Botswana is facing a growing concern regarding the influx and outflow of hard cash, which has raised suspicions of potential money laundering activities. The Financial Intelligence Agency (FIA) has recently released its annual report, highlighting the significant increase in cash transactions and the associated value over the past three years. In article, STAFF WRITER, LAONE RASAKA analyzes the implications of Botswana’s cash-intensive economy on money laundering and illicit proceeds, as well as the role of the banking sector in reporting suspicious transactions.
Cash Intensive Economy and Money Laundering
The FIA’s report reveals a substantial rise in both the number and value of cash transactions in Botswana. The value of cash transactions increased from P25 billion to approximately P62 billion, with a corresponding rise in the number of transactions from 0.65 million to 1.68 million. This trend indicates a growing preference for cash transactions, which significantly increases the vulnerability of the country to money laundering activities.
A cash-intensive economy provides an ideal environment for money laundering due to the ease of concealing illicit proceeds. Cash transactions are difficult to trace, making it challenging for authorities to identify and investigate suspicious activities. Criminals can exploit this anonymity to legitimize their ill-gotten gains and integrate them into the formal financial system.
Reporting Suspicious Transactions
The Financial Intelligence Act mandates reporting entities to file suspicious transaction reports (STRs) with the FIA within a specified timeframe. These reports are crucial in identifying potential financial offenses and combating money laundering. The FIA’s report indicates a 64% increase in the number of STRs filed between 2021/2022 and 2022/2023.
The banking sector accounted for the highest number of STRs, with a significant increase from 151 in 2021/2022 to 393 in 2022/2023, representing a 160% rise. This surge in reporting can be attributed to increased economic activity following the COVID-19 pandemic, which led to a stagnation in the economy. The banking sector alone accounted for 70% of the total STRs received by the FIA during the review period.
Common Suspicious Activities
The FIA’s report highlights several suspicious activities that have been observed over the past five years. These include customers refusing to proceed with transactions when asked for additional information, attempting to open accounts or apply for loans using fraudulent documents, and abandoning the process when asked to provide relevant information about large sums of money from purported investors. Additionally, customers refusing to update customer due diligence information have also raised suspicions.
The most common suspected predicate offenses identified during the review period were fraud, obtaining by false pretenses, corruption, and tax crimes. These offenses indicate a range of illicit activities that could potentially involve money laundering and the integration of illicit funds into the formal financial system.
International Cooperation and Requests for Information
The FIA plays a crucial role in facilitating international cooperation and exchanging information with other Financial Intelligence Units (FIUs) to combat money laundering. During the 2022/2023 financial year, the FIA received 10 international requests for information from other FIUs, compared to six in the previous year. The agency also sent four requests to foreign FIUs during the same period.
Furthermore, the FIA received requests for information from various countries, including Namibia, Zimbabwe, Algeria, South Africa, Montenegro, Jersey, Syria, Netherlands, Rwanda, Mauritius, Turkey, and Sierra Leone. The agency also sent requests to countries such as South Africa, Zambia, Zimbabwe, Cayman Islands, Switzerland, Namibia, Tanzania, Australia, Seychelles, Mauritius, and Spain.
The significant increase in cash transactions in Botswana raises concerns about the country’s vulnerability to money laundering and illicit proceeds. The cash-intensive economy provides an ideal environment for criminals to launder their ill-gotten gains, as cash transactions are difficult to trace. The banking sector has played a crucial role in reporting suspicious transactions, accounting for the highest number of STRs filed with the FIA.
To combat money laundering effectively, it is essential for Botswana to strengthen its regulatory framework, enhance cooperation with international partners, and promote greater transparency in financial transactions. By addressing these challenges, Botswana can mitigate the risks associated with dirty money and protect its financial system from illicit activities.
Overall, it is imperative for Botswana to remain vigilant and proactive in combating money laundering, as the consequences of allowing illicit funds to flow through its economy can be detrimental to its reputation and economic stability.
BPC Signs PPA with Sekaname Energy
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.
UDC deadlock: Boko, Ndaba, Reatile meet
It is not clear as to when, but before taking a festive break in few weeks’ time UDC leaders would have convened to address the ongoing deadlock surrounding constituency allocation in the negotiations for the 2024 elections. The leaders, Duma Boko of the UDC, Mephato Reggie Reatile of the BPF, and Ndaba Gaolathe of the AP, are expected to meet and discuss critical matters and engage in dialogue regarding the contested constituencies.
The negotiations hit a stalemate when it came to allocating constituencies, prompting the need for the leaders to intervene. Representatives from the UDC, AP, and BPF were tasked with negotiating the allocation, with Dr. Patrick Molotsi and Dr. Philip Bulawa representing the UDC, and Dr. Phenyo Butale and Wynter Mmolotsi representing the AP.
The leaders’ meeting is crucial in resolving the contentious issue of constituency allocation, which has caused tension among UDC members and potential candidates for the 2024 elections. After reaching an agreement, the leaders will engage with the members of each constituency to gauge their opinions and ensure that the decisions made are favored by the rank and file. This approach aims to avoid unnecessary costs and conflicts during the general elections.
