Forex cartels loot K336 billion a year

…K18bn externalised in April by Chinese

…338 cards ladies was deal gone sour

..Prophet, Sheikh, Chinese, Politicians all part of it

Over K10 billion worth of foreign exchange is externalised every month by a syndicate that involves high-level government officials, Police, and businesses linked to Chinese, Prophets, and Mosques in Malawi’s capital of Lilongwe, The Investigator Magazine can reveal.

The figure could be more as exporters do not return all the export money. We are investigating the tobacco, tea, and legumes exporters and we are yet to get a response from the Reserve Bank of Malawi, Malawi Investment and Trade Centre, and Ministry of Trade on the exporters list despite submitting access to information requests last month.

The Investigator Magazine has confirmed that the five ladies recently arrested by Airport Police were couriers that were flying into Dubai and Johannesburg every two weeks to cash close to K500 million kwacha for several businesses run by Chinese and Asians in Lilongwe.

The ladies are part of the ring that has established itself in Lilongwe and some in Blantyre that externalises foreign exchange in the country and outside Malawi using multiple systems that involve banks, politicians, and businesses.

No forex, thanks to a coalition of launderers

The revelation that Malawi has only six days’ worth of foreign exchange could have alarmed any serious nation which heavily relies on imports. The reaction, however, has been to hide the crisis levels the nation is facing by removing Ralph Tseka as the central banks’ spokesperson.

The Investigator Magazine has traced one prominent politician and businessman in Blantyre, two cabinet ministers, a group of Asians in Lilongwe led by a Sheikh who stays along Lilongwe Mchinji Road and Chinese nationals as forming the leaders of foreign exchange dealers.

Two well-known foreign exchange bureaus owned by Asians (we are seeking legal opinion before we name them as there is an existing court injunction obtained against Platform for Investigative Journalism) and a money transfer service are also used by government departments including the Reserve Bank of Malawi and Ministry of Finance to buy forex at higher rates and share the difference.

The coalition is using businesswomen and young men to collect cards from college students and businesses and National Bank and Standard Bank are the main cards that have been used in the transactions. National Bank has since reduced the card amount from US$1500 to US$750 in response to the scams.

None of the Banks have responded to our queries.

The card syndicate is well connected, and three Lilongwe-based young men (names withheld) are said to be the ring leaders backed by Police, including airport Police, who facilitate passage of cards, by collecting them from the teams and giving them when boarding to avoid airport scanners.

338 cards -scam went wrong

The five women arrested recently in Lilongwe were only exposed after some Airport Police officers who were not part of the syndicate leaked their arrest which was meant to scare their sponsors to increase their commission.

“The commission is as low as 5000 to 10,000 dollars per trip, yet they cash at least 200,000 to 500,000 dollars per trip. Of course, tickets and everything is paid for. These ladies, their Police and Lilongwe handlers wanted an increase in commission and staged the arrest, but it went out and now they have a real case with the whole country watching. It is a scam gone wrong,” said a source from the group.

The group is said to have grown to include senior officials from the Malawi Police Headquarters Criminal Investigations Department (CID), fiscal police, Airport Police, Reserve Bank of Malawi, and several Asian businesses that keep the group well palm oiled.

The women’s version that they are from a bank nkhonde set up cannot be proven as the money is deposited by almost one or two sources and evenly distributed in the cards by an insider banker and some use cash deposits.

One of the ladies runs a stationery shop whose value by the Investigator assessor who visited the shop cannot be over K25 million, while one lady is said to be dating a cabinet minister who called on the Police to release them.

Zambia bans Malawi’s cards, Kenya arrests some women

Most of the initial cash externalisation was done in Zambia by the group until early this year when Malawi bank cards got banned as banks delayed transfers, the group cashed Zambia kwacha and bought dollars on the market.

Chinese businesses banked in Lusaka straight to their bank accounts at the Bank of China in Lusaka.

The transactions were limited, and after the ban on Malawi cards, the alternative had to be found fast, that is when the syndicate turned to South Africa.

Kenya was briefly used but abandoned after some women were arrested by Kenyan Police. The women allegedly related to some High Court Judges and high-profile politicians that enabled their release from Nairobi.

