Panama-based conglomerate, “to string multiple prospects in the oil sector into the emerging colossus of the MRS empire.”
 
Corlay Global “was used to buy Chevron downstream companies in Texaco Cameroun SA (100 per cent), Chevron Nigeria Holdings Ltd (100 per cent), Chevron Benin SA (100 per cent), Chevron Congo SA (100 per cent), Chevron Côte D’Ivoire (100 per cent) and Chevron Togo SA (65 per cent).”
 


These purchases, which added up to about $1 billion, would fall under different country’s tax regimes.
 
Al Hussaini writes, “In Nigeria, for instance, no fewer than six taxes would apply: company income tax, education tax, PAYE, Value added tax, capital gains tax and withholding tax,” with many experts stating that this offshore structure allowed MRS Holdings to “skillfully [avoid] the withholding tax regime.”
 
Furthermore, the West Africa Leaks has “shown that MRS is a majority shareholder of Corlay Global SA, which gives MRS decisive powers in running the company,” while other disclosed files reveal “that Mr. Dantata is the sole signatory to Corlay Global SA.”
 
Now, Al-Hussaini reports, “the onus is on the Federal Inland Revenue Service and other authorities is to establish whether MRS Oil had unpaid back taxes and/or whether one or both offshore entities engaged in tax evasion or money laundering in the scheme set out above.”
 
For the full range of stories released as part of the West Africa Leaks, click HERE.
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