Faith Musonda, an obscure low profile news presenter, was elevated to an overnight sensation when Zambians learnt that a police raid at her home in an up-market Lusaka suburb had unearthed a cache of new Zambian currency bank notes spilling out of several traveling bags.
In all, there was K65 million – the equivalent of just over US$4 million in cash, as well as US$ denominated bank notes totalling $57,000. By any standards, this was a lot of money and naturally, Faith Musonda had some explaining to do.
While the Faith Musonda case throws up an unlikely scenario, it also highlights the growth of a disturbing trend in Zambia. While private individuals like Musonda are known to harbour large amounts of cash in their homes, cash that is bound to raise unwelcome questions and curiosity from regulators is increasingly finding its way outside the country to international tax havens and offshore accounts.
One such destination is the United Arab Emirates (UAE) — much favoured by Zambia’s latest breed of new-rich, many of them the subjects of criminal investigations on suspicion of involvement in get-rich-quick government graft and corruption.
Trade and business ties between the UAE and Zambia are strengthened by Emirates Airlines’ flights between Dubai and Lusaka, five times a week. Over the years, Dubai has not only become an aviation gateway to the rest of the world for Zambian travellers, but crucially, it has become an increasingly important destination for business deals, trade and a repository for ill-gotten wealth.
A case in point is that of former permanent secretary Charles Sipanje, identified in leaked documents seen by Makanday Centre for Investigative Journalism.
The documents reveal that Mr. Sipanje opened a company called Atlantic Commodities Investment Limited in 2018.
The documents identifying Sipanje – and other Zambians – come from a trove of 11.9 leaked documents obtained by the International Consortium of Investigative Journalists.
ICIJ shared the documents with more than 600 journalists from 150 news organizations, including MakanDay, the only Zambian media partner. Journalists spent months sifting through the leaked documents, tracking down hard-to-find sources and digging into court files and other public records from dozens of countries.
The leaked records come from 14 offshore services firms from around the world that set up shell companies and other offshore entities for clients often seeking to keep their financial activities in the shadows. The records include information about the dealings of nearly three times as many current and former country leaders as any previous leak of documents from offshore havens.
The global investigation is known as the Pandora Papers.
According to the leaked documents, an invoice to Mr. Sipanje from SFM, a Dubai-based offshore law firm, confirms that a company was created in Ras al Khaimah – United Arab Emirates for a fee of Euro 3,213. This went towards company formation, the opening of a corporate bank account, and the dispatch of original corporate documents from UAE to Lusaka via courier.
Another document shows that Mr. Sipanje was assisted in creating the company by First National Bank (FNB) Zambia, where he operates two accounts. Membo Chatulika, an employee of the bank in Zambia wrote a bank reference for Mr. Sipanje, confirming that Sipanje has maintained an account at FNB since 2012.
It is not clear what UAE’s Atlantic Commodities Investments Limited deals in, but there is a link with a local Zambian registered company – Atlantic Commodities Limited. Company registration records at the Patents and Companies Registration Agency (PACRA) list Sipanje as one of the shareholders in the Zambian company – Atlantic Commodities Limited. It was registered in June 2009 and lists its principal activities as mixed farming.
In addition to its listed activities in mixed farming, Atlantic Commodities Ltd is also active in the Zambian mining sector, having been awarded a mining license in Serenje, central Zambia. The mining license allows the company to exploit a range of mining commodities including quartz, aquamarine, copper and manganese.
References to Atlantic Commodities Limited in the Zambia Extractive Industries Transparency Initiative (ZEITI) 2018 and 2019 reports show that although some payments were made to state mining regulators, the said amounts in question did not pose any serious implications to the company.
According to a ZEITI official, payments by Atlantic Commodities were “aggregate taxes paid by the company to ZRA. Since the amount is small (below our cut off amount for reconciliation) we don’t break the payment into constituent components such as mineral royalty or corporate income tax. We just total everything the company paid and report. For large amounts we disaggregate the payments by tax type, etc.”
Other documents seen by MakanDay show that on 9 January, Sipanje spent almost K20,000 (approx. US$1,200) on a purchase from Luis Vuitton, the luxury clothing and handbag store.
In January 2018, he paid K10,357 to Batoka Sky Helicopter, presumably on holiday in Zambia’s tourist capital, Livingstone. By Zambian standards, it is clear from documents seen by MakanDay that Sipanje is a high roller, wining, dining, and shopping at some of the country’s top-rated hotels and restaurants, and in South Africa, a frequent shopper at the posh and exclusive Sandton City in Johannesburg.
In September 2018, as part of mandatory UAE legal requirements governing the registration of foreign-owned companies, Sipanje submitted his CV to SFM – the offshore law firm, for SFM to accept him as a client and to ascertain his identity. However, his CV did not mention his role as Permanent Secretary (PS) in government.
Among several high level roles during the Patriotic Front (PF) government, in 2018 Sipanje served as Permanent Secretary for Lusaka Province. His other previous roles in government were as Permanent Secretary in the Ministry of Transport, Works, Supply and Communications, and Permanent Secretary for Northern Province in north Zambia. He was also a non-executive board member for state-owned enterprises.
In February this year, he was fired from his government position and later lost his bid for election as member of parliamentary for the former governing party’s Mbala constituency seat in northern Zambia.
It is noteworthy that of all the Zambian government ministries, Transport, Works, Supply and Communications is the infrastructure nerve centre, collaborating with other relevant ministries and departments for new construction works and the maintenance of roads, airports, military houses, toll gates, government office blocks, clinics and hospitals, schools, and new district government infrastructure – to name a few.
Also of significance is his last role as Lusaka Province Permanent Secretary. Under phase three of the Link Zambia L400 project, Lusaka was the beneficiary of an extensive road rehabilitation project partly financed by Eximbank of India.
In 2018, Sipanje appeared before the Parliamentary Public Accounts Committee (PAC) to respond to queries raised in the 2016 Auditor General’s Report.
PAC committee members subjected the auditors’ report to a sustained probe, and concluded that the matter was serious enough to merit a severe reprimand and recommended a further investigation of suspected theft of government finances by Sipanje’s ministerial subordinates.
Previously, Sipanje’s name was mentioned in media reports implicating him and others of involvement in a multi-million Kwacha kickback payment scandal connected to a contract to upgrade the Mansa Airport in northern Zambia. Nothing to date, has emerged from those allegations.
The leaked documents that have been reviewed by a team of journalists from across the globe show that many shell companies in Dubai, have beneficial owners who are wanted as criminals or under investigation in the USA.
Merely appearing in the data is not a sign of wrongdoing. Questions put to Sipanje to explain what activities Atlantic Commodities Investment Limited is engaged in UAE and why he chose UAE as a domicile for the company have yet to be answered.
For more, visit ICIJ’s Pandora Papers page: here: https://www.icij.org/investigations/pandora-papers