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65% of Africa’s illicit financial flows are in Zambia – CTPD

ESTIMATES by a High Level Panel Report have revealed that Zambia accounts for 65 per cent of Africa’s Illicit Financial Flows (IFFs), says Centre for Trade and Policy Development (CTPD) chief executive Isaac Mwaipopo.

And Southern Province permanent secretary Sibanze Simuchoba says Zambia is among many other African countries where IFFS pose significant threats to the social and economic development of the country.

In a speech read on his behalf by Isaiah Mbewe at the launch of the Stop the Bleeding Campaign against IFFS at New Fairmount Hotel in Livingstone, Mwaipopo said tax crimes, money laundering and illicit flows were part of complex issues that undermined good governance, ethical politics, government and civil society programmes intended to promote inclusive growth and reduce inequality.

“Current estimates are contested, but estimates by High Level Panel Report on IFFS indicates that Zambia accounts for 65 per cent of the Africa’s Illicit Financial Flows and locally accounts for 80 per cent of Zambian IFFs through copper,” Mwaipopo said.

He said it was for this reason that CTPD was in the forefront to promote financial integrity, accountability and fight against IFFs by seeking collaboration with diverse stakeholders.

Mwaipopo added that Zambians must reach a point where they begin to question and probe all financial mismanagement.

And Simuchoba said Zambians had a duty to build strong and ethical institutions whose financial integrity was beyond question.

“We can never relent in our efforts as a nation to promote a just and fare development which leaves nobody behind,” Simuchoba said.

He said the illicit financial flows were not new to Zambia and had continued to slow down the development of the country.

Simuchoba added that Africa continued to lose in excess of US$50 billion to 60 billion annually through illicit financial flows.

The Financial Intelligence Centre (FIC) last week revealed that it was under siege from criminals who were trying to influence the shut down of the institution so that they could freely conduct money-laundering activities.

The institution further disclosed a total of 35, 783 suspicious cash transactions involving over US$ 1 billion in nine months linked to corporate and individual bank accounts.

The News Diggers had earlier revealed that Lusaka lawyer Lewis Mosho had started the process of removing FIC director general Mary Tshuma by raising criminal charges against her.

It was further reported that Mosho and some PF officials wanted Tshuma removed so that a more submissive director general could be appointed to replace her.

But other sources have revealed that changing the leadership of the FIC would not alter the status quo since the centre was an affiliate of the global Financial Intelligence Unit that monitors suspicious transactions across the world.

And during a recent press briefing in Lusaka, FIC board acting director John Kasanga said criminal elements were targeting senior managers at the institution with false allegations in order to get rid of them.

“Public institutions, especially the FIC have an important role in safeguarding our country from criminal elements. Unfortunately, I must share with you that the FIC is facing real threats from these criminal elements who would like to destabilise the institution. This has taken a form of threats to the personal safety of the FIC senior staff and attempts at spreading false insinuations about its senior management,” Kasanga said, according to News Diggers.

“So the public must be made aware that the sources of these threats are from the same elements that are committing serious financial crimes. They are the same people who are trying to influence the shut down of the FIC. They are trying to influence negative views about the FIC and its senior staff. Unfortunately, they are also trying to use their proceeds from criminal activities to corrupt other public institutions to further their agenda of trying to neutralize the FIC. So the FIC is under siege. We are under siege.”

He said the FIC had identified the criminals behind the maneuvers because their illicit financial activities were already on the institution’s database.

“A weakened FIC will enable such elements to continue to commit crimes without anyone recording what they have done, or putting together the evidence required by law enforcement agencies to prosecute them. But what these individuals don’t realise is that the FIC knows who they are because their activities are documented. What has been documented cannot be erased by eliminating individual members of staff of the FIC,” Kasanga said without mentioning Mosho.

“So they can try and destabilise, but as long as we continue to have government support over the ideals of maintaining the FIC, that information will always be there for anyone to use if they want to prosecute. So trying to threaten individuals will not help. The best they can do is to stop getting involved in criminal activities; that is the answer. We would like to assure the public that the FIC remains undaunted and we remain committed to discharging our mandate professionally and without fear of favor.”

Earlier, the FIC disclosed that between January and September 2017, over US$ 1 billion had been reported in various suspicious cash transactions.

During the period under review, close to US$1 billion was suspiciously deposited in company accounts, while US$72 million was deposited in personal bank accounts.

There were about 8,277 such transactions involving K1.8 billion and $8.8 million, according to the FIC.

Cash deposit transactions were 17,000 involving K3.6 billion and US$ 883million while individual suspicious transactions were picked up at 1,884 involving K483.8 million and US$6.4 million.

Individual deposit transaction were recorded at 3,369 transactions which involved K548 million and US$71,9 million.

“These suspicious transactions were processed by our financial institutions and what is significant about this is that they are based on people transacting in cash, which makes it difficult to trace the source of the money. And for those who are paying, you don’t know who is being paid from these withdrawals,” said Kasanga as reported by News Diggers.

“I should also mention that the information we have does not give you the total picture because this is just where we have got the information, but there are other things happening in the economy that we can’t pick up. We also want to share with you the results of the suspicious transactions over the nine months period. We picked up a total of K664 million which was completely suspicious transactions and the value of this was US$53.3 million. What is notable about this, 45 per cent of these transactions were associated with tax evasion, amounting to K300 million.”

The FIC further revealed that many companies which were getting government contracts were suspiciously owned and not registered for tax.

“We have also been monitoring the tenders awarded by statutory agencies and parastatal companies. It is rather disappointing to share with you the results of this analysis. It indicated that about 50 per cent of the contract awarded by these institutions, this year so far, have been awarded to entities that are not registered for tax. Others are not tax compliant. But being tax compliant is a perquisite to be awarded a public contract,” said Kasanga.

“We also established that some of these companies that are getting public contracts, their ownership is very opaque. When you check at PACRA, you find that the names of the companies differ from the people who are purporting to be the owners of the companies. So what is happening is that a number of companies are surrogates. The people being shown to be the fronts of these companies are surrogates. Most of such cases involved what we call politically exposed persons who are using their associates to conduct business on their behalf because officially they are banned from participating in certain bids.”

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