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Malawi Law Society wants banks probed

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The Malawi Law Society (MLS) has urged those responsible for bringing perpetrators of the theft of public funds, dubbed cashgate, to also investigate the role banks played in the plunder.

MLS president, John Suzi Banda, made the call during the society’s annual conference held on Friday in Mangochi.

The focus of this year’s conference was on the financial sector.

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“On regulation of commercial banks, I hope we can explore the role of these financial institutions in public finance management. I have time and again stated that the role that financial institutions played in facilitating the massive looting of public funds christened ‘Cashgate’ require further investigation by the authorities,” said Banda, adding:

“Where collusion or criminal negligence is discovered, charges ought to be quickly and mercilessly brought against those officers of the financial institutions that are suspected of having fallen short of their obligations under the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act.”

Banda wondered why millions of kwacha were cashed through the banking system when those who cash lesser amounts are subjected to strict procedures.

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He asked the authorities not to play double standards on the issue saying in much the same way as partners of law firms— which are classified as financial institutions under the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act— willingly disclose the amount of funds that have passed through their trust accounts, banks needed to be subjected to the same levels of scrutiny in relation to Cashgate.

“One would hope that this same standard, if not higher, was going to be applied to financial institutions proper through whose accounts billions of our scare resources passed through.

“Ladies and gentlemen, let us for a moment pause here and ask how people were allowed to cash money in hundreds of millions of kwacha before a teller when I have to wait for a good part of an hour if not more for triple verification to cash a K500,000 cheque,” queried Banda.

He added:

“Were the tellers not suspicious? Were the branch managers not suspicious? What about the internal audit? What about the central bank? What was its role? The looting of our hard earned tax was too systematic and organised to be the work of a few greedy individuals,” he said.

He, however, said his sentiments are not meant to put “undue” pressure on the investigating, prosecuting and regulatory authorities.

In response, Bankers Association of Malawi (Bam) president, Misheck Esau, said MLS has a right to express its opinion.

Esau added that as far as Bam was concerned, its members followed measures put in place in the banking sector and were not in the wrong.

“Banks and, indeed, other financial institutions pay the highest compliance costs compared to any other sector in this country. Bam’s position is that its members have put in place measures and systems to comply with laws and regulation at all times.

“It is, therefore, our strong belief that our members dealt with their client accounts in compliance with the minimum levels of compliance required of banks even in the case of government accounts that were involved in this evil act of cashgate,”

Esau said.

He, however, asked those with incriminating evidence against banks to report to relevant authorities for the law to take its course.

“Having said the above, we observe that the country is ruled by law. In the event that some bank, or bank employee, flouted any laws and regulations in conduct of accounts that were involved in Cashgate, then the law will take its course at the time and hour that those responsible for these cases will determine and decide to take legal action.

“So far we believe state agencies are doing a good job. It is not the agitation against banks by the law society or anyone that will get our members in trouble with the law. Perhaps, it is whether there was wrong doing by banks that could [get our members in trouble],” said Esau

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