South Africa as the preferred route

The Investigator Magazine in December 2022 received audio of Malawian Asian businesses discussing with money changers in South Africa who wanted to change as much as K100 million per day, as they had lots of cash.

The Investigator Magazine traced the accounts that money was paid in from Malawi as Sky World Investments at FNB Bank in Johannesburg.  The cash went into the Premier Account number with the last digits ending 4692 and at least K250 million worth of rands were transferred within a week of our tracing.

Another account with the name MAS Investment at the same bank was used by a Malawian businessman identified as Faizal based at Lilongwe old town, where the Investigator Magazine has been informed, he left the country in a hurry.

“All his money laundering is left to the young man we call BG. He coordinates the collection of money and flies into South Africa and Dubai every other week. The other colleague is Dennis who is connected to the same ring. These boys can be traced through flights,” said the source.

Social media pages of the young men show them in Johannesburg and Dubai and close friends interviewed said the lifestyle of the three youngsters has changed since last year when they started acting a couriers for money launderers.

A Hawala Sheikh at Chitipi and a Prophet in Lilongwe

The Investigator Magazine traced the payments in Lilongwe to a charity along Mchinji road where a Sheikh was said to be the main Hawala (money exchanger) for most frequenters at the Mosque.

The exchange systems include donations from charitable organisations into Malawi and direct cash transfers which are handled at the mosque. Those close to the Sheikh said billions of kwachas are dropped by businesses of Malawians of Asian origin and the Sheikh facilitates the transfers.

When we approached the Sheikh, he denied the allegations saying he only works for charity to support Malawian orphans we found at his campus.

Another prominent Prophet in Lilongwe was mentioned as having been a courier for the jailed Chinese businessman Yunhua Lin who is said to be running a parallel money laundering scheme from Maula prison.

The Prophet is said to be a conduit for hundreds of thousands of dollars which are then sent to South Africa and Dubai.

K18 billion changed in April and May

The biggest amount that has changed this year was between March and April when a Lilongwe based Chinese national invaded the forex market and changed K18 billion.

The Chinese national identified only as Huang, spoke chichewa and was one of largest suppliers, left Malawi for a holiday with his family and is yet to return.

“Cash was paid in South Africa, Dubai, and even in China. There was K18 billion cash, transferred from every bank and every system one can think of. If Malawi does not have forex now, they helped it fly around 18 million dollars in less than a month,” said a money changer in Lilongwe.

He said the Chinese national swooped all the black-market forex at higher rates and asked for all currencies for weeks to be surrendered.

The Police allegedly provided escorts to those changing money and vehicles with dollars, rands, and even Mozambican meticais received special protection as the man gave “Christmas” to anyone who could change the dollars.

Most Chinese shops have closed as foreign exchange becomes scarce and they are repatriating it through the syndicate.

Politicians, businesses with a South African card machine

The Investigator Magazine found out that most businesses have South African card machines which they use to swipe cards and money is automatically transferred to their South African bank accounts evading taxes and banking regulations.

A prominent Blantyre-based politician and businessman was also mentioned as one of the people who use a machine in Malawi and collect the cash in his South African account.

“They are senior figures at Capital Hill who are opening accounts in South Africa to transfer their money there. Some are politicians. Everyone who even gets government contracts is busy taking forex out of Malawi to hide it somewhere, all the controls are gone,” said another operator.

All forex is externalised.

As foreign exchange becomes scarcer, there is a total breakdown of order with officials from Reserve Bank, Commercial banks, Ministry of Finance, Forex Bureaus, Police, and politicians ganging up to help foreign nationals drain the little realised from tobacco sales and other exports.

“Some are genuine businesspeople who contribute the cards. But the cartels are benefitting, it will be difficult to stop the business until Malawi generates enough,” said our source.

At an average of 10 million dollars a month, the 336 million dollars externalised by the syndicate annually is almost equivalent of Malawi’s total tobacco sales.

We have requested comments from all those named in this report and we will update if they choose to respond.

Editors note: We are validating account numbers, and flight tickets and once we validate, we will publish the full names of the cartel. We apologise for the delay in publishing as we had to obtain extra evidence. Be on the lookout for the names, dates, and places the syndicate has been using.

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