The High Court in Lilongwe has ruled that money amounting to K120,917,295.60 found in a bank account allegedly opened by one of Reserve Bank of Malawi (RBM) top managers Charles Mchakulu constitutes proceeds of crime and should therefore be forfeited to the government.
Mchakulu and two others are currently answering charges of fraud, theft and money laundering in relation to the money which was found in a National Bank of Malawi account number 1004030113 domiciled at the bank’s Victoria Avenue branch.
The account was being operated under Ideal Stationary owned by Lucy Sukali linked to Mchakulu of RBM where the money was allegedly coming from.
Judge Charles Mkandawire said he was satisfied that the money in question was indeed proceeds of crime stolen from RBM and that therefore it has to be confiscated in accordance with the law.
He noted in his ruling that both Mchakulu and his co-accused Lucy Sukali have not explained the source of the said cash.
“This court is satisfied on the balance of probabilities that the cash K120,917,295.60 constitutes proceeds of crime. I therefore make an order of forfeiture pursuant to section 74(1) (b) of the Financial Crimes Act.
“Unfortunately the respondents could not say anything on the cash that came from Reserve Bank of Malawi to the first respondent’s bank account. This was indeed strange for the respondents not to say even a single statement on how this massive cash had found itself in their bank account,” Mkandawire said.
The application for forfeiture of the money in the account was brought to the court by the Financial Intelligence Authority (FIA) which also wanted two houses belonging to the suspects to be forfeited before it withdrew the application.
The money was allegedly being stolen by Sukali trading as Ideal Stationery but it turned out that the account was created by Mchakulu to facilitate the transfers.
From 2017, it is suspected that in total K355,706,125.52 was stolen from RBM using this account but at the time of forfeiture, the bank account had a balance of K120,917,295.60.
According to the ruling, although Ideal Stationary is a duly registered firm created for the business of stationery, there was no legitimate business conducted with RBM to warrant the payment received during the stated period of the transaction.
Anti-Corruption Bureau (ACB) Director-General Reyneck Matemba has welcomed the ruling, saying it is a step forward in the fight against fraud and money laundering.
“Civil forfeiture is one of the best ways to fight money laundering, fraud, theft, corruption and other financial crimes. It is quicker and less onerous than the criminal conviction-based forfeiture,” Matemba said.
In civil forfeiture, the standard of proof is on a balance of probabilities, as compared to criminal conviction based forfeiture, which requires proof beyond any reasonable doubt.
“Considering the fact that criminal cases take long to be investigated and then prosecuted, law enforcement agencies in Malawi, just like in many other countries, have, in appropriate cases, resolved to use the civil forfeiture route more often than the criminal conviction based forfeiture, and the Financial Intelligence Authority has led the way with this case,” Matemba said.
He added that the advantage with civil forfeiture is that once you prove to the court that the money in issue or other assets are more likely than not to constitute proceeds of crime, the burden shifts to the other person to show to the court how he or she got the money and other assets.
According to Matemba, if someone fails to provide evidence on the source of the money, the court can order that that money or other assets be forfeited to the government.
Matemba said civil forfeiture is what countries like Nigeria have been using for years to forfeit huge sums of money and other proceeds of crime.
He said the Financial Crimes Act, as a new law, has provided institutions like ACB with an opportunity to quickly fight against financial crimes in Malawi.
Immediately after Mchakulu’s arrest in June last year, then RBM spokesperson Mbane Ngwira had confirmed that the fraud was discovered through a system of surveillance of transactions in the banking system.
Ngwira had said the suspects “had been making unsupported transfers from a government ORT [other recurrent transactions] account to a stationery supplier, Ideal Stationery.”
Meanwhile, Mchakulu’s lawyer Gift Katundu has said what remains now is for the criminal aspect of the case, which is being handled by ACB and the Director of Public Prosecutions, to be settled. Katundu said the date for the continuation of the matter is not yet set for the suspects who are currently on court bail.