BUSINESS DAILY AFRICA: Before he died in a hail of bullets in 2014, Mombasa tycoon Shahid Pervez Butt ran a secretive business empire, part of which was set up in the tax havens of the West, including the island of Jersey.
The true nature of Mr Butt’s wealth — estimated at Sh5 billion — is shrouded in secrecy, and the businessman himself was only occasionally brought to the limelight by disputes involving his commercial interests or criminal charges in court.
Before his death on July 11,2014 he was battling charges related to bankrolling terrorism and incitement to violence preferred against him by the government.
But the structure of Mr Butt’s vast estate can be partly revealed after his widow, Regine Butt, and her mother moved to court early September, 2014 seeking to settle a property dispute with his first wife and her son. The case puts the empire Mr Butt built at the centre of one of Kenya’s biggest estate battles in recent years.
The businessman owned some 209 motor vehicles, mostly luxury buses in a fleet under his most prominent investment, Modern Coast Express Limited, a bus service that connects East Africa’s major towns. He also ran a logistics operation through Vantage Point Clearing and Forwarding and Vantage Road Transporters, serving clients transporting cargo to and from the port of Mombasa.
Also referred to as Mohamed Shahid Butt, he owned scores of houses, plots and other commercial properties at the coast directly and through various companies, including Blue Bell Properties and Premac Properties.
Cash flows from the real estate and transport concerns were held and invested in off-shore tax jurisdictions, with some of the most preeminent wealth management institutions, reflecting his sophisticated and globally astute approach to running the estate.
He was not the ordinary-looking businessman, sporting a receding hairline and sagging eyelids who appeared at the Mombasa court on December 27, 2013.
The businessman’s son Haroon Butt – from his first marriage to Akhtar Butt — is listed as a co-owner of various properties, including the off-shore assets. Haroon is the operator of a Standard Chartered account in Jersey, a tax haven that has become a favourite of Kenya’s elite class. The island is popular for its banking, mutual funds and trust services, drawing on its strong political, economic, legal systems and tax-shelter status to attract cash-rich institutions and individual clients.
Jersey has more than 70 banks with more than $300 billion (Sh26.4 trillion) in assets and is estimated to hold over $400 billion (Sh35.2 trillion) in mutual fund and trust assets. The late businessman also had an account in the Bermuda islands, whose banks offer customers strong privacy protection against parties that may inquire into their activities.
Banks operating in the British territory also offer a tax-free means for accessing global investments, including equities and bonds. Mr Butt had a number of offshore savings and investment accounts, such as the one he held at American Express Asset Management which invests in UK-quoted equities.
Another of the accounts was with Commerzbank, a German institution offering investment banking and wealth management solutions.
While little is known of how he started out, Mr Butt was personally in charge of managing his massive wealth. He was the managing director of the various companies he owned, including Vantage Road Transporters Limited.
He had a reputation as a tough negotiator and was resolute in protecting his interests from other parties. In the late 2000s, for instance, Mr Butt locked horns with the government, which intended to dispossess him of a 4.2-acre parcel of land located in Mombasa’s Port Reitz area.
The Kenya Ports Authority (KPA) was acquiring land in the area to pave the way for construction of a 2.8-km road to a proposed new container terminal at Kipevu. Mr Butt offered to sell the land to the KPA at Sh250 million in January 2012 and later revised the price to Sh915.3 million, nearly four times the original quote. The KPA responded with a final offer of Sh62.5 million, leading to a stalemate that saw the businessman go to court to block the buyout
The KPA had earlier opened negotiations with the previous land owner Salim Abdalla that would have seen it acquire the land at a much lower cost. Mr Abdalla was considering an offer of up to Sh39 million from the KPA but opted to seal the deal with Mr Butt.
“Before anything became of (KPA’s) offer, Abdalla sold the property to the proprietors of Vantage Road Transporters Limited,” reads part of court documents detailing the court battle played out in the Mombasa High Court.
Besides the businessman, three other land owners were to be bought out including the late drug baron Ibrahim Abdalla Akasha who was shot dead in Amsterdam in 2000 in a gang feud.
The court ruled in Mr Butt’s favour, stopping the KPA and the Commissioner of Lands from effecting the compulsory acquisition in a judgement issued in March last year. It’s unclear whether the parties later reached a settlement, with construction of the new container terminal ongoing.
Besides taking on the government, Mr Butt was also rigorous in weeding out employees who allegedly stole from his businesses. In 1999, for instance, Mr Paul Ngoche, a driver of one of the businessman’s trucks, was charged with stealing wheat valued at Sh50,555. He was expected to deliver 36 metric tonnes of wheat to MacNeal Millers of Thika but the consignment offloaded fell short by 1,820 kg.
The driver denied the allegations, saying he was on leave when he was arrested at Migori and charged with stealing. He was found guilty and sent to prison despite the prosecution’s failure to demonstrate how the wheat was stolen, with no evidence that the bags were opened.
The judge ruled that “whatever means were used to steal, the wheat was indeed stolen”. Mr Ngoche, however, won an appeal the next year when the courts ordered his release from jail.
“This was a case where the ingredients of theft by servant was not proved and more, the possibility of the bags being loaded in short weight was proved better than any other theory,” the Mombasa High Court ruled.
The same court will now decide the merits of Mrs Regine Butt’s application that discloses the accoutrements of wealth enjoyed by the deceased’s family. The widow is seeking to be paid Sh1.5 million monthly from the businessman’s estate to meet her living expenses, including Sh200,000 for fuel and vehicle maintenance.
She also wants Sh1.05 million each year to pay school fees for her two children who are studying at a private school in Mombasa.
Mrs Butt says she and her mother, Roselinde Gudrun Ostertag, are unemployed and depended on the late businessman. Mrs Akhtar Butt and her son Haroon have been named as interested parties in the case.