The Botswana Meat Commission (BMC) cannot account for an undisclosed sum, believed to be running into millions of Pula, stashed in a secret bank account in the Cayman Islands, a diminutive tax haven renowned for clandestine financial activity.
The secret bank account has been opened under Mainline Carriers, the only BMC subsidiary company in Botswana. Sunday Standard investigations have turned up information that BMC auditors ÔÇô Deloitte & Touch├® – have for the past five years been unable to audit accounts of Mainline Carriers because important documents cannot be traced, especially those relating to the secret bank account in the Cayman Islands.
The Cayman Island has minimal disclosure requirements and tough corporate privacy laws. Failure by Deloitte and Touch├® to audit Mainline Carriers accounts has touched a raw nerve with the Parliamentary Committee on statutory bodies. In their report for the year ending March 31, 2010 the parliamentary watchdog kicked quite a stink, although they did not go as deep as the Cayman Islands secret account.
The Parliamentary watchdog queried that BMC failure to submit audited reports on accounts of one of its subsidiaries, Mainline Carriers PTY (Ltd) “a flagrant breach of Section 20 and 10 of the BMC Act”.
The report by parliament states: “For a period of 48 months, Parliament and the nation have been kept in the dark in regard to the commercial operations of the subsidiary. A veritable veil of secrecy has descended upon the commercial affairs and the state of the assets of the Botswana Meat Commission subsidiary.”
The Cayman Islands ÔÇô which is a tax haven – is one of just a handful of countries which are primarily used by tax cheats, shady investors, corporations and hedge funds seeking cover from transparency or to evade tax.
At the time of going to press, BMC had not responded to a Sunday Standard questionnaire on who had been nominated as Mainline Carriers directors for the bank account in Cayman Islands. The Sunday Standard also sought to establish names of signatories to the secret account and why the account was opened in the Cayman Islands when Mainline Carriers is based in Botswana. Was it to evade paying tax to the Botswana Unified Revenue Service (BURS), to keep the account secret or both? Part of the Mainline Carriers stash in the Cayman Island is believed to be money raised when the BMC’s only local subsidiary sold off most of the property and plots it owned in the country. Sunday Standard was not able to establish if the BMC paid tax to BURS from the proceeds of the sale.
There are fears that the secret account may result in the BMC being blacklisted by the European Union as a tax cheat following a report earlier this year by Cayman Island monetary authorities that it is going to disclose a laundry list of previously hidden corporations, investors and hedge funds using the Caymans for cover from transparency. In addition ÔÇô the names of those involved will be visible for the first time as well, which will make it that much easier for Western governments to identify tax schemes. This is an assault on tax cheats ÔÇô mainly corporations and wealthy individuals. The Caymans Islands is the latest country to submit to banking transparency.
It is believed that part of the reason why BMC paid P1, 7 million to get rid of former Managing Director, David Falepau, was because he was pushing for a forensic audit of BMC subsidiaries, including Mainline Carriers. Falepau was paid off for the rest of his contract and an additional six months, and part of the deal was that he will not discuss BMC operations with a third party.
Shortly before he was forced to resign, Falepau had written to the Assistant Auditor General, requesting for an audit into the BMC operations. In his letter he stated that the audit should not just be done at BMC but the BMC group of Companies.
He suggested that a number of previous assignments could assist in this undertaking. He pointed to the preliminary audit which was undertaken by KPMG. Falepau opined that the consultancy company, (GRM) engaged by BMC from 2008 to 2010 recommended a forensic audit of at least one of the BMC offshore subsidiaries.
A number of auditing firms have been involved in the reconciling of the accounts of the BMC and its subsidiary companies but nothing has been presented in the public domain. “At the current time I have requested Deloitte of Botswana to consolidate this activity,” said Falepau in his letter to the Board.
Falepau’s request was never discussed at Board level.
