The Big Interview with Ahmed Afif, Opposition spokesperson on Financial and Economic Affairs

Monday 24 July, 2017

The Big Interview with Ahmed Afif, Opposition spokesperson on Financial and Economic Affairs

Findings against FIU "look pretty serious"

The Opposition has achieved a significant legislative victory by amending the Proceeds of Crime Act and putting in place practices in line with international norms to fight against fraud and corruption. Ahmed Afif, the MNA behind these changes explains why loopholes in the previous Act had to be closed. He also states in no uncertain terms that the tax burden is undermining entrepreneurship in Seychelles.

by R. Meetarbhan

Ⓡ: President Danny Faure assented on 3 July to the amendments brought by the Opposition to the Proceeds of Crime (Civil Confiscation) Act 2008. What are the key elements of these amendments?

Ⓐ: Let me explain what exists today, what is wrong with it and what we proposed as a solution. The Proceeds of Crime Act enacted in 2008 allowed the Financial Intelligence Unit (FIU) to be able, on mere suspicion of a criminal act and with no hard evidence, to seize assets such as land, vehicle, boats, notes and currencies as well as to freeze bank accounts. They have freezing powers of up to 30 days. The law provides that if within those 30 days the person whose assets are seized does not make an application to the court then these accounts automatically become the property of the State.

Ⓡ: Does the FIU need a court warrant to proceed with the seizure?

Ⓐ: For 30 days, no. They act on their own. If the Director believes that there are good reasons to seize the assets, that is enough for the FIU to proceed.

Ⓡ:Would the FIU be able to seize assets only in cases where a financial crime is suspected?

Ⓐ:No, it could be for drugs trafficking or proceeds of any criminal offence.

ⓇBut this led to overlapping roles between FIU, Police and the NDEA!

Ⓐ:Correct. That is precisely why an amendment was brought. It separated the two categories of assets. The new Act treats bank accounts separately. Confiscation of physical assets will continue to be undertaken by the Police or whomsoever the authorities delegate this to, e.g. the NDEA. But freezing of bank accounts will come under the purview of the FIU.
Crimes that eventually lead to money laundering are dealt with under the Anti-Money Laundering Act (AMLA). This should be the responsibility of the FIU. Police and the drug enforcement agency deal with other crimes. The reason for that is very simple. You make government very efficient in that the units designed for specific activities are best suited for these.
The police is good at finding out where you hide drugs or where stolen and illegally acquired assets are. The FIU is best at watching inter- national transactions and relating it to a crime. As it is today if you suspect someone is engaged in money laundering, what is his penalty under the Proceeds of Crime Act? Nothing. The government will seize his assets. If he does not protest within 30 days, the money becomes a property of the State and that is the end of the story. Whereas if you put it under the Anti-Money Laundering Act, there is prosecution leading to fines or imprisonment. Why have they not done it that way, I don't really understand. The only reason that was given to me by the Attorney General when we were debating the bill prior to its presentation before the National Assembly, was that there are cases where it is difficult to obtain solid evidence. They find it easier to seize bank accounts under Proceeds of Crime Act rather than prosecute under AMLA. I said that that is your prerogative when it is a non-bank account asset. We are not interfering with that even if I believe from a moral and constitutional point of view, it is wrong. It means you are guilty until you prove your innocence. But I am not even going there. I am saying how many cases do you have now that you are not even prosecuting but you have frozen people's assets and waiting for them to say my assets are clean?

Ⓡ: Before the amendment, seized assets became the property of the State after 30 days unless the owner claims they are not proceeds of crime?

Ⓐ: Even after the amendment, it is so except for bank accounts. In a transition clause under the new Act, FIU has 30 days to lodge a charge in all pending cases. If no crime can be identified related to the money frozen or no case is brought to the court within 30 days of the amendment coming into force, then FIU has to release the money.
The funds they hold today amounts to over 30 million dollars. Some accounts have been held for three to four years in some cases and no charges were ever placed against the account holders. The latter have no idea what they are suspected of having done wrong.

Ⓡ: Is it reasonable to believe that in 30 days FIU can obtain evidence in the suspected criminal transactions?

Ⓐ: Yes. Because this clause relates to ongoing cases only. Some of them have been under investigation already for three or four years, maybe before FIU froze the accounts. The moment you freeze an account you believe there is a crime related to it. So you should be ready to take it to the Attorney General. 30 days is enough to make up your mind when the matter has been around for years.

Ⓡ: You once alleged that the FIU has been using its power to freeze accounts as a leverage to extort money from people. Do you still believe that this practice has existed in Seychelles?

Ⓐ: I still believe this very much. In fact I have proof of that. But the client does not want me to divulge his name or the content of a letter which he received from the FIU. The letter was very explicit. It states clearly that we are "open to a settlement."

Ⓡ: A private settlement between the client and the FIU, you mean?

