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Johannesburg - Former Barloworld Limited CEO Isaac Shongwe, who has been named in the Panama Papers as a shareholder of a company registered in the British Virgin Islands, initially denied knowledge of it to News24, but later said he was not aware of how a wealth management company dealt with his offshore business.
A searchable database of the leaked documents from Panama-based law firm Mossack Fonseca revealed that Shongwe and his wife Khumo Portia Shongwe are shareholders of a company called Reboetswe Limited.
On Tuesday Shongwe, who is currently a non-executive director for Barloworld, initially denied knowing what Reboetswe Limited was, telling News24: "I don't know what the hell that is."
He however said he needed to check with Citadel Wealth Management, who deal with his financial affairs.
Citadel confirmed to News24 that it dealt with Shongwe's offshore business, and that all his affairs were tax compliant.
Shongwe later told News24 on Wednesday that he had offshore business, but was not aware of how Citadel dealt with it.
"Citadel are my advisers. They advise, and then if we go with it, they develop the strategy and they execute that mandate," he said.
Shongwe said he did not attend some meetings with them, although his wife did, and he did not know who Citadel had “engaged with”.
He gave the example of Old Mutual investing his pension money, but not knowing where it was invested as long as they "protect the money".
"You choose a service provider and are ensured that everything is above board and taxes are paid."
Shongwe had also initially denied knowing the firm Phatshoane Henney Attorneys, who are named as intermediaries in the documents. The law firm is linked to at least 436 other entities in the Panama Papers.
Phatshoane Henney however confirmed to News24 that he was a client of theirs.
READ: SA law firm linked over 400 times in Panama Papers
"We confirm that we have been instructed by Mr Isaac Shongwe to assist with his estate planning as far as his foreign investments are concerned," it said in an email to News24.
Citadel also said it had engaged Phatshoane Henney's services, and referred News24 to a statement issued by the law firm.
Phatshoane Henney told News24 in an emailed statement that all of their clients' investments in foreign companies "are in accordance with the applicable exchange control regulations which also require tax clearance certificates".
"Taxes are therefore paid, both in SA 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 in order 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 the shareholders’ registers, were transparent and should correspond with the clients’ records with the SA Revenue Service.
"Full and complete FICA records are maintained in accordance with the Financial Intelligence Centre Act."
Berry said South African exchange control regulations allowed local residents to invest, or to do so through a non-resident company, but did not 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.
When asked by News24 why he decided to do business offshore, Shongwe, who is also the founder of management consulting company Letsema Consulting, said that people are legally allowed to take a portion of their money offshore.
"From time to time I have opportunities overseas – if I am building a company or where I have just opened an office in Nairobi," he said.
"With my investments, 95/96% is in South Africa. But it is good to have capital overseas to use at some stage. My son is just now finishing his studies at UCT [University of Cape Town] – it would help if he wants to do his Masters overseas.
"These investments tend to be frowned upon, because you get some people who say ‘South Africa is going down so I am taking my money out of it’. But that is not the case [with me]. As a business person my core business is here, in South Africa. I just wanted to diversify my portfolio."
