Investec and the Panama Papers

Bank distances itself from former trust company’s Panama Paper links.

JOHANNESBURG – As a firm, Investec has no relationship with Panama Papers-linked law firm Mossack Fonseca, according to the bank’s CEO, Stephen Koseff, who believes Investec’s repeated appearance in the papers might relate to trust companies no longer owned by the group.

The Panama Papers – leaked from Panama-based law firm, Mossack Fonseca – earlier this year unearthed a network of trusts and companies based in offshore tax havens that belong to politicians, businessmen, sports stars and some criminals.

The (now former) prime minister of Iceland, Sigmundur David Gunnlaugsson, resigned following protests in that country, after the Panama Papers revealed that he and his wife had set up a company in the British Virgin Islands (BVI).

Investec, meanwhile, scores more than 24 000 hits in the database of company names, the Financial Mail earlier reported.

“Investec is not aware of why it has been named in the Panama Papers as we have no relationships with Mossack Fonseca,” the group said in a statement.

“Investec has sound anti-money laundering policies and processes in place and does not condone or support transactions or tax structures that have the intent of evading tax.”

While Investec may not be aware of why it has been named in the papers, one of its directors seems to have some idea.

Quoting Lord Howard Flight, a former deputy chair of Britain’s conservative Tory party and current director of Investec Asset Management, The Guardian reports that the Guinness Flight trust company, formerly owned by Investec, used Mossack Fonseca companies to manage investments on behalf of Guinness Flight clients.

As part of its £95 million acquisition of UK banking group, Guinness Mahon from the Bank of Yokohama in 1998, Investec acquired Guinness Flight Trustees.

This Guernsey-based company was, in 2002, combined with Jersey-based Theodores Trust & Law Group and Geneva-based Radcliffes Trustee Company to form the Investec Trust Group.

The Investec Trust Group “is now an important part of our integrated private banking group”, according to Investec’s 2002 annual report.

The bank sold all of its trust businesses in 2013 as part of its efforts to “simplify” its specialist banking activities, according to the company’s recent statement.

“Guinness Flight Trustees was not involved in advising either individuals or companies on reducing their UK tax liabilities and, to the best of my belief, had no involvement in harbouring the proceeds of crime, facilitating tax evasion, sanctions evasion, money laundering or bribery and corruption,” Lord Flight told The Guardian last month.

Koseff noted that, where it is discovered that clients may have offshore dealings, they are ‘repapered’ to ensure that such companies are legitimate and that no activity could be the proceeds of crime or money laundering.

“We are very cautious on this stuff,” he stressed.

Investec does not provide structuring or tax advice, Koseff said.

“That’s something that we banned years ago, decades in fact, in our organisation.”

Citadel clients named in Panama Papers

Clients of local wealth manager, Citadel have appeared in the Panama Papers.

According to Citadel’s Hilary Dudley, this is because the service provider for some Citadel clients’ offshore structures has used the services of Mossack Fonseca to establish BVI companies.

“Once the company is incorporated, Mossack Fonseca is no longer involved. We have also been advised that Mossack Fonseca is one of only two key providers of this service in the BVI,” notes Dudley, who is MD of Citadel Fiduciary Proprietary Limited, in a statement.

Phatshoane Henney Attorneys, the legal firm that advises Citadel’s service provider, PraxisIFM and United Ventures Limited, recommends that clients who are investing significant amounts abroad use another name to avoid “onerous administration and fees”, Dudley says.

While exchange control regulations do permit South African residents to invest offshore through non-resident companies, South African trusts are not allowed to invest abroad, which is particularly problematic for the estate planning of wealthy families.

“Phatshoane Henney Attorneys confirms that all clients’ investments in foreign companies comply with exchange control regulations, which also require tax clearance certificates on behalf of tax payers. Clients are therefore fully compliant from a tax perspective, with all applicable taxes being paid, both in South Africa and in other tax regimes,” Dudley highlights.

Offshore tax havens: what’s the big deal?

That a person or company is mentioned in the Panama Papers does not mean that they are involved in any illegal or unethical activity.

