The European Union (EU) placed Botswana on its money laundering blacklist because former President Lt Gen Ian Khama’s administration allowed politicians and their relatives to launder millions of pulas in dirty money from the Botswana construction industry ÔÇô Sunday Standard investigations have established.
An Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) assessment conducted on Botswana two years ago found a smoking gun suggesting that Botswana politicians and their relatives are laundering proceeds of corruption from the country’s lucrative construction industry.
The ESAAMLG report has revealed that between 2013 and 2016 the Botswana Financial Intelligence Agency (FIA) received a total of 246 reports of suspicious financial transactions most of which involved politicians and their relatives (Politically Exposed Persons PEPs).
The ESAAMLG report further revealed that the Botswana government is sitting on an explosive report believed to be linking some politicians and their relatives to corruption in the construction industry.
“The information provided by the authourities to support the effectiveness of the Anti Money Laundering/ Counter Terrorism Financing (AML/CTF) regime of Botswana indicated that a National Threat Assessment (NTA) exercise had been carried out but the results of this assessment were not shared with the assessors” because the Botswana authourities said the information was “very sensitive.”
The contents of the report are believed to have informed the current crusade by the Directorate of Intelligence and Security Services (DIS) Directorate on Corruption and Economic Crime (DCEC) Botswana Unified Revenue Services and the Botswana Police Service under the President Mokgweetsi Masisi administration to break the nexus of corruption between politicians and construction magnates. Preliminary investigations into the nexus of corruption between business and political elites suggests that billions of pula worth of contracts were steered to construction companies with links to former Directorate of Intelligence and Security Services Isaac kgosi and his political associates.
Through information gathered from the authourities ESAAMLG assessors established that “corruption relating to large scale government construction tenders and the construction industry in general” posed a high money laundering risk.
ESAAMLG reported that the “Suspicious Transactions Reports which the FIA gets from reporting entities are mainly on fraud and tax evasion and most of the cases involve Politically Exposed Persons (PEPs.) “This is consistent with information provided to the assessors” that corruption relating to large scale government construction and PEPs pose a serious money laundering risk, states the report.
It has also emerged from the ESAAMLG report that FIA passed its reports on suspicious transactions to law enforcement agencies during Khama’s presidency. Suggesting that the Khama administration was reluctant to investigate the nexus of corruption between political and construction elites, ESAAMLG reported that, “the authourities have however, not demonstrated the usefulness of the PEPs trend analysis to identify and investigate potential money laundering cases.”
The report stated that the money laundering cases which were investigated had “no link to the AML/CTF risk profiling and assessment” which revealed that politically exposed persons believed to be laundering corruption proceeds from the construction industry posed a high money laundering risk.
ESAAMLG “assessors established that FIA produces quality reports enough to support the DCEC and BPS in initiating and investigating predicate offences and money laundering as well as tracing of assets linked to subjects of interest. Although law enforcement authourities rated the quality of FIA disseminations as very good, the pursuit of money laundering by DCEC and BPS arising from such disseminations is very low.”
Although FIA reports revealed that construction investors, politicians and their relatives (PEPs) were money laundering high risk group, ESAAMLG reported that, “Botswana does not apply measures or business relationships and transactions on any identified high risk customer or country. The legal requirement does not provide this requirement and there has not been any assessment of the ML/TF risks in Botswana to determine low or high risk customers with a view to applying commensurate mitigating controls. As a result there are no enhanced measures applied on PEPs and any others which have been identified through interview to be vulnerable to money laundering.”
The report further established that, “there are no AML/CTF requirements relating to KYC/CDD (know your customer/ customer due diligence) for PEPs in Botswana. The assessors therefore wanted to examine whether PEPs were not exposing (FIs) Financial Institutions and DNFBPS (designated non financial business and professions) sectors to proceeds generated from such related corruption and other crime. The assessors also wanted to understand the extent to which the absence of KYC/CDD requirements on PEPs could be affecting the AML/CFT regime regulating FIs and DNFBPS.
With the recent raid on Bango Trading Construction Company by DIS, DCEC, BURS and BPS, a pattern is emerging that the investigating quartet is targeting overscheduled construction companies with powerful political connections.
Bango Trading Managing Director Moffat James and Estate Construction Managing Director Kegone Sebina who are the most overscheduled contractors in one of the more lucrative sectors of government contracting are reported to have close links to former DIS Director General Isaac Kgosi. The pair has already been raided by the investigating team.
Bango Trading and Estate Construction Company who have netted close to P 1, 5 billion government contracts under former President Lt Gen Ian Khama have also been the subject of a parliamentary query because of the many government contracts awarded to them.
Member of Parliament (MP) for Gaborone North Haskins Nkaigwa last year expressed concern that the two companies were repeatedly winning multimillion Pula tenders disadvantaging other local competing companies.
Investigators are trying to piece together information that the duo gamed the system through their connections to Kgosi and a number of Cabinet Ministers. It is believed that a portion of the money found its way back to their political handlers.