One of the main points of contention is the allocation of Molepolole South, which the BNF is adamant about obtaining. In the 2019 elections, the UDC was the runner-up in Molepolole South, securing the second position in seven out of eight wards. Other contested constituencies include Metsimotlhabe, Kgatleng East and West, Mmadinare, Francistown East, Shashe West, Boteti East, and Lerala Maunatlala.
The criteria used for constituency allocation have also become a point of dispute among the UDC member parties. The issue of incumbency is particularly contentious, as the criterion for constituency allocation suggests that current holders of UDC’s council and parliamentary seats should be given priority for re-election without undergoing primary elections. Disadvantaged parties argue that this approach limits democratic competition and hinders the emergence of potentially more capable candidates.
Another disputed criterion is the allocation based on the strength and popularity of a party in specific areas. Parties argue that this is a subjective criterion that leads to disputes and favoritism, as clear metrics for strength and visibility cannot be defined. The BNF, in particular, questions the demands of the new entrants, the BPF and AP, as they lack a traceable track record to support their high expectations.
The unity and cohesion of the UDC are at stake, with the BPF and AP expressing dissatisfaction and considering withdrawing from the negotiations. Therefore, it is crucial for the leaders to expedite their meeting and find a resolution to these disputes.
In the midst of these negotiations, the BNF has already secured 15 constituencies within the UDC coalition. While the negotiations are still ongoing, BNF Chairman Dr. Molotsi revealed that they have traditionally held these constituencies and are expecting to add more to their tally. The constituencies include Gantsi North, Gantsi South, Kgalagadi North, Kgalagadi South, Good Hope – Mmathethe, Kanye North, Kanye South, Lobatse, Molepolole North, Gaborone South, Gaborone North, Gaborone Bonnignton North, Takatokwane, Letlhakeng, and Tlokweng.
The resolution of the contested constituencies will test the ability of the UDC to present a united front in the 2024 National Elections will depend on the decisions made by the three leaders. It is essential for them to demonstrate maturity and astuteness in resolving the constituency allocation deadlock and ensuring the cohesion of the UDC.
Repeat flight-risk suspect pays the piper
In Botswana, the Constitution Section 5 (3) (b) provides that conditions of bail are necessary to ensure that an accused appears at a later date for trial or for proceedings preliminary to trial. These conditions may include restrictions on interfering with state witnesses, the payment of a certain amount, the provision of sureties, the submission of travel documents, reporting to the police regularly, and appearing for all court mentions or proceedings. Failure to abide by these conditions can result in the revocation of bail. Robert Seditseng, a murder accused who has been detained since 2016, is currently facing the consequences of not adhering to his bail conditions – therefore paying the piper.
Despite numerous unsuccessful bail applications over the past five years, Gaborone High Court judge Michael Leburu denied Seditseng bail this week. Seditseng had requested to be set free before his trial starts on April 12th, but his freedom will now depend on the verdict. He is charged with the murder of his girlfriend, Siscah Mutukee, on June 22nd, 2016, in Charleshill.
Judge Leburu ruled that Seditseng is not a candidate for bail due to being a flight risk, as he has previously absconded from court. Defense lawyer David Ndlovu pleaded with the court to consider the time Seditseng has already spent in prison, but Leburu questioned whether there was any guarantee that Seditseng would not abscond again, given that he had done so twice before.
An affidavit from Investigations officer (IO), Constable Kedibonye Botsalo, supports the view that Seditseng is not a suitable candidate for bail due to his tendency to abscond when granted bail. The affidavit explains that Seditseng was initially denied bail by the magistrate court due to ongoing investigations and the possibility of tampering with evidence. However, a concession was later made by the prosecution, and Seditseng was granted conditional bail by the lower court.
The court documents reveal that Seditseng failed to appear before court on March 7th, 2016, without providing any explanation. As a result, a warrant for his arrest was issued. The case proceeded without him on several occasions until he finally appeared before court on July 13th, 2017. On that day, Seditseng’s bail was revoked due to his inability to provide valid reasons for his absences.
On October 4th, 2017, Seditseng was granted bail for the second time. However, he was once again absent from court on October 31st, 2017, without providing any reasons. He continued to be absent from court on five subsequent occasions until his arrest and appearance before court on August 30th, 2018.
During a period of nine months, Seditseng absconded from court without providing any reasons for his actions. This repeated pattern of absconding demonstrates a clear disregard for the bail conditions and raises concerns about his willingness to appear for trial.
Given Seditseng’s history of absconding and the potential risk of him doing so again, Judge Leburu’s decision to deny him bail is justified. The purpose of bail is to ensure the accused’s presence at trial, and Seditseng has repeatedly shown a lack of commitment to fulfilling this obligation. It is crucial to prioritize the safety of the community and the integrity of the justice system by keeping flight-risk suspects like Seditseng in custody until their trial is concluded.
In conclusion, the denial of bail to repeat flight-risk suspect Robert Seditseng is a necessary measure to ensure his appearance at trial. His history of absconding from court and failure to provide valid reasons for his actions demonstrate a disregard for the bail conditions and raise concerns about his willingness to face justice. By denying him bail, the court is prioritizing the safety of the community and upholding the integrity of the justice system.