“There are legitimate uses for offshore companies and trusts”, the International Consortium for Investigative Journalists (ICIJ), which broke the story, acknowledges.

For example, a local company that wants to conduct business outside of South Africa may elect to establish an offshore company to avoid double taxation. They will still be taxed on income earned globally in South Africa, due to our residence-based tax system, and domestic revenue authorities will arguably gain a larger share of income on which to levy tax.

Having said that, South Africa does have double taxation agreements with a number of countries to prevent the double taxation of income accruing to South African taxpayers from foreign sources.

In any event, countries have the right to determine what tax rates should be, even if they are zero.

South Africa’s corporate tax rate, for instance, is 28%, while the UK plans to reduce its corporation tax to 17% by 2020. It’s unlikely that the UK will be accused of being a tax haven for doing so.

But the issue with many of these so-called “secrecy jurisdictions” is less the low tax rates than, well, the secrecy. Due to local laws, if someone wanted to hide money away for whatever reason or conceal the true owner of a company or trust, these countries make it possible to do so.

Aside from the overt criminal activity that this may protect, the wealth that these jurisdictions are either unlawfully, or unethically, amassing – often from developing economies such as ours – warrants considerable scrutiny.


Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


Investec are so guilty of financial misconduct, I am surprised that they are allowed to continue trading.

Why is it that Investec are never far away from controversy?
Remember the Fedlife Guaranteed Fund? Its members were well and truly screwed by – you guessed it – Investec ? ?

Oh really ?
“Investec has sound anti-money laundering policies and processes in place and does not condone or support transactions or tax structures that have the intent of evading tax.
We are very cautious on this stuff,
Investec does not provide structuring or tax advice,
That’s something that we banned years ago, decades in fact, in our organisation.” – Stephen Koseff

Stephen Koseff , what about Investec’s involvement with ”Guinness Flight trust company” ?
What about the fact that Investec Bank UK assisted JCI in laundering R 270,8 of cash proceeds from the theft and sale of 5,46 million Rand Resources shares into amounts nominated by JCI (Noseweek 179). ”Nearly R100 million of this went to Investec !
Stephen, methinks Investec is extremely fortunate to still have a banking license as the John Louw Mcknight & Co forensic reports ( reports so far unchallenged), showed that between 1999 and 2005, all Randgold’s liquid listed shares had been stolen and its sale had generated R 1,9 billion in cash, which had been distributed to four main recipients:
JCI and related parties – R 896 million
Western Areas – R 522 million
Brett Kebble and his associates – R 378 million
Investec – R 106 million
The definition of money laundering Mr Koseff is,
”the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses”
My view is that Investec is guilty of this and that your banking license should be suspended and the guilty parties charged!

Are you planning to lay a charge against Investec at your nearest police station?

The minority shareholders are already suing Investec…..why do I need to lay a charge?

So when is the court case?

I don’t speak on behalf of the minority shareholders but please read (maybe Business Day report) about ”A GROUP of minority shareholders in former Kebble-controlled Randgold & Exploration (R&E) are planning action to claim R1.3bn from Investec Bank after the High Court in Pretoria ruled that they had the “locus standi” or legal standing to do so”, around October 9,2015 !

Investec’s reputation for ethical behaviour is non existent given its ongoing collaboration with the Brett Kebble megatheft.

now Panama a few years ago it was the Guernsey banks and then some other.
the tacit allowing of these off shore accounts by the IMF World Bank and the super powers was to garner all the hot money from all over the world.
now the “leak” of the papers is nothing but how to get this money confiscated and the money laundering laws be brought to bear on the “criminals” into the coffers of the “protectors” of the world’s financial systems. these monies will go a long way to alleviating the financial difficulties of the USA and its cohorts the IMF and World bank. what after Panama

The name “Guinness Flight Trustees” appears 2,769 times in the Panama Papers. The name “Investec” appears 24,732 times in the Panama Papers.

Investec simply follow the standard response to any accusation.
The tried and tested ” Deny, deny, deny.” This gives them time and given enough time all things will pass and memories will fade.

End of comments.




Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us:

Search Articles:
Click a Company: