The Sh5bn empire that slain Modern Coast owner built

Corporate News 

The late Shahid Pervez Butt. He was gunned down on July 11 in Changamwe. PHOTO | KEVIN ODIT | NATION MEDIA GROUP 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• He was gunned down on July 11 in Changamwe.
• The businessman had interests in the local and regional transport and real estate sectors among others.
• He had several off-shore savings and investment portfolios in some of the leading financial capitals.
• His liabilities have not been ascertained. His assets have been estimated at Sh5 billion.

Before he died in a hail of bullets two and a half months ago, 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, 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 now be partly revealed after his widow, Regine Butt, and her mother moved to court early this month 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.

READ: Coast Bus: Butt widow in court over Sh5bn estate

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 rescinding hair 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