As hope for the country’s economic rebound remains uncertain, Malawi News has discovered that millions of Kwacha confiscated from proceeds of unlawful deals lie idle, several years after courts forfeited them to government coffers.
Our investigation shows that the said proceeds of criminal wealth that were recovered by courts are lying idle at the Financial Intelligence Authority (FIA) bank accounts.
However, Section 130 (1) of the Financial Crimes Act 2017 gives power to the Minister of Finance to administer the confiscated fund but with approval from Parliament.
In September last year, the High Court in Lilongwe ruled that money amounting to K120,917,295.60 (around $161,465) found in a bank account allegedly opened by one of Reserve Bank of Malawi (RBM)’s senior managers, Charles Mchakulu, constituted proceeds of crime.
The court therefore, ruled that on the balance of probabilities, the money constituted the proceeds of crime and ordered its confiscation under the Financial Crimes Act.
Malawi News analysis of assets recovered from cash gate convicts in 2014-15 also shows that a total of K 571 million, largely in form of cash, was forfeited to government.
In 2014, government seized K112 million (USD 31, 800) and Rand 122, 400 cash from Victor Sithole after court had charged him with possession of stolen goods, money laundering and illegal possession of forex.
In August 2014, K63 million was also recovered from former principal secretary for Tourism, late Tressa Senzani, another cash gate convict who had surrendered her house valued at 63 million and K 270 million was recovered from another Osward Lutepo on his business premises.
According to the Ministry of Finance, there is over K183 million available from the forfeited proceeds.
.Ministry of Finance spokesperson, Williams Banda said The Confiscation Fund, as established under FCA, is administered by the Financial Intelligence Authority (FIA) on behalf of the Minister of Finance.
“A Confiscation Fund Account was opened in November 2017 for purposes of depositing money and to-date the account has K183,928,499.95. The funds are from various sources such as Anti- Corruption Bureau, Malawi Police Service, FIA, Reserve Bank of Malawi and court judgments in relation to various financial crimes. All the funds that have so far been deposited into the account have never at any point been withdrawn from the account,” he said.
Chairperson of the Public Accounts Committee (Pac) of Parliament Shadreck Namalomba pointed out that his committee has equally been struggling to get reports from FIA on confiscated proceeds from various financial crimes.
“The Public Accounts Committee has, for so long now, been pushing that we be furnished with reports from the FIA. This has not been adhered to up to now. When FIA appeared before the cluster committee, we took them to task on the very same issues of not doing enough on tackling Illicit Financial Flows,” he said.
Namalomba, however, said his committee will be presenting a detailed report in Parliament on how much resources are being managed by FIA.
When contacted by Malawi News, FIA’s Compliance Manager, Masautso Ebere, said the said funds are subject to an audit.
“FIA together with other stakeholders, Ministry of Finance, DPP and ACB with assistance from the international Asset Recovery Centre of Basel Uk are developing regulations for the fund. The funds are subject to audit by Auditor General,” Ebele said.
Director of Public Prosecutions Steve Kayuni could not quantify how much has been recovered from stolen assets but called for clear regulations on the use of money recovered from financial crimes.
“The thing is that asset recovery is just starting to take course and it is one of the priorities but the process takes a while in court as challenges are likely from defence,” he said.
While applauding government for establishing asset forfeiture unit and confiscation fund centre commentators have called on government to ensure transparency and accountability on management of the proceeds recovered from of unlawful crimes.
They further cite the need to strengthen the asset recovery regime in order to maintain comprehensive statistics of property frozen, seized and confiscated.
Malawi last updated its 2013 national risk assessments (NRS) in 2018.
According to the report, some of the threats that predicate offices in the country include corruption, tax crimes and illegal externalisation of foreign currency, fraud and smuggling of goods.