THE OFFSHORE SAGA. CLIENT 13173

THE OFFSHORE SAGA. CLIENT 13173
One of the largest private banks in Switzerland, Union Bancaire Privée advises some of the world’s wealthiest people on how to manage their money. Its eight-story glass headquarters overlooks Lake Geneva and the nearby Prada, Versace and Mont Blanc storefronts.
Like other private banks, Union Bancaire Privée often works with law firms in the British Virgin Islands, the Seychelles and other secrecy jurisdictions to create, register and maintain shell companies – which are without real operations and which list paid stand-ins as corporate officers on official paperwork – and similar entities that help clients conceal their ownership and wealth.
Some “offshore” clients are private citizens seeking to avoid taxes in the country where they live or acquire their wealth. Other clients are politicians and public officials, who are called “politically exposed persons” in the trade, because their wealth is deemed more likely to stem from bribery or other forms of corruption.
In July 2003, the same month that Kenyatta defended Moi in public, records show that a Union Bancaire Privée lawyer, Othmane Naïm, asked Panama offshore specialists to help register a new foundation, to be known as the Varies Foundation. The foundation, like a trust, was designed to manage and shelter wealth for its beneficiaries.
Draft bylaws, also from July 2003, name the foundation’s beneficiaries: Uhuru Kenyatta and his mother. Later, records show, Union Bancaire Privée helped manage a foundation for Uhuru’s brother, Muhoho.
Invoices from Alcogal in Panama to the bank show that the Swiss advisers referred to the Kenyattas with a code: “client 13173.”
As with trusts and foundations offered elsewhere, including Belize (also South Dakota and Nevada), Panama foundations can be designed to allow families to transfer wealth from one generation to another, tax free. Typically, an individual, or “founder,” transfers assets, such as a bank account or real estate, to the foundation, which becomes the assets’ legal owner.
Panamanian foundations are prized, like trusts, because those who create them, the true owners of the assets, are not required to register their names with the Panamanian government. That secret remains with their lawyers. Any breach of confidentiality laws carries a jail sentence of up to six months, the same sentence imposed in Panama for certain categories of child abuse.
According to a World Bank study, foundations are a common tool to mask dirty money. Ferdinand Marcos, autocratic president of the Philippines, is alleged to have stolen billions of dollars while he ruled the country from 1966 to 1986, funneling millions through a Panamanian foundation.
Alcogal said that it complies with requirements where it operates and “performs enhanced due diligence on a client who is determined to be a high-risk customer.” It told ICIJ’s media partner, Finance Uncovered, that it has not provided services to the Kenyattas’ foundations since 2014.The foundations were eligible for suspension under Panamanian law for failing to pay annual taxes, Algocal said.
Naim told ICIJ that he could not respond to specific questions, but said “we always complied with all applicable legislations and regulations.”
The Pandora Papers reveal the Kenyattas also secretly owned offshore shell companies.
Muhoho Kenyatta owned three registered in the BVI, according to records: One had a bank account that held an investment portfolio worth $31.6 million in 2016; another had unspecified investments at a bank in London.
From 1999 to 2004, Ngina Kenyatta and her two daughters held shares in a BVI company, Milrun International Ltd. The sisters used the company to buy a London apartment in the upscale Westminster neighborhood, according to records.
Similar apartments in the modern brick building now sell for more than $1 million. The apartment was rented until July by an English member of parliament, Emma Hardy, according to public records. Hardy’s attorney said that she signed an ordinary rental agreement and had never heard of the company involved.
Return to power
Following elections in 2007, a sharply divided Kenya was under another coalition government, and, with part of the family fortune secreted offshore, Uhuru Kenyatta mounted a comeback, assuming a new political persona. The populist had become an anti-corruption reformer.
In public, Kenyatta vigorously espoused transparency, and anti-corruption activists praised him for his fight against graft.
When he ran for president a second time, in 2013, he toured the country, repeating seven “key pledges,” including food, water and electricity for all. He also promised security on the nation’s restive border with Somalia and stringent anti-corruption measures, including new laws and agencies to probe and punish wrongdoers.
“It is time to get tough on those who seek to use their positions of power for their own personal gain,” a coalition of four political parties, including Kenyatta’s, declared in their coalition manifesto.
That year, at the age of 51 and after decades of grooming, Uhuru Kenyatta was elected president.
In his first State of the Nation address, Kenyatta promised honest government and offered to forgo 20% of his salary.
Meanwhile, Forbes magazine, in 2011, ranked Kenyatta as Kenya’s richest person and the 26th wealthiest in Africa, estimating the family fortune at about half a billion dollars. And Kenyatta, as president, fought to keep some things secret.
Two months after Uhuru Kenyatta won the 2013 election, the same commission that examined corruption as far back as his father’s presidency reported testimony that Jomo Kenyatta had acquired vast tracts of land through illegal means. The commission also found that the elder Kenyatta had “interfered in the investigation” of the assassination of a political rival.
A furious Uhuru Kenyatta demanded a retraction, albeit only about land deals that cast suspicion on the origins of the family’s empire. After a heated debate, in which several commissioners refused to comply with Kenyatta’s demand, the majority retracted references to the deals and issued a revised report.
“Protecting the wealth and economic power of the family today seemed more important to the Kenyatta family than the implication than their father was involved in the cover-up of a murder,” Ronald Slye, one of the dissenting commissioners, recalled in an interview with ICIJ.
As Kenyatta approaches his constitutional two-term limit next year, He increasingly has staked his legacy on transparency.
“What we own, what we have, is open to the public,” Kenyatta told the BBC in 2018, referring to his family’s wealth. “If there is an instance where somebody can say that what we have done has not been legitimate – say so.”
He continued: “Every public servant’s assets must be declared publicly so that people can question and ask, what is legitimate? If you can’t explain yourself, including myself, then I have a case to answer. If you want to continue serving, you must make it public. Period.”