Harare - Impala Platinum (Implats), the second-largest miner of the precious metal, was yesterday battling to contain a potentially bitter fallout with Harare after documents showed the company’s unit in Zimbabwe had used an offshore company to pay employees.
Zimplats is the largest mining company in Zimbabwe and a significant contributor to the country’s fiscus. Together with other foreign companies in Zimbabwe, Implats is facing fresh demands that it gives up majority shares into the hands of black groups in the country.
But leaked documents in the Panama Papers have now put Implats in direct confrontation with the government. The documents are being seen as evidence that Zimplats externalised foreign currency from Zimbabwe.
“We have yet to be fully appraised of this but we will demand a full explanation from Zimplats and will ask the tax authority to deal with the company if it emerges that it has violated any exchange control or illicit financial flows regulations,” a government minister said yesterday.
Finance Minister Patrick Chinamasa was not immediately available for comment.
The Panama Papers detail how politicians, celebrities and companies sought to externalise foreign currency using offshore accounts, shell companies and offshore havens.
A source quoted by Business Report in November claimed that “companies are benefiting” from offshore havens and shell companies and also alleged “the accounting, audit and advisory firms” that were selling “high risk tax-dodging schemes to South African companies with operations in Africa”.
Two of the top four audit companies in South Africa did not respond to the allegations that they were part of the big tax avoidance and illicit financial flows network.
“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” the International Consortium of Investigative Journalists – which participated in the investigation of the leaked documents – quoted Gabriel Zucman, an economist at the University of California, as saying. Zucman is the author of The Hidden Wealth of Nations: The Scourge of Tax Havens.
He said the release of the documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy. Implats has, however, sought to downplay the looming fallout with Zimbabwe over the leaks.
Spokesman Johan Theron refuted allegations that Zimplats had engaged an offshore company, HR Consultancy, for the payment of its employees.
“All salaries at Zimplats are funded and paid by the company internally and overseen by the Board Remuneration Committee,” Theron said.
But he acknowledged that some questions were being put across to the company regarding this and refuted that Zimplats had engaged HR Consultancy in any capacity.
“We have responded to calls… that we don’t know this company and that Zimbabwe Platinum Mines has never dealt with it,” Theron added.
Zimbabwe is apparently tightening the screws on illicit financial flows and foreign currency externalisation by corporates. Treasury officials also say some companies have been rerouting financial proceeds through tax havens to avoid paying taxes.
The country said this year that it would take new financial measures, such as closely monitoring corporate accounts activity, in a bid to stem externalisation.
“In order to guard against externalisation by related companies through service payments, management fees, technical fees, service fees or by whatever name they come under, shall not exceed an aggregate of 3 percent of revenue and shall require (central) bank approval,” Reserve Bank of Zimbabwe governor John Mangudya said.