Geldof's Geld

The International Consortium of International Journalists reported last month that Bob Geldof, the man credited with drawing attention to famines in East Africa, intends to screw African nations out of much-needed tax revenues. According to ICIJ's Will Fitzgibbon:

Bob Geldof’s firm wanted to buy a chicken farm in Uganda, one of the poorest countries on earth. But first, an errand.

After soaring to fame in the 1980s for organizing Live Aid and other anti-famine efforts, the former Boomtown Rats rocker had shifted to the high-powered world of international finance. He founded a U.K.-based private equity firm that aimed to generate a 20% return by buying stakes in African businesses, according to a memorandum from an investor.

The fund’s investments would all be on the African continent. Yet its London-based legal advisers asked that one of its headquarters be set up more than 2,000 miles away on Mauritius, according to a new trove of leaked documents.

The tiny Indian Ocean island has become a destination for the rich and powerful to avoid taxes with discretion and a financial powerhouse in its own right.

One of the discussion points in the firm’s decision: “tax reasons,” according to the email sent from London lawyers to Mauritius.

Geldof’s investment firm won Mauritius government approval to take advantage of obscure international agreements that allow companies to pay rock-bottom tax rates on the island tax haven and less to the desperately poor African nations where the companies do business.

“One little wad of cash can be the difference between a poor country building big infrastructure or not,” a Ugandan tax official told ICIJ.

A spokesman for Geldof’s firm, 8 Miles LLP, said its investors include international development finance institutions that “request that we consolidate their funds in a safe African financial jurisdiction for onward investment into the various target African countries. Because of its reputation, Mauritius is used by many private equity investors for this purpose.”

The spokesman said the firm’s African investments follow high standards “to create jobs, improve communities…and by generating increasing tax revenues which support the governments where we operate.” The spokesman said, “Only when we sell a company will the sale proceeds be paid back into the fund in Mauritius.”

Geldof declined to comment.

There is a lot more about the financial attractions of the island nation, a Commonwealth member, including a copy of some supporting evidence, here.

One worries that the new Minister of State at the Department for International Development, Dr Andrew Murrison, will continue his predecessor's policy of diverting development aid money into "business development" which is unlikely to help people on the ground.