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Readers the world over are still busy crawling through information from the “Panama Papers” leak — which has revealed how high-profile persons around the globe used corporate havens to dodge taxes.
And in Zimbabwe, they’re turning their attention to one particular name leaked in the documents: the country’s largest platinum miner.
That’s Zimplats — the local subsidiary owned 87 percent by major miner Impala Platinum. Which the Panama Papers say used offshore accounts to dodge tax rules in Zimbabwe.
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The leaked documents note that Zimplats established a company in the Isle of Man, called HR Consultants. Which was used to pay the salaries of Zimplats’ senior managers.
The offshore firm thus eliminated the need for salaries to be routed through Zimbabwe. Almost certainly simplifying payments, and possibly avoiding local taxes on these monies.
But such a strategy is illegal under Zimbabwe rules. With reports suggesting that the Reserve Bank of Zimbabwe was never notified of the payment scheme, constituting a major breach of tax legislation.
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As one local expert interviewed by BDLive noted, “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.”
For its part, Zimplats has denied that it took part in any such arrangements — with a spokesperson saying the company has “no relationship” with any of the companies mentioned in the Panama Papers leak.
There are indeed some details missing from the story. Such as the method Zimplats used to transfer cash from the parent company to the offshore firm, to then be forwarded to executives as payment.
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But Zimbabwe’s government said it will now take a hard look into the matter. With the country’s central bank governor John Mangudya warning, “Violation of exchange control rules and regulations is a punishable offence.”
This could be an especially big story given that Zimplats is a key player in the global platinum sector — being the largest operator in the world’s third-largest producing nation. Watch for more details emerging as investigations proceed.
Here’s to going off-island
By Dave Forest
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Dave is Managing Geologist of the Pierce Points Daily E-Letter.