The Financial Intelligence Centre (FIC) has launched the 2018 Money Laundering/Terrorist Financing (ML/TF) Trends report which has brought to the fore shocking revelations of suspicious transactions involving officials in government (Politically Exposed Persons – PEPs), Zambians in business, foreigners and other connected individuals. The 2018 report has revealed an increase of 30 per cent in these suspicious transactions involving corruption and money laundering to K6.1 billion from K4.5 billion recorded in 2017. That there has been such an increase in suspicious transactions in a period of one year should be a serious source of concern for all to investigate the truth behind these shocking figures and details of alleged wrongdoing.
According to the FIC director general Mary Chirwa, the 2018 Trends Report on Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) is intended to increase public awareness and understanding of Zambia’s AML /CFT regime. It provides a synopsis of suspicious financial transactions analysed and related financial crimes identified by the FIC during the year. Such information is critical in supporting Zambia’s response towards the prevention and detection of money laundering and terrorist financing.
Shocking revelations have been made in the 2018 Trends Report, though the trend is similar to what happened in 2017. Again, transactions allegedly involving corruption topped the list at K4.9 billion, accounting for the bulk of the money involved in these suspicious transactions. Tax evasion followed at K1 billion; theft at K110 million and fraud at K54 million. With a fight against corruption declared and strong statements given by President Edgar Lungu to the effect that those involved in questionable deals will not be spared, if found wantin, these suspicious transactions are still on the rise. In total, 176 suspicious transaction reports were recorded of which 80 were disseminated to Law Enforcement Agencies on suspicions covering tax evasion, fraud, corruption and money laundering. It is left to the investigative agencies to move on those cited should their investigations prove some wrongdoing in line with revelations made by the FIC.
Though shocking, the contents of the FIC 2018 Trends report on corruption were expected, but not at this level, because we know that there are a number of people who have taken advantage of their positions and association with top leaders to engage in a variety of wrong things and expect some form of protection in the end. But that’s not workable because law is law and it does not segregate. Either way, the law does catches up with us regardless of how long it might take. This is a problem that has engulfed not only the government but the private sector as well. What is clear for now is that law enforcement and investigative agencies have a lot of work to do to get to the root of it all and nip this problem in the bud.
The FIC report names PEP N, who has alleged amassed wealth not in line with his expected income within a short period of time through suspected corrupt practices with the aid of two other PEPs, his associates – PEP D and PEP C. It is alleged that PEP N influenced the awarding of contracts to foreign construction companies and in return, these companies constructed 49 residential properties for him valued at ZMW 70 million. They further purchased two luxury vehicles for him valued at ZMW 4 million. With respect to PEP C and PEP D, it was noted that they had acquired four (4) properties valued at ZMW 61,000,000.
A review of the bank accounts of PEP N and PEP C for the period 1st October 2015 to 30th April 2018 revealed credit turnover of K12 million for PEP N and K35 million for PEP C and this has been reported to appropriate investigative agencies. These scenarios show a serious drive by some government officials and others in business to make as much money for themselves as possible at the country’s expense. While a few are having endless headaches about the country’s future, there are those officials, in partnership with some outsiders, who are out to sweep this country clean. But we have seen how those whose wealth is way beyond their level of income have been courted by the Anti-Corruption Commission, Drug Enforcement Commission and other law enforcement agencies. There is more yet to be revealed and the long arm of the law will catch up with all those involved. As stated in the report, the revelations are a tip and the rest of the work is left to the investigative wings to ascertain whether or not those cited (although not named) were truly involved in these suspicious transactions.
Then there is a Mr. S, a foreign national resident in Zambia, who received huge amounts of money in his personal account that he used to finance other businesses in the country, paid some public officials ostensibly as kickbacks for favours given and sent a substantial amount to his home country. Additionally, two foreign nationals named X and Y incorporated company D in Zambia. Company D held bank accounts with bank B. Mr. X requested the bank to amend his name, date of birth and nationality. Upon receipt of this request, the bank performed customer due diligence and adverse information on the new credentials was revealed. The new name was linked to a terrorist group in Country Q within Africa. Mr. X made multiple forex purchases using his company account to fund his travel from Zambia to the African Country where terrorist activities are rampant. The forex purchases by Mr. X were suspected to be funding terrorist activities in Country Q. This matter was also disseminated to competent authorities for further investigation. How were these transactions possible? These foreigner nationals must be running a strong network to successfully carry out their activities without any arrest. Having such acts taking place successfully without any stop to them is a reminder that Zambia needs to strengthen its monitoring mechanisms and get all these criminal minds out of the way.
Also in the chain come nine law firms cited as having played a role in facilitating/masking criminal transactions in collusion with some public officials. These identified law firms assisted suspected criminals to mask the source of funds and aided its reinvestment or movement to foreign jurisdictions. “Most cases involved illegally obtained funds transferred to law firms who then facilitated the acquisition of property such as land and motor vehicles on behalf of the launderers. In 2018, the Centre analysed cases related to nine (9) law firms amounting to ZMW 365 Million,” the FIC report has told us. What courage! Lawyers are individuals of high integrity that must respect the law because they know the law. Lawyers are not called learned for mere display but this accolade signifies the importance attached to the profession. The bar of integrity used on lawyers is much higher than an average individual hence their conduct is expected to be above reproach.
Another area of concern is public procurement, which, according to the report, is vulnerable to corruption. This is where, according to the report, tender procedures for some contracts were not followed, shell companies (non-operational entities without physical addresses) were used to get contracts from government. Some of these shell companies actually had contracted awarded to them before they were even formed. This is a serious money laundering activity that is robbing this country of billions of kwacha that government could effectively put in key services such health, education and provision of other social services.
Our investigative agencies who have been given full reports with names of those suspected to be behind these shell companies must, as a matter of urgency, take this matter up and bring to book all those who will be found wanting. Zambia currently has huge economic problems – the country’s debt burden is getting heavier (as acknowledged by finance minister Margaret Mwanakatwe) and more austerity measures have been announced to get salvage the economy. It is deeply disturbing to have these going on in a country whose government is battling debt repayments and extremely low import cover (of only slightly over a month instead of the recommended three months). This, in short, means Zambia is in a situation that requires a high level of belt tightening and ensuring no wastage of the available resources.
Actually, the FIC Act of 2016 does not stop the institution from naming the PEPs, the law firms, the audit firms, the political parties receiving money from companies that have been awarded public contracts, the foreigners using Zambia to launder money and those behind the casinos also being used for questionable deals. Only when those involved start getting named in these reports will we see a stop to such activities. President Lungu, who has been quite firm and serious about ending corruption and bringing the culprits to book, will obviously ensure no one is protected and will leave the investigative wings to do their work independently. The FIC has done its job; the rest is up to the law enforcement agencies to either arrest or clear those allegedly behind these suspicious transactions.