4  Asians risk lengthy jail in forex externalisation case involving K5bn

Four Mzuzu based businesspersons of Asian origin are facing the prospects of life imprisonment sentences, MK500m fines and the revocation of their business licences if the High Court in Mzuzu convicts them for the alleged cases of money laundering, forgery and breach of the exchange control regulations.

The Reserve Bank of Malawi through its legal counsel Thabo Chakaka Nyirenda is prosecuting the case and in an interview this week Nyirendasaid: “There is too much illegal externalization of foreign currency in Malawi. Billions of dollars have been lost”

Between January and July 2017 and in eight separate transactions processed at NEDBANK Mzuzu Branch, the quartet – Junaid Muhammad Ibrahim, Shehza Abdul Aziz Muhammad, KashifIqbar and Muhammad Zubair Khan – obtained foreign currency amounting to approximately USD 6 million (MK5 billion) on the pretext that they would import Salt making machines and Tan Salt.

Wesly Mwafulirwa of Kawelo Lawyers, who is representing the four, glorified his clients.

“They are honest, innocent, doing business in an honest manner and above all they are good people,” Mwafulirwa said in a telephone interview.

Under criminal case number 734 of 2017, Director of Public Prosecutions Mary Kachale nodded to RBM to go ahead with the prosecution of the four.

“It is hereby certified in exercise of the powers conferred by section 289 of the Criminal Procedure and Evidence Code that the case is a proper one for trial by the High Court as a summary procedure case,” Kachale said.

Weak controls over Malawi’s banking system and delays in prosecuting cases when money-laundering has been discovered are allowing foreign companies, including some Indian ones, to take millions of dollars out of the country illegally and with impunity, according to court documents and interviews with experts and officials.

In the capture of banking system and financial institutions, it has been discovered that between January and November 2017, the Finance Intelligence Authority (FIA) uncovered 63 unsupported forex transactions worth US$7.4 million (approximately K5.4 billion), remitted without imports being returned into Malawi, according to information from the Reserve Bank of Malawi (RBM) and the FIA itself.

Broadly, the offences involve the making and use of false documents and deceptions by persons applying for permission to remit large sums of foreign currency abroad.

In one instance, between January and July 2017 at NEDBANK, Mzuzu Branchin the city of Mzuzu using account numbers – 011990004554, 061000012717, and 061000012962 obtained US$2,192,292.50 but no imports were made.

Both Reserve Bank of Malawi and the Finance Intelligence Authority have evidence that huge sums of illicit funds are possibly being laundered using the Malawian banking system under the disguise of import payments being made by what appears to be legitimate businesses.

“All cases to do with illegal externalization are done by Pakistani nationals. My suspicions are that they sponsor terrorism,” Nyirenda said.

And in unresolved cases at the Malawi High Court dating back to 2014, 13 Indian owned companies allegedly externalized $4 million in eight separate transactions. Indian companies have long played an important role in Malawi’s business world and now control about 60 percent of the economy through various companies ranging from manufacturing to banks and hotels.

The cases against the 13 Indian companies are known because they have been brought to court by the RBM and FIA.

The companies and individuals are: AMAD, M R – Intertrade Agency and Mozimpex, USMAN, S and BILAL, S – Hasbro Ltd and Verizon, ARIF, M – Noor General Distributors and TS Distributors, RAZZAQ/RAZAQ, M and MANJARA, A S I – ZamZam Import &Export, GANI, S G and RAZA, N – Premium Commodity Traders Fawa Products; Tarar Enterprises Hong Kong: Vic Charm Ltd, RAWANI, S S [FRS Co Ltd; BT Trading Co; Al Johara; Nantong JunloveInt; HK Polymers], Musa KariamIbrahiam of Zambezia Traders, KaramatUllahChaudhry and Naeen M. Iqbal.

For instance, Mahomed Rafiq Amad Managing Director of Intertrade Agency faces nine counts involving the externalization of a total of US$2,058,000.

They have pleaded not guilty, according to court documents seen by Nyasa Times.

Contacted by phone for comment, they declined to comment, saying they matter is being handled by the court system.

Under count one, Amad is alleged to have used a Customs Declaration Form Number C80 of 31/08/13 of Chiponde Border valued at US$768,000.00, in support of an application made to CDH Investment Bank for remittance of the said sum of VIC CHARM LIMITED of Hong Kong, purportedly to pre-clear 4,500 Metric Tonnes imported Cotton seed, when in actual fact no such importation was ever made, thereby fraudulently externalization the said US$768,000.00 from Malawi.

It is also alleged that on or about the 2nd day of September 2013 at CDH Investment Bank in the City of Blantyre, Amad was in possession of US$720,000.00, which he knew, or had reason to believe represented, in whole or in part, directly or indirectly, the proceeds of illegally obtained foreign currency.

It is also alleged that on or about the 7th day of October, 2010 at CDH Investment Bank in the City of Blantyre using Account Number 0020135092200 and Account Name Intertrade Agency obtained foreign currency amounting to US$570,000.00 for the purpose of payment of goods imported, namely, cotton seeds from Mozimpex of Mozambique, when in fact no such goods were imported.

Similarly, two other Indians, Karamat Ullah Chaudhry and Lakhu Mohamed Naeem M Iqbal face 13 counts ranging from forgery of official documents, making a false document without authority, uttering a false document to illegally obtaining foreign currency.

They could not be reached for comment, but have pleaded not guilty. Court documents allege that the duo on five separate occasions externalized a total of $1.6 million.

• The Centre for Investigative Journalism Malawi (CIJM) – investigative-malawi.com – supported this story.

 

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