There is nothing new in Pandora Papers

President Uhuru Kenyatta in an earlier address. [Courtesy]

The recently leaked name of the documents, Pandora Papers, alluded to Greek mythology and piqued our curiosity and emotions. The presence of our President on the list made things more interesting and Kenyan.

In a curious twist, President Uhuru Kenyatta replied and kept us waiting for a fuller answer.

His view that the leak was a positive development and would improve financial transparency and openness in Kenya and worldwide was nothing more than brinkmanship, like popping a balloon.

Other state officials were confirmed to have such accounts after informing the Anti-Corruption Commission.

It would be interesting to find out who else is on the list. My guess is telling me that you will find non-beings as proxies. Not every Kamau, Onyango or Abdul opens such accounts.

The public has no local accounts, much less foreign ones. Even the term tax haven is confusing to the public. You would probably understand if it’s “Heaven” not that I am condescending to the Kenyan public.

No wonder MCAs and other agents enjoy traveling overseas. Such trips are considered prestigious, as are offshore accounts. After all, we all long to be rich and wealthy, only circumstances don’t allow it.

Offshore account holders are divided into two classes; the corrupt and the clean. The corrupt want to hide their illegally acquired money.

That sends shivers down my spine. What if that money is misused to influence voting behavior, or to stir up social unrest or chaos?

Money fraudulently obtained is likely to be used illegally. That is why corruption is so corrosive to society.

The other class are the rich and affluent looking to diversify their portfolios. You don’t want to put all your eggs in one basket.

Such accounts reduce the burden of business transactions and protect the value of a person’s assets, as they are often denominated in dollars or some other strong currency.

But why tax havens? They assure you of the secrecy and security of your money. Surprisingly, such accounts may not pay as much interest as Kenyan banks.

You could erode your wealth by charging an administration fee, but the security and anonymity largely make up for the low or no interest rates.

It’s like the public sector: you don’t get paid well, but your job security is high.

Bring money

It is revealing that tax havens are not just small islands in the Caribbean, but also industrialized countries such as Singapore, Switzerland, the Netherlands and the USA. This leaves no doubt that tax havens have other uses than shielding property owners. They bring money into the country, create jobs and increase the economy. Maybe this money will be given to us as a loan later!

For this reason we should make Kenya a tax haven and enjoy the benefits. This includes jobs for lawyers, bankers, accountants, and other professions. I remember many of my former students getting jobs in the Caribbean islands when the Sarbanes-Oxley Act was enacted in the US in 2002 following financial scandals involving Enron Corporation, Tyco International, and WorldCom.

We could get enough money to borrow from other countries. We can also look at the positive part of tax havens.

Tax havens suck up money from other countries because of their perceived security and secrecy. What is the difference between tax havens and the extraction of minerals and other resources from our continent by foreign powers?

Sending money to tax havens is a vote of no confidence in our economic system. Why not keep money here? We shouldn’t make and take away wealth here. Does moving money into tax havens mean we need to reform our financial and tax systems?

Maybe there is something we can borrow from tax havens. Would Nairobi’s development into an international financial center reduce the flow of tax havens? One hundred and thirty-six countries (excluding Kenya) have a minimum corporate tax rate of 15 percent. How does this affect tax havens? Are you getting more innovative?

We should be brave enough to look at all the money leaving the country, and not just in tax havens. A lot of money is leaving this country instead of being reinvested, but we are always on the lookout for foreign direct investment. The trick is to make the country so conducive that more Kenyans and foreigners want to keep their money here.

Political stability is the starting point. I can bet that a lot of money will disappear just before the elections, when the uncertainty is greatest.

The Pandora Papers will not have the expected political backlash in Kenya. The political class has mastered the art and science of turning stories for their benefit. There are full salary spin doctors or retainers. Another sensational story can always be used to “kill” the unwanted.

Occurring problems

Some problems arise from the leak beyond revealing the world leaders and their secret wealth. First, we knew the contents of the Pandora Papers, there was no big surprise. We can say that Pandora’s box was empty. All of this information about who has money in tax havens was public, we just wanted confirmation.

You can only keep money in a tax haven if you have it and we know who has the money in Kenya. We can worry about how they got it later.

Second, have we looked at the link between dual citizenship and tax havens or offshore accounts?

Third, we should measure the patriotism that runs in our blood. Shouldn’t our leaders lead by example? Shouldn’t they suffer with us? Do you remember economic growth when “Najivunia Kuwa Mkenya” was the national mantra? When we almost weaned ourselves from the IMF and donors?

Let’s not forget that the inflow and outflow of money is an integral part of the global financial and trading systems. We should accept that money follows opportunities. As Kenya continues to develop, financial sophistication will follow. We hope the sophistication benefits ordinary citizens, not a few.

After all, most Kenyans will not leave this country alive or dead.

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About Sonia Martinez

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