Maravi

Chiluba is a thief, rules judge Smith

Chiluba is a thief, rules judge Smith
By Speedwell Mupuchi
Friday May 04, 2007 [16:45]

LONDON High Court judge Peter Smith today ordered former president Frederick Chiluba to pay about US$35 million. This was after judge Smith established that Chiluba had defrauded Zambia of a total of US$41 million through the BK Facility and the Zamtrop account in London. Judge Smith has ordered Chiluba to pay about 85 per cent of total sum (US$41 million) within 14 days upon service of the judgment. Chiluba has been ordered to pay about US $21 million money he misappropriated through the BK conspiracy case and US$20 million in the Zamtrop conspiracy case. The BK facility involved Chiluba's alleged dealings with Congolese businessman Raphael Soriano alias Katebe Katoto for the supply of arms and fighter aircrafts.

This means that Chiluba would be required to pay about US $34.9 million, which the 85 per cent. Judge Smith found that instead of preventing corruption, Chiluba actively participated in it and ensured it happened.

And judge Smith found that government money was used to provide Chiluba's personal wardrobe and that although much of it had been seized, it was plain Chiluba was still benefiting from the wardrobe when he went out in public in Zambia or when he went abroad for treatment.

The judge also said Zambians would know that whenever Chiluba appeared in public wearing a smart handmade suit or a pair of his "signature" shoes that they were acquired by stealing money from the people the vast majority of whom live at subsistence levels.

This is contained in his judgment delivered yesterday in London in a case in which the Attorney General of Zambia took out a civil suit against Chiluba and 19 others who were alleged to have siphoned about US$20 million from the state treasury.

Those co-accused with Chiluba include Cave Malik and Company, Xavier Francis Chungu (XFC), Attan Shansonga, Stella Chibanda, Aaron Chungu, Bimal Thaker, Faustin Kabwe, Francis Kaunda, Boutique Basile, Nebraska Associates Limited, MISSL Associates Limited, Hearnville Estates, Jarban SA, Raphael Soriano Katoto, Belsquare Residence, NV Roland Cracco and Robert Standaert.

In his judgment that was also beamed live in Lusaka via satellite, judge Smith said he was satisfied that Chiluba and former Zambia Security Intelligence Service director general Xavier Chungu were major conspirators and were also in breach of their fiduciary duties.
Judge Smith found that Chiluba's earnings then and before were extremely modest in terms of the sums involved in the action.
He noted that his current assets were equally modest and there was nothing to show from his background that he was in a position to accumulate large wealth.

"It is somewhat ironic that he was initially elected on an anti-corruption ticket against the first President of the Republic Dr Kenneth Kaunda. This case shows how he too rapidly succumbed to the lure of having access to large sums of money which he was unable to keep his hands off," judge Smith stated.

He said the claims against Chiluba were US$2,995,369 maximum currently for breach of fiduciary duty.

He said the figure was not appropriate and asked the Attorney General to seek the same figure as was claimed against XFC and Stella Chibanda (SC) which is US$25,754,316 plus US$600,000.
"He was uniquely positioned to prevent any corruption. Instead of preventing corruption he actively participated in it and ensured it happened. It is difficult to find an adjective that adequately describes the failure on the part of FJT," he said.

"He has defrauded the Republic. He has deprived the people over which he was exercising stewardship on their behalf of huge sums of money which was supposed to be spent for their benefit."
Judge Smith said Chiluba had diverted those monies for wide ranging benefits of the co-conspirators but had not shown restraint in the amount of money which he "plundered" from the government coffers.
"It is a shameful series of actions and he should be ashamed," he said.

He stated that Chiluba initially participated in the proceedings and served a defence.

"On 31st May 2005 he swore an affidavit of means which disclosed limited assets. His defence was an inadequate document. He only participated in the proceedings as long as it suited him to try and stop them. Once that ruse failed he 'discontinued participation'. He has therefore made a deliberate decision not to serve a witness statement or give oral evidence despite the fact that every reasonable and fair step was taken to ensure that all of his fears were allayed. He gave no genuine reason for not giving evidence," he said.

"When the trial started in London he issued a statement which broke the terms of the ring fencing order designed to protect him. He was provided with transcripts until the provision of transcripts was abused by one of the Zambian based defendants by leaking it selectively to the press."

He said that as former president in the light of the serious allegations made against him, Chiluba ought to have in conscience explained himself to the Zambian people.

He said Chiluba was in a position so to explain in the proceedings without any fear of compromising any defence in criminal proceedings and without any fear that the evidence he gave could be misused by the Attorney General.

