BY GOLDEN MATONGA & GREGORY GONDWE
Hetesh Anadkat, one of the richest Malawians and owner of First Capital Bank, runs offshore accounts in tax havens beyond the reach of Malawi’s tax authorities, The Pandora Papers, the biggest leak of documents on financial secrecy has revealed.
The Pandora Papers— an investigation by the International Consortium for Investigative Journalists (ICIJ) and partners across the global including Malawi’s Platform for Investigative Journalism (PIJ) and Nation Publications Limited—lays bare the global entanglement of political power and secretive offshore finance.
Based upon the most expansive leak of tax haven files in history, the investigation reveals the secret deals and hidden assets of more than 330 politicians and high-level public officials in more than 90 countries and territories, including 35 country leaders.
Ambassadors, mayors and ministers, presidential advisers, generals, and a central bank governor appear in the files.
Several global leaders, celebrities, criminals, and business persons have been named in the cache of documents received by the ICIJ which have been shared with its partners and among the Malawi-connected individuals, some of the highest-profile include businessman Hetesh Anadkat and wife Meeta.
The Anadkat family is the owner of First Capital Bank and has stakes in other companies in the country and beyond including Letshego Holdings is a microfinance holding headquartered in Gaborone, Botswana.
Others found in the leaked data are business persons whose dealings with Malawi government in particular had been subject of corruption investigations for years.
Hitesh and Meeta Anadkat, whose family owns First Capital Bank, is revealed to have been joint owners of a company called Reid International Limited incorporated in British Virgins Island (BVI), a tax haven, in 2010.
The documents show Reid International Ltd made payments to Premier Capital (Mauritius) Ltd which owns First Capital Bank. In 2014, Reid International Ltd borrowed $750,000 from Falcon Private Bank in Zurich, Switzerland, the documents further indicate.
According to a 2010 letter from Clariden Lieu Bank, Meeta and Hitesh Anadkat had a bank account with CLARIDEN LEU, a private bank in the United Kingdom.
In registering the company, Reid International Ltd used nominee shareholders and directors, a tactic used by company owners seeking to hide ownership or avoid tax obligations, according to finance and tax officials ICIJ spoke to.
Anadkat, one of Malawi’s richest businessman in an interview said his use of shell company or offshore accounts was necessitated by the needs of doing business across the world.
In 2017, the previously Malawi Stock Exchange (MSE)– Listed FMB (before rebranding to First Capital Bank) disclosed intentions to transfer their shares in FMB to Mauritian based FMB Capital Holdings Plc (FMBCH), a move the will see the FMBCH listing on the MSE and FMB delisting on MSE.
Mauritius is regarded as a tax haven and had just signed tax treaty with Malawi. FCB was also just following a trend by other companies on the continent including Malawi Mangoes.
Malawi Mangoes was incorporated in the United Kingdom in 2009, according to financial records filed in London. This U.K. entity was dissolved in 2015. By then, Malawi Mangoes had incorporated two companies in Mauritius (in 2012 and 2013), under the island’s global business system. In other words: Mauritius didn’t facilitate the company’s entrance into Malawi. It had already happened.
The ICIJ documents suggest the Anadkat family—the owners of the bank—has been benefiting from tax havens longer.
In an interview, Anadkat, however, refused to comment on whether he had received tax advice and decided to open the accounts to pay less tax to Malawi authorities.
He insisting he was among the highest taxpayers to Malawi. “I pay my taxes to Malawi. I perhaps pay the highest taxes in Malawi. It’s how the international system works, I have international companies and I have offshore accounts. I cannot give you more insights than you have,” he said in an interview.
“I have not done anything illegal. I have a British passport. I am a legitimate businessman. I don’t see the need why I should be which are often is used to obscure the ownership of a shell company,” said Anadkat.
Tax havens allow the rich to get away with paying little taxes which means the poor end up picking up the shortfall in government revenue through punitive tax regimes, according to experts.
Rachel Etter-Phoya, a Researcher working for the Tax Justice Network (TJN) in an interview argued that the veil of secrecy provided by tax havens and shell companies aid companies to milk the country while paying back little in returns.
“Malawi’s Registrar General must have the legal mandate to collect and verify information on who really owns and benefits from the activities of companies and trusts. We have a new order in Malawi that is set out to help small businesses, and businesses owned by women, young people and people with disabilities to supply goods and services to government,” said Etter-Phoya.
She adds: “Yet without knowing the ultimate beneficial owners and without having adequate sanctions for those who lie on declarations, dishonest big businesses may just use other people to front companies.”
An ICIJ analysis of the secret documents identified 956 companies in offshore havens tied to 336 high-level politicians and public officials, including country leaders, cabinet ministers, ambassadors and others. More than two-thirds of those companies were set up in the British Virgin Islands, a jurisdiction long known as a key cog in the offshore system.
At least $11.3 trillion is held “offshore,” according to a 2020 study by the Paris-based Organization for Economic Cooperation and Development. Because of the complexity and secrecy of the offshore system, it’s not possible to know how much of that wealth is tied to tax evasion and other crimes and how much of it involves funds that come from legitimate sources and have been reported to proper authorities.
The Pandora Papers investigation unmasks the covert owners of offshore companies, incognito bank accounts, private jets, yachts, mansions, even artworks by Picasso, Banksy, and other masters – providing more information than what’s usually available to law enforcement agencies and cash-strapped governments.
People linked by the secret documents to offshore assets include India’s cricket superstar Sachin Tendulkar, pop music diva Shakira, supermodel Claudia Schiffer and an Italian mobster known as “Lell the Fat One.”
The Pandora Papers investigation is larger and more global than even ICIJ’s landmark Panama Papers investigation, which rocked the world in 2016, spawning police raids and new laws in dozens of countries and the fall of prime ministers in Iceland and Pakistan.
The Panama Papers came from the files of a single offshore services provider: the Panamanian law firm Mossack Fonseca.
The Pandora Papers shine a light on a far wider cross-section of the lawyers and middlemen who are at the heart of the offshore industry.
The Pandora Papers provide more than twice as much information about the ownership of offshore companies. In all, the new leak of documents reveals the real owners of more than 29,000 offshore companies.
The owners come from more than 200 countries and territories, with the largest contingents from Russia, the U.K., Argentina and China.