N$103 400 was stolen from the SME Bank on 3 December 2012, the day it opened its doors to the public for business.
The money was taken as petty cash using a bank withdrawal slip by senior managers at the bank.
New information gleaned from court documents and other investigations found that the N$103 400 and other millions were later deposited into company accounts belonging to Zimbabwean businessman Enock Kamushinda. Eventually the money ended up paying for his credit card accounts and other bills for his wife and children.
Kamushinda is seen as the kingpin behind the looting of over N$260 million, which collapsed the SME Bank and left it with over N$1 billion in debt.
Despite media reports pointing to suspicions of criminal activity at the now failed bank, authorities like the Namibian police and the Bank of Namibia did nothing to arrest the situation.
An investigation by The Issue and a study of court documents show Kamushinda was the ultimate beneficiary of the looting, which collapsed the bank and left many aspirant Namibian businesspeople in debt and destitute.
The elaborate looting scheme saw at least N$120 million of the money sent to South Africa through Moody Blue Trade and Invest 14 being traced to the Democratic Republic of Congo (DRC). Kamushinda is believed to have mining operations in that country.
N$30 million was traced to Dubai and linked to individuals implicated in the Gold Mafia expose of a criminal enterprise looting Zimbabwe.
Some of the money was returned to Namibia via companies linked to Kamushinda. Large sums of money were paid to businesswoman Tanya Hangula and Esau Mbako, who is an assistant to agriculture minister Calle Schlettwein.
Kamushinda and his lieutenants at the SME Bank looted the money using various schemes and methods, which included petty cash withdrawals, a sophisticated cross-border foreign exchange ‘Hawala’ scheme, and fictitious investments. These schemes are responsible for the looting of over N$260 million from the bank between December 2012 and January 2017.
The N$248 million is money the bank’s liquidators know for sure was looted and could trace. Authorities suspect more money could have made its way into the pockets of Kamushinda and a handful of politically connected Namibian businesspeople, civil servants, and diplomats.
N$7.4 million in petty cash withdrawals
Court and investigation documents now point to uncovering a scheme where Kamushinda benefited from a string of petty cash withdrawals from the bank’s vault, amounting to over N$7.4 million. The money was siphoned from the now-defunct bank between December 2012 and March 2014.
The withdrawals started on the day the bank opened for business to the public on 3 December 2012, with N$103 400. The amounts varied from as high as N$300, 000 000 and as low as N$10 000. The money would mainly be deposited into the bank accounts of businesses owned by Kamushinda.
The money was mainly paid to entities like Crown Finance Corporation and Heritage Investments. It would ultimately end up in Kamushinda’s personal bank accounts or paying for some of his personal bills, like water and electricity of his properties in Windhoek.
This scheme stopped around March 2014, and the withdrawal amounts became lower. Prying eyes from employees and auditors appear to be the reason why the scheme was discontinued.
The scheme coincided with the change of signing powers in December 2012. As soon as the bank became operational, signing rights were changed from executives requiring a signature from either the chairman or one of the non-executive directors. The new system allowed for the executives in the bank to sign off money transfers from the bank’s accounts, without board verification.
The N$250 million cross-border money machine
By December 2013, 12 months after the bank opened, its management and deputy chairman, Kamushinda, devised other schemes that led to N$250 million leaving the bank and being channeled through companies in South Africa.
One such scheme was a sophisticated black market foreign exchange system, also known as Hawala. In this ploy, Kamushinda would collect cash in US dollars from business people in Zimbabwe in exchange for consumer goods not available in that country. These business people would pay Kamushinda in hard cash to his runners in Zimbabwe. Money equivalent to the said US dollar amounts would then be paid out of the SME Bank’s account and transferred to South African entities, who would purchase the consumer goods and deliver them to Zimbabwe. The only problem is that the money from the SME Bank was never returned.
The money taken out of the SME bank’s accounts and sent to South Africa is often disguised as legitimate transactions or expenses, like computer-related expenses or investments.
During December 2013, the first batch of the money, N$546 000, was transferred to an entity called Moody Blue Trade and Invest 14. On the bank’s financial records, these transfers were accompanied by what is now known to have been fictitious invoices for computer equipment, which cost the bank, according to bank records, N$83 million paid out between December 2013 and February 2015.
By July 2014, the bank’s auditors became suspicious and started questioning the N$546 000 paid out during December 2013, amongst other questionable financial transactions. These questions brought about a rethink of how to explain away uncomfortable questions. Sometime during February 2015, the description of the N$83 million spent on computer-related expenses was changed on the bank’s books to only N$8 million, while the remaining N$75 million miraculously turned into an investment with South African-based Mamepe Capital, owned by Mauwane Kotane. The ensuing months saw Mamepe Capital issuing the bank fake monthly investment statements.
To make the scheme look legitimate, the SME Bank, during April and May 2015, paid N$30 million over to Mamepe in four tranches. N$20 million of that was then returned to SME Bank as investments that had matured, Kotane kept the remaining N$10 million. At the same time, the bank was also experiencing a cash crunch, and the appearance of what looked like yields on investments served to give the board confidence.
In July 2016, the bank’s auditor, BDO, asked Mamepe to prove the N$75 million investment exists and where it was actually invested.
Investigators later learned that a behind-the-scenes agreement was reached between Mamepe, senior officials from the now-defunct VBS Mutual Bank in South Africa, and members of the SME Bank management. The agreement gave birth to documents being produced to create the impression that the SME Bank’s money was invested with VBS. This was not the case and the SME Bank’s auditors, BDO, kept insisting that they needed to see evidence proving where the money was actually invested.
The auditors’ insistence appears to be the cause of the intervention by Bank of Namibia. The intervention led to probes conducted by the central banks of Namibia and South Africa, which uncovered industrial scale looting at both the VBS Mutual Bank and the SME Bank. These investigations eventually led to the closure of the two banks.
Despite the overwhelming evidence, Namibian authorities have yet to take action against individuals implicated in what now looks like a clear cut bank robbery. The looting happened right under the nose of the Bank of Namibia and the FIC, until November 2016 when then director of banking supervision Romeo Nel opened a case with the Namibian police. By then it was too little too late. While police ignored a tip-off in a situation where a senior officer responsible for investigating the SME Bank, received a N$350 000 business loan from the bank he was supposed to investigate for alleged theft, fraud and money laundering.
Last month the Supreme Court raised alarm bells, questioning why Kamushinda and others have not been arrested or being pursued criminally by the authorities. Kamushinda left Namibia during February 2017, shortly before BoN took charge of the failed bank and has never returned since.
This article was produced in partnership with Integrity Namibia