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How financial services giant, Deloitte, helps firms dodge taxes

New York City where the headquarters of transnational financial services provider, Deloitte is based.

Transnational financial services provider, Deloitte, was RVR’s auditor. Whether they helped shine the light on suspected unethical financial activities at RVR is not clear because they had not responded to our queries by the time we went online.
It is noted, however, that Deloitte’s name has been linked to questionable audit practices in some of the financially troubled companies in the country, such as CMC Motors, Mumias Sugar, KPCU, Tuskys Supermarket, National Bank of Kenya and Dubai Bank.
Deloitte is accused of being notorious in advising big businesses on how to avoid paying taxes in some of the world’s poorest countries.
One of the world’s biggest financial service providers, Deloitte, which was first registered in the United Kingdom, has its headquarters in New York, and has more than 200,000 employees in more than 150 countries, 50 of them in Africa.
It provides audit, tax, consulting, enterprise risk and financial advisory services. Africa is among Deloitte’s fastest growing markets, according to an ActionAid report. It has operations in Mozambique, Zambia, Sierra Leone, Tanzania and Kenya, which include some of the poorest countries in the world.
ActionAid states that it has uncovered documents showing that Deloitte is providing information on tax avoidance strategies for use by wealthy corporations in extremely impoverished countries, advice that costs countries hundreds of millions of dollars in taxes.
ActionAid allegations are based on a Deloitte document dated 2013 and titled Investing in Africa through Mauritius.
The ActionAid report, researched and written by Richard Grange, says the Deloitte document gives specific advice on how to structure businesses via Mauritius in order to avoid tax in parts of Africa.
An official of Deloitte declined to respond to our questions. The Deloitte employee, Ms Beatrice Gachenge said in an email: “We are bound by client confidentiality.”
In Mozambique, for instance, Deloitte shows companies that it is possible to achieve 60 per cent reduction in withholding tax and a 100 per cent reduction on any capital gains.
Mozambique is a poor country where over 50 per cent of the population live below the poverty line, with an average life expectancy of 49 years.
Mauritius has been described as ‘The Gateway to Africa’ for international businesses. It has more than 14 double taxation treaties in place with African countries, including Kenya. Various other agreements are under discussion. The trouble with double taxation treaties is that they can be abused by companies seeking to minimise their tax bills.
Tax avoidance in Africa, while legal, has been condemned by former United Nations Secretary-General Kofi Annan.
“It is unconscionable that some companies…are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximize their profits, while millions of Africans go without adequate nutrition, health and education,” Mr Annan says.
A map that gives directions to where Deloitte offices are based in New York City.
A step-by-step guide to money laundering
According to UK based anti-corruption agency Global Witness, it is easy to launder money. All you need is to disguise your identity behind a shell company, then open a bank account in the company’s name rather than your own.
Below are step-by-step ways in which fraudsters conceal their identity, hide stolen assets, fund terrorism and dodge taxes.
STEP ONE: Register your company in a place that keeps the names of its owners and managers secret. Countries of choice include Switzerland and the British Virgin Islands, with Mauritius as Africa’s best-known and most popular tax haven.
STEP TWO: Make sure you look legit by having some of your companies in above-board sounding places. If you are concerned that it won’t look good having a company registered in some sunny Caribbean island secrecy jurisdiction, start a company in the US state of Delaware. The state does not publish any information on who is behind its companies, nor does it collect any in first place.
STEP THREE: Give yourself extra protection by fronting other people as the owners and directors of your company. Get them listed.
STEP FOUR: If you are in the UK, open your company directly with the corporate registry; there are no checks on you. You can go directly to the corporate or company registry, through a lawyer, or you can employ another company or individual called a ‘company service provider.’
STEP FIVE: Finally, open a bank account in the name of your new company and get spending. Banks in places such as Latvia and Cyprus are said to ask very few questions. In Africa, Mauritius is a darling of money launderers.
This story continues today.


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