R.B
JF-Expert Member
- May 10, 2012
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Canadian Lawyer Calls for Probe On IPTL
Tanzania criminal law authorities should start investigations on financial fraud and money laundering into illegal commissions and kickbacks in the affairs and operations of the Independent Power Tanzania Limited (IPTL), a Canadian lawyer, Dr Camilo Schutte, has advised.
Referring to a financial expert report, Dr Camilo claimed that such conducts were arranged by Mechmar Corporation (Malaysia) Berhad (Mechmar) and Wartsila, with Standard Chartered Bank (Hong Kong) Limited (SCBHK) being alleged to have received the proceeds of crime.
The report in question is among three expert reports that have been tendered in court in civil trial of VIP Engineering and Marketing Limited against SCBHK, Standard Chartered Bank (SCB), SCB Tanzania Limited, Joint liquidators of Mechmar, Wartsila Nederland and Wartsila Tanzania Limited.
"Mechmar, Wartsila and Danaharta acted in concert to divert cash to payment of debts that were inflated, prevented the buildup of cash surplus and created false sense of legitimacy by adding untrue entries in financial statements and varying terms of the original loan without authorization," he said.
According to Dr Camilio, a leading international lawyer with VIP, SCBHK acquired the loan facility in 2005, as modified in the term loan facilities and the 2003 variation. But, he said, the legal right to repayment of a loan qualifies as proceeds of crime, which were transferred to SCBHK.
"Through the transfer, SCBHK acquired the right to receive payments from IPTL and executed and administered that right and accepted at least 14 million USD in cash under the 2003 variation. The right to payment and he cash actually received qualify as criminal proceedings," the lawyer pointed out.
It is stated in one of the three expert reports that in order to establish the crime of money laundering it is immaterial whether the suspect entity had the express intent to launder, it is sufficient that he knew of the criminal origin.
Knowledge of the origin does not have to be direct knowledge of the crime and can also exist where the circumstances surrounding a transaction are such that it is very likely that a predicate crime has taken place.
A deliberate or reckless failure of bank controls as described by the Banking Expert Report can lead to substantial violations of law. Indeed SCB itself has been the subject of numerous anti-money laundering, sanctions and further non-compliance actions by local regulations.
In 2012, the New York Department of Financial Services imposed a civil penalty on SCB's New York Branch of 300 million US dollars, finding that the bank had evaded sanctions directed at Iran for its customers.
The settlement documents noted that SCB's internal procedures hindered it from effectively identifying potentially high-risk customers and transactions for further review in multiple areas of the bank. Also in 2012, the United States government settled criminal charges with SCB, imposing a forfeiture of 227 million USD in respect of transaction undertaken in violation of sanctions.
Armed with the expert report, Dr Camilo concluded that Mechmar and Wartsila engaged in a scheme of kickbacks and undocumented loans to embezzle money from IPTL and defraud the company, thus victimizing the Tanzanian state and VIP as co-shareholder.
He claims that such conducts constituted predicate crimes under anti-money laundering statutes and treaties. While SCBHK allegedly committed money laundering act by acquiring, possessing, using and administering the 2003 variation knowing that the proceeds were derived from crime
Tanzania criminal law authorities should start investigations on financial fraud and money laundering into illegal commissions and kickbacks in the affairs and operations of the Independent Power Tanzania Limited (IPTL), a Canadian lawyer, Dr Camilo Schutte, has advised.
Referring to a financial expert report, Dr Camilo claimed that such conducts were arranged by Mechmar Corporation (Malaysia) Berhad (Mechmar) and Wartsila, with Standard Chartered Bank (Hong Kong) Limited (SCBHK) being alleged to have received the proceeds of crime.
The report in question is among three expert reports that have been tendered in court in civil trial of VIP Engineering and Marketing Limited against SCBHK, Standard Chartered Bank (SCB), SCB Tanzania Limited, Joint liquidators of Mechmar, Wartsila Nederland and Wartsila Tanzania Limited.
"Mechmar, Wartsila and Danaharta acted in concert to divert cash to payment of debts that were inflated, prevented the buildup of cash surplus and created false sense of legitimacy by adding untrue entries in financial statements and varying terms of the original loan without authorization," he said.
According to Dr Camilio, a leading international lawyer with VIP, SCBHK acquired the loan facility in 2005, as modified in the term loan facilities and the 2003 variation. But, he said, the legal right to repayment of a loan qualifies as proceeds of crime, which were transferred to SCBHK.
"Through the transfer, SCBHK acquired the right to receive payments from IPTL and executed and administered that right and accepted at least 14 million USD in cash under the 2003 variation. The right to payment and he cash actually received qualify as criminal proceedings," the lawyer pointed out.
It is stated in one of the three expert reports that in order to establish the crime of money laundering it is immaterial whether the suspect entity had the express intent to launder, it is sufficient that he knew of the criminal origin.
Knowledge of the origin does not have to be direct knowledge of the crime and can also exist where the circumstances surrounding a transaction are such that it is very likely that a predicate crime has taken place.
A deliberate or reckless failure of bank controls as described by the Banking Expert Report can lead to substantial violations of law. Indeed SCB itself has been the subject of numerous anti-money laundering, sanctions and further non-compliance actions by local regulations.
In 2012, the New York Department of Financial Services imposed a civil penalty on SCB's New York Branch of 300 million US dollars, finding that the bank had evaded sanctions directed at Iran for its customers.
The settlement documents noted that SCB's internal procedures hindered it from effectively identifying potentially high-risk customers and transactions for further review in multiple areas of the bank. Also in 2012, the United States government settled criminal charges with SCB, imposing a forfeiture of 227 million USD in respect of transaction undertaken in violation of sanctions.
Armed with the expert report, Dr Camilo concluded that Mechmar and Wartsila engaged in a scheme of kickbacks and undocumented loans to embezzle money from IPTL and defraud the company, thus victimizing the Tanzanian state and VIP as co-shareholder.
He claims that such conducts constituted predicate crimes under anti-money laundering statutes and treaties. While SCBHK allegedly committed money laundering act by acquiring, possessing, using and administering the 2003 variation knowing that the proceeds were derived from crime
