Khama magic a curse for Wilderness Holdings

25 Jun 2018

Name African Presidents who are trying to grow their tourism sector and chances are more than half have Keith Vincent’s business card.

The Chief Executive officer of Wilderness Holdings has been chauffeur driven in a government VIP black Mercedes Benz out of Maputo air port, made to skip custom formalities in Kenya and received a personal phone call from President Paul Kegame of Rwanda who arranged for a privatesoiree with him in New York.

Vincent is no stranger to the corridors of power. The tour guide turned multimillionaire tour operator however knows that rubbing shoulders with power can be both a blessing and a curse. While most African presidents are falling over each other to attract Wilderness Holdings’ investment, Vincent has also seen the company scalded by media vitriol because of its association with former President Lt Gen Ian Khama.

Wilderness Holdings which is the third largest private sector employer in Botswana after Choppies Supermarket chain and Debswana mining company has always made headlines for the wrong reasons. Its success story has been blighted by its association with the former president.

For example Mambo which is one of the enterprises under Wilderness Holdings in Botswana was in 2015 voted the best hotel in the world. This placed the hotel above some of the top flight Hotels like the Trump Towers in New York  United States, the -Berkeley, Hotel in London, U.K. and the Royal Mansour Marrakech, in  Morocco. The story however made only a footnote in obscure news pages while the headlines screamed “Khama plunders NPF to bail out Wilderness”

The company which believes in responsible nature-based tourism as the most effective and practical vehicle to ensure the sustainability of African conservation in the modern era, has also won the world best sustainability award ahead of big corporations like Coca cola Apple and GM. To reporters who are always out to get a scoop, this story was not worth their time. Vincent however feels that it is actually worse than that: In the scramble to bash Khama the media does not want truth to get in the way of their story, and often times the lines between fact and fiction are deliberately blurred in a bid to deliver a scoop.

We are in his spacious boardroom at the Fairground Holdings where Vincent is going on and on about how Wilderness Holdings has always gotten an unfair deal from the media.

From the story on how President Khama and Wilderness Safaris stash money in tax haven published by the African Investigative Publishing Collective, under the headline ‘The Plunder Route to Panama:  How African oligarchs steal from their countries’ to another story published by the Sunday Standard under the headline “Khama raided NPF to bail out Wilderness Safaris” Vincent takes me line by line shooting down the allegations.

The report on The Plunder Route to Panama:   states that President Khama owns a paradise andlarge parts of the bills paid for this ‘African paradise experience’ fund a number of tax-haven-based off-shore accounts that belong to the Wilderness Safari conglomerate in which President Ian Khama and his relatives and friends hold shares.

Vincent on the other hand states that “Wilderness Holdings Limited is a public company, listed and traded on the Botswana and Johannesburg Stock Exchanges.  Any member of the public is free to buy or sell Wilderness shares at any time.  There is no evidence to suggest that President Khama is a shareholder of the company. In addition, there is no truth-, and no evidence is advanced to support-, the allegation that Wilderness uses off-shore accounts in tax havens for any purpose.”

The report further states that “Overseas Adventure Travel/ Grand Circle, based in the US, for example, conducts business with Baobab Safaris, a subsidiary of Wilderness that President Ian Khama holds a sixty percent stake in.”

Vincent maintains that it is not true, stating that “President Khama’s stake in Baobab Safaris is in fact 9%.”

 

The story states that, “such income pays dividends to concessions such as Linyanti, owned by the president and other shareholders -among whom his relatives and close associates- but the money never arrives in Botswana itself.”

Rebutting the story Vincent says, “This sentence displays a fundamental misunderstanding of the relationship and flow of dividends between subsidiaries and holding companies:  subsidiaries pay dividends to their holdings companies and there is no basis for the reverse to occur.  The Linyanti concession is in fact held by the company Linyanti Investments in which President Khama’s stake is 5%.  The remaining 95% is owned by Okavango Wilderness Safaris, a 100% subsidiary of Wilderness Holdings.  No evidence is advanced in support of the allegation that ‘the money never arrives in Botswana itself’ and this is not true:  all funds due to these companies are remitted to the relevant bank accounts in Botswana.  It should also be noted that, as a Botswana registered and listed entity, all profits from all group subsidiaries have to be remitted to Wilderness Holdings Limited in Botswana before they can be returned to shareholders.  ”

The report states that more than half of Wilderness’ tourism and travel subsidiaries are operated from abroad. It is correct that there are a number of non-Botswana companies in the Group.  However, these all relate to businesses operating outside Botswana.  Every single Group business in Botswana is owned and operated by a Botswana registered and operated company.”

While the story states that “Okavango Wilderness Safaris, a financial and assets management arm of the Wilderness Group, does not have headquarters registered in Botswana”, Vincent insists that   “this is completely untrue:  Okavango Wilderness Safaris is the main operating company for Wilderness in Botswana (it is not a financial and assets management arm of the group).  It is registered in Botswana, operates from premises in Maun and northern Botswana and employs nearly 1 000 people.”

The story further states that, “other subsidiaries Wilderness Safaris Limited-Bermuda, New Wilderness Holdings of Mauritius and Norisco SA in Luxembourg and Seychelles are finance and asset management arms of the group that are based in jurisdictions that allow very low to zero percent taxation.  The tax-haven based entities have no employees or organisational and/ or operational activities.”

