MALAWI’S BACKSTREET BANKERS

They say they are not a bank but a forex bureau, but many call them exactly that – a bank. They can send money anywhere in the world–like your regulated bank; and in court, a former insider is detailing just how it all works and how, in one deal gone wrong, allegedly, he lost over K3 billion.

Mussa and Zubair at the Centre of a Financial Deal Gone Wrong

  • RBM to Launch An Investigation

BY JACK MCBRAMS

A financial deal gone wrong between several Malawian and UK businessmen has unearthed a web of underground financial dealings among the Asian-Malawian business community—culminating in an exposé of how the prominent Malawian businessman runs an underground financial institution that ‘banks’ for the business community. It also acts as the community’s forex dealer, moving millions of dollars out of the country through ‘couriers’.

Various sources have confided to the Platform for Investigative Journalism of existing backstreet banks, particularly among Asian community, but it’s the legal wrangle–playing out in Malawi, United Kingdom and European Union courts–that is opening the lid on the little reported area. 

In an exclusive all-revealing interview, UK-based Pakistani national Max Pathan told the Platform for Investigative Journalism that local businessman Zubair Osman, who runs Victoria Forex Bureau, is the local Asian community’s banker who uses the forex business as a front for his illegal backstreet bank. 

Zubair Osman has already dismissed the claims in an interview with PIJ.

An unverified list that PIJ has seen from a different source indicates that the bank, known as alternatively Zubair OG Bank or simply as OG Bank among the Malawian Asian community, services 87 very prominent businesses—all owned by Asians of Malawian origin. 

“Mr Zubair OG has been using the forex bureau to pull out millions of cash US dollars from local banks and cover his illicit transfers helping his clients to buy properties in the UK, Dubai, Pakistan, Hong Kong and China and bring in goods to Malawi at low value to avoid paying customs and duties,” Pathan, who has held an account with the OG Bank, claimed.

Pathan claims that the OG Bank delivers cash for clients from Malawi to the UK, Dubai, Pakistan, Hong Kong, China, or South Africa using ‘couriers’ at 5 per cent of the screen rate.

“The bank also offers electronic transfer for dollar attachment and is charged at 5 per cent of the screen rate to the destinations, but China is higher at 7 per cent of the screen rate,” he says.

He claims that the ‘bank’ also issues fake receipts for the Reserve Bank at 10 per cent of the amount, safe keeping of funds at 3 per cent to 5 per cent of the amount.

According to Pathan, OG Bank charges 10 to 15 per cent to convert black money to white money; money laundering. 

Black money includes all funds earned through illegal activity and otherwise legal income that is not recorded for tax purposes. Black money proceeds are usually received in cash from underground economic activity and, as such, are not taxed. Recipients of black money must hide it, spend it only in the underground economy, or attempt to give it the appearance of legitimacy through money laundering.

He claims that the system works the same way Malawian banks work. 

“Firstly, you approach Mr Zubair OG to open an account, which is called safekeeping. Once approved, you then deposit or transfer money either within Malawi or abroad. No official receipt will be given, only confirmation on WhatsApp chat but for bigger customers account statements will be provided.

“He tells you clearly in case anything goes wrong or if his bureaus are raided it will be 50/50 loss for both parties which will clearly outline the 50 percent of your risk if anything happens,” Pathan explains, further adding that the ‘bank’ accepts all major currencies and uses Victoria Forex Bureau as collection and drop off points. 

According to their website, Victoria Forex Bureau has 201 locations across Malawi, of which 26 are branches and 175 are conveniently located kiosks. 

Pathan, who held an account with the OG Bank between 2011 and 2016, says, although there were no formal receipts, he would receive regular updates after every transaction, whether deposits or withdrawals.

“I would get notifications from either Mr Zubair OG or his nephew Mr Mohammed OG of the amount received from my debtors in Malawi, who would deliver money either in local or foreign currency,” he says. 

To verify the authenticity of the claims, PIJ conducted its own independent investigations. 

A source at the National Bank of Malawi, who is a very senior manager but who spoke to PIJ on condition of anonymity, confided that the bank has flagged Victoria Forex Bureau several times owing to suspicious deposits. 

“They often deposit around K400 million on a daily basis, but the source of the funds is inexplicable. We have flagged the bureau with both the Reserve Bank and the Financial Intelligence Authority (FIA) but surprisingly, there has been no action against them,” our source said.

PIJ was unable to independently verify these claims but the FIA said they have never received any reports on either Osman or Victoria Forex Bureau.

FIA compliance and public relations manager Masautso Ebere told PIJ that the authority is not aware of any financial institution that is operating that kind of syndicate in the country.