Judge Smith said Chiluba was provided with all the documents and did not lack anything in terms of the case.

Judge Smith said he was quite satisfied that Chiluba had an active role in the setting up of the Zamtrop account and its operation.
"I am also satisfied that on occasions he actively participated in payments made to it and he received substantial personal benefits. The first personal benefit occurred as early as 29th December 1995 when $20,000 was transferred to Basile. That payment was authorised by XFC," he said.

"Significant sums were spent on benefits for his children in terms of cash, business class air tickets, expensive school fees or similar. He did not have the resources to fund this. The only slender possible justification put forward is that the Zamtrop account was fed by beneficial donors and this money was used. I reject that as being incredible."

He said he could not conceive that an innocent person would mix donation monies with government monies in a government account if it was a genuine government account.
"Second no evidence has been adduced to show any such donations. Third even if there were donations there is a procedure for declaring the donations; it is not supposed to be hidden away in a secret account which is monitored by FJT, XFC and the Auditor General. In other words FJT is simply lying," he established.

Judge Smith said that the "Picture payments" (so called with some hilarity by the Zamtrop officials who administered it by reference to a picture of FJT on the wall) whilst not clearly identified as having come from Ministry of Finance and into the Zamtrop account, nevertheless were sums that Chiluba ought to have declared and accounted for if they came from third parties.

He said these monies were however not available for Chiluba's private use unless they are fully declared and accounted for.
He said Chiluba well knew about the payments.

"On at least one occasion he discussed them with Beauty Kaluba the ZANACO Branch Manager in London. Absent any explanation for these payments (and there is none) I conclude any third party payments were made dishonestly to repay or secure favours from FJT," he said.
Judge Smith also said it was disingenuous for Chiluba in his interview statements with the Task Force and his defence to suggest that any questions over operation of the Zamtrop account be addressed to Xavier Chungu.

"First it ignores FJT's overall control of the Zamtrop account via the Financial Charter and his right to have that account audited. Second, it ignores the fact that he received significant benefits from the Zamtrop account without any justification for such entitlement," he said.

"The best example is again the Basile clothes. He has created for him a wardrobe of stupendous proportions. He knows he has not paid anything towards it. He knows therefore that somebody must have paid for it and he knows in fact that XFC has arranged the payments through the Zamtrop account," he noted.

"He knows therefore that government monies have been used to provide his own personal wardrobe. Much of it has been seized but it is plain that he is still benefiting from the wardrobe when he goes out in public in Zambia or when he goes abroad for treatment as the press photographs show."

Judge Smith stated that if Chiluba had carried out his duties of checking the audit and operation of the Zamtrop account he would have known he had received substantial benefits from it.
"He either made no enquiries because he knew full well the money was being dishonestly misappropriated (inter alia) for his own benefit. Alternatively he made no enquiries because he knew dishonest activity was being carried out on that account and he did not wish to make any such enquiries. The latter is the less likely scenario because he himself received substantial benefits," judge Smith said.

"Nevertheless it makes him responsible for the full losses caused by the conspiracy and the breach of fiduciary duty."

He said Chiluba raised a number of specific points in paragraphs 13 and 15 of his defence.

Judge Smith said Chiluba denied ownership of the Ndola farm known as Monkey Fountain.

He said he was satisfied on the basis of the evidence led by the Attorney General that the property was bought by Fountain Estates Ltd a company incorporated on 13th August 1999 in Zambia with BBT as a director and shareholder for Chiluba's benefit.

He said Fountain Estates was used to purchase the farm and Faustin Kabwe said it was owned by "FJT".

"He said it was set up on instructions from XFC through Cave Malik. There is no reason why Faustin Kabwe FK should lie about FJT owning the property. Cave Malik CM was plainly used to conceal the true ownership of the company behind the nominee shareholders," he noted.

Judge Smith also noted the Attorney General's allegations over properties purchased for Chiluba's solicitors.

"Zamdaell Ltd purchased two properties under an agreement dated 7th February 1997 for the benefit of FJT's lawyers Eric Silwamba and Vincent Malambo in lieu of legal fees owed by FJT to them. FK (Faustin Kabwe) in his defence says that he and AFSL acted on instructions of XFC. AC's (Aaron Chungu) defence is similar. Their justification was that the purchase was for ZSIS purposes and they were not entitled to enquire further and had no need to," he said.

Judge Smith said that was not a sufficient answer when a transaction puts a person on enquiry as to its correctness.

