Trade-based money laundering was used extensively in Malawi’s so called Cashgate corruption scandal according to a report in a South African newspaper.
The Mail & Guardian said it obtained a leaked copy of the report by UK auditor, Baker Tilly, which examines 48 companies allegedly involved in the scandal.
“The scam was based on over-invoicing, double payments and payments for items that were not supplied or for which there was no supporting documentation,” the report says.
It identified a total of 32 cheques worth 1.3bn kwacha (US$3 million) that were paid to 18 companies without supporting evidence; 3.8bn ($8.8 million) kwacha flowed from inflated procurement prices, and the sum of 1.9bn kwacha (US$4.3 million) related to payments for which there was no evidence of goods or services being provided.
“Eight businesses were identified as opening new bank accounts or reopening dormant accounts and within three months depositing at least one cheque, with no supporting records or evidence of supply available,” according to the report.
The newspaper report also suggested that the companies were in league with commercial bank officials.
The Cashgate corruption scandal may have cost the public 24bn kwacha (US$54 million) – almost double the official estimate – with some of the money siphoned off for politicians’ election campaigns, according to the Baker Tilly report.
Categories: Trade Based Financial crimes News