Friday, April 19, 2024

DIS used trusts to launder money

There are many valid reasons why the government saw the need to tighten up laws that regulate trusts but a particular one is said to have motivated the tabling of the Trust Property Control Bill as a matter of urgency: over the past 10 years, the Directorate of Intelligence and Security Services (DISS) has been allegedly using trusts to launder government money. 

Whether that did indeed happen will be laid bare by a clause in what, with President Mokgweetsi Masisi’s assent, would probably be the Trust Property Control Act by now. A week prior, the Minister of Justice, Defence and Security, Shaw Kgathi, alerted MPs to the introduction of this law when he revealed that he would be tabling it “next week.” That indeed happened a fortnight when he tabled the bill which gained legislative passage a few hours later. 

“To continue as country without statutory law regulating and controlling trust property is to provide a possible money laundering stage on which illegal activities can be disguised through such legal arrangements,” Kgathi said when presenting the bill.

He went on to lament “an environment such as ours in Botswana, where trust arrangements are not subjected to accountability and transparency requirements”, cautioning that this environment “can facilitate undesirable results.” Speaking generally of trusts, the minister said that “these corporate vehicles can and are being used, intentionally or unintentionally, for money laundering and terrorist financing activities.”

Rarely is what ministers say in parliament headline news – such news in this particular case comes courtesy of revelations by Government Enclave sources. According to the latter, the law is part of a much larger plan to dismantle an apparatus that was set up by DISS during the previous administration. In its rogue years (2008 to 2018), DIS operated above the law and its former Director General, Isaac Kgosi, could well have been telling the truth when he told the parliamentary Public Accounts Committee (PAC) that he didn’t take orders from anyone, the president included. To this day, a parliamentary tribunal that was supposed to have been established in terms of the act of parliament that establishes DISS itself to provide another layer of oversight has never seen the light of day. The lack of oversight over DIS meant that the spy agency could use government money as it pleased and “for security reasons”, its expenditure was never revealed even to the PAC.

Taking advantage of a situation in which, as Kgathi said, the country had no law that regulated trusts as well as its immunity from scrutiny, DIS is said to have set up a network of trusts into which it laundered millions upon millions of government money. The rogue spy agency, to which P250 million was unlawfully diverted from the National Petroleum Fund (NPF) last year, has also been fingered in criminal acts such diamond and ivory smuggling as well drug trade. Using loopholes in the law was one of the ways that DISS used to trick money out of the system. The saga of the P250 million began with DIS requesting the Public Procurement and Asset Disposal Board (PPADB) to directly appoint a company to build strategic fuel storage facilities across the country. When PPADB, which exercises some oversight over the consolidated fund, refused, DISS averted its attention elsewhere. 

According to a Ministry of Justice, Defence and Security source, the NPF was a very deliberate target. While the Minister of Finance and Economic Development, Kenneth Matambo, has assured the nation that special funds are safe, a source says that is far from being the case.

“Actually, it is a lot easier to steal money from special funds than from the consolidated fund,” says the source who illustrates his point with the NPF saga. “The fuel storage facilities would have been built with money from the consolidated fund. However, it was extremely difficult to get the money because the process involves a lot of oversight, including that of PPADB. That is not the case with special funds which are not strictly controlled. That is why it was easier to get the P250 million from the Petroleum Fund.”

One DIS trust is said to have been fronted by a former ruling party activist who used money from that trust to finance an elaborate operation to break up the opposition Umbrella for Democratic Change coalition. To an extent, this mission has been accomplished because what was the UDC before the alleged operation is now a quarrel of four political parties that don’t give minimal impression that they will limp together to the finish line of the 2019 electoral race next October.

Circumstances under which the new law materialized are being given as definite proof of the connection between the new law and DISS. Parliament’s Standing Order 72.3 permits ministers to table bills on urgency. Kgathi invoked this standing order when he tabled the bill, explaining that it should be considered on urgency “as it is a requirement necessitated by recommendations of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a financial action task force style regional body which Botswana is a member.” He added that the latter’s next assessment for Botswana will take place at the end of this month. However, as some MPs pointed out, such recommendations were made two years ago and Botswana has long known when the next assessment would happen.

There is political analysis from some sources that the enforcement of the new law will yield self-preservation dividends for President Masisi. Installed on April 1 this year, the new president has not really entrenched himself because he inherited a booby-trapped government. Surveillance equipment worth P300 million that DISS acquired is said to be missing; there was an informal and very well-resourced DISS within the official DISS that was purposefully designed to ensure the political survival of his predecessor, Ian Khama; and some senior ruling party activists are said to be plotting to topple Masisi at the Botswana Democratic Party’s special congress next year and replace him as the party’s presidential candidate for the 2019 general election. The millions of pula that DISS laundered would be critical in the success of an operation to topple Masisi.

As Kgathi told parliament, Clauses 18 and 19 of the new law prohibit a trustee from destroying any document or record connected to a trust property before expiry of 10 years from the termination of a trust without the consent of the Master and Registrar of the High Court. Clause 12 provides for the retrospective enforcement of the new law. As regards DISS trusts, the practical meaning of these clauses is that even if they hurriedly shut down, such trusts cannot destroy documents to hide evidence. It also means that they will suffer penalties provided for by Clause 12.


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