"However that does not apply to FK and AC because I am satisfied that they well knew what the purpose of the purchase was and this statement is merely a lie to justify their role in an attempt to legitimise it. There can be no ZSIS purpose to justify this purchase," he noted.
Judge Smith also noted that although Chiluba listed the £30,000 received from Cave Malik as an issue he failed to deal with, it was impossible in his view to think of any lawful justification for monies in the Zamtrop account being handed over in cash to Chiluba.
"It simply shows how FJT regarded the Zamtrop account as a 'cash cow' for him and the other conspirators to take from as he wished. In the terms of his salary this represents nearly 45 per cent of his total salary received over 10 years," he noted.

He also said he was satisfied that the purchase of 12B SERVAL ROAD by River Properties (using government monies) with a Cave Malik nominee company as director and secretary and BT as a shareholder was for Chiluba's benefit.

He said the total amount expended appeared to be US$145,000 purchase price and US$297,500 for chattels.
"FJT still lives in this property and there is (to put it mildly) an ambiguity as to whether or not he is supposed to be a tenant. There is more detail on this transaction in respect of claims against BT but I am quite satisfied that the property was intended to be purchased for the benefit of FJT beneficially and that beneficial interest was deliberately obscured by the way in which it was acquired. It belongs to the Republic as do the chattels," he established.

He said the faint suggestion that the property was a government pension provision was untenable because if it were, there would be no need to hide the acquisition through obscure nominees.

Judge Smith noted that between February-September 2002 BT (Bimal Thaker) effected large payments ($74,730) to or for the benefit of Chiluba and/or his children.

He said no justification was forwarded by Chiluba which showed that he was entitled to the monies.

"In his defence he denied that it was government property and that the transfers were illegal and he says that he did not authorise a transfer of government money to Cave Malik and demands Attorney General proves this. FJT however provides no evidence as to the source of the funds other than misappropriated government monies," he noted.
"The preferable interpretation (which I accept) is that FJT knew that these payments were funded out of government money which had been transferred under the direction of XFC from the OOP to CM between July - November 2001. He knows this money is coming in because he received £30,000 in cash in November 2001 at the hands of BT personally he asked for it in advance according to BT."

"The significant point about these payments over and above the fact that they were made for the benefit of FJT and/or his children is that they were made after the huge publicity in Zambia about the corrupt activities. This is an example of the conspirators carrying on in the same old way finally removing the last elements of stolen money from the CM client account. It is done with the connivance of XFC because he authorised the original payments, with the connivance of FK because he directed CM to effect the payments and with the connivance of FJT because he received the benefit of the payments."

Judge Smith stated that the US$74,730 paid in such short period represented 75 per cent approximately of 10 years of Chiluba's salary.
He also noted that Chiluba received for his benefits payments from the Zamtrop account amounting to US$308,255.54 between December 8, 1995 and July 10, 2001.

"Once again FJT asserts that money received by him and his family through the Zamtrop account was private money. I reject that again as a lie. No justification for these payments has been provided by FJT," he stated.

Judge Smith also rejected Chiluba's explanation that a picture payment of US$91,664.01 out of the Zamtrop account to former chief Justice Matthew Ngulube and his family that was private money.
He said Chiluba procured the payment and was liable for it.
He also rejected as not credible Chiluba's defence that he did not remember ordering payments of US$179,000 from the Zamtrop account to churches in America.

Judge Smith also dismissed Chiluba's denial that he paid US$1,029,400 of government money to Boutique Basile.
"This is not credible. Who did he think paid for all these clothes? In this context I reject the faint suggestion of IM in his closing that the difference between the invoiced amount ($557,803) and the amount actually paid ($1,029,400) (excluding the payments made by CM) could be cash paid to Basile for ZSIS operatives. First there is not a shred of evidence to support that. Second Basile has not said that," he said.
"I am not required to determine why the excess money was paid and where it has gone. There is no lawful justification for it. I am satisfied that it was paid away as part of the conspiracy. The conspirators are therefore liable for the entirety of the payment whether it went on Emperors clothes or was pocketed by Basile or was otherwise remitted back to them unless they adduce evidence to show it was properly spent. No such evidence has been adduced. The conclusion I draw therefore is that it was stolen in its entirety."

"The people of Zambia will know that whenever FJT appears in public wearing a smart handmade suit or a pair of his 'signature' shoes that they were acquired by stealing money from the people the vast majority of whom live at subsistence levels."

Judge Smith stated that Chiluba's personal effects seized by the Task Force were considerable.

