Government Officials and ICT Personnel Implicated in Multi-Million Dollar Fraud Scheme
A shocking investigation has revealed that officials from all government institutions, from Accounts Assistant level up to senior officers, have been involved in the operation of the Integrated Financial Management Information System (IFMIS), an EPICOR-based computer network.
The “Cashgate” Scandal
The scheme, known as “cashgate,” allowed officials to upload fake funding and generate payments amounting to MK6.9 billion (US$15.5 million) in favor of 39 businesses for goods and services that were not provided. The criminals used real user names and deleted the transactions from the IFMIS server with the assistance of ICT personnel, making it impossible to trace.
How It Worked
- Accounts officials and ICT personnel worked together to upload fake funding and generate payments.
- Once the payments were processed, the suppliers withdrew the funds in cash from banks, swelling up bank withdrawals significantly.
- A total of 10 banks were used by the criminals to defraud government with 104 cheques at play in this scam.
New Technique Emerges
In a separate case, authorities have observed a new trend of crooked individuals starting up a business with a similar name to an existing organization or business with the intention of diverting cheques. The scheme involves colluding with staff from targeted organizations or businesses to gain access to cheques, which are then altered and deposited into their own accounts.
Case Study: Diverting Cheques to an Illegitimate Company
- A businessman registered a company with a name similar to a trendy technological company in Blantyre.
- The company was used to open an account at Bank M, where three cheques were deposited, drawn on different banks by purported clients.
- An investigation established that the accountant at the legitimate company had connived with the businessman to alter and divert cheques meant for the legitimate company.
Red Flags
The Financial Intelligence Unit (FIU) has identified several red flags in these schemes:
- Registration of a business name similar to an existing organization or business
- Opening of accounts at banks without proper verification
- Altered cheques with forged bank stamps
- High volumes of merchandise with cheques and cash seemingly coming from everywhere
Conclusion
The authorities have arrested several suspects in the concluded “cashgate” cases, and others are still pending trial. The investigation highlights the need for increased vigilance and awareness among businesses to prevent these types of fraud schemes.