Pandora Papers: Pressure on President Kenyatta to wire home billions stashed abroad

The revelation that President Uhuru Kenyatta’s family has billions of shillings worth of properties and liquid assets stashed abroad has sparked fresh calls for repatriation of foreign-held wealth to help grow the struggling Kenyan economy.

The first family, in a global exposé christened the Pandora Papers, was listed among powerful global figures holding multi-million dollar properties in foreign countries as well as Sh3.3 billion worth of stocks and bonds, which critics say should be liquidated and sent back to jumpstart the ailing economy.

President Kenyatta, in a statement released Monday, did not deny ownership of the offshore accounts but said the “Pandora papers and subsequent follow up audits will lift the veil of secrecy and darkness for those cannot explain their assets or wealth.”

The exposé contained in 12 million files leaked to the International Consortium of Investigative Journalists (ICIJ) did not accuse the first family of involvement in any illegalities, but the president’s political opponents still argue the colossal amount should be repatriated and invested locally to create employment for thousands of jobless youths.  

Kikuyu MP Kimani Ichung’wa, a strong critic of the president, said the fortune held by the President’s family in foreign countries fails to inspire confidence in the stability of Kenya’s economy and political system.

He argued that the assets held in the offshore accounts could help to boost growth in an economy that is limping under the weight of a debt load estimated at Sh9 trillion.

“If only we had the confidence in ourselves and invested at home millions of our people wouldn’t be languishing in poverty. We can deal with our fiscal debt at a go should the funds be repatriated to the country,” said Mr Ichung’wa.

Offshore properties

While admitting that it is not illegal to operate offshore properties under the Kenyan law, Uasin Gishu Woman MP, Gladys Shollei, said it is immoral for the President, by virtue of his office, to have a foreign bank account.

“It may be legal but it’s immoral. You cannot be leading a country that is suffering economically when you yourself are taking the wealth out of the country especially when a lot of the wealth was made within this country,” she said.

President Kenyatta’s Jubilee government has, in the past five years, been at the forefront of calling on Kenyans to repatriate foreign-held cash to help in growing the local economy.

 More than Sh1 trillion, equivalent to more than one third of Kenya’s annual Budget, was wired back to the country in the three years to 2019, from offshore accounts, taking advantage of a tax amnesty offered by the Treasury.

Read: Wealthy Kenyans return Sh118bn stashed abroad 

 The Kenya Revenue Authority (KRA) said the amount was repatriated by some 16,000 applicants who took advantage of the amnesty window during which they were not required to declare the source of their wealth or even account for previous years’ tax arrears.

Besides the Pandora Papers, the ICIJ has in the past five years released other documents dubbed the Panama Papers, Paradise Papers and Mauritius Leaks, all of which have implicated Kenyan businessmen, politicians and government bureaucrats in the use of offshore companies to avoid tax or stash illicit funds.

Another study --Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts-- showed that Kenya’s political elite in the Moi and Kibaki regimes stashed more than Sh327.89 billion in offshore bank accounts in two decades.

 The report offered details of how Kenya’s ruling political elite enriched themselves either from foreign aid cash or kickbacks from State agencies that received donor funding. The report, backed by the World Bank, was published last year.

The Pandora Papers have so far not disclosed identities of other Kenyans, besides the President’s family, who are holding offshore assets.

Source of funds

Director of Public Prosecutions (DPP) Noordin Haji, in an interview yesterday, said his office will probe individuals mentioned in the Pandora Papers if the documents help unearth crime as a source of funds.

Mr Haji however said it is too soon to give a conclusive answer on whether the documents leaked will lead to any investigations.

“I can only comment on legal documents. If I have the documents officially forwarded to me by a competent authority of a competent person then I can do something. Some of those dates given (in media reports on the Pandora Papers) were prior to him (Mr Kenyatta) becoming President. There is nothing barring anyone in their private capacity from holding offshore accounts. Only public officials are barred,” Mr Haji said.

Activist Okiya Omtatah said the Pandora Papers “would join the archives that are full of unfollowed leads.”

“We don't have rule of law. Law enforcement agencies are captured by the same individuals accused of corruption so I don't see any way out," said Mr Omtatah.

The ICIJ investigation linked the first family to 13 offshore companies. There is nothing illegal in opening offshore companies. But these shell companies are increasingly attracting attention globally since they have been used to clean dirty money or hide stolen wealth from poor nations.

 The latest revelations in the expose as published by Finance Uncovered, show that President Uhuru Kenyatta’s family members have used offshore companies to own three properties in the United Kingdom.

 One, a flat near Westminster in London, now worth an estimated £1m, was until this summer rented out to a British Member of Parliament, although she did not know who owned it.

 Other world leaders found in the files include the King of Jordan, the prime minister of the Czech Republic Andrej Babiš and Gabon’s President Ali Bongo Ondimba.

The Pandora Papers also show that Muhoho Kenyatta, the president’s younger brother who manages large sections of the family’s businesses, owned an offshore company with a portfolio of cash, stocks and bonds worth $31.6 million in 2016.

Other documents in the leak show a foundation set up in Panama in 2003 for the president’s now 88-year-old mother, “Mama” Ngina Kenyatta. All the assets held in the foundation were to pass on to her son, Uhuru, in the event of her death.

The Pandora Papers contain only a handful of clues about the purpose of the Kenyattas’ offshore interests or what funds and assets they might have placed in these secretive entities.

According to Finance Uncovered, one document simply says a company in the British Virgin Islands (BVI) had been set up by Kenyatta family members with “savings from their family and their activities.”

 They reveal that the first family’s offshore investments, including a company with stocks and bonds worth Sh3.3 billion ($30m), were found among hundreds of thousands of pages of administrative paperwork from the archives of 14 law firms and service providers in Panama and the British Virgin Islands (BVI) and other tax havens.

 UBP private-wealth advisers also helped Mr Kenyatta's brother, Muhoho Kenyatta, set up an entity in Panama called Criselle Foundation in 2003.

 The foundation was registered to the offices of Alcogal in Panama City, and was nominally run by board members from the Panamanian law firm.

 It was set up for the benefit of Muhoho Kenyatta, with his son Jomo Kamau Muhoho, as successor.

 A search of public records in BVI and Panama found that most of the companies linked to the Kenyattas are now dormant, some of them as a result of non-payment of regulatory fees.

 President Kenyatta in the Monday statement said he would respond to the leak comprehensively after his return from his State Visit to the Americas.

 Proceeds of crime

"The movement of illicit funds, proceeds of crime and corruption thrive in an environment of secrecy and darkness.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,” stated the president.

Wealthy Kenyans have traditionally stashed wealth abroad to either escape the taxman’s scrutiny or to spread their risks by investing in the more politically and economically stable Western democracies.

 A report by an American think tank, the National Bureau of Economic Research (NBER), last year revealed that Kenya’s super-rich were holding more than Sh5 trillion in offshore tax havens across the world.

 Another international report released in 2007 detailed how a corrupt network in the Moi administration looted at least Sh130 billion and stashed it abroad, including in the United Kingdom and South Africa.

 The report by risk advisers Kroll and Associates was commissioned by the then President Mwai Kibaki’s administration.

 The 110-page report published online detailed how people close to Mr Moi set up shell companies, fronts and secret trusts to siphon away Kenyan taxpayers’ money, which they stashed in banks, real estate and companies in an estimated 30 countries around the world.

 By Ibrahim Oruko, Paul Wafula, Brian Wasuna, [email protected]