"First there were 349 shirts. A large number of these bore the FJT monogram on them and they were from virtually every designer outlet. Second there were 206 jackets and suits. A large number of these were from Basile bearing the FJT monogram. Third there were 72 pairs of shoes. A large number of these were hand made by Basile with the FJT logo. All were for FJT's unique personal specification (high heels)," said. "Many of them were in their original shoe covers and had not been used. There were a large number of other items."
Judge Smith also found that Chiluba benefited Bob Standaert's purchase of materials for his re-election

"I have already referred to the amount of $660,000 transferred from the Zamtrop account to an account held by Bob Standaert and his evidence as to what it was used to discharge. FJT's assertion that Standaert had not said that FJT had instructed him and that he denies authorising it or having any knowledge is simply disingenuous. The amount of expenditure that has been incurred is huge by Zambian standards and it was incurred to procure FJT's re-election," he said.
"I am therefore satisfied that all of the above leads to the inevitable conclusion that FJT was a major conspirator and was also in breach of his fiduciary duties."

"The conspiracy quantum is the same figure of that of XFC. Although AGZ limits the amount of breach of fiduciary duty I am not persuaded about that. GT has specifically traced from MOF monies the sum of $140,847 and $11,000 to FJT. I refer to the other payments which AGZ contends are attributable to FJT. In my view as I have said this level is too low as regards breach of fiduciary duty. It is too low as regards the conspiracy claim.

"In case I am wrong I am of the opinion that all of the items are properly recoverable from FJT as a minimum. The only inference to be drawn from the transactions given his modest background is that these represent government monies which have been misappropriated for his and his family and friends' personal benefit. He is therefore accountable in full for these amounts as they have been paid in breach of his fiduciary duties."

But Chiluba has said the matter was political and that its outcome was predetermined.

He said the outcome of the case had immediately prejudiced and seriously undermined the proceedings and outcome of the criminal trial currently taking place against him in the magistrate's court.
Chiluba said the judgment was an affront to justice; to run in two parallel trials simultaneously based on the same facts and circumstances.

"I have maintained that I will not recognise the authority of the London High Court on its attempt to try me in matters that are Zambian as it has no jurisdiction," Chiluba said.

"It is in this regard that I have refused to submit myself to this court process and consequent findings in its so-called judgment. Matters to note are the following; there is no reasonable justification to have taken this case before a foreign jurisdiction as I am not facing charges of crimes against humanity or human rights violations. Simply stated, this case is a case of allegedly common fraud and corruption."

Chiluba said it was legally folly to have proceeded with a civil claim when the criminal proceedings in the magistrate's court were on-going.
He said the case proceeded without his defence and representation and its outcome smacked of political malice and was inevitable and designed to suit the sponsors of the process who were the British government.

"The repeated but false assurances from Justice Peter Smith that his proceedings will be ring fenced and shielded away from media and the public, that matters before the Lusaka magistrate court are not prejudiced or influenced, are contemptuous as he has read the judgment in open glee," he said.

"My fundamental right to be presumed innocent until proven otherwise by a competent court in Zambia as guaranteed by the Republican constitution has been violated by this ruling. And of public interest is the irrational decision to pursue a claim whose cost has run in million of dollars and cost more than the money the claim intends to recover."
On Xavier Chungu, judge Smith found that the quantum of the claims in conspiracy against him was US$25,754,316 plus $600,000 payments to Cave Malik from OOP (conspiracy) and US$25,754,316 for breach of fiduciary duty in the alternative.

"XFC by his control of the Zamtrop account knew that transfers were being made for improper purposes (see the clothing purchases for himself and FJT, the jewellery from Fine Jewellers, the donations to the President's favourite causes, school fees and other payments for the benefit of the FJT children and others)."

Judge Smith also said Chungu effected transfers of large amounts of money from the Zamtrop account both to Redcliffe and Attan Shansonga.

He said he was satisfied that those transfers were effected as part of the conspiracy of which he was a party.

"I make the same observation in respect of transfers from the Zamtrop account through the clients' account in London of MCD and CM. There is no reasonable interpretation for this routing of money other than a desire to hide the source of the money (the government) and to use significant amounts of the money so routed for non-government purposes," judge Smith said. \
"It is equally clear that in 1995 he came to a secret arrangement with FK to use AFSL as the medium for further laundering of government monies. IM was recruited to this operation by XFC and FK at the Churchill Hotel meeting in London in 1995."
He said Chungu received traced benefits of US$164,775 plus US$90,453. WM

Labels: CHILUBA, CORRUPTION, COURTS

posted by MrK @ 3:41 AM