Innscor, Zimplats fingered in Panama Papers

Another high-profile Zimbabwean company has been named in the Panama Papers for payments and other transactions to directors which are viewed as illegal.

The Panama Papers is a tranche of millions of leaked financial documents detailing a trove of billions sheltered in tax havens, and pocketed by political power players around the world.

Innscor Africa has been named in the leaked documents as having engaged Panama law firm Mossack Fonseca to process payments to two high-profile directors via offshore companies in the British Virgin Islands.

Zimplats, a unit of Impala Platinum [JSE:IMP] (Implats), was recently named in the Panama Papers for having paid executives' salaries using an offshore company. However, Implats refuted this although sources in Zimbabwe say the government is probing the company over the matter.

Innscor runs Chicken Inn, Nando's and Steers outlets in Zimbabwe and also has other diversified interests in food processing, agriculture and automotive spare parts. It is listed on the Zimbabwe Stock Exchange and has a partnership in National Foods with Tiger Brands.

"This raises questions, as the companies involved are big companies that may have all the reasons to use offshore havens. The central bank is following up on this and will probe the transactions for any clue of illicit financial flows and tax avoidance on the part of the company and the directors named in the papers," a source in the banking sector, who declined to be named, told Fin24 on Monday.

The leaked documents have been investigated by the International Consortium of Investigative Journalists (ICIJ). The Voice of America, a partner to the ICIJ investigation, reported on Monday that Innscor insisted that it had not done anything wrong as the transactions in question were "conducted in accordance with all applicable laws".

This is despite leaked documents showing that Innscor directors Zinona Koudounaris and Michael Fowler engaged lawyers from the Panama law firm to register about four offshore companies in partnership with accounting firm Nothern Wychwood. The offshore firms were incorporated in the British Virgin Islands.

"Koudounaris is a well-known and successful businessman and is director of a large Zimbabwean quoted group, Innscor Africa Limited, involved in retail and manufacturing industry, hotel and tourism in Southern Africa… SOF (source of funds) is from accumulated salary," said Sophia Birchall, an administrator at Northern Wychwood, in correspondence with Mosack Fonseca in early 2015.

Zimbabwean bank CBZ wrote letters of reference for Koudounaris and Fowler in 2014, which were used in the creation of accounts for the offshore companies. The letters were signed by personnel and managers in the wealth management division at CBZ Bank.

"In all our dealings with Mr M J Fowler, he has proved to be a man of high integrity and good character. He has conducted all his business dealings as a respectable man who would not commit himself beyond his means.

"We hereby recommend him favourably for any services that he may require. This letter is however issued without prejudice to the bank or any of its officials," a reference letter, investigated by the ICIJ, read.

The documents show that Koudounaris and Fowler, whose residences are cited as Alexandra Park and Colne Valley, are the beneficiaries of the four offshore companies. Experts say companies and businessmen usually use offshore and shell companies to avoid tax but this may also be legal, according to lawyers.

However, the Zimbabwean government has raised its antennae, especially as it battles foreign currency externalisation from the liquidity-starved southern African country. The Reserve Bank has increased its account monitoring processes and functions in a bid to root out illicit financial flows and offshore havens used for tax avoidance and underpayment of tax, Treasury sources said.