Machakos Senator Johnstone Muthama has been mentioned in the report. Photo/FILE

Kenyans stash Sh50b in UK bank

Swiss branch of HSBC uncovered as haven for fat foreign accounts of global super-rich, among them locals who own almost 0.05pc of national budget allocation

By Maureen Ng’ang’a @kuimoryn
Kenyans will today be shocked to learn that more than Sh51 billion is stashed away in accounts at a London-based bank by 742 super-rich felllow citizens, apparently seeking to avoid detection of their wealth at home.
The money, that is enough to cover huge chunks of the national budget deficit or fund construction of infrastructure, is said to be held in the vaults of the Swiss branch of the UK-based Hong Kong Stock Brokerage Company (HSBC) bank.
The information is contained in a report uncovered by investigative journalists that indicates that the highest amount of money banked by one Kenyan individual is Sh3.15 billion ($35.8million). HSBC is the world’s second largest bank.
The secret report obtained by the International Consortium of Investigative Journalists (ICIJ) via the French newspaper Le Monde, covers almost 60,000 leaked files dating back to 2007, associated with more than 100,000 HSBC clients and legal entities from more than 200 nations.
According to the study, Kenya has been ranked third among African countries in amounts held by the bank, behind Algeria and South Africa. Globally, Kenya is number 26 in terms of clients who own 1,093 accounts, which means that some of the 742 clients own more than one account.
In terms of cash stashed away, the country is number 58 globally, out of more than 200 countries featured. This comes as the Ethics and Anti-Corruption Commission (EACC) was quoted in the People Daily yesterday as ordering all public officers to close all unapproved private bank accounts held outside the country.
They were given a March 31 deadline, in accordance with the Leadership and Integrity Act. However, the HSBC report points out that holding an account with the bank does not imply any criminal culpability or dubious dealings. The disclaimer reads: “There are legitimate users of Swiss bank accounts and trusts.
We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Swiss Leaks interactive application have broken the law or otherwise acted improperly.” Curiously, for Kenya only Machakos Senator Johnson Muthama is mentioned among 60 other people globally featured in the report who were selected by ICIJ as a sample, based on public interest.
However, Muthama’s account is listed as dating into the last two decades and which he closed 15 years ago. “It was not clear how much money the wealthy gemstones magnate has in the bank but HSBC files recorded Muthama’s name in connection with the client account “ROCKLAND96”, which was set up in 1996 and closed in 2,000,” the report says.
Muthama was also linked to the numbered client account “20443NM” over the same period. Bank files listed eight of his relatives, one of them identified as Nduya Muthama, also linked to the numbered account. However, the leaked files do not specify the exact role that he had in relation to the accounts.
In his comments, Muthama is quoted in the report as confirming that the account Rockland96 was opened in 1996, saying: “This was necessary because of my foreign directors/partners who were in the process of setting up the mining company, funds were needed.”
“The account was, therefore, opened to facilitate remittance of funds into one central account for the sole purpose of purchasing mining equipment and spare parts. Once the mine was set up, the account was consequently closed,” he added.
The documents show HSBC’s dealings with clients engaged in a spectrum of illegal behaviour, especially in hiding hundreds of millions of dollars from tax authorities. The secret files obtained by ICIJ — covering accounts dating back to 2007 associated with more than 100,000 individuals and legal entities from more than 200 nations — are a version of the ones the French government obtained and shared with other governments in 2010, leading to prosecutions or settlements with individuals for tax evasion in several countries.
It’s not illegal in most countries to maintain offshore bank accounts, and being identified as holding an HSBC private bank account is itself no indication of any wrongdoing. The report also shows private records of famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.
Other clients who held HSBC bank accounts in Switzerland include former and current politicians from Britain, Russia, Ukraine, Georgia, Romania, India, Liechtenstein, Mexico, Lebanon, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, Philippines, South Africa and Algeria.
The leaked account records claim some clients make trips to Geneva to withdraw large wads of cash, sometimes in used notes. An analysis by ICIJ shows that almost 2,000 of HSBC clients who appear in the files are associated with the diamond industry.