“The FIA is not aware of any illegal bank – a bank that is operating without a licence – in the country. Licencing of the banking sector in Malawi is under the mandate of the Registrar of Financial Institutions. The mandate of the FIA is derived from the Financial Crimes Act, with a core function to receive and analyse financial information and disseminate financial intelligence to relevant competent authorities. The FIA does not operate outside this mandate,” he said in response to PIJ’s inquiry. 

He added that FIA does not investigate any abuse of a licence by a regulated entity, as this falls outside its mandate.

On its part, the Reserve Bank of Malawi said they were only made aware of the ‘illegal bank’ on or around 5th July 2022.

“RBM was indeed tipped on the alleged illegal operations relating to Victoria Forex Bureau Ltd and/or alleged illegal trading in forex by Malawian Asian businesses. RBM together with other Law Enforcement Agencies will investigate the allegations and may take action depending on the outcome of the investigation,” the central bank’s PR manager Davie Ndege said in response to our inquiry.

He noted that although RBM conducts periodic on-site inspections and off-site analysis of the business of all licensed forex bureaus in Malawi to check compliance with the relevant laws and regulations, they have investigated Victoria Forex Bureau for illegal transactions or any violations related to the abuse of its licence.

The K8 Billion Lawsuit That Opened A Can of Worms                                                                                                

PIJ was actually made aware of the existence of the OG Bank through a lawsuit filed against Osman in the Malawi High Court and in the Business and Property Courts in Birmingham in the United Kingdom by another former OG Bank customer, Zakir Mussa who claims that Osman swindled him in excess of K3 billion through the bank.

In documents submitted to the court, which PIJ has seen, ex-Malawi national Mussa who is now based in the UK, alleges that during the period from 2015 to 2019, he made substantial loans (with interest, in excess of £1.5 million) to two Malawian brothers, Moshin and Mahomed Mussa, who run the companies Mussa Nurmahomed and Phazi Industries, for the benefit of their businesses in Malawi. 

“This had been advanced to support businesses known as Mussa Nurmahomed (business entity) and Phazi Industries Limited. All four are residents of Malawi. This has a foreign overseas component and is made up of the principal amount borrowed and monthly illegal charges on a loan,” reads the court documents.

Zakir Mussa’s lawyer Bruno Matumbo of Excellence Chambers refused to talk to PIJ but referred PIJ to the court submissions he submitted on behalf of his client.

In the affidavits, Mussa claims that he entered into loan agreements with the Mussa Defendants [Moshin and Mohamed Mussa] while Osman and/or Victoria Forex Bureau agreed to and did act “as his agents and bankers” in Malawi. 

“Our first transaction was for £25,000. Mr Muhammed Mussa asked to make payment in the UK Bank then added another £25,000, making it £50,000. After that, he instructed me to use Mr Zubair OG/Victoria Forex for all receipts and payments as he claimed it is easy for him and has a great understanding with Mr Zubair OG, not knowing I was being trapped. 

“Mr Mohammed and Mr Moshin would instruct me to pay out their suppliers for purchase of goods from Deekay Suppliers Ltd and I would then instruct Mr Zubair OG/Victoria to release funds from the GBP Account which I held with him. For every payment, both Mr Zubair OG and Mr Muhammed and Mr Moshin Mussa of Mussa Nurmuhammed/Phazi Industries Ltd would confirm on the spot. As for paying their monthly interest dues, they would deliver cash USD to Victoria Forex Bureau or, if it was GBP Sterling, Mr Zubair OG would give his clients UK bank account details,” Mussa told PIJ in an interview.

But speaking through his lawyer Lusungu Gondwe of Ritz Attorney’s, Osman struck back, accusing Mussa of being a low life who wants to extort him.

“Our client advises that he knows Mr Mussa has no capacity to lend money to anyone in the magnitude of what he is claiming. As said before, Mr Mussa worked for our client in Malawi in 2005 before he travelled to the United Kingdom where he worked at Tesco as a mere shelver. His business filings/returns at Companies House in the United Kingdom do not project Mr Mussa as a man of any or any valuable means. Our client notes that from the evidence he has and knows about him, Mr Mussa is a pauper who wants to attack successful business people extortionately,” said Gondwe in response to our questionnaire.

But Mussa accuses Osman of clearly misrepresenting facts.

“Mr Zubair’s claims are false that I was struggling with my business up North and I approached him for work between 2000 and 2005. Instead, it was his brother, ex-MP Mr Hanif Osman Gani Issa who offered me a 50 per cent partnership in running his two business branches, Consumer Electronics and Victoria Forex Bureau Ltd in December 2004. I moved to Lilongwe in January 2005 and that is when I met Mr Zubair OG for the first time and by June 2005 I had decided to leave Malawi to settle in the UK, selling off all my assets and closed all my businesses in a proper manner by July 2005. So, his claims that I was working for him are a joke,” he says.

