Jacqueline Munyaka, a commercial law practitioner, says that many wealthy individuals prefer to invest their earnings abroad, first to reduce their tax liability as Kenya’s rates are high when compared to other countries.
Countries like the British Virgin Islands and Seychelles have strict secrecy laws that prohibit revelation of asset ownership details to the public, making them attractive to investors who want to stash their wealth.
From gorgeous classic cars to dazzling apartments and plump offshore bank accounts, the long list of lavish assets revealed in a series of big money scandals have offered a deep insight into how Kenya’s super-rich spend their enormous earnings.
Before the court cases, the ultra-wealthy have stayed invisible from society.
Most, if not all, of the wealthy individuals whose asset portfolios have been revealed in court cases have opted to enjoy their riches in silence, with various regulatory authorities revealing several properties targeted for confiscation. Unlike most common men who take to social media to flaunt any new assets they acquire, secrecy in spending appears to be the most common trend among Kenya’s super-rich.
Privacy is rapidly becoming an unattainable luxury, the latest Knight Frank Wealth report notes, and ‘‘most rich people value privacy and, understandably, prefer to keep information about their investments and assets to themselves.’’
Secret havens
Jacqueline Munyaka, a commercial law practitioner, says that many wealthy individuals prefer to invest their earnings abroad, first to reduce their tax liability as Kenya’s rates are high when compared to other countries, and second to maintain a high level of secrecy.
Countries like the British Virgin Islands and Seychelles have strict secrecy laws that prohibit revelation of asset ownership details to the public, making them attractive to investors who want to stash their wealth.
The British Virgin Islands, for instance, collects over $200 million (Sh20 billion) in corporate fees every year, which motivates its government to maintain the status quo as regards to business operation and asset ownership.
“Taxes are huge in Kenya while countries like Seychelles are easy on taxes. Also, company records are open in Kenya and for you to discover capital, transactions or ownership of a Kenyan company you only need to apply to the Registrar of Companies,” says the Munyaka & Company Advocates managing partner.
“In Mauritius, company records are super confidential, and most people prefer this kind of secrecy.”
Former Imperial Bank boss Abdulmalek Janmohammed, for instance, invested his money in houses, company shares and land located in prime locations within some of the world’s most popular tax havens like Mauritius and the British Virgin Islands and holiday destinations like Zanzibar and Dubai. He also held several assets in South Africa and the United Kingdom.
Their location outside Kenya’s borders has made it difficult for local authorities to pursue confiscation orders from the courts. Kwame Owino, the Institute of Economic Affairs chief executive, says that each individual has their own reason for secrecy, but that it is certainly an interesting trend.
They own houses in some of the best islands in the world. photo | courtesy
Flaunting wealth
Aly-Khan Satchu, CEO of advisory firm Rich Management, says that flaunting riches is a phase experienced mostly by individuals who have only recently come into money.
He holds that those that maintain their wealth eventually evolve beyond that phase and opt for secrecy and a low-profile life that involves interacting with their peers in exclusive environments. “The nouveau riche want the world to sit up and take notice. The ultra-rich have already transitioned through that moment and prefer discretion and typically the company of their peers,” Mr Satchu says.
The investments expert adds that the super-rich do not view some of their purchases from an income-earning avenue point of view, but as trophies that they can afford to keep exclusively to themselves.
They mainly buy and collect luxury assets for personal enjoyment and not for their potential to grow in value, to show off, intellectual curiosity or as a safe haven for capital, a Knight Frank survey further says.
“Most of us look at assets from the perspective of earning some kind of a return. The ultra-rich can afford to buy trophy assets and only for their own delectation,” Mr Satchu says.
Among the rich, there are groups. The ‘‘parvenus’’ which a Journal of Marketing in 2010 defined as those people who want to associate themselves with other rich people and distinguish themselves from have-nots, a group that most of Kenya’s rich fall in. These are rich people who have not yet gained the prestige or manner associated with being super-rich.
Then there are ‘‘poseurs’’, those who go for big logos or flaunt their Sh3 million renovated kitchen on social media.
What they buy
But despite the classes, when it comes to luxury purchases and investments, the heart often rules the head. Luxury homes, classic chronometers, a painting by one of the world’s great artists and classic cars that are never seen on the road but cost millions of shillings to occasionally polish are high on the list of objects bought by the ultra-wealthy.
Mr Janmohammed, for instance, maintained a high-end studio apartment in Dubai. Former Chase Bank boss Zafrullah Khan and his wife Shehla own a Ferrari Dino and limited edition Corvette.
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