The Financial Intelligence Centre says at least one Politically-Exposed Person (PEP) was found to have received huge payments from a government ministry into his company account but failed to deliver on promised equipment.
According to its 2017 Money Laundering/Terrorist Financing Trends Report, this PEP received huge cash payments in excess of US $2 million, had an interest in five companies, but only one of those was active.
The FIC further disclosed in the special case study that the PEP, who was awarded contracts to the one active company, received public funds amounting to US $6 million and K70 million in the foreign and kwacha accounts, but failed to supply the promised equipment to the ministry.
“Our inquiry revealed that Mr. X had registered interest in five companies. One of the five companies, ABC, was active. The other companies seemed to exist on paper only. In the period under review, from August 2015 to April 2016, Company ABC received credits amounting to US $6 million and K70 million in the foreign and kwacha accounts. We noted that all the payments originated from a Government Ministry,” FIC stated.
“Secondly, it was noted that the same Government Ministry awarded a number of contracts to Company ABC to supply equipment in 2014. We verified that there was no equipment imported by Company ABC.”
The FIC also revealed that the same company was not tax compliant.
“Further, that companies in which Mr. X had interest in, were none compliant for tax purposes. The findings were corroborated with other government agencies. Within a short period of time of being associated to a political party, Mr. X has increased his wealth and subsequently acquired a number of properties,” stated the FIC.
“In the case under review, it was noted that Company ABC solely relied on the government payment to order equipment. Further, it was noted that the same funds paid by the government were used to start liquidating a loan obtained from a government institution. In an effort to disguise the source of funds, our analysis indicated that huge amounts were transferred to law firms where the funds were later withdrawn in cash. This is a clear scheme of misuse of designated Non-Financial Institutions and Professions (DNFBP). Possible offences: bribery, corruption, tax evasion and money laundering.”
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.