Whistle-blower leaks billionaires' secret accounts

Machakos Senator Johnston Muthama. He was named as one of the Kenyans who operate or operated an account with a Swiss bank. He admitted opening the account but says it was later closed. [Photo: File/Standard]
Billionaires in Kenya stashed away Sh51 billion ($559.8 million) in a major international bank based in Switzerland, according to a report by a team of international journalists from 45 countries.

Among the accounts of interest is one called "Rockland96", now closed, linked to wealthy gemstone dealer and Machakos Senator Johnston Muthama, the only Kenyan named in the report.

The leaked files, based on the inner workings of HSBC's private banking arm, relate to accounts holding over Sh9.1 trillion ($100 billion).

HSBC owns a Swiss bank and has footprints in Europe, South America and the United States, and a branch in South Africa. The report is based on a leak of the details of 100,000 accounts by a whistle-blower in the bank. Some personalities linked to the HSBC accounts are said to have been assisted by the bank to evade hundreds of billions of shillings in taxes.

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The Kenyan accounts have placed the country in the top 100 of the 203 countries on the list, at position 58.

Mr Muthama is mentioned among a host of famous names in business and the arts, although the list also includes a female arms dealer once accused of selling weapons that fueled the fighting in Burundi.

It is not clear why the other Kenyans are not named, but one account is said to have held close to Sh3.2 billion ($35.8 million). Switzerland, France, the United Kingdom, Brazil and the United States are among the countries on the list.

The leaked HSBC files offer a rare glimpse inside one of the world's most private banking systems. They show the bank's dealings with clients engaged in a spectrum of illegal behaviour, especially in hiding hundreds of millions of dollars from tax authorities.

According to the dossier, about 463 such accounts from Kenya were opened between 1975 and 2006. These were linked to 1,093 bank accounts.

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Globally, 742 clients are associated with Kenya, with a third of them having a Kenyan passport or nationality. Muthama, through his personal assistant, confirmed to the journalists that the details in the report were correct but maintained that the account was opened for a specific purpose and later closed.

"I do not have any foreign account at the moment and that company does not exist," he said in a telephone interview.

Facilitate remittance

His statement matched what he had told the journalists investigating the leaks. Muthama told them that his Rockland96 account was opened in 1996.

"This was necessary because of my foreign directors or partners, (who) were in the process of setting up the mining company. Funds were needed. The account was therefore opened to facilitate remittance of funds into one central account for the sole purpose of purchasing mining equipment and spare parts. Once the mine was set up, the account was consequently closed," he said.

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Muthama is listed among famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.

It is not illegal in most countries to maintain offshore bank accounts, and being identified as holding an HSBC private bank account is of itself no indication of any wrongdoing. Some of the individuals named in the files may also have had some connection to a Swiss bank account, such as a power of attorney, while not owning the money in the account, or owning only part of it.

The data was originally smuggled away by former HSBC employee turned whistle blower, Hervé Falciani, and handed to French authorities in 2008. French newspaper Le Monde obtained material from the French tax authority investigation into the files and then shared the latter's material with the International Consortium of Investigative Journalists (ICIJ), with the agreement that ICIJ would pull together a team of journalists from multiple countries that could sift through the data from all angles.

ICIJ enlisted over 140 journalists from 45 countries, including reporters from Le Monde, BBC, The Guardian, 60 Minutes, Süddeutsche Zeitung and over 45 other media organisations.

The reporters found the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria.

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They found several people on the current US sanctions list, such as Selim Alguadis, a Turkish businessman alleged to have supplied sophisticated electrical goods to Libya's secret nuclear weapons project, and Gennady Timchenko, a billionaire associate of Russian President Vladimir Putin and one of the main targets of sanctions imposed on Russian individuals and businesses in response to the annexation of Crimea and the crisis in eastern Ukraine.

International society

In 2013, Muthama was elected to represent Machakos County in the Senate. Previously, he had represented Kangundo constituency in the National Assembly between 2008 and 2012.

A graduate of the Gemological Institute of America, Muthama made most of his wealth from gemstones and is the executive chairman of Muthama Gemstones (Kenya) Ltd, an international society that deals in mines and precious stones. He was also founder of the Kenya Gemstone Dealers Association.

Muthama was also linked to the numbered client account "20443NM" over the same period. Bank files listed eight of his relatives – including one named Nduya Muthama – linked to the numbered account.

Tanzania is ranked 100. The maximum amount of money associated with clients connected to Tanzania was Sh1.8 billion ($20.8 million).

Uganda was ranked 105. The maximum amount of money associated with clients connected to Uganda was Sh800 million ($8.8 million).

There were 83 client accounts opened between 1972 and 2006, linked to 212 bank accounts for customers from Uganda.

Also on the list is Aliko Dangote, Africa's wealthiest industrialist. Dangote, who is investing in Kenya's cement sector, was last year ranked by Forbes magazine as the richest man in Africa and the 23rd in the world with an estimated fortune of $21.6 billion.

He is the founder and CEO of the Dangote Group, a conglomerate operating in 16 African countries. The Nigerian mogul made his fortune in the production of four major commodities: sugar, salt, flour and cement. His businesses have since expanded to other sectors, including oil and real estate. The other African is Abdul-Karim Dan Azoumi, a diamond exporter.

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