Zim considers protection law against briefcase businesses . . . Bill to insulate against Panama repeat

18 May, 2018 - 00:05 0 Views
Zim considers protection law against briefcase businesses . . . Bill to insulate against Panama repeat Mr Chikura

eBusiness Weekly

Ishemunyoro Chingwere Business Writer
Zimbabwe’s Speaker of Parliament Advocate Jacob Mudenda said a law on corporate operations before parliament was critical for guarding the country against corrupt and money-laundering briefcase businesses similar to those exposed in the famous Panama Papers scandal.

Speaking at a CEO Africa Business Breakfast meeting in Harare, Advocate Mudenda said when the Companies and Other Business Entities Bill is passed into law, it would help protect Zimbabwe from unscrupulous business practices.

Zimbabwe is currently working on amending and updating the Companies and Other Entities Act, and one of the key additions in the current bill is that all companies, even those operating online will be legally bound to provide physical or online addresses.

The Panama Papers scandals uncovered over 11 million leaked company documents that detailed financial and lawyer-client irregular information for hundreds of thousands of offshore entities. The documents were taken from a Panamanian law firm and corporate service provider and were leaked in 2015 and revealed private financial information about wealthy individuals and shell corporations which were used for illegal purposes.

In his remarks, speaker Mudenda said this risk can be avoided if Zimbabwe promulgates the Companies and Other Business Entities Bill.

“I think one important clause before you wrap up is clause 31 . . . all registered businesses must have physical addresses, those that don’t have physical addresses and operate electronically must also provide electronic addresses. And I think this is a very important development to ensure that we don’t have a plethora of briefcase business people. But also more importantly the use of shelf companies being used as you know with the scandal of the Panama papers, worldwide was astronomical.

“And the vehicle that was being used was shelf companies that could not be easily traced and a lot of money, laundered money, was flying all over the world therefore increasing the issue of capital flight from sovereign states,” he said.

Stakeholders, although they were largely agreed that the bill was a welcome relief to the outdated Companies Act, raised a few issues which they said needs to be addressed before enactment into law to ensure the legislation is water tight. Deposit Protection Corporation CEO Mr John Chikura said current requirements, particularly for banks and the insurance, left gaps which he said could be manipulated.

“Currently, in resolving payment we are having to use the Companies Act and the Insolvency Act for liquidations, judicial management and schemes of arrangements. Now, we just hope that the legislature is not going to create a gap or a void where nobody actually looks at beefing up the Banking Act to ensure that everything is covered to enable the resolution of failing debt, he said.

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