Mauritius offshore used to to move kickbacks from Angolan sovereign funds?
Key findings of an ICIJ report on Mauritius’ offshore banking show potential breaches in the Island’s financial services.
The report says managers of Angola’s sovereign wealth fund used Mauritius to move millions of dollars.
The Angolan fund is called Fundo Soberano de Angola, or FSDEA.
The report also says these were fees and dividends, while observers are saying they could be kickbacks.
Dated November 2017, the report says it compiled files from Appleby’s Mauritius office.
They reveal complex schemes and shell companies.
Records show one Jean Claude Bastos-owned company paying dividends to another of Bastos’ company.
It also shows the scheme used a layer of companies in various offshore jurisdictions.
Was it an attempt to conceal the movement of funds redirected from the Angolan Sovereign Fund?
What is certain is that part of the funds passed through Mauritius offshore.
The ICIJ said controversial tax agreements with countries in Africa helped slash tax rates.
According to the report, Jean-Claude Bastos de Morais was trying to invest offshore but was having a hard time.
However, he could not find a place to put his money.
The 50-year-old Swiss-Angolan financier turned to Appleby, an elite law firm with offices in tax havens around the globe.
After numerous attempts to place his money offshore, Bastos finally found Appleby’s Mauritius office for salvation.
In 2013, after Angola’s sovereign wealth fund entrusted Bastos with $5 billion, he turned to Mauritius.
“We are pleased to be able to act on your behalf,”
That is what Appleby’s top lawyer in Mauritius, Malcolm Moller, said to Bastos’ Quantum Global in October 2013.
The warm email welcome for Bastos’ business is one of more than half a million secret records found in the Paradise Papers.
These are from Appleby’s Mauritius office revealed by German newspaper Süddeutsche Zeitung.
The files were shared with the International Consortium of Investigative Journalists and 94 media partners around the world.
The Paradise Papers come from the offshore law firm Appleby and corporate services provider Estera.
ICIJ says there is sufficient documentation detailing Appleby’s operations in Mauritius.
There are emails, bank account applications, PowerPoint presentations on tax avoidance, and other confidential documents.
They open a window into the operations of Appleby’s 40-plus-employee operation in Mauritius.
By extension, they illuminate the surprising importance of Mauritius as a hub in the secretive offshore financial network.
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The first step was to get the approval from the regulators in Mauritius.
Once the approval obtained, Appleby’s Mauritius office helped Bastos and his company move some Angolan public funds.
According to ICIJ, the funds were slated for the management of investments in African hotels and infrastructure.
The money moved through offshore companies in three jurisdictions.
They included some incorporated in Mauritius, known for its low taxes and high tolerance for secrecy.
An email sent to Appleby’s Mauritius employees reminded them of the sensitivity of their new client.
Quantum Global’s lawyer wrote – in boldface type – the name of a British Virgin Islands company called Red Sahara Ltd.
Later renamed QG Investments Ltd., the company would later receive tens of millions of dollars in dividends.
It is ultimately a Bastos company.
The information was “highly confidential,” the lawyer wrote.
“That is to say, please do not share any information.”
The Angola fund once paid $20 million for shares in a company incorporated in the British Virgin Islands, Capoinvest.
That company was helping to finance the development of a major port in northern Angola.
In its 2014 annual report, Angola’s sovereign wealth fund twice mentions Capoinvest, which also owns the Angolan company that is developing the port.
There is no mention, however, of the additional offshore companies that own Capoinvest.
Appleby’s files reveal it is owned by a chain of three companies incorporated in the British Virgin Islands and two more in the Seychelles.
All of them ultimately owned by Bastos.
In his statement, Bastos said Quantum Global complies “in all countries with legal, tax and regulatory standards.”
He said, “I have routinely disclosed my shareholding in Capoinvest.”
Mauritius also provided a low-tax haven for substantial fees the Angolan fund paid Bastos’ operation.
Let us see what the financial statements of QG Investments Africa Management Ltd., says.
It indicates that Bastos’ Mauritius company received $63.2 million in management fees throughout 2015.
An amount $21.9 million sent to a Quantum Global company in Switzerland.
“The fees seem extraordinarily high,” said Andrew Bauer, an economic analyst and sovereign wealth fund expert.
On top of that, records show one Bastos-owned company paying dividends to another.
In 2014 and 2015, QG Investments Africa Management paid $41 million in dividends to his QG Investments.
Altogether, QG Investments is based in the British Virgin Islands.
Bastos says Quantum Global advisory fees “are according to standard industry practices.
Nevertheless, there is full disclosure of all transactions, he says.
He said that “as any other shareholder, I am earning dividends out of the distributions of my companies.” He said his ownership of QG Investments Africa Management is tax-efficient.
Bastos declined to comment on “confidential business matters” that led him to approach Appleby offices in Jersey and the Isle of Man.
Bastos said Quantum Global chose Mauritius because of its low taxes, “excellent infrastructure, relaxed reforms” and advantageous tax treaties, known as “double taxation agreements,” with most African countries.