Drug Enforcement Commission (DEC) Commissioner Alita Mbahwe says some cases which appear in Financial Intelligence Centre reports are false on inquiry.
The FIC’s 2017 Money Laundering/Terrorist Financing Trends Report released last month revealed that Zambia incurred losses last year linked to financial crimes such as corruption and tax evasion, among others, amounting to a staggering record-breaking K4.5 billion.
The report stirred controversy as government and ruling party officials say the FIC breached the law by releasing ‘intelligence’ information whilst opposition and civil society leaders have questioned law enforcement agencies’ inertia.
But speaking when she appeared before the parliamentary committee on National Economy, Trade and Labour Matters to submit her recommendations on the proposed Credit Reporting Bill No. 6 of 2018, Tuesday, Mbahwe said four cases from FIC reports were under investigation.
Mbahwe, however, disclosed that some of the cases in FIC reports turned out to be false after investigation.
“I will start with the second question, the one which talks about the FIC and Drug Enforcement Commission relationship; I think you might be aware that from history, the Drug Enforcement Commission has had the Anti-Money Laundering Unit. It used to be a hybrid type of money laundering unit where we were collecting intelligence information, as well as investigating until such a time that the two were separated, hence forming the FIC, which does the intelligence-gathering and then it is expected to disseminate that information that it gathers to law enforcement agencies for further investigations. So, basically, their role has been to collect intelligence and to give it to us,” Mbahwe said.
“And we have been receiving reports, for instance in the year 2017, the report that they were recently disseminating, we only had received four cases from the FIC for further investigations, so we have been receiving these reports and making follow-ups on them. Some of them, we investigate and they are false on inquiry, [while] some of them we investigate and take to the courts of law for the prosecutions to take place. As defined in Section 2 of the Bill, the Drug Enforcement Commission, through its Anti-Money Laundering Investigations Unit, supports the enactment of the Credit Reporting Law. This is because most of the financial crimes revolve around the financial institutions, which if not properly developed could cause severe hardships in the fight against money laundering, the financing of terrorism and other related financial crimes in the country.”
Mbahwe also asked the Committee to consider, through the Bill, educating individuals of their rights and protections in relation to their personal credit and demographic information.
“Education is an important component of credit reporting industry. The objective would be to inform individuals of their rights and protections as it relates to their personal credit and demographic information that would be shared with a Credit Reporting Agency (CRA). The Committee may, therefore, wish to consider the aspect of education in the Bill. It is worth noting that Bank of Zambia took up the mantle and the findings of the study done by Bank of Zambia on Credit Reporting Services revealed that insufficient credit available and volatile macro-economic environment, coupled with a poor credit culture, had increased the cost of credit and reduced the number of borrowers. The poor credit culture was attributed to the lack of precision in identifying deserving borrowers, which could be mitigated through the activities of the Credit Reporting Agencies,” Mbahwe said.
Meanwhile, Zambia Revenue Authority (ZRA) Commissioner General Kingsley Chanda equally supported the proposed amendment of the Credit Reporting Bill and the Public-Private Partnership Bill.
Chanda said the proposed Public-Private Partnership Bill, if amended, will minimise debt contraction for the country and ensure successful implementation of developmental projects.
Speaking when he also appeared before the named parliamentary committee, Chanda said the proposed PPP approach in financing projects will also create consistency in approving projects.
“The Public-Private partnership Bill No.7 of 2018 seeks to, among other things, revise the functions of the Public-Private Partnership Unit in the Department of the Ministry responsible for Finance and also to revise the functions of the Public-Private Partnership Council. Generally, the proposed PPP Bill is progressive as it provides safeguards in the contraction of Public-Private partnerships. This will enhance public confidence and ensure successful implementation of the Public-Private partnerships in Zambia. Unlike resorting to borrowing to finance development, PPPs have the advantage of minimising debt contraction. This is so, as in most cases, private capital is used to finance these projects, which then generate resources to enable the developers recoup their investment from the projects itself. Furthermore, the coordinated approach to analysing proposed public-private projects will ensure consistence in the manner these partnerships are approved. This will enhance project assessment and ensure that only viable projects are selected for partnerships thereby creating value for money,” Chanda submitted to the Committee.
Chanda also proposed that it would be progressive to include the conviction of tax offenders in Section 10 (4) (g) of the Bill.
“Section 10 (4) (g) provides for removal of a member from the Technical Committee who is convicted of dishonesty and fraud. While the offences provided for [are] very wide and general, it could be progressive to expressly include conviction for tax offences. Although the Secretary to the Treasury [Fredson Yamba] is designated to chair the Technical Committee under Section 10, it has been observed that the composition of the team does not include the Permanent Secretary responsible for finance. It may be necessary to include the office on the technical team as it is responsible for the day-to-day operations of the Public-Private Partnerships Department, and maybe better-placed to advise on financial matters,” said Chanda.
“Under Section 5, the retention of the clause that deals with the development of technical and good practice guidelines the standardization of bidding documents will promote transparency in the procurement chain, which has the potential to enhance confidence amongst prospective partners. Although most public institutions do not have expertise in project management, the proposed amendment under section 5 (1) (k) limits the responsibility of the Department to facilitation of training. This is positive given capacity issues that could arise if the department was to provide the training. The role of the department has, therefore, been deduced to facilitation of training and provision of advisory services.”