By Marvin Chanda Mberi
In the last two consecutive years, the Financial Intelligence Centre has been subject to ridicule by the political players owing to the politicization of the work.
In their quest to paint those in the corridors of power darker than the colour black, reliance has been placed on the perceived ill in the management of national resources to make the exposure a source of despondency especially as we head to the politically charged year.
Without any taint of doubt, some subjective minds expected that “Politically Exposed Persons” (PEPS) will again be the basis of political talking points.
Likely, the litany of allegations of wrongdoing that have previously flooded the Executive and the PEP have since been subdued by the indiscriminate institutional reforms that have been implemented in the aftermath of the 2016 General elections.
We had the liberty to invest time to intently read the latest Trends Report and we are delighted that in an unprecedented move, the PEPs have technically been cleared from the malpractices of yesteryears and they will make no more headlines.
This development has not taken place in isolation but dependent on the various factors which we will highlight in this write up in a fair detail. Herein is our analysis in numerical order.
In its quest to promote efficiency in the prudent utilization of national resources, the PF Government has promoted the independence of the institutions charged with the responsibility to fight against corruption. For example, for the first time, the PF Government under President Lungu’s tenure assented to the Constitution of Zambia in 2016 which enhanced security of tenure for the office of Auditor General among others. For the first time since independence, despite the abuse of the criminal justice system, ACC has arrested but unsuccessfully prosecuting cabinet Ministers.
In its report, FIC acknowledges the institutional framework to the effect that the Inspectorate Department has been introduced to complement its work. In this regard, we do appreciate the enormous role the institution plays to promote financial crime prevention as well as promoting financial crimes literacy among stakeholders.
In its report, we understand that in its quest to consolidate its rigorous efforts, FIC has enhanced inter-institutional collaboration with the relevant regulatory and investigatory wings. This is the sharp contrast with the previous works were it worked to the exclusion of other institutions. It is this previous lonely effort which made the entree to produce uncoordinated and half-baked reports which largely brought the Government into disrepute. The relevant institutions include but not limited to banks, the Central Bank, Zambia Revenue Authority (ZRA), Drug Enforcement Commission (DEC), regulatory bodies among others. We are on record of arguing that had the institution collaborated with other institutions in the past, it would not have produced the previous reports which were clothed with the political overtone.
As regards the lamentation by the institution that it was unable to do a satisfactory work owing to the human resource constraint is with all due respect unconvincing. We say so on our understanding based on the institution’s own admission that it works in collaboration with other institutions. Since FIC and the sister institutions are working to achieve the same objectives, the Centre can take advantage of the goodwill of the sister institutions to exchange information as an alternative to cushion the human rescore constraint.
We are glad about the significant reduction of suspicious transactions from ZMW 1.6 Billion (from the previous Trends Report) to ZMW 984 Million (in the year under review). This is a result of the various internal controls implemented by the Central Government with the operationalizing of the Public Finance Act of 2018 as most financial malpractices originated in the public sector. We have also noted that the financial malpractices have the Accounting Departments and the commercial banks as the weakest link. Lessons have been learnt and let the right thing be done. Never is the less owing to the observation of specific laws which were violated by perpetrators, the onus on the institutions charged with administration and enforcement of necessary laws to put their houses in order and take a preventive approach.
On the exposed fraud allergy committed by the Mining Companies, the revelation by the Centre has exonerated ZRA Commissioner General Mr. Kinsley Chanda who had brushed shoulders with the Mining Companies on matters of taxation. ZRA must therefore take a firm stance and defend our sovereignty on taxation. Looking at the complexity of Tax fraud, the Taxman must ensure that as per the recommendation espoused in the Trends Report, take practical measures within the law to strengthen its capacity to counter future tax cheating and ensure that correct taxes are paid. The Trends Report at page 20 (although did not expressly say so) seems to prefer the introduction of Sales Tax to substitute the frequently abused Value Added Tax (VAT). It is our hope that this will bring the stakeholders to the negotiating table and ensure that the best interest of the nation is secured in the administration of taxation.
As regards corruption in the award of tenders, our submission is that the ills lie in the incoherent in the implementation and administration of the procurement system. In this regard, there is need to confer Zambia Public Procurement Authority (ZPPA) institutional independence (preferably it should report only to the President) as this will safeguard its oversight and supervising authority in the quasi-Government institutions who are one of the busiest procuring entities. This is one of the ways to endorse the recent proposal by Zambia Institute of Purchasing and Supply (ZIPS) to introduce the position of Procurement General when the leaders met with President Edgar Chagwa Lungu. The State-Owned Enterprises (SOEs) cannot be therefore be explosively excluded in the noble cause of implementing a highly transparent procurement system devoid stains of corruption. This requires a heightened supervisory system by the respective Boards of Directors to whom residue authority to supervise SOEs is irrevocably delegated into. With sound Corporate Governance, the Boards can easily hold the Management of the erring parastatals accountable.
With regards to crimes allegedly committed with the aid of Financial Service consumers, perhaps it is one of the gaps that are in place that promotes illicit financial transactions. It is high time some provisions of the Banking and Financial Services Act no. 7 of 2017 were amended to integrate Mobile Money Services as part of the definition of the bank.
In conclusion, after careful scrutiny of the report, our observation is that the report presented no mention of wrongdoings by the Presidency, his cabinet, PF or its structures or indeed PEPs. Indeed, this must be commended as the previous reports are now bearing fruits and we hope there will be a corrupt-free public service delivery. The pilferage of financial resources has been linked to the procuring entities and this has necessitated the institutional and legal reforms of procurement laws. We expect in future that the Centre will be useful in thwarting the financial scammers who have now invaded the Mobile Money services as there is a need for assured consumer protection in the financial market.