Vincent on the other hand says “New Wilderness Holdings (Mauritius) is not, and never was, a subsidiary of Wilderness Holdings.  We believe that this company has long been de-registered.

Norisco Holdings was the holding company for our investment in North Island in the Seychelles which was sold in 2010.  This company has no further purpose, holds no assets or revenue and is in the process of being de-registered.

The sole remaining company—Wilderness Safaris Limited (Bermuda)—holds a number of investments but no longer has any income and so the allegation that this company is being used because of the low tax rate is baseless.”

The story also says “the exclusive nature of tourism in the Okavango Delta has tended not to be of direct benefit to the people of Ngamiland District (since) the tourist revenue is not retained in Ngamiland or in Botswana,” writes Professor Joseph Mbaiwa of the University of Botswana in a recent tourism revenue study. Mbaiwa believes that as much as ninety percent of this value may be retained outside the country in payments to external travel agents, expat wages and food and other supplies imported from outside Botswana as well as profits.”

Vincent on the other hand maintains that   “although the study by Professor Mbaiwa was published recently, it is important to note that it was written in 2000 and the most recent data cited in the study is from 1999.  As such, the data are out of date and contain a number of inaccuracies.

More recently published peer-reviewed research suggests that in fact the  opposite is the case and that ecotourism in the Okavango and other parts of northern Botswana is the primary contributor to improved livelihoods and increased standards of living. Indeed, it is a critical contributor not only to these remote rural areas, but also to the national fiscus.”

The report on the Panama papers says professor Mbaiwa “ bases his findings on calculations that over eighty percent of the ‘paradises’ in Chobe and the Okavango are at least partly owned by foreign companies, with over fifty percent of these fully owned by foreign safari operators.” Vincent says, “Our calculations—easily obtained from publically accessible records—show that at least 63% of safari camp beds in northern Botswana are in fact owned by local companies. We would encourage independent confirmation of this, as the information is publicly available.”

The report also claimed that former Wilderness Safari Human Resources Director Sally Anne Follet- Smith heads the Botswana Tourism Organisation (BTO), a parastatal that regulates and controls stakeholders in tourism. Vincent on the other hand insists that “although Ms Follett-Smith was a loyal and long-serving employee of Wilderness Safaris, she was never a director of the company and also did not head up the Botswana Tourism Organisation, as is alleged.  Further to this, we understand that she has not been an employee of the BTO for some time now.”

While the story says Follet-Smith is also a board member of national airline Air Botswana, a company that was recently almost given, by presidential directive, to Wilderness Safaris in exchange for an undertaking that it would inject US$ 30 million to jump start it.  Simultaneously, the government would also provide a US$ 30 million capital injection. Vincent says, “This is news to us!  While we did respond to a public invitation for Expressions of Interest in Air Botswana, the terms of any potential deal were never revealed to us.”

The report claimed that “President Khama himself owns shares in Baobab Safaris, SebaSafaris and Linyanti, all concessions of the Wilderness Group.”Vincent is adamant that “Seba camp in the Okavango is in fact owned by the company Elephant Back Safaris.  Wilderness has no equity stake in this company but does provide marketing, sales and management services to it.  So far as we are aware, it is incorrect to state that President Khama owns a share of this company.

We understand that there may in fact be a company known as Seba Safaris but this is not a member of the Wilderness group and we cannot comment on the shareholding of that company”

The report concludes by stating that “the Botswana Unified Revenue Services, despite confirmations of lack of expertise and resources to understand and track illicit finances, states in its latest financial report that it is being owed more than 2 billion Pula, US$ 200 million, in both unpaid and uncollected taxes.”

Vincent feels that “the inclusion of this sentence, at this point, is gratuitous since the implication is that it somehow applies to Wilderness:  no facts or evidence are advanced in support of this implication.  Our tax affairs are meticulously maintained and there are no taxes due which are unpaid.”

Vincent also dismissed another story published in the Sunday standard that President Khama plundered the National Petroleum Fund to bail out Wilderness saying Wilderness Holdings has always made a healthy profit and has never needed to be bailed out.

The story stated that, “A curious decision by former President Lt Gen Ian Khama raided P500 million from the cash strapped National Petroleum Fund (NPF) while boosting the bottom line of Wilderness Safaris by an estimated P100 million.” Vincent asked: “What is the basis of this allegation? 

For Wilderness to have benefited in the sum P100 million, as is alleged, this would suggest a saving in costs of P20 million to P25 million per annum. And yet our total aviation fuel bill in FY2013 (the last full financial year before the decision which is alleged to have resulted in this boost to our bottom line) was P18.4 million.  In other words, if this alleged benefit was to the extent claimed our fuel bills would have reduced to zero!  But Wilderness Air Botswana’s fuel bill over the financial years ended February 2015, 2016, 2017 and 2018 was P56 million (i.e., averaging P14 million per annum. No evidence is submitted to support the allegation that such subsidy exists and indeed, our analysis of fuel prices in the region over the last three years (see below), suggests that there is little evidence that such subsidy exists at all, let alone in that quantum. 

The press release by Puma Energy in the Sunday Standard of 10 June further confirms that ‘the aviation issue affects solely Puma Energy as the only supplier of aviation fuel to all the country’s major airports’.; After tax profits of Wilderness Air Botswana over the four years in question totalled P14.5 million (an average of P3.6 million per annum).  This illustrates the absurdity of the suggestion that the business was subsidised to the tune of P100 million, as is alleged.”