The man who set to be South Africa’s next president is caught up in yet another tax scandal – and this times it involves Africa’s largest mobile phone company, MTN. Cyril Ramaphosa, who went the business route at the end of apartheid, has been accused of shifting millions of dollars from companies in one country to another:

MTN was involved in shifting millions of dollars from its subsidiary companies in Nigeria, Uganda, Côte d’Ivoire and Ghana to companies in Dubai and Mauritius in order to avoid its tax obligations. This all happened under Ramaphosa’s watch, as he was chairman of MTN’s board of directors, between 2001 and 2013.

This follows accusations from the Mail&Guardian last year that Lonmin – the mining company which Ramaphosa was a board member of between 2010 and 2013 – was ‘involved in a scheme to move profits generated from its platinum mining activities in South Africa to Bermuda’.

Cyril, who is one of South Africa’s richest men, has taken a strong stance against tax avoidance in recent years, but actions of his past dealings could result in a reconsideration of who will run for president in 2019. Sure.

MTN has been accused of paying ‘management fees’ to offices that provide ‘back office support, technology transfer (to subsidiary companies) and use of the MTN brand’. But the question is whether or not these are “real offices staffed with people doing actual work to earn the money”.

Territories like Dubai and Mauritius are better known as “tax havens”—many multinational companies stash their profits here using complicated payment systems to subsidiaries. The lure of a low tax rate, or a sometimes a zero-rate tax regime, is hard to resist: it means multinationals can cut the cost of doing business without paying tax in the country they’re required to do so.

However, allegations have been denied by MTN’s chairperson, Chris Maroleng. The company has in fact responded fully to the investigative teams’ requirements.

[source: qz]