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Citadel moves to allay Panama Paper fears

May 13 2016 18:31
Ahmed Areff, News24
The International Consortium of Investigative Jour

The International Consortium of Investigative Journalists (ICIJ) has released a database with all the names mentioned in the leaked documents from Panama-based law firm Mossack Fonseca.(Rodrigo Arangua, AFP)

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Johannesburg – Citadel Group said on Friday that, if any of its clients are mentioned in the Panama Papers, its services to them have always been tax compliant.

"We can assure you that the services provided to our clients have, to our knowledge, always been regulatory and tax compliant. Citadel will not compromise on governance standards," the company said in a statement. 

It was outlining its dealings with Panama-based Mossack Fonseca, the law firm from which 11.5m confidential documents were leaked. 

It said the facts were that PraxisIFM and United Ventures Limited, which were working under legal advice from Phatshoane Henney Attorneys, were the service providers for some Citadel clients' offshore structures. These structures were “used as multi-generational estate planning structures”. 

"The offshore structure set up for clients consists in part of a British Virgin Islands (BVI) company. The choice of the BVI as a jurisdiction is essentially based on the existence of a strong legal system under English law and cost effectiveness."

Phatshoane Henney is named at least 436 times in a searchable database of the papers. 

Citadel said the firm of attorneys had told them that PraxisIFM and United Ventures Limited had used Mossack Fonseca to establish the BVI companies that formed part of the structure.

"Once the company is incorporated, Mossack Fonseca is no longer involved. We have also been advised that Mossack Fonseca is only one of two key providers of this service in the BVI."

Citadel and Phatshoane Henney were recently mentioned in relation to former Barloworld CEO Isaac Shongwe, who is named in the database. 


Shongwe is a shareholder in a company called Reboetswe Limited, registered in the BVI. He said he was not sure how Citadel dealt with his offshore business. 

Citadel confirmed to News24 on Wednesday that it dealt with Shongwe's offshore business and that his affairs were tax compliant. 

Shongwe said: "Citadel are my advisers. They advise and then, if we go with it, they develop the strategy and they execute that mandate."

Phatshoane Henney confirmed to News24 that Shongwe was a client. Citadel said it had engaged their services and referred to a statement the law firm had issued.

Phatshoane Henney told News24 in an emailed statement that all its clients' investments in foreign companies were in accordance with applicable exchange control regulations.

"Taxes are therefore paid, both in South Africa and abroad, as and when applicable in terms of the relevant tax legislation," said CEO Jan Berry. 

"We have always and are still advising clients investing significant amounts abroad not to do so in their personal names to avoid various onerous administrative and cost consequences, especially in the event of death," he said.

Berry said the shareholdings of the firm's clients in companies "formed on our instructions" were recorded in shareholders’ registers, were transparent, and should correspond with the clients’ records with the SA Revenue Service. 

South African exchange control regulations allowed local residents to invest, or to do so through a non-resident company. They did not, however, allow South African trusts to invest abroad. 

"Since exchange control regulations further prohibit the pooling of foreign investments, a non-resident company within which each family member can hold his/her own shares is, in our view, the best suitable vehicle to serve as the family’s multi-generation estate planning platform," Berry said.

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