Zambia lost K4.5bn to financial crimes in 2017 – FIC

The Financial Intelligence Centre has revealed that Zambia incurred estimated losses of K4.5 billion linked to financial crimes such as corruption and tax evasion, among others, in 2017.

And Financial Intelligence Centre (FIC) director-general Mary Tshuma says corruption is sky-rocketing in Zambia.

Meanwhile, Tshuma observed that future FIC reports will be irrelevant if law enforcement agencies continue being inactive.

According to the FIC’s 2017 Money Laundering/Terrorist Financing Trends Report released, Thursday, Zambia incurred losses last year linked to financial crimes such as corruption and tax evasion, among others, amounting to a record-breaking K4.5 billion.

Data availed in the comprehensive report reveals that among the financial crimes committed last year, tax evasion cases ranked the highest, with an estimated loss of K3.9 billion.

Corruption, especially in public procurement, was second with estimated losses amounting to around K500 million, while money laundering and fraud were found in third and fourth place, with losses amounting to K90.5 million and K3.5 million, respectively.

“In 2017, the Centre analyzed and disseminated a total of 425 reports to local law enforcement agencies. The majority of cases were disseminated on the grounds of suspected tax evasion and corruption. The amount of estimated losses related to the above violations in 2017 was K4.5 billion,” the FIC disclosed.

Data further shows that of the cases that were reported to law enforcement agencies last year, five were under prosecution, 23 were under investigation, but only one conviction was secured.

In its trend analysis for the financial year under review, FIC noted that corruption in public procurement had continued, with a total of 624 cases that were analyzed.

“The trend in which companies connected to PEPs [Politically-Exposed Persons] being involved in suspected corruption and money laundering has continued. In some instances, shell companies have been used to conceal the beneficial owners of these companies. In 2017, the Centre analyzed 624 reports on suspected procurement corruption,” FIC narrated.

“In our inquiries, we noted the following methods of procurement corruption; collusion between Politically-Exposed Persons and vendors or suppliers; collusion between employees and vendors. Further, we noted that bribery, bid rigging, embezzlement, and submission of false claims are the most common schemes.”

And Tshuma said that corruption was sky-rocketing in Zambia.

“…But because we are okay with a two per cent, the five per cent, corruption is skyrocketing in this country because we seem to be okay with the people that…we are looking at, ‘okay, if you are offering me K500,000, how much are you, yourself, going to benefit?’,” Tshuma told stakeholders during the unveiling of the report at Radisson Blu Hotel, Thursday.

“Maybe, if we made it into a proper business transaction, we would see that it doesn’t benefit anyone, it doesn’t benefit this country, then we would put a stop to it.”

She observed that Zambians were in the midst of a “mental warfare” in the battle against corruption in the country.

“It’s a mental warfare that we have in this country, and it will take a lot to change our mindsets to try and look at the bigger picture, and not individual interests, and my children only. ‘I need to look at the children in Shangombo [District of Western Province]; I need to look at the children in other areas; how will they benefit from the projects that are happening in this country’,” Tshuma said.

“Corruption is something that we cannot even go into detail because it’s in red; it’s actually beeping! So, it’s something that…even when you are sleeping, you can tell what’s happening. So, it’s really an area where we need to put a lot of efforts as a country. And corruption, remember, it takes two to tango.”

Meanwhile, Tshuma observed that future FIC reports will be irrelevant if no prosecutions on the reported cases of corruption to relevant law enforcement agencies deriving from the intelligence information were executed.

According to detailed analysis, one of the case studies disclosed in the report points to a named company that was awarded a contract to purchase utility trucks by a government ministry.

“The Centre had previously disseminated the matter on company X to appropriate competent authorities. Our conclusion in this matter was that company X was a newly incorporated company and had no proven financial capacity and experience to deliver. The major suspicion was that the price at which the utility vehicles were bought was highly inflated,” revealed the report.

During the question & answer session, several observers noted that high-profile cases, such as the one that was illustrated in the report, were not being prosecuted fast enough by law enforcement agencies.

Tshuma said she prayed there would be meaningful prosecution of one of the cited cases in the report.

“I am praying that by the time we come back next year to launch the 2018 report, this case study should have seen the courts of law. And, if that happens, then we will know that we are making progress or else, chair, we should stop launching the report,” Tshuma said to a rapturous applause from the packed auditorium.

“So far, from our records, I think the K4.5 billion should be the highest figure in terms of dissemination that we have done.”

Earlier, renowned economist John Kasanga, who is also acting FIC board chairperson, explained that the annual trends report outlined various financial crimes, perpetrators and real case studies of how proceeds of crime were laundered.

Officially launching the latest report, Attorney General Likando Kalaluka claimed that the current PF government was committed to fighting the problematic vice.

“The fight against this crime calls for concerted efforts by all stakeholders. By this, I wish to personally make reference to the Anti-Money Laundering Authority, which is key in this regard, in the sense that it consists of various stakeholders. On the other hand, government has equally provided legal and institutional framework through which the FIC can work,” said Kalaluka.

The FIC trend reports contain intelligence information on money laundering and other serious financial crimes, which are made available for law enforcement agencies, such as the Anti-Corruption Commission (ACC) and Zambia Police Service, among others, who can then utilize it for successful arrests and prosecution of individuals found wanting.

         

Stuart Lisulo

About Stuart Lisulo

Stuart Lisulo is an experienced Zambian journalist with a focus on business news.
Email: stuart [at] diggers [dot] news

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