Did businessman smuggle cash?

2017-02-05 06:05

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Botswana police are investigating Simbi Phiri, a Malawian businessman based in South Africa, after he allegedly crossed the border with $886 000 (R11.8m) in cash in the boot of his car.

According to papers before the Botswana Court of Appeal, which City Press has obtained, Phiri did not declare R1.1m of the money to customs authorities when he crossed the Tlokweng border post near Gaborone – and, in so doing, allegedly violated the Customs and Excise Duty Act.

Botswana police picked up on this alleged breach after the full amount was deposited into the Botswana account of civil engineering company Khato Civils at Stanbic Bank on July 25.

They also discovered a trail of similar transactions dating back to 2014.

In back-and-forth court applications, the appeal court eventually granted the director of public prosecutions a restraining order, allowing him to freeze Phiri’s accounts and those of his company, pending an investigation into alleged money-laundering and related offences.

“The investigation is ongoing,” said Nlayidzi Gambule, spokesperson for the Directorate on Corruption and Economic Crime (DCEC).

He told City Press this week that “Phiri’s accounts are frozen, pending the investigation”.

Phiri owns Khato Civils, which was one of three companies involved in a R2.2bn tender to supply water to 59 villages in Limpopo’s Mopani district.

Khato Civils has been awarded other multimillion-rand contracts in South Africa.

In his home country, Phiri is a philanthropist.

He built a police station in Mchinji worth 85 million Malawian kwacha (R1.6m), and handed it to the country’s minister of home affairs and internal security, Grace Chiumia, in December.

He also drilled a borehole worth R110 000 for the station and donated a Ford Ranger and five motorcycles to the police.

Phiri also spent R3.7m on renovating a health centre.

However, 12 subcontractors working under Khato Civils on the Mopani project allege that Phiri has not paid them since August, and that they are owed about R25m.

“Khato Civils told us that the department of water affairs and sanitation did not pay them and claimed that they want to stop the operation,” said Pat Ritshuri, one of the contractors.

“We have not been paid since August.”

The department transfers all money to Lepelle Northern Water – the entity responsible for bulk water supply to Limpopo’s municipalities – to pay service providers.

However, Phiri said Lepelle owed his company R250m.

“I do not keep a cent in my account after I am paid. I have told the subcontractors and our suppliers that we have also not been paid.

"I do not have cash to subsidise the Giyani project. Should I then sell my house to pay them?” Phiri asked.

He said he would not abandon the project because he had equipment valued at R100m in Giyani which he could not remove overnight.

“I have done my best for the project. My concern is that I have performed very well, and if I am paid, we can finish the project three years earlier,” Phiri said.

But Phineas Legodi, Lepelle’s chief executive officer, said Khato Civils was paid all its money – except in December, when a “part payment” was made.

“We have been paying Khato Civils all the time. The only outstanding payment is the one for the month of December,” said Legodi.

“He has been paid for all the months last year. We made a part payment and we will pay the outstanding balance before the end of February.

“The pressure being put on me is that we have not been paying [Khato Civils] on time. If that is the issue, the effect should be the same … that they are unable to pay subcontractors on time, not that they are unable to pay subcontractors completely,” he added.

Sivikio Mabunda, secretary at the Forum of Limpopo Entrepreneurs, said:

“We cannot allow big companies to manipulate small contractors. How is [Khato Civils] going to operate on site if the contractors are not paid? This matter must be sorted out as soon as possible.”

Phiri said he understood the subcontractors would make “all sorts” of allegations against him because they needed to pay their employees.

Regarding the Botswana case, he insisted it was a ploy to sabotage him as he was in line to win a tender worth six billion Botswanan pula (R7.6b).

In that country, Phiri said, Khato Civils had invested R60m worth of machinery.

“It is [a case of] tender wars there. They want to put us into disrepute. If someone else is appointed, that case will end,” Phiri said.

The Botswana Court of Appeal’s three judges said in their judgment it would be improper for Phiri and Khato Civils to be denied the use of their money for “undefined periods, simply because there is an investigation which might lead to a criminal prosecution, a conviction of which may result in a confiscatory order”.

According to the judgment, a DCEC investigator found a number of transactions in foreign currency – South African rand, euros and US dollars – involving Phiri, Khato Civils and Stanbic Bank following the $886 000 deposit.

The judges also found that Phiri had entered Botswana through the Tlokweng border on three occasions since 2014 and deposited “large cash amounts” in dollars and euros.

“[In July 2015], [Phiri] entered Botswana from South Africa through the same border gate, declaring cash in the sum of $300 000 [R4m] but depositing $500 000 [R6.6m] into one of his personal accounts held with [Stanbic Bank]”, the judgment reads.

“According to the investigator’s affidavit, the under-declarations at the border created a reasonable suspicion that the Customs and Excise Duty Act had been breached in that some of the money was brought into the country illegally, without being fully declared.”

Phiri’s response was:

“It is correct that no clearance, or declaration, from either the [SA Reserve Bank] or the [SA Revenue Services] was presented at the point of exit from the South African border into Botswana.

"My understanding was that there was no requirement, which understanding was further compounded by the fact that on each occasion that I declared the currency to the Botswana Unified Revenue Service, neither clearance nor declaration forms were ever demanded or requested.

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