President Uhuru Kenyatta says he will soon respond in detail to revelations that his family has hidden a fortune in excess of $30 million (Sh3.3 billion) in overseas tax havens.
The Kenyattas are part of the global elite whose offshore financial dealings have been laid bare in a massive leak of documents to The International Consortium of Investigative Journalists (ICIJ).
Use of secretive trusts and foundations in low-tax jurisdictions is often seen as an effort to hide ill-gotten wealth or avoid paying taxes.
Some clients of the private wealth management firms may, however, only be seeking to protect genuine wealth from political risks in their home country.
“My attention has been drawn to comments surrounding the Pandora Papers. Whilst I will respond comprehensively on my return from my State Visit to the Americas,” Mr Kenyatta said in a statement.
“The Pandora Papers and subsequent follow-up audits will lift that veil of secrecy and darkness for those who cannot explain their assets or wealth.”
The brief statement implies that he will seek to explain the source of funds in the transactions captured in the leak.
The President, his mother, sisters and brother, have for decades used foundations and companies in tax havens, including Panama, to hold assets worth more than $30 million (Sh3.3 billion) according to the documents.
The records – from the Panamanian law firm Aleman, Cordero, Galindo & Lee (Alcogal) – show that the family owned at least seven such entities, two registered anonymously in Panama and five in the British Virgin Islands.
One BVI company owned a home in central London, according to the records, and two other companies held investment portfolios worth tens of millions of dollars. The Kenyattas’ offshore wealth, revealed in the ICIJ leaks for the first time, represents a small part of the family fortune that runs into tens of billions of shillings.
A large part of the family’s wealth is held in Kenya in the form of thousands of acres of land, properties and stakes in scores of companies, including Brookside Dairy, NCBA Group, Timsales Holdings, Mediamax Group and Heritage Hotels.
According to ICIJ, the family began to accumulate much of its offshore wealth while Mr Kenyatta was a rising political star.
Two offshore companies were created during a period when Kenya was navigating transition from the regime of President Daniel arap Moi, Mr Kenyatta’s former political patron.
Under Kenyan law, the President must provide a list of financial interests to the Ministry of Finance each year.
Mr Kenyatta’s family did not respond to ICIJ requests for comment, including whether he declared any offshore interests or was required to do so.
The Pandora Papers are a collection of more than 11.9 million records from 14 law firms and other service providers based in the United Arab Emirates, the Seychelles, Panama, Singapore and other tax havens.
The investigation has revealed assets of 35 current or former world leaders, including the King of Jordan, the Prime Minister of the Czech Republic, and Mr Kenyatta’s fellow African leaders Ali Bongo Ondimba of Gabon and Denis Sassou-Nguesso of the Republic of Congo.
Swiss bank Union Bancaire Privée helped set up the Kenyattas’ offshore investments.
In July 2003, the bank’s lawyer Othmane Naïm asked Panama offshore specialists to help register a new foundation, to be known as the Varies Foundation. The foundation, like a trust, was designed to manage and shelter wealth for its beneficiaries.
“Draft bylaws, also from July 2003, name the foundation’s beneficiaries: Uhuru Kenyatta and his mother. Later, records show, Union Bancaire Privée helped manage a foundation for Uhuru’s brother, Muhoho.
Invoices from Alcogal in Panama to the bank show that the Swiss advisers referred to the Kenyattas with a code: ‘client 13173’,” say the papers.
As with trusts and foundations offered elsewhere, including Belize (also South Dakota and Nevada), Panama foundations can be designed to allow families to transfer wealth from one generation to another, tax-free.
Typically, an individual, or “founder,” transfers assets, such as a bank account or real estate, to the foundation, which becomes the assets’ legal owner.
Panamanian foundations are prized, like trusts, because those who create them, the true owners of the assets, are not required to register their names with the Panamanian government. That secret remains with their lawyers. Any breach of confidentiality laws carries a jail sentence of up to six months, the same sentence imposed in Panama for certain categories of child abuse.
The Pandora Papers reveal the Kenyattas also secretly owned offshore shell companies.
Muhoho Kenyatta owned three registered in the BVI, according to records: One had a bank account that held an investment portfolio worth $31.6 million (Sh3.4 billion) in 2016; another had unspecified investments at a bank in London.
From 1999 to 2004, Mama Ngina Kenyatta and her two daughters held shares in a BVI company, Milrun International Ltd. The sisters used the company to buy a London apartment in the Westminster neighbourhood, according to records.