But Gondwe retorted: “For the respect that our client has for PIJ and the trust he has in your integrity, he requests you and PIJ to check in the UK that Mr Mussa is under the support of social welfare and that is his source of survival. Our client further requests you also to check with HMRC and authorities in the UK on Mr Mussa’s means so that the veracity of his means and ability to lend such amounts of money as he claims is verified before you publish.”

To prove his client’s case, Gondwe, on behalf of Osman, provided us with Mussa’s Business Link company’s tax returns from the UK that show that he only had £4,840 by the end of 2018.

When we put this across to Mussa, he claimed that he indeed has been financially incapacitated by the loss he suffered at the hands of Osman.

Mussa claims that all the OG Bank transactions were done in the UK from bank to bank or cash to Osman’s agents.

“That’s why I am quite surprised how he is bringing in Reserve Bank rules and regulations as the loanees never wanted to use Reserve Bank, and instead they opted for OG Bank or Victoria Bank or Mr Zubair OG,” Mussa said.

According to Mussa, whenever his clients made bank payment in the UK under the instructions of Osman and Victoria Forex Bureau, Osman would give bank details for his clients who have UK bank accounts but are resident in Malawi and Mussa would be notified by either Osman or his nephew Mohammed OG or by Muhammed or Moshin Mussa or whoever was making the payment. 

“And my account would be updated in Zubair OG/Victoria Forex records,” he said.

For local internal debit or credit, he says the system works the way a bank does.

“It is similar if someone has an account with Mr Zubair OG or Victoria both debit and credit are done internally. It is just like having a bank account in the same branch, and you instruct the bank manager to make and receive payments,” he explains.  

A Court evidence

Mussa says he made payments directly or indirectly to Osman and/or Victoria Forex Bureau for onward transmission to the Mussa Defendants in connection with the loans, but the Mussa defendants have failed to make any repayments, their defence being that they received no payments from Osman or Victoria Forex Bureau.

Another Court evidence

Part of the voluminous evidence that Mussa has presented in court includes a whole folder of WhatsApp chats between him and Osman where the two are transacting over Mussa’s OG Bank account. Mussa claims two of the numbers, TNM and Airtel lines, are Osman’s. We were unable to independently verify the Airtel line, but the TNM line is registered to Ahmed Osman.

In several chat trails, Mussa can be seen giving instructions to Osman to update his OG Bank account based on deposits made in Osman’s Barclays UK account. The chats are accompanied by deposit slips into the UK Barclays account as proof of deposits, while Osman confirms receipt of the funds and immediately updates Mussa’s OG Bank account with the corresponding funds.

A Court evidence as proof of transaction

In other chats, Mussa can be seen giving instructions to Osman to release funds to his lenders in Malawi. Once these payments have been made, Osman then deducts the amount paid from Mussa’s account.

Another proof of transaction tendered as evidence in court

In the court dockets that PIJ is privy to, Mussa argues that Osman and/or Victoria Forex Bureau have acted in breach of the alleged agreement and/or their duties arising from the same.  

Mussa’s claim is that the money he was claiming from the Mussa Defendants had been given to Osman through Victoria for onward transmission to the Mussa Defendants. Osman denies this.

“The main argument for adding me as a defendant was that I was not willing to give an account of the funds. I deny having any obligation to do this. The Mussa Defendants argued that I could instead be called as a witness, and it was not necessary for me to be a party. I have no issue with this as I live and work in Malawi,” Osman said in his documents filed in his defence. 

Mussa alleges that, if the money was not in fact released to the Mussa Defendants, then he has suffered loss and damage in a like sum; alternatively, Osman is liable to account to him for his dealings with the money. 

But in his defence, Osman claims that at no time did he receive any money through Victoria Forex Bureau and that he did not receive any instructions or money from Mussa and was not aware of his business dealings with the Mussa defendants. 

In his defence filings, Osman also makes the point that Mussa appears to have been involved in making loans that are illegal under Malawi law. 

On March 9, 2022, Osman’s UK solicitors served Osman with a summons for a UK trial in which he is being co-sued alongside his sister, brother-in-law, and nephew who are purported to have received deposits from Mussa on behalf of Osman. 

However, Osman challenged the jurisdiction of the UK court on 29th March 2022 and sought an extension of time for evidence and submissions. On 30th March 2022, District Judge Talog-Davies made the order and the time was subsequently extended to 25th May 2022.

In the meantime, Osman applied in the Malawi court for an anti-suit injunction to restrain Mussa from prosