Ian Stuart Kirby, President Ian Khama’s close associate and the President of the Court of Appeal, the country’s highest court, has invested in at least seven offshore companies between 2005 and 2009, according to documents detailing the dealings of a discredited Panama-based law firm Mossack Fonseca.
After a year-long investigation, respected investigative journalist, Ken Silverstein writing in Vice Magazine, concluded that Mossack Fonseca “has served as the registered agent for front companies tied to an array of notorious gangsters and thieves”. These include Rami Makhlouf, a notorious Syrian ‘bagman’ for President Assad, various associates of Muammar Gaddafi and Robert Mugabe, as well as an Israeli billionaire who “has plundered one of Africa’s poorest countries.”
In 2015, a huge data leak of Mossack Fonseca emails completed the picture. The leak revealed how the law firm arranged for scores of the wealthiest individuals to aggressively avoid taxes in their home countries and even launder money. It did so by setting up a myriad of shell companies in tax havens. These entities shield the identity of the true beneficiaries of funds in those company accounts. Through this opacity, a range of financial crimes are made possible. Tax investigators have referred to the Panamanian law firm as one of the largest creators of shell companies in the world.
Leaked Mossack Fonesca communications show that Judge Kirby has already sold his shares in four of the seven entities, remaining a shareholder in three companies. This was confirmed by Judge Kirby himself when confronted with these allegations.
Judge Kirby maintains that his role in these companies is above board. He states that each of the seven companies were formed to buy, develop and later sell one property each in the United Kingdom. They were special purpose vehicles set up by a real estate agent active in Botswana, Pam Golding Properties. Judge Kirby was but one investor among others. Judge Kirby claims that he redeemed his shares in four of the companies at a ‘considerable loss’ on account of a weak real estate market and the world economic recession.
Tax Havens: Breaking the Spirit of Tax Law?
At present Judge Kirby retains shares in three companies: Jaye Limited, Beachleigh Holdings Limited and Allmonde Company Ltd. All three companies are registered in the British Virgin Islands, and Mossack Fonseca appears to have assisted in their registration according to the documents and emails seen by Ink Centre for Investigative Journalism.
There is little rhyme or reason other than tax avoidance for a company doing business in the UK to be registered several thousand miles away in the Caribbean. According to Fair Tax Campaign, tax avoidance techniques for companies are all about location. This consists of where a company chooses to open offices and where it chooses to allocate its profits and expenses. “Companies wanting to minimise their tax bills shift their profits to subsidiaries where there is a low or zero tax regime, e.g. a tax haven.” The British Virgin Islands is precisely such a haven. While tax havens are technically legal, the tide of respectable opinion has turned against their use. First, tax havens facilitate secrecy and secrecy allows malfeasance to be hidden. Second, countries who host the economic activity that produces income are deprived of taxes that could be used in those countries.
There is no suggestion in the leaked information that the companies Judge Kirby invested in were specifically avoiding or evading tax commitments. However, a question does hang over the location of the companies’ registration, British Virgin Islands, and the law firm chosen to perform this registration, Mossack Fonseca. Kirby claims that he was not aware of the law firm but admits that he was aware that the companies were ran from Guernsey, an island declared a tax haven by the Eropean Union.
Before being appointed Attorney General, Judge Kirby was the senior partner at IS Kirby Legal & Taxation Consultants where, according to a legal commentator, his ‘experience as a lawyer was largely limited to representing corporations’. Corporations using the services of tax consultants typically seek to minimize the amount of taxes they pay while remaining legally compliant. While this attitude is to be expected from a CEO charged with maximizing profits at every turn, it remains debatable whether it is becoming of judicial officers to be involved in companies if these take advantage of aggressive tax avoidance schemes. Just as drinking at taverns at all hours is a lawful activity, so is having an interest in a company registered in a tax haven. However, a judicial officer is probably not expected to keep that sort of company. After all, the law has both a letter and a spirit and judges are expected to conduct their affairs so as to “sustain and enhance public confidence in the judiciary”, according to the Botswana Judicial Code of Conduct.
Kirby’s Stakes Undisclosed
In reply to our enquiries, Judge Kirby points out that Botswana has no exchange controls meaning that there are no limitations placed on his moving funds off-shore. Of course, he would have to pay tax in Botswana on any profits made, if he ever brought the funds back to Botswana. There is no reason to doubt Judge Kirby’s assertions that the companies were used to buy and sell a properties in the UK; a perfectly lawful activity. However, this is not publicly available information. Nor are the names of his fellow investors publicly known or the fact that he invested heavily, over £140 000 (Over P2million), in the seven Pam Golding joint ventures.
Were this information to be publicly known, it would assist litigants determine potential conflicts of interests arising from Judge Kirby’s commercial dealings. Although his stakes in each company did not seem to rise above 2%, this value is still not so diluted or trivial so as to trigger the de minimis principle. For example, should a large shareholder in the companies, Cannon Asset Management, or one of its directors, Adrian Cann, formerly of Deloitte in Botswana, be involved in a legal dispute serving before Justice Kirby, their connection would not be known. This is not to suggest that such a connection would be covered up. However, the value of transparency is that the public does not have to rely on the self-disclosure of a judge as to a conflict of interest. The judiciary’s interests are in the public domain and a strong argument exists that this transparency enhances the credibility of the legal system.
Indeed, High Court Judge Michael Mothobi recently opined: “the disclosure of personal interests of judges must be given priority if the impartiality and independence of the judiciary is to have any credibility in the public eye”. Unfortunately there seems to be much resistance in Botswana to parliamentarians, the executive or the judiciary to register their financial interests.
In no country in the world are judges expected to withdraw from the world of commerce entirely. However, where their interests are declared, litigants can decide whether to apply for the recusal of a particular judge in cases where there is a reasonable apprehension of bias. Where details of common shareholdings are locked up in share registers in the British Virgin Islands, sometimes in shell companies, litigants are completely in the dark. The old adage that birds of a feather flock together is really about drawing inferences. We have every confidence that in the matter of the seven companies registered by Mossack Fonseca in which Judge Kirby had an interest, this inference should not be drawn. When called upon, Judge Kirby has been forthcoming about the nature of his involvement in those companies. However, it would probably be wise for judges, not only in Botswana, to exercise the utmost probity and engage in some due diligence about the tax planning of companies in which they invest. It will leave a very bad taste for a local judge to sanction tax dodging in his own jurisdiction but to be party, even if indirectly, to schemes designed to circumvent the laws in other parts of the world. Judge Mothobi’s call for a register of judges interests would also make stories like this completely unnecessary.
The Panama Papers
In the next days, weeks and months Ink Centre for Investigative journalism, working closely with International Consortium for Investigative Journalism, African Network of Centers for Investigative Reporting and select local news organizations will reveal names of Botswana companies and individuals that have invested millions of Pula in tax havens around the world. The Centre’s journalists were part of a one- year investigation into the records of a discredited law firm Mossack Fonseca. The Panama based law firm is accused of assisting politicians, warlords and criminals to evade tax.
The Panama Papers: About this project and key numbers
The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe’s most prominent figures.
The International Consortium of Investigative Journalists, together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, spent a year sifting through 11.5 million leaked files to expose the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more.
The trove of documents is likely the biggest leak of inside information in history. It includes nearly 40 years of data from a little-known but powerful law firm based in Panama. That firm, Mossack Fonseca, has offices in more than 35 locations around the globe, and is one of the world’s top creators of shell companies, corporate structures that can be used to hide ownership of assets.
ICIJ’s analysis of the leaked records revealed information on more than 214,000 offshore companies connected to people in more than 200 countries and territories.
The data includes emails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions, including Nevada, Hong Kong and the British Virgin Islands.
ICIJ’s data and research unit indexed, organized and analyzed the 2.6 terabytes of data that make up the leak, using collaborative platforms to communicate and share documents with journalists working in 25 languages in nearly 80 countries.
The largest cross-border journalism collaboration ever has uncovered a giant leak of documents from Mossack Fonseca.
The secret files:
Include 11.5 million records, dating back nearly 40 years – making it the largest leak in offshore history. Contains details on more than 214,000 offshore entities connected to people in more than 200 countries and territories. Company owners in billionaires, sports stars, drug smugglers and fraudsters.
Reveal the offshore holdings of 140 politicians and public officials around the world – including 12 current and former world leaders. Among them: the prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.
Document some $2 billion in transactions secretly shuffled through banks and shadow companies by associates of Russian President Vladimir Putin.
Include the names of at least 33 people and companies blacklisted by the U.S. authorities for doing business with drug traffickers, terror groups and or rogue nations like North Korea and Iran.
Show how major banks have driven the creation of hard-to-trace companies in offshore havens. More than 500 banks their subsidiaries and their branches – including HSBC, UBS and Société Générale – created more than 15,000 offshore companies for their customers through Mossack Fonseca.
Also see “Breach of the judicial integrity”