Appleby, a hundred-year old law firm, who has had clients ranging from Queen Elizabeth II to Illovo Sugar has come under fire after a data leak spanning from the 1950s to 2016 led to global embarrassment.
The Paradise Papers, numbering 13.4-million leaked documents from Appleby’s offices in Mauritius, have revealed how the rich evaded millions of dollars in tax and kept questionable business decisions under wraps.
HOW THEY EVADED $3 TAX AT ZAMBIA SUGAR
AmaBhungane reported on Monday morning that Appleby had advertised how it was “advising Standard Bank of South Africa Limited on a $70-million facility for the purpose of refinancing Zambia Sugar Plc, a subsidiary of Illovo Sugar Limited”.
Illovo Sugar’s refinancing of $70-million from Standard Bank reportedly enabled the company to evade Zambian tax laws by paying only 0.5% tax when the country taxes corporates at a rate of 35%. It is estimated that Illovo deprived Zambia of around $3-million in taxes
This leak, dubbed the Paradise Papers, highlights damning cases of tax abuse and questionable business practices involving multinational companies, high level politicians, celebrities, wealthy executives and even royals.
It includes never-before-seen details of corporate registries in 19 countries infamous for ensuring high levels of secrecy – key nodes in the global shadow economy.
The Paradise Papers leak also includes references to Illovo Sugar.
While merely being an Appleby’s client, or simply being mentioned in the leaks, does not imply wrongdoing, the leak of information is likely to embarrass companies.
A number of top SA banks also make regular appearances in the data. Several SA banks maintain offices in secrecy jurisdictions, from where account details were compromised – including Investec and Standard Bank.
In a brochure for potential clients, Appleby brags about its role in “advising Standard Bank of South Africa Limited on a US$70-million facility for the purpose of refinancing Zambia Sugar Plc, a subsidiary of Illovo Sugar Limited”.
That loan to JSE-listed Illovo Sugar, then 51% owned by British Foods Plc, was itself the subject of a tax avoidance scandal after a report by international NGO ActionAid exposed how Illovo used artificial structuring to dodge Zambian taxes. This meant Illovo paid an effective tax rate of 0.5% when Zambia had a corporate tax rate of 35%.
ActionAid estimated that Illovo deprived the Zambian government of up to $3-million in taxes – 14-times larger than UK aid provided to the country to combat hunger.
That Illovo Sugar case offers a sense of some of the kinds of transactions Appleby was engaged in – involving secret trusts and webs of offshore shell companies to avoid taxes.