Ⓐ:It does not state private settlement. But why should a civil servant settle for an alleged crime? He is not a judge. You decided there was a crime and froze the account without having to lodge a charge against the account holder. This
opens the way for "settlements."

Ⓡ: So the amendment closed a loophole in the law.

Ⓐ: Absolutely. With that amendment, they can't make deals any longer. FIU must prove that a crime has been committed. Now we shall go to the fullest extent of the law. FIU will prosecute launderer whose money assets are frozen. And it is a Judge who will make the decision, not a civil servant work- ing with the FIU.

Ⓡ:You said the FIU can only seize bank accounts. What if the suspected launderer converts his money into assets.

Ⓐ: Then he is prosecuted under Proceeds of Crime Act, not AMLA. The Police or NDEA seize his assets if they believe there was a crime committed in obtaining these assets. We have not touched these powers.

Ⓡ: So, the FIU has 30 days to lodge a charge in cases that are pending. What about new cases?

Ⓐ: New cases will he handled under the AML Act, they will have 180 days before they take it to court. After 180 days they can even ask for an extension. In most countries, freezing powers are for a couple of days only. If you are so convinced that there is a crime, go to an external body, go to a Judge or the Attorney General and let them look at the case in an impartial way. Yes you can freeze the money but let there be two or more impartial persons such as judges who can take the decision. When a person alone takes the decision to freeze an account, there is a possibility of wrongdoing.

ⓇWhat you are alleging is serious. It would mean that former FIU officials were possibly corrupt and seeking "settlements" with suspects?

Ⓐ: I have no reason to believe otherwise. In fact I sit on the National Assembly Finance and Public Accounts Committee (FPAC) which has already begun investigations on the suspected wrongdoings. We have preliminary reports from the ministry of Finance and we shall have very detailed reports from the Auditor General's office shortly. All the marks of a corrupt operation are present.

Ⓡ: But can the Auditor General reveal his findings to the FPAC?

Ⓐ: Now, yes. President Faure has given his assent on Monday 17 July to amendments to the Anti-Money Laundering Act and the National Drugs Enforcement Agency Act. The Auditor General can now report fully on his findings from audits of the FIU and the NDEA. Before the amendment, the Auditor General could not divulge information to anyone unless ordered by the law or by a court. Preliminary indications are pretty bad. What we understood is that the former head of the FIU was operating an account in Mauritius through a company which has changed its name. It initially had a licence to operate but was struck off the register later. Yet, that company was still operating a bank account until this year. So you had executives of the FIU who owned an offshore company in Mauritius and which billed the FIU with large
sums of money.

ⓇIf the company is struck off, how does it keep on holding a bank account?

Ⓐ: There must have been collusion or a serious error by the bank. These are the questions to be raised. How does a bank keep operating an account of a company struck off by the registrar in Mauritius. I am talking here of information obtained by the Seychelles ministry of Finance after they went officially to Mauritius to seek information from Mauritian authorities. The Auditor General did further investigations since then. It looks pretty serious. For ten years SCR8 million were paid annually to that offshore company.

Ⓡ: For ten years, and nobody was aware of that payment?

Ⓐ: They were aware but thought it was above board. Nobody questioned it. FIU would receive an invoice from Mauritius. The Head of the FIU would officially approve payments for security services.

Ⓡ: What security services?

Ⓐ: We don't know. We asked the question when the FIU man himself was in the National Assembly. He said because he paid third parties. We asked who were the third parties. He said he couldn't divulge that information because FIU is tracking people in Afghanistan, Somalia, etc. Basically, they send you on a wild goose chase. During all those years I have been working in government, we never had to pay for any information, even for tax information.

Ⓡ: Are you implying that FIU were paying for fictitious services then?

Ⓐ: Well that is something which is most probable. I say probable because we have not seen the final report, but I can't think of any other possibility.

Ⓡ: For ten years, somebody was signing cheques without verifying?

Ⓐ: Everybody was scared of them because they were a unit reporting directly to the President. Not even to the minister of Finance nor the Central Bank until quite recently when there was an SI (statutory instrument) signed, transferring their reporting powers to the Central Bank.

Could the Auditor General have found out this wrongdoing?

Ⓐ: Probably not. The Auditor General would go to the FIU accountant and ask: Did you pay for services which are not salaries and operational costs? Can I see the invoices? Were they certified by the FIU? The FIU would say yes to all of these and that is the end of the story.

Ⓡ: He would not enquire about the nature of the "services" paid for?

Ⓐ: These are financial procedures. Just like it is beyond the ambit of auditors to assess if the army is buying the right equipment or not. The Auditor General checks the invoice and the payment instructions. He verifies whether the budget was approved, whether the Central Bank carried out the transfer in foreign exchange and billed the FIU account in rupees. All was correct and passed. All audited. FIU paid SCR8 million that way for ten years. FIU was a unit working under the President, so they assumed everything is fine.

Ⓡ: Were auditors afraid to question them?

