Monograph 108 complete download - Institute for Security Studies

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Namibia 11 financial institutions falling under its mandate. In this regard it can issue guidelines and directives on how to detect and control money laundering in those sectors. It would appear that it might also be able to impose reporting obligations in the same manner, as the Bank of Namibia is able to do in respect of banking institutions. Financial institutions which are subject to supervision by Namfisa include public accountants and auditors who are members of the Institute of Chartered Accountants of Namibia, pension and provident funds, friendly societies, money lenders, unit trust schemes, participation bond schemes, managers of participation bonds schemes, licensed stock exchanges and brokers, medical aid funds, persons registered as Lloyds intermediaries, insurers and re-insurers, insurance agents and insurance and re-insurance brokers, boards of executors or trust companies and any other person who renders financial services as a regular feature of his/her business even if that person may not be registered. 9 An aspect of its supervisory functions is the power of investigation and evidence gathering. It does not, however, have prosecutorial powers as these are reposed in the Prosecutor-General. 10 In investigating any matter falling within its mandate Namfisa has powers granted in terms of the provisions of the Commissions Act. Witnesses and their evidence are treated as if Namfisa was a Commission of Enquiry. Thus persons may be compelled to give evidence and may be held in contempt for refusing to testify, producing documents required by Namfisa for evidentiary purposes etc. Namfisa is empowered to enlist the assistance of any persons it considers necessary to assist in the performance of its functions. Thus it can call on the police to assist in obtaining search and seizure warrants, in effecting arrests etc. Namfisa has recently had occasion to do so in regard to the affairs of two unregistered money lending close corporations and a trust, in the case of Cornelia Cartharina Lewies Familie Trust (Namibia), Janeel Financial Services CC and Dupwies Financial Services CC T/A Lighthouse Financial Services, High Court case no. (P) A 137/2003. Ms Lewies, a South African resident carrying on business in Namibia, set up three related close corporations, namely Janeel Financial Services and Lighthouse Financial Services (set up to undertake microfunding business) and the Lewies Family Trust (set up to act as surety for the monies advanced). Ms Lewies did so ostensibly on the legal advice of her husband, a practising lawyer in South Africa. On his advice, which turned out to be erroneous, none of the institutions were ever registered as micro-lending businesses in Namibia after their incorporation.
12 Tackling money laundering in East and Southern Africa The modus operandi of these entities is that Janeel and Lighthouse have branches in every major urban area in Namibia except Windhoek and cater for persons who find themselves in need of funds but would otherwise not be catered for by the usual banking institutions, i.e. those who are marginalised. In terms of the provisions of the Usury Act 1968 (Act No 73 of 1968) and regulations published by the Minister of Finance on 6 August 2002, 11 permitted interest rates which may be applied by micro-lenders are stipulated. The maximum interest that can be charged may not exceed 35% per annum or approximately 2.8% per month. Ms Lewies co-founded a trust, which acts as surety for any loans advanced to individuals by Janeel and Lighthouse. Typically, a borrower signs two agreements, one with the lending entity, Janeel or Lighthouse, for the amount of money lent plus interest at 2%, and another with the Lewies Family Trust as surety in respect of interest payments at 28%. The amount charged to the borrower and entered in the computer is the capital amount plus 30% and this is the amount the borrower is obligated to pay per month. The borrower is required to cede his automatic teller machine (ATM) card and personal identification (PIN) number. In the event that the borrower pays in full, the Trust does not have to pay anything in terms of the suretyship arrangement. If the borrower does not repay his debt it also does not have to pay anything. In fact, Janeel and Lighthouse have sued all defaulting borrowers in court. In the opinion of Namfisa the whole scheme is fraudulent. Acting on complaints received and information gathered during its routine inspections, Namfisa decided to search and seize records, documents and computers at 11 branches of these entities. With the assistance of the police it obtained search warrants from the district courts in which the branches are cited and seized files, documents, computers, ATM cards and files. It has established that over a period of three years the three entities made a profit in excess of N$25 million (ZAR25million) through these practices. Namfisa sought to retain the information on the computer hard discs of the three entities, which it had seized, for evidentiary purposes. Following disagreement on how this information was to be copied and certified for evidentiary use, Namfisa refused to return the computers. It had initially returned some files and ATM cards. The three entities resorted to legal proceedings and filed motion proceedings on an urgent basis. They sought the return of the computers and other ancilliary relief such as a declarator to the effect that the search warrants were invalid and setting them aside and also to the effect that the three entities were lawful even though they were not registered as micro-lending institutions in terms of the laws of Namibia. 12
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