Panama papers: Press Trust among 46 Malawi businesses in off-shore tax haven

…Reserve Bank defends ‘tax dodgers’

…“We don’t pay tax to Malawi” says Press Trust

The Reserve Bank of Malawi has disclosed that it duly approved Press Trust Overseas Limited, a subsidiary of Press Trust, to avoid paying tax in Malawi by registering in the tax havens of British Virgin Islands, Jersey and Channel Islands, reveals a collaborative investigation by Malawi24 and Centre for Investigative Journalism Malawi.

Press Trust Oversees is wholly owned by Press Trust which in turn ownership footprints in a group of businesses both listed and unlisted at the Malawi Stock Exchange ranging from banks, telecommunication, beverages and fuel service stations such as IndeBank, Press Corporation, Press Agriculture, National Bank, Standard Bank, TNM and Mwaiwathu Hospitals.

Press Trust Corporation is an organization established through an act of parliament and run by political elites and well connected persons in Malawi. The company was founded by Kamuzu Banda with a 99% shareholding stake to help finance the Malawi Congress Party (MCP).

Press is among 46 businesses and individuals from Malawi listed in Panama Papers, a database leak revealing the myriad ways in which big businesses and prominent individuals including politicians can exploit secretive offshore tax regimes.

But RBM spokesperson Mbane Ngwira told Malawi24’s special investigative reporter that the central bank gives approval for any company to invest outside Malawi based on information given by the applicant, a loophole that was used by Press Trust to register its subsidiary in an offshore tax haven.

“RBM does not authorise illicit transactions.  Press Trust could have responded by indicating what they got the licence for and if it indeed was used for that purpose” said Ngwira spokesperson in a written response to African Independent.

Experts on tax dodging who have analysed the Panama Papers have argued that this is often the approach taken by businesses that want to avoid paying their equal share of tax in a country where they are doing businesses by stashing their earning away.

“There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly” said the International Consortium of Investigative Journalists (ICIJ) which published the Panama Papers leak from Mossack Fonseca law firm.

By all account, Press Trust is a huge organization in Malawi, a country World Bank estimates projects as the World’s poorest. Yet, Press’ financial and annual reports do not indicate that the company is registered in Tax havens such as British Virgin Islands despite using the Panamanian based law firm since 2008 to handle its offshore services.

Commentators who Malawi24 spoke to were stunned by these revelations wondering why Press Trust kept its dealings with Mossack Fonseca a secret from the public.

The leak shows Press Overseas was registered in the British Virgin Islands in May 26, 1999. The company’s Chief Executive Officer Patrick Mhango in an email response said the Reserve Bank of Malawi approved the foreign subsidiary’s incorporation and basis of operation a year later.

“By the way, Press Trust being a public trust does not pay taxes either here in Malawi or indeed anywhere else” said Patrick Mhango.

“The objective of PTOL was never to take advantage of the ‘tax heavens’. It was a purely commercial business decision to expand the investments of Press Trust globally in the well-established global capital and money markets”, Mhango said.

According to the leak,Press Trust is at the centre of a cobweb with other business entities that are in other countries. Click on the image above to reveal these connections.