By Peter Sinkamba
The leak this week of paradise papers has exposed complex ways how wealthy people and corporations have legally generated and protected their wealth through off-shore havens.
The leak has documented how the world’s biggest businesses, heads of state and global figures in politics, entertainment and sport have sheltered their wealth in 19 secretive tax havens.
A 2006 off-shore investment for my colleague Hakainde Hichilema was among that was captured in the leaks.
The revelation appears to have generated great controversy in the country.
Like has done most figures across the world, HH has defended himself that the investment is legal.
I totally agree with him on the legality of the investments, but I think that argument is beside the point for the Zambian case. The apartheid system, for example, was a perfectly legal system. However, that does not make the system right for the victims of the apartheid system. What is legal is not always right.
Therefore, in my view, HH ought to have given better reasons. And indeed, there are more examples, and better reasons, to make a case for off-shore investment by Zambia and Zambian business corporations.
For example, prior to privatization in 2000, ZCCM Ltd was a partnership which was majority-owned by the Government of the Republic of Zambia with a 60.3% shares being state-owned. Other shareholders of ZCCM Ltd were Zambia Copper Investments Ltd (ZCI), an associate company of Anglo American Plc, which held 27.3% of shares, with the balance of 12.4% of shares held by private investors.
ZCI and other private investors that owned ZCCM Ltd, were registered in Bermuda and Cyprus, some of the most popular off-shore investments destinations.
GRZ was in partnership with Bermuda and Cyprus registered companies from 1970 when it nationalized Nchanga Consolidated Copper Mines (NCCM) and Roan Consolidated Mines (RCM).
Even after privatization, GRZ has been in business with private investors registered in off-shore destinations, not only in the mining but banking sector as well. For example, GRZ invests most treasury bills in companies registered in off-shore havens. The motive for GRZ before privatization and after was, and remains, to attract foreign capital into the country.
Put simply, therefore, it is not wrong to invest in off-shore havens if the motive is to attract capital from those havens into the country.
What is wrong is where the motive of investment into those havens is to hide stolen funds from the country; to evade or avoid tax; to launder inappropriately acquired wealth; and several other motives that deprive the State or nationals what is lawfully due to them.
Perhaps, instead of focusing on the legality of the investment, my colleague would better have demonstrated how he used the off-shore investment to attract foreign capital; how he invested it locally to grow his business empire to what it is; and how without it, he could not have been as wealthy.
He could have been even figurative about it, because as they say: “figures don’t lie!”
Otherwise in my view, with proper explanations backed by empirical evidence, there really ought not to be any fuss about it.