Malawi state agencies deadlocked over arrest of Indians who externalized $4m

Heads of Malawi’s six state agencies are yet to append their signatures to a Memorandum of Understanding (MOU) to kick start an operation code named, Operation Kuluma, aimed at investigating and prosecuting financial crimes in Malawi.

The agencies are, Reserve Bank of Malawi, the Malawi Revenue Authority, the Anti-Corruption Bureau, the Financial Intelligence Unit and the Malawi Police Service, according to documents seen by the Centre for Investigative Journalism Malawi (CIJM).

The delay in putting in motion Operation Kuluma and or changing the country’s regulatory framework regarding financial crimes is a blow to the ruling Democratic Progressive Party (DPP) which is trying to plug financial holes occasioned by a donor freeze in the wake of the cashgate scandal.

A leaked memo from the Reserve Bank of Malawi Governor Charles Chuka dated 8^th November 2016 to the Solicitor General and Secretary for Justice shows that the FIU is stonewalling the review of the Money Laundering and Terrorist Financing Bill.

At the meeting held from 24^th to 26^th October, 2016 at Game Haven Lodge in Thyolo District involving officials from the Reserve Bank of Malawi, Financial Intelligence Unit, Ministry of Finance and Ministry of Justice on the review of (the Bill) – there was no consensus regarding the demarcation of supervisory roles between the Registrar of Financial Institutions and the Financial Intelligence Unit.

“There was further no consensus on whether the Registrar of Financial Institutions should have powers to issue freezing directives against accounts suspected to have been involved in financial crimes and on the need to criminalise operating fictitious/ghost accounts since there is no law that criminalises opening and operation of fictitious accounts,” Chuka said.

President Peter Mutharika said in May 2016 when he opened the Reserve Bank of Malawi Mzuzu branch that forex externalization is aggravating people’s poverty.

“This country is losing a lot of money in forex externalization. We are losing more money than the aid we need from anywhere. We must hurry to arrest and slay this monster of forex externalization once and for all,” Mutharika said.

The MOU, which has been chalked by the six state agencies, relates to the investigation and prosecution of offences against the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act, 2006 [MLA]; Exchange Control Act, 1984 [ECA]; Customs & Excise Act, 1969 [CEA]; Regulations there under; and the Penal Code of Malawi.

“Recognizing the damage done to the economy of Malawi by the depletion of its foreign currency reserves and noting the high probability that proceeds of crime have been laundered and sent out of the jurisdiction of Malawi’s courts,

“The Parties to this MOU agree to co-ordinate, co-operate and collaborate at all stages of the investigations and prosecutions of the individuals and companies implicated in the criminality [the suspects]” reads part of the MOU.

Operation Kuluma has initially targeted 13 Indian owned companies who allegedly externalized $4 million in eight separate transactions.

The companies and individuals are: AMAD, M R – Intertrade Agency and Mozimpex, USMAN, S and  BILAL, S – Hasbro Ltd and Verizon, ARIF, M – Noor General Distributors and TS Distributors, RAZZAQ/RAZAQ, M and MANJARA, A S I – Zam Zam Import & Export , GANI, S G and RAZA, N – Premium Commodity Traders Fawa Products; Tarar Enterprises Hong Kong: Vic Charm Ltd, RAWANI, S S  [FRS Co Ltd; BT Trading Co; Al Johara; Nantong Junlove Int; HK Polymers], Musa Kariam Ibrahiam of Zambezia Traders, Karamat Ullah Chaudhry and Naeen M. Iqbal.

Broadly, the offences involve the making and use of false documents and deceptions by persons applying for permission to remit abroad large sums of foreign currency.

For instance, Mahomed Rafiq Amad Managing Director of Intertrade Agency faces nine counts involving the externalization of a total of US$2,058,000.

Under count one, Amad is alleged to have used a Customs Declaration Form Number C80 of 31/08/13 of Chiponde Border valued at US$768,000.00, in support of an application made to CDH Investment Bank for remittance of the said sum of VIC CHARM LIMITED of Hong Kong, purportedly to pre-clear 4,500 Metric Tonnes imported Cotton seed, when in actual fact no such importation was ever made, thereby fraudulently externalization the said US$768,000.00 from Malawi.

It is also alleged that on or about the 2nd day of September, 2013 at CDH Investment Bank in the City of Blantyre, Amad was in possession of US$720,000.00 which he knew or had reason to believe represented, in whole or in part, directly or indirectly, the proceeds of illegally obtained foreign currency.

It is also alleged that on or about the 7^th day of October, 2010 at CDH Investment Bank in the City of Blantyre using Account Number 0020135092200 and Account Name Intertrade Agency obtained foreign currency amounting to US$570,000.00 for the purpose of payment of goods imported, namely, cotton seeds from Mozimpex of Mozambique, when in fact no such goods were imported.

Similarly, two other Indians, Karamat Ullah Chaudhry and Lakhu Mohamed Naeem M Iqbal face 13 counts ranging from forgery of official documents, making a false document without authority, uttering a false document to illegally obtaining foreign currency.

Court documents show that the duo on five separate occasions externalized a total of $1.6 million.

Director of Public Prosecutions (DPP) Mary Kachale certified in the certificates of summary procedure trial criminal case number 824 of 2014 and Criminal Case Number 234 of 2011 that the cases were proper for trial by the High Court as summary procedure cases.

**The Centre for Investigative Journalism Malawi (CIJM) supported this story.