“We have always tried to create better ways to curb crime, but criminals find alternative ways to beat the system: JAI BANDA of Dr Mtambo Law Firm investigated some of money laundering cases in 2007.
CONTRARY to the zero tolerance rhetoric by President Bingu wa Mutharika revelations from Transparency International indicated that the problem of corruption was getting worse in the country thereby increasing the possibility of laundering the proceeds of crime through the country’s financial systems.
There were many money laundering cases in Malawi from June to December last year that included fraud, drug trafficking, theft, robbery and tax evasion.
Fraud
Of significance during the period was insurance fraud. The Insurance Association on of Malawi warned the public to be on the look out as fraudulent acts were on the increase in the insurance industry. The Association went on to place flyers in the local dailies in which they stated that the fraud involved people of many disciplines which included lawyers, police officers and staff from insurance companies.
In the course of investigations one lawyer, who spoke on condition of anonymity, did reveal that it was true that there were indeed some lawyers who connived with hospital staff and police to issue false reports for processing by Insurance companies. The funds obtained from such kind of frauds are laundered as legitimate payments from insurers.
Chairman of the Insurance Association against fraud Eric Chapola further argued that the racket was manifested through fake documents issued by the professionals. Policemen would collude with fraudsters to issue fake police reports while medical officers would issue hospital reports and lawyers would push insurance companies to pay such fake claims.
The Medical Aid Society of Malawi (Masm) is another institution which during the period was hit by massive fraud. In the months of October and November the Society faced huge increases in dubious claims forcing the country’s health insurance provider to pay up to K80 million (US$ 571428.60). The Sales and Marketing Manager for MASM Andrew Ngomwa attributed the staggering figure to suspected high cases of fraud.
Health Insurance fraud ranges from doctors billing insurers service than the core performed (this is called “up coding”). The doctors provide services such as tests, surgeries and other procedures that are not necessary in order to get additional payment. Other fraudulent tactics include
Drug trafficking
An interview with the Officer In-Charge of the Police Station in the small town of Limbe revealed that Indian hemp in Malawi is mainly for export to the neighbouring countries. A 90 kilogramme bag is sold at K100, 000.00 (US$714.28) in Mozambique. Naturally the money realised from the sale of the indian hemp has to be injected into the formal system.
In July, police in Chileka impounded 80 bags of indian hemp weighing 90 kilogrammes and nine others weighing 50 kilogrammes each. The indian hemp was loaded in a three tonne lorry. The indian hemp was impounded in Lirangwe on its way to Blantyre from Nkhotakota .
In September, two men were arrested at Thabwa road block leading to the Southern Town of Nsanje which borders Mozambique with 16 cartons of indian hemp weighing a total of more than 100 kilogrammes and in November Blantyre police acting on a tip off impounded 23 bags of indian hemp weighing 90 kilogrammes each from a lodge situated on the outskirts of the City of Blantyre.
The above cases just show the magnitude of indian hemp being caught in transit in Malawi. The proceeds of the indian hemp are available to the drug trafficker for laundering. The police indicated that most of the indian hemp from Malawi is exported to the Republic of South Africa which gives rise to outgoing money laundering.
Theft and robbery
Money for laundering is at times derived from proceeds of robberies. In June armed men stole at gunpoint a Nissan Double Cabin vehicle. Mzuzu police confirmed that Mzuzu the capital city of the North had a spate of carjacking especially targeting twin cab vehicles. The vehicles are driven across the border using unchartered roots to Zambia and Tanzania and are sold. The monies realised are eventually laundered in these countries as proceeds of business.
In July in the central region of Malawi in Ntcheu two men were sentenced to fourteen years for motor vehicle theft. The two were arrested in Mozambique where they wanted to sell the car. It can be safely assumed the two in addition to bringing hard cash they could have brought goods from Mozambique. Favourite goods from Mozambique include liquor, macaroni and other food stuffs and a number of motor vehicles thieves are believed to indulge in cross border trade.
During the period it was not only motor vehicles which were robbed. In September armed robbers went away with K2,000,000.00 (US$14285.71) after raiding Metro Cash ‘n’ Carry depot in Blantyre. Similarly during the same month police arrested two security guards deployed at a construction company on allegations that they connived on the theft of K7,000,000.00 (US$50 000) meant for salaries. A visit was undertaken to the robbed premises in a town called Phalombe wherein the robbed company’s personnel indicated that they believed money realised from the robbery had been exported to Mozambique.
Tax evasion
On June 12, 2007 the Malawi Revenue Authority (MRA) held a press conference in Blantyre where it stated that they had uncovered three schemes some tax evaders used when importing cars and flat television screens. The tax authority revealed that they had seized three vehicles and 80 TFT LCT – TV Screens. MRA Deputy Director of Investigations and Audit Emmanuel Kaluluma said the evader marked the cartons “computer monitor” to evade tax. The scheme was exposed when MRA officials conducted a risk check. The tax evader took advantage of a policy government set that allows importation of computers duty free except for Value Added Tax. Had the scheme not been uncovered the evaders would have reaped off government K9 000 000.00 (US$ 64285.71) if they had been successful in the racket.
In another racket, a Malawian national only identified as Burton was on May 27 hired by a fellow Malawian based in South Africa, Deckerman Gumbi to drive a Toyota Fortunar into the country with fake a Malawian registration number CK 7618. What this tax evader did was to pretend as if the vehicle went out of Malawi and it was returning home through Mwanza border post. Investigations discovered that it was just a new vehicle being imported into the country. The tax collecting body was going to lose K3 400 000.00 (US$ 24285.71) in revenue in this racket which sum would have been laundered as legitimate funds.
Corruption
Corruption is another predicate offence which yields money for laundering. In the town of Mzuzu, the Mzuzu Chief Resident Magistrate convicted a policeman who sought money in order to release and drop criminal charges against three suspects. He solicited K6,000 (US$ 42.85) as an inducement to drop criminal charges.
In September President Bingu Wa Mutharika disclosed that government was investigating Minister of Information and Civic Education Patricia Kaliati on corruption allegations on the way she handled the Nyika-Vwaza conservation concession tender process when she was Minister of Tourism. The Member of Parliament for Mzimba West Loveness Gondwe had questioned the circumstances surrounding the Nyika-Vwaza Eco Tourism in Parliament accusing Kaliati of taking kickbacks from one of the bidders an investor from the United Arab Emirates.
The views expressed in this article are those of the author and not necessarily of Blantyre Newspapers Limited (BNL).
http://www.dailytimes.bppmw.com/article.asp?ArticleID=8146
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