draining development.pdf - Khazar University

402 Draining Development?Box 12.1 A Suspicious Activity Report Leads to a TransnationalCorruption InvestigationAccording to press reports, the Chinese government gave a loan to Namibia of US$100million through the Export-Import Bank of China (Exim) for the purchase of scannersfor airports in Namibia after a visit by Chinese President Hu Jintao in 2007. The loanwas given at a low rate on the condition that the Namibian government subsequentlybuy the scanner technology from Nuctech under a US$55.3 million contract (althoughless-expensive options were available from competitors).It was arranged that the Namibian government would make a down payment ofUS$12.8 million, and the rest of the contract was financed by Exim. After the downpayment had been paid from government coffers, a payment was made by Nuctechto Teko Trading for facilitating the contract. It was alleged that Nuctech had negotiatedwith Teko Trading to receive 10 percent of the contract if the average price of onescanner was US$2.5 million. If the selling price was over this amount, the companywould receive 50 percent of the difference, and a subsequent negotiation fixed thepayment for this agreement at the equivalent of the Namibian government’s downpayment.According to a report in the New York Times, the scam was discovered “becauseof a new money laundering law that requires Namibian banks to routinely report largemoney transfers to investigators.” a An official from the Windhoek bank implementedthe procedure and alerted the Finance Ministry when a large amount was received intothe account of Yang Fan, the Chinese Nuctech representative for Africa.Yang allegedly deposited US$5.3 million into the account of Teko Trading onMarch 11, 2009. Teko then sent invoices to Nuctech for US$12.8 million, which was theamount of the down payment paid by the Namibian Ministry of Finance. Yang and theNamibian owners of Teko Trading—Teckla Lameck (a public service commissioner) andJerobeam Mokaxwa—were arrested and charged with corruptly accepting gratificationfor giving assistance in the procuring of a contract with a public body. bYang also transferred US$2.1 million into an investment fund, while the other twoaccused spent large amounts of funds purchasing vehicles and houses. The Namibiancourt subsequently froze the assets of the accused and US$12.8 million of Nuctech’sassets under Namibia’s Organized Crime Prevention Act.a. Wines, M., “Graft Inquiry in Namibia Finds Clues in China,” New York Times, July 21, 2009.b. As of July 2010, the case was still ongoing, but Chinese authorities were reportedly cooperatingwith the local investigation in Namibia.A clerk at the Namibian supervisor of banks’ office noticed an unusualinflux of capital into the country—in fact, tens of millions of dollars—intoaccounts that Alexander had opened. The clerk thought that suspicious,especially since Alexander was not a resident and had no business contactsin Namibia, and he had only arrived a few days earlier. The clerk lodged aquery with Interpol, which contacted the FBI, and the rest is history. 32