Saturday, September 06, 2008

Nchito accuses Kabwe of money laundering

Nchito accuses Kabwe of money laundering
By Laura Mushaukwa
Saturday September 06, 2008 [04:00]

FORMER Access Financial Services Ltd (AFSL) director Faustin Kabwe yesterday testified that his company did not maintain mirror accounts in Zambia to show records of money it held for third party sources in the United Kingdom. This is in a case in which Kabwe is jointly charged with former president Frederick Chiluba and former AFSL director Aaron Chungu for theft by public servant involving about US $500,000.

The trio is alleged to have stolen the money in 1998.
During cross-examination by Task Force prosecutions lawyer Mutembo Nchito, Kabwe told the court that it was not appropriate to maintain mirror accounts because of the nature of the business AFSL was doing on behalf of their client Zambia Security Intelligence Service (ZSIS).

Asked when and when not it was appropriate to keep records of accounts by his company, Kabwe said it was appropriate to keep records when funds moved and not appropriate when the transactions were done offshore.

In response to a question of whether transactions AFSL did in the UK were considered off balance sheet transactions, Kabwe said they would.

On how the money in the UK was accounted for, Kabwe testified that the money was duly accounted for, to the satisfaction of the client.

Nchito asked Kabwe whether the accounts of AFSL should disclose its assets and liabilities but he said not necessarily because it was on the basis of what was appropriate and in accordance with the client's business instructions.

Nchito then brought Kabwe's attention to the International Accounting Standards requirement of disclosure of financial transactions in line with his response of only disclosing when it was appropriate.

Kabwe testified that International Standards required appropriate disclosure of financial transactions and strict compliance with the client's instructions.

Asked whether as a firm a client could tell the firm what to disclose and what not to disclose, Kabwe said the client could not.

Kabwe added that transactions which AFSL conducted on behalf of its various clients through its overseas lawyers were monitored, recorded and reconciled on the basis of the books of accounts maintained by Meer Care and Desai and that the role of AFSL was to ensure that the records at Meer Care and Desai were correct.
On which particular ledger the US $9 million that moved from the Zamtrop Account to Meer Care and Desai went to, Kabwe said it was deposited in the bank account of Meer Care and Desai and in the ledgers of the firm, would be credited to an account under which the subsequent underlying transaction would be conducted.

When Nchito could not get a satisfactory answer from Kabwe on the particular ledger the money from the Zamtrop Account went to in Meer Care and Desai, he put it to him that his company had AFSL accounts in Meer Care and Desai to which he responded in the affirmative.

Kabwe said he did not know the exact number of AFSL accounts that his company held at Meer Care and Desai. He also told the court about another account called Uptree Account owned by the ZSIS.

Kabwe testified that he did not know whether or not Uptree received government money.
He explained that the Uptree Account was set up by Meer Care and Desai under instructions from ZSIS through AFSL the interface between ZSIS and Meer Care and Desai.

Kabwe said AFSL duly recorded the remittances and other transactions were accounted for within Meer Care and Desai.

He told the court that AFSL disclosed to Bank of Zambia (BoZ) the accounts of the financial transactions in the United Kingdom.

On what accounts he drew attention to BoZ of AFSL's financial activities in the UK, Kabwe said although AFSL had a ledger in the UK, it did not reflect in Zambia.

He said AFSL would be liable to be questioned if it did not disclose some of its transactions. Nchito put it to Kabwe that failure to record offshore transactions was clear evidence of money laundering but Kabwe denied.

He told the court that there was a debtor-creditor relationship when a client put money in his company's care. Kabwe said he was not aware that Meer Care and Desai provided a financial service to AFSL.

He testified that he and Aaron Chungu were directors of Zamdell in Zambia and that the owners of Zamdell were Zamdell International and a Mr. Dell.

Kabwe pointed out that ZSIS were the beneficiary owners of Zamdell and he acquired Zamdell on behalf of ZSIS. He said he did not know who had physical possession of the bearer shares but believed that Mr. Meer and Mr.

Dewar had custody of the bearer shares
Asked how the government was protected in the Zamdell transaction, Kabwe said the request to buy Zamdell came from ZSIS and personnel of ZSIS had taken appropriate steps to apply for the investment to the Auditor General.

He added that Mr. Dewar and former intelligence chief Xavier Chungu were always in contact, from the beginning of the transaction. Nchito put it to Kabwe that the transaction was not in the interest of government, but Kabwe said there was no evidence that he personally benefited from the transaction.

He said after acquiring property on behalf of his client ZSIS, they informed them of what they had done.

But Nchito reminded Kabwe that the current intelligence chief Regis Phiri said he knew nothing about the Zamdell arrangement.

“Xavier Chungu left and Phiri took over. Why didn't you tell him you were sitting on their money as AFSL? Nchito asked.

Kabwe said ZSIS was not just an ordinary client and that he and his colleagues were not privy to their internal arrangements and other procedures they conducted whenever there was a change.

He said he had written to the current intelligence chief Regis Phiri concerning the relationship AFSL had with his predecessor Xavier Chungu but did not have an opportunity to follow up the matter as investigations had started in June 2002 and he was consequently arrested.
The matter comes up on September 22, 2008.

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