Businesses & Financial News

Kenya is a hub of financial secrecy, report reveals

By Steve Umidha

Kenya has been faulted as the region’s complicit country in helping individuals hide money from the rule of law, according to a new report from the Tax Justice Network (TJN).

The network’s findings further found that the country’s influential institutions was aiding high and mighty individuals both in public and private sectors in siphoning public funds and moving the ill-gotten money offshore with the help of western consulting firms.

“Kenya’s financial sector is highly secretive,” reads in part the Financial Secrecy Index  in which Kenya scored 76 out of 100 in terms of secrecy.

The report by TJN further noted that, though the country’s share of the offshore world was not large, it has increased since 2018 and could increase further as the government positions Nairobi as the latest African International Financial Centre.

Kenya now holds one of the top spot is the region, where financial secrecy jumped 24 percent. Only Angola and Nigeria are ahead of Kenya in such disgraceful rankings.

The FSI ranks each country based on how intensely the country’s legal and financial system allows wealthy individuals to hide and launder money extracted from around the world. The index ranks countries on a scale from 1 to 100. Zero means full transparency, while 100 means cloaked in full secrecy. The score is combined with the volume of financial activity conducted in the country by non-residents.

A higher rank on the index does not necessarily mean a jurisdiction is more secretive, but rather it enables secretive banking, anonymous shell company or real estate ownership which in turn enables money laundering, tax evasion and substantial offshore concentrations of untaxed wealth.

Indeed, in 2016, the Panama Papers implicated several Kenyans hiding their wealth in offshore jurisdictions notably in Mauritius, with a number of well-connected politicians identified –pointing to the fact that the use of secrecy jurisdictions is not unknown in Kenya.

In 2019, the Mauritius leaks revealed that DAC Aviation International, a UN Contractor, had been engaging in tax avoidance, leading to the revenue authority raising an audit. Despite efforts by activists to have the Kenya-Mauritius double taxation agreement suspended, the executive arm of government opted to sign another agreement.

The Kenyan government in March 2019 lost its attempt to keep a tax agreement it signed with Mauritius nearly eight years ago after a high court ruling by Justice W. Korir declared void and unconstitutional the Double Tax Avoidance Agreement (DTAA) the two countries signed in May 2012, which brought to an end a 5-year old suit whose petitioner maintained its consequences were dire on the ordinary mwananchi.

 2,751 total views,  2 views today

Social Media Auto Publish Powered By :