A Fox in Charge of a Global Money-Launderer’s Henhouse

In 2014, the central banks of Tanzania and Cyprus took over the notorious FBME Bank, which was accused of a long list of banking violations that allegedly made it the money-laundering epicenter of global finance. But the man they put in charge of administering the bank appears to have been about as controversial as the bank itself. The Lebanese brothers Ayoub-Farid and Fadi Saab, the owners of FBME, are said to have called him “our man.”

He is Lawrence Nyasebwa Mafuru, a onetime whiz kid who was once one of Tanzania’s youngest bankers in a variety of positions at Standard Chartered Bank’s Tanzania unit, which itself was accused of a string of banking offenses during the previous decade although his name doesn’t come up regarding them. He was a close associate of the former Tanzanian President Jakayla Kikwete, whose 10-year reign was characterized by massive corruption and the disappearance and murder of several journalists.

Controversial departure from scandal-plagued bank

Mafuru’s close association with Kikwete apparently protected him from prosecution over the theft of millions of Tanzanian shillings from Tanzania’s National Bank of Commerce when he was managing director. He was suspended for three months and resigned in December 2012 after returning to work.

He was then made the Treasury Registrar at Tanzania’s Ministry of Finance, supervising the Tanzanian operations of FBME, then the country’s largest commercial bank. As registrar, he was hit by additional allegations of corruption when he refused an order in a case brought by two individuals for FBME to deposit US$4 billion with the court for reasons that were not made clear.

Apparently he ran a series of controversial programs as treasury registrar that attracted the attention of authorities including accusing investors in privatized farms and businesses of being unsuccessful and threatening prosecution and confiscation. However, he carries Politically Exposed Person status (PEP) which has continued to protect him from prosecution although he was sacked as registrar by the incoming president, John Magufuli, in December..

According to a plethora of reports by corporate investigation firms and others, Mafuru’s reputation and actions raised questions in turn over the honesty and integrity of the Tanzanian Central Bank for appointing him as administrator of FBME. He is said to have a long history as a go-between for organized Russian mafia gangs operating out of Russia and Cyprus, facilitating Russian laundered money in multiple Cyprus banks.

International Fight over FBME’s Disposal

The courts in Cyprus are now seeking to establish whether Tanzania or Cyprus has jurisdiction over disposal of the bank’s business. According to sources in several countries, there is deep concern over which country gets it. There is fear that if jurisdiction goes to Tanzania, the country’s endemic corruption will mean disaster for the depositors.

FBME had first been ordered out of business in 2014 by the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which accused it of money laundering, terrorist financing, transnational organized crime, fraud, sanctions evasions and other international illicit activity.

Eventually, in April of this year, after a three-year battle, FinCEN succeeded in denying FBME access to the US SWIFT system, through which most of the world’s financial transactions take place. FBME and the Saab brothers are still fighting the charges in courts across the world, with its owners maintaining their innocence. Mafuru’s position Statutory Manager of FBME Bank ended with the decision to revoke the license of FBME Tanzania. But his two-year reign bears investigating.

Outlaw Money flows into FBME

As Asia Sentinel reported on July 6, for instance, as an example of the outflows of capital from Russia, some US$230 million was allegedly stolen from Hermitage Capital, a Russian investment fund operated by an American named William Browder through a tax dodge and laundered through a string of shell companies controlled by Russian Mafiosi and into FBME as illustrated by the chart below. The theft has since become a major international bone of contention between the United States and Russia with the passage of an act in Congress in effect sequestering the international movement of funds by top Russian officials believed connected with President Vladimir Putin.

At the right side of the chart are two companies, Altem Investment and Zibar Management Ltd that are said to be vehicles in the hands of a shadowy figure named Dmitri Klyven, the ultimate beneficial owner. Klyven is rumored to be head of the entire Russian Mafia.

Also among the depositors is an oil and gas contracting firm known as Hesco Engineering and Construction Co. Ltd., headed by George Haswani, a businessman in Syria who has been sanctioned by the European Union and the United States. Hesco is alleged to have been a middleman in the purchase of oil by the Syrian government but which is actually supplied by the Islamic State, the murderous Jihadi offshoot of Sunni Islam that has wrought havoc in Iran and Syria. Haswani has denied any connection to ISIS and said he would sue the EU although he acknowledged in an interview with Reuters that Hesco had been working as a subcontractor to Russia’s Stroytransgaz in an area that is under ISIS control.

According to a confidential audit of a list of suspect accounts by Ernst and Young, Hesco is one of many depositors whose “size of wealth/annual income is not evidenced in the Business Economic profile. (There is) no evidence of a comparison of expected turnover with actual turnover.”

No record where the money came from

In all, Ernst and Young identified 91 depositors with FBME, almost all of which had sources of wealth that were “not evidenced in the companies’ business economic profile” and in which so-called KYC (know your customer) standards were dubious at best. Many, headquartered in tax havens such as the British Virgin Islands, the Commonwealth of Dominica, Cyprus, Gibraltar or others, were missing complete lists of directors, their business activities were vague or missing, or the size or nature of transactions are not evidenced.

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Putting an allegedly corrupt figure in charge of a known corrupt institution raised many flags, with individuals warning that Mafuru might be leveraging his connections in Russia, Lebanon and Cyprus to play a role in Tanzania’s so-called blood diamond and gold trade, which FBME is suspected to have been deeply involved in before it was suspended from banking activities. He was believed to be involved, through Zanzibar and Tanzania, in negotiations between shipping owners and Somali pirates, although the details are unclear.

Given his apparent previous relationship with the Saab brothers, as when he refused the order for FBME to deposit the US$4 billion with the Tanzanian court, plus their amicable relationship with him, putting him in charge of the bank seems to have been questionable at best.

During the resolution of FBME Bank, where the main role of a central bank is to protect and safeguard customers’ interest, evidence provided to Asia Sentinel shows that Mafuru and a local Tanzanian lawyer gave several customers of the bank in Tanzania access to their money despite a freeze on withdrawals after taking a cut of 10 percent, confirming once more his well-known nickname “Mr. Ten Percent.”

Although Mafuru’s role as Treasury Manager at the Ministry of Finance stopped in December 2016, it is uncertain if somewhere during the liquidation of FBME he will show up again. He is too connected in political circles and too friendly with the owners of the bank, sources in Cyprus told Asia Sentinel.