The Center for Trade Policy and Development (CTPD) says the 2016 Financial Intelligence Report which exposed illicit cash flows and money laundering activities must not be treated as an academic exercise but should be probed.
Lask week, the Financial Intelligence Centre launched the report which revealed that over K1 billion had been reported in suspicious cash transactions, the bulk of which the Centre attributed to general elections.
In a statement yesterday, CTPD acting executive director Isaac Mwaipopo said it would be shocking if the people behind the illicit flows of public funds cited in the Financial Intelligence Trends Reports (FITR) went unpunished like has been with reports of the Auditor General.
Mwaipopo said it was an urgent need for law enforcement agencies and investigative wings to step in and protect public resources.
“CTPD notes the continued leakage of resources through illicit financial flows and money laundering and we think this is robbing the nation of the much needed resources for financing the local development agenda. We also note that at the center of the Suspicious Transaction Reports reviewed, are multinational corporations involved in mining and Politically Exposed Individuals. We will be shocked as an institution if the findings from the 2016 intelligence report are treated as a mere academic exercise like has been the case with the Auditor General’s report, where year in year out, misappropriation of public funds are being reported, but no meaningful action is being taken to hold to account institutions and individuals cited to have misused public funds,” Mwaipopo stated.
Mwaipopo noted that some of the findings that might need immediate follow ups from the FITR report included the increase in the repatriation of funds from offshore centers which had led to Zambia losing out financially.
“The pattern observed was that most foreign owned companies wired funds to foreign jurisdictions that are not tax compliant, this is besides the observations of an increase in transfers of funds to high risk countries such as United Arab Emirates and Mauritius, country commonly known as tax havens and according to the 2015 Global Financial Integrity Report on Illicit Financial Flows, estimates are that Zambia is losing an average of 2.8 Billion dollars annually through financial flows, these are transactions often concealed or disguised using corporate vehicles before they are introduced into the financial system,” he stated.
“The report further highlights that there is externalization of corporate funds through over invoicing of goods and services provided by foreign suppliers, who are given preference over local suppliers by multinationals. This needs to be addressed as it takes away the opportunity for local suppliers to benefit from the extractive sector. There are also cases of purchase of Copper ore from Small Scale Miners in the Copperbelt that is being exported to tax havens.”
Mwaipopo called on all public institutions mandated to protect public interest to immediately act on the findings from the recently launched Financial Intelligence Trends Report.
“CTPD calls on all public institutions mandated to protect public interest such as on the use of public funds to step up and act on the findings from the recently launched 2016 Financial Intelligence Trends Report. CTPD observes that Zambia is currently in the process of negotiating a bailout package from the International Monetary Fund-IMF, this follows the Economic challenges the country had been going through. These are development paths the nation would have avoided if the nation takes adequate measures to curb illicit financial flows as the resources we keep losing outstrip the financial aid we continue seeking from international cooperating partners,” stated Mwaipopo.
“We commend the financial Intelligence center for the great work being done and their efforts need to be complimented by acting on the findings. We urge all institutions mandated to protect public interest to act on the findings as the nation is in need of resources to drive the wheels of development.”