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The Dark Money Funding Botswana Politics

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  • Parties, MPs in dire need of money amidst expensive campaigns
  • Khama, opposition court outsiders for funding
  • BDP reports alleged Khama funders to ANC
  • Reports say BOB unable to fight money laundering
  • FIA says they are on red-alert

Political finance is unregulated in Botswana and no direct or indirect mechanism of political funding by the state exists. The Independent Electoral Commission (IEC) has put up restrictions through archaic election expenditure laws which have remained unenforceable for many years. The law compels candidates to report their financial expenditures after campaigns, but in practice, no such reporting ever occurs, as the IEC also declines to enforce these provisions.

As confirmed to this publication in its previous reporting by the Independent Electoral Commission (IEC) itself, no member of parliament; not a single one, including the Speaker herself, has filed obligatory financial returns in accordance with the Electoral Act. All candidates are obliged to submit the Returns to the Electoral Officer in a manner to be stipulated by the Secretary of the IEC. Failure to submit the Returns renders elected members’ participation in the National Assembly unlawful. The violation renders all MPs being prohibited from sitting in and voting in the National Assembly.

Furthermore, the political actions of third party actors are also not regulated and the IEC has given up on enforcement of its political finance laws, leaving the business of politics unregulated, vulnerable to exploitation and massive money-laundering schemes.

Botswana’s anti money laundering campaigns are led by the Financial Intelligence Agency (FIA) while Bank of Botswana is the authority responsible for supervising credit and financial institutions and compliance with the legislative framework on the prevention and suppression of money laundering and terrorist financing.

Despite this, the recent Anti-Money Laundering and Counter-Terrorist Financing Measures Report says “banks are opting to report suspicious transactions to Financial Intelligence Agency than to the BOB”.

“The lack of adequate supervision of banks by BOB owing to capacity and absence of understanding of its supervisory role under the Financial Intelligence Act, represent a significant concern for detection and prevention of Money Laundering and Terrorism Financing in Botswana based on risk exposure and materiality of the sector,” the report said ,adding that in practice however, the BoB-Prudential Supervision Division has conducted 9 inspections including -up inspections over the period (2012-2016). Of concern is that seven (7) banks have not been subjected to any form of Anti Money Laundering inspections over this period.

Asked about Botswana’s vulnerability, FIA director, Abraham Sethibe in an email response told this publication that “his organization remains committed to counter the ills brought about by money-laundering, terrorism financing and financing of the proliferation of weapons of mass destructions regardless of where the offenses manifest themselves.”

He declined to make comments on whether he will support political party funding as a tool to curb and fight money laundering in politics saying that, “there is no legislation that regulates political parties funding hence the FIA cannot express any views regarding the issue.”

While other democracies support political parties through public subsidies and bank loans, opposition in Botswana complain that their strength and power is hampered by poor finances as their only stable source of income is through councillors and members of parliament subscription fees of P400 and P800 respectively.

Botswana Congress Party spokesperson, Dithapelo Keorapetse admits that it is not easy, “It is tough and we cannot rule out issues of money laundering for survival. These can be solutions to sustain administrative, projects and campaign issues unlike the ruling party that uses its incumbency position to entice funders.”

Recently the ruling party moved swiftly to foil any possible funding for its nemesis-Ian Khama by approaching the ANC to impede the Motsepe family on suspicion that they were in cahoots with Khama to destabilize and unseat the ruling party.

In August 2018, the Umbrella for Democratic Change (UDC) president Duma Boko revealed that that he will sponsor 2019 campaigns with over P10 million and since then, the Directorate on Corruption and Economic Crime (DCEC), FIA and the Botswana Unified Revenue Services (BURS) have been accused of harassing the presidential aspirant. Suspicions about Boko and money laundering are not new, he has faced similar allegations due to his success in sourcing funds from his international backers, some whom he referred to as his “wealthy friends” during an interview with The Botswana Gazette.

The country is currently investigating a high profile, 250 million Pula money-laundering case involving a judge, a former Minister and the former spy chief. Evidence before the DCEC alleges that President Mokgweetsi Masisi has also benefited and or has knowledge of money received from troubled asset manager, Bakang Seretse.

Seretse made the donations through his company Basis Points Capital, which at the centre of the National Petroleum Fund (NPF) case.

In a hand delivered letter to attorney Daphne Briscoe, Seretse said: “I refer to my deposit of P3, 300,010 into your trust account. The balance of P300,010 must be paid to His Honour, The Vice President Mr Mokgweetsi Masisi towards his election campaign as a donation from myself. The instruction as to how the money should be distributed shall come from Mr Masisi himself”.

Basis Points Capital is not the only political funder in Botswana. De Beers is alleged to be the main funder of the BDP . The pressure on political parties to raise money increases the power of monied interest groups, companies and individuals who can and will influence party behaviour in exchange for financial support.

Recently, the Bank of Botswana (BoB) Governor – Moses Pelaelo called on the country’s key financial stakeholders that deal with issues relating to money laundering to join hands and map a way forward to address what he calls “strategic deficiencies”.

Botswana’s laws have in recent times been classified by many authoritative bodies as lacking crucial aspects regarding the anti-money laundering and countering Financing of Terrorism acts.

The Financial Action Task Force has placed Botswana on its list of high-risk countries while the Anti-Money Laundering and Counter-Terrorist Financing Measures Report on Botswana exposed pitfalls in Botswana’s legislation and further portrayed Bank of Botswana as deficient in combating money laundering.

Political Literature suggests that there is a need for implementation of a regulatory framework and reforms about disclosure of funding sources and treatment of foreign donations. Experiences suggest that even when scandals lend salience to the issue of party finance reform, parties will not necessarily sacrifice assured economic gains for possible political payoffs.

International Scholar, Spyridon Repousis in his paper ‘Politicians, Political Parties’ Funding and Anti-money Laundering’ warns and advises on conduit contributions, “the individual making the contribution acts as a straw donor in order to conceal the identity of the real donor and the true source of funds. Conduit contribution scheme is designed to circumvent political contribution limits, which were established for the purpose of reducing influence on incumbent and potential public officials.”

Detecting a conduit contribution scheme, he says requires a review of the political account, identifying the red flag associated with the scheme, then following the money trail. “A red flag regarding the timing of conduit contributions is that they may be intentionally made very late in the campaign cycle, even after the election, since some expenditures may not be due immediately,” he says. He advices banks to apply Know Your Client Principle for straw donors. “Like other economic crimes, banks are uniquely positioned to expose this particular violation of law,” he adds.

Repousis warns that dealing with political corruption and identifying it is undoubtedly difficult and poses a challenge when “guarding the guardians”. He however encourages banks to be brave to avoid damages because accepting and managing funds from corrupt PEPs and political parties will severely damage a bank’s reputation and can undermine public confidence in the ethical standards of an entire financial centre.

“In addition, the bank may be subject to costly information requests and seizure orders from law enforcement or judicial authorities (including international mutual assistance procedures in criminal matters) and could be liable to actions for damages by the state concerned or the victims of a regime,” he says.

Under certain circumstances, the bank and/or its officers and employees themselves can be exposed to charges of money laundering, if they know or should have known that the funds stemmed from corruption or other serious crimes.

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