Zimbabwe’s platinum mining giant, Zimplats Holdings, allegedly set up an offshore company more than a decade ago to pay salaries for its senior managers, leaked documents reveal.

The alleged offshore company was set up without the knowledge of the Reserve Bank of Zimbabwe and, in the process, breached the southern African nation’s exchange control laws. According to documents leaked from Panama-based law firm Mossack Fonseca to German newspaper, Suddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ), HR Consultancy was allegedly set up for the sole purpose of receiving funds and remunerating Zimplats’ senior managers.

According to the leaked data, an entity called Northern Wychwood registered HR Consultancy in the Isle of Man and sought the services of Mossack Fonseca to facilitate the registration process. The shareholders and directors at HR Consultancy are corporations, and the senior managers to be paid by HR Consultancy are Zimbabwean citizens.

However, the names of the supposed recipients are not listed, nor are the amount of money allegedly paid to them over the years.

It is also not clear how the funds seemingly paid to the senior managers were to be channeled to the offshore company. But it is on record that Northern Wychwood continues to update HR Consultancy’s certificate of incumbency, with the latest filing done with Mossack Fonseca last year.

Zimplats denies having a relationship with HR Consultancy or Northern Wychwood. If true, this leaves the possibility that Zimplats’ name was fraudulently used by Northern Wychwood to set up HR Consultancy as a supposed conduit of Zimplats salaries.

The shareholder of HR Consultancy is Hanoverian Limited, which is based in the British Virgin Islands. Hanoverian Limited, according to the leak, lists Palatinate Limited as its corporate director. In turn, Palatinate Limited’s directors are Hanoverian Limited, Bryan Campion Ellis, Peter Whitney Fearnhead and Shaun Fergusson Cairns.

‘Serious Crime of Money Laundering’

A senior corporate lawyer who spoke to VOA’s Studio7 on condition of anonymity said the fact that Northern Wychwood continued to pay consultancy fees to Mossack Fonseca means that HR Consultancy is still doing the work it was established to do.

An expert on banking practices in Zimbabwe, who also requested to remain anonymous, says that by setting up an offshore firm to pay Zimbabwean managers without the knowledge of the central bank, Zimplats would have been illegally externalizing money and dodging paying taxes on the part of its Zimbabwean managers.

“As long as the central bank was not involved in this, Zimplats would be committing a serious crime of money laundering, externalization and tax evasion,” says the expert, adding that as a Zimbabwean company, Zimplats may well have violated disclosure rules if the Mossack Fonseca communications are accurate.

Zimbabwe’s central bank governor, Dr John Mangudya, said Zimplats’ alleged behavior would not be in line with government policy. “There is no company or firm in Zimbabwe that is authorized to operate offshore accounts for the purpose of paying its senior managers who are Zimbabweans and working in Zimbabwe. That practice bodes around externalization and is thus a typical case of illicit financial flows,” said Mangudya in a written statement.

“Zimbabwe is not aware of that practice which, if proven, is a blatant violation of the country’s exchange control policy. Violation of exchange control rules and regulations is a punishable offence,” explained the central bank chief.

‘No Relationship’ with Zimplats

When asked whether Northern Wychwood provides consultancy services to Palatinate, Hanoverian and HR Consultancy, Donna Summers, the company’s accountant and office manager, declined to comment.

Mossack Fonseca’s corporate liaison officer, Jordan Spencer, refused to comment on his company’s relationship with HR Consultancy, Zimplats and Northern Wychwood. “We are not allowed to give any information about our clients to third parties,”he said.

Zimplats’ head of corporate affairs, Busi Chindove, said “Zimbabwe Platinum Mines Private Limited has no relationship with the companies listed.” Chindove added that Zimplats was not aware of the company HR Consultancy, nor the transactions referred to.

Her comments were echoed by Implats’ spokesman, Johan Theron, who said his company had no knowledge of HR Consultancy. “As far as I could establish, we have never conducted any business with such an entity.”

Implats owns 87% of Zimplats and has significant control over the appointment of directors to various boards, and ultimately over the Zimbabwean-entity’s corporate structure and salaries.

Asked about Implats’ position on the use of legal and financial secrecy of tax haven, Theron said: “We don’t subscribe to the use of such services at all. In fact, we have prioritized transparency in all our dealings and gone out of our way to transact fairly, openly and to transact and pay taxes in the countries in which we operate as far as possible.” He added that his company welcomed disclosure as it was the interest of openness and transparency, and “will initiate an urgent full investigation into the purported Zimplats links with the Zimbabwe authorities”.

However, correspondence in 2012 between Northern Wychwood and Mossack Fonseca suggests that HR Consultancy handled the remuneration for the senior managers of Zimplats Holdings Limited. “We receive the funds to cover the total salaries from Zimplats and pay the managers accordingly,” says the correspondence, dated 5 November 2012.

A source of funds or wealth declaration form signed by Palatinate in July last year states that it is a director of Northern Wychwood Limited’s client companies. It lists Zimbabwe, South Africa, United Kingdom and the Isle of Man as countries where its activities are conducted.

Efforts to get comment from Cairns, Campion Ellis and Fearnhead were unsuccessful at the time of publishing. But investigations by VOA’s Studio7 have established that Campion Ellis and Fearnhead are both originally from Zimbabwe. Fearnhead was a director at the now dissolved African Minerals Development Limited, while Campion Ellis, an accountant born in Zimbabwe in 1946, once worked for a UK company, FIHZL, which was dissolved in 2007. Cairns posted on an old students’ social network saying he worked for De Beers before setting up a trust fund in the Isle of Man in 1993. He also posted an email address at Northern Wychwood.

Zimbabwe’s former minister of finance, Tendai Biti, whose ministry oversaw the central bank’s operations between 2009 and 2013, says if it is true that Zimplats set up an offshore company to pay salaries for its managers, then the managers at Zimplats also evaded paying taxes since they were being remunerated for work they did on Zimbabwean soil.

$3bn in Illicit Financial Flows

A recent central bank report claims Zimbabwe lost $3 billion through illicit financial flows between 2009 and 2012, while Africa as a whole lost $3 trillion in illicit financial flows during the same period.

Mangudya told the media in December 2015 that Zimbabwe lost more than $500 million in illicit financial flows that year alone, money which should have benefited the country’s struggling economy.

Biti says some of the offshore companies are vehicles of corporate shenanigans, including tax avoidance and evasion, which are illegal.

In the case of Zimbabwe, Biti says once funds have been externalized, it violates a number of laws that include, among others, the Exchange Control Regulations of 1996, the Serious Offences Act and the Anti-money Laundering Act.

The leaked documents highlight the extent of shady offshore dealings that have robbed many countries of billions of dollars in taxes. In its report, ICIJ says the leaked documents make it clear that major banks are the big drivers behind the creation of hard-to-trace shell companies in the British Virgins Islands, Panama and other offshore havens. The ICIJ says the revelations in this unprecedented global investigation into more than 11 million secret files highlight the extent of secret business done by banks, law firms and other middlemen that hide extraordinary – and often illegal – wealth.