Ⓐ: Auditors were intimidated because FIU was powerful. Auditors are not comfortable to question people working under the President.

When did you, the Opposition, become suspicious?

Ⓐ: When they brought the budget to us they explained everything or tried to explain every budget line except that one. They spoke for an hour without saying anything on this one. They were asking for SCR15 million for the year 2017. We said what about this budget line? This is how we became suspicious.

Ⓡ: With hindsight would you agree there is something wrong with the audit system?

Ⓐ: What is wrong is that the ministry of Finance was unable to question the amounts that they were requesting. The failure lies also with the National Assembly. There was no oversight. The budget used to be approved in a day or two in the past.

Ⓡ: What will happen when the Auditor General presents his re- port to the FPAC?

Ⓐ: There will be a need to establish whether illegal activities have taken place. The Attorney General and the Anti Corruption Commission would have to investigate whether there is a case to be charged.

What happens if the suspects are not in the country?

Ⓐ:They claim they were able to follow operations all around the world. So maybe we can do the same, wherever they are residing. It is the Police, the judiciary and the ACCS who will work on that, not the National Assembly. A lot of damage has been done to Seychelles. Freezing 30 million of dollars without any charges! Investors who hear about that would fear to come to Seychelles because of this perceived threat looming above them. They do not know that things have changed over here.

Ⓡ: What should be done to avoid such occurrences in the future?

Ⓐ: Good oversight from the National Assembly. Then you need a ministry of Finance that is fully empowered to investigate any unit and an anti-corruption commission that is fully equipped and does not have to wait for the National Assembly to raise questions. We have unfortunately been through a period where the executive was immensely strong. They had the protection of a National Assembly which would cover them in a way. There was no ACCS in the past. Only a Public Ethics Commission. The checks and balances did not work.

Ⓡ: You are on record saying that FIU's murky dealings have affected local banks' reputation. Do you think the country has been able to rebuild its image since then?

Ⓐ: No, I do not think the situation is back to normal. Once the findings in the FIU case are made public, things may be worse. People sitting outside won't know the details. They will just hear that some people inside the FIU were involved in a scandal. Investors might wish to stay away from this country. It will take a while to clean up. It is like a wound that takes a while to heal. It will heal faster if the government steps up and talks very strongly to portray Seychelles as an investor- friendly country. The ministry of Finance, Central Bank and Financial Services Authority have to go out and conduct a big PR exercise.

Ⓡ: Any suggestions to the President at a time when he is preparing to make major announcements in an address to the National Assembly?

Ⓐ: Learn to cut expenditure. Ensure the right revenue is being paid to the state. Ensure that decisions are made fast. Make taxation more simple. Modernise the International Business Companies (IBC) Act. Amend the AMLA so that authorities have five days or so instead of 180 days to lodge a case after freezing an account.

Ⓡ: What are the drawbacks of the IBC ACT?

Ⓐ: In August 2016 they enacted a new International Business Companies (IBC) Act to replace the IBC Act of 1994. The new Act made provisions for the full disclosure of the identity of Directors and of Beneficial Owners. There is no reason for a company to be incorporated in Seychelles if it has to disclose these data to the public. We amended the Act but the president did not assent it. He said he will have discussions with other stakeholders but we have passed the date for assent.

Ⓡ: If I put it to you that heavy taxation in Seychelles is a brake to the entrepreneurial spirit, would you agree?

Ⓐ: Yes, I do. Taxes represents about 32% of GDP. One third of all wealth created goes to government as taxes. Business taxes are way too high. In Mauritius, the rate is 15% across the board. It forces government to be more efficient and spend smartly instead of forcing the wealth creators to keep on contributing more. The heavy rate would be fine if public services were of a high quality. But when your kids have to go to private schools, when you have to fly overseas for medical treatment, when the road infrastructures are poor, and yet you are heavily taxed then you will think about ways to avoid taxes legally. You will set up mechanisms to avoid taxes. It is known that the lower the taxes, the higher the compliance level. High taxes lead to low compliance and low investment levels. A flat rate of 15% is reasonable. Government is reluctant because they have not been able to cut expenditure. They are scared to take the risk to reduce taxes and this will never happen as long as they cannot control expenditure.

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FINDINGS AGAINST FIU DAMNING!
July 29, 2017
Is Ahmed Afif guilty by Association?


In a stinging interview with the Today Newspaper this week, Honourable Ahmed Afif, member of the Finance and Public Accounts Committee (FPAC) of the National Assembly, gave the country a preview of the findings of an FPAC investigation in the Financial Intelligence Unit (FIU). He hinted that the findings look pretty serious. True to his words, a report of the investigation into alleged embezzlement of funds by high officials of the FIU, namely the Irish, submitted by Wavel Ramkalawan exposed flagrant violation of financial rules and abuse of powers by the Irish oligarch.

http://seychellesrealitytoday.blogspot.co.uk/2017/07/findings-against-fiu-damning.html