The High Court in Lilongwe has ruled that K120,917,295.60 that the Financial Intelligence Authority (FIA) ordered National Bank of Malawi to freeze an account of Lucy Rachael Sukali (trading as Ideal Stationery) be maintained and that the forfeited funds should be put in the Confiscation Fund.
Judge Charles Mkandawire ruled this forfeiture in pursuant to section 74(1) (b) of the Financial Crimes Act as the transaction of the said funds constitutes proceeds of crime.
Facts of the case are that, in applying for the preservation order, FIA’s Financial Analysis Manager, John Minofu reported that upon receiving receipt of a report of suspicious transaction on May 20, directed National Bank to freeze funds amounting to the K120,917,295.60 in Sukali’s account.
Investigations and analysis of Sukali’s account indicated that the funds were received from the Reserve Bank of Malawi — described as inward telex payment RFB total amount of K355,706,125.52.
Justice Mkandawire observed that although Sukali’s Ideal Stationery is a duly registered business created for the business of stationery, there were no legitimate business with the Reserve Bank of Malawi to warrant the payments received during the stated period nor were there any other business transactions with any other known businesses.
FIA’s investigations and analysis concluded that Sukali’s business was a front created by Charles Ezra Mchakulu to facilitate the theft and laundering of funds from the Reserve Bank since the Central Bank could not trace any supporting documents justifying the payments.
Following the two respondents’ application to the Court, FIA then appealed that the Court should order that the K120,917,295.60 should be forfeited to Malawi government and described as proceeds of crime.
The two respondents did not explain how Sukali’s Ideal Stationery deserved to be paid the money and the Judge observed that it was strange that both Sukali and Mchakulu were failing to make any single statement as to how the massive cash had found itself in their bank account.
On June 11, 2019 FIA filed an ex-parte application to the Court for a preservation order pursuant to section 65 of the Financial Crimes Act which provides that a competent authority may apply to the Court for an order prohibiting any person, subject to the conditions and exceptions in the order, from dealing in any manner with any realizable or tainted property.
The preservation order was immediately put in force related to the balance of the K120,917,295.60 in account number 1004030113 at Victoria Avenue Branch of National Bank of Malawi, residential property at Plot No. Area 6/137 and residential property at Plot No. Area 12/460.
The court further ordered that the property should be brought under the control of FIA Director General, who is the administrator of the confiscation fund on behalf of the Minister in terms of section 130(2) of the Financial Crimes Act.
The persons involved in the case, Lucy Rachael Sukali (trading as Ideal Stationery) and Charles Ezra Mchakulu, then working for the Reserve Bank, filed for on September 27, 2019 an ex-parte application for leave to apply for setting aside of the preservation order.
The Court dismissed the applications on November 13, 2019 and ordered that the preservation order that was given on June 12, 2019 be still in force.
On September 11, 2020, the second applicant, Charles Ezra Mchakulu filed a response to the November 13, 2019 ruling and during the hearing on September 16 he made an oral application pursuant to Order 12 of the Courts (High Court) (Civil Procedure) Rules 2017 withdrawing the application in relation to the residential properties and that they would be proceeding with only the cash of K120,917,295.60 that was in National Bank.
Mchakulu, as second respondent, was acting as an administrator to Lucy Rachael Sukali (trading as Ideal Stationery) when he was working as Manager-Banking Operations at the Reserve Bank of Malawi.
Justice Mkandawire took cognizance that the two have since the preservation order been arrested and charged with other accomplices for the offence of theft, fraud and money laundering.
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