Ill-gotten Money and the Economy
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Box 4.1. Government Institutions Pension Fund Case There is an ongoing investigation by the government involving the Government Institutions Pension Fund (GIPF). About NAD 600 million of public servants’ pension money was disbursed from 1994 to 2006 as loans through the Development Capital Portfolio scheme into about 21 Namibian companies, which failed to pay back the money to the GIPF and which was written off as bad debt. The companies were owned by a small group of well-off local businessmen. Several companies were liquidated, while some appeared to be briefcase entities that did not have any assets that the GIPF could have attached as guarantee for any defaults. Based on a normal return on investment each year, the loss to the members of the pension fund would be over NAD 1.8 billion.a The Namibia Financial Institutions Supervisory Authority (Namfisa) and the Auditor General are now investigating the GIPF issue. The ACC is not investigating this case because most of the transactions took place before it was constituted. Source: The Namibian. 2007 Note: a. This includes NAD 1.2 billion (US$164,484,425) in opportunity costs, that is, money Namfisa believed was lost because of opportunities forgone in the GIPF’s choice of one investment over another (Duddy 2010).
Box 4.2. Nuctech Case (Case Ongoing in Court) According to the New York Times (and other media reports and court filings), Namibian prosecutors accuse the Africa representative of Nuctech Company Limited—a leading global provider of security scanning equipment—and two Namibians of joining an alleged bribery scheme that secured a US$55.3 million contract in May 2008 to install 13 Nuctech scanners at customs intersection points across Namibia. It is alleged that the contract price had been inflated. The Government of Namibia is reported to have initially paid a cash deposit of about US$12.8 million to Nuctech. The purpose of this payment, as set out in the contract, was to enable Nuctech to start production of the scanning equipment. However, Nuctech entered into a back-to-back contract with Teko Trading, a Namibian company listed as a Nuctech consultant, in which it agreed to pay this exact sum to Teko as a “commission payment.” It is alleged that about US$4.3 million was paid to Teko Trading pursuant to this deal, which was then split among Nuctech’s Africa representative and the two Namibian suspects. The case came to light because of the anti-money laundering law that requires Namibian banks to routinely report large money transfers to investigators. It is alleged that the three defendants in the Nuctech case appear to have spent much of the money on an “enormous spending spree” in a few days’ time: 15 motor vehicles, two luxury apartments, several houses, a unit trust fund, and a farm. In April 2010, the suspects pled not guilty to 13 charges of corruption, money laundering, and fraud. In May 2010, the Nuctech case went to the high court. The number of charges was increased to 18. According to the court filings, the charges include two main counts of fraud, six counts under the Anti-Corruption Act, two charges under the Prevention of Organised Crime Act, three charges under the Immigration Control Act, three counts under the Close Corporation Act, and two charges under the Value Added Tax Act. At the time of writing this report, the case was still pending before the court in Namibia. Sources: Wines 2009; http://www.namibian.com.na/index.php?id=28&tx_ttnews%5Btt_news%5D=72864&no_cache=1. For a summary of the allegations and charges of the case as filed in the High Court of Namibia, see http://www. scribd.com/doc/41722454/Summary-of-Substantial-facts-Tecko-Trio.
Goba (2007) analyzed four large cases of suspected fraud and corruption that were allegedly commi ed under the pretext of investment.16 The cases show a similar modus operandi: use of insider information and shell companies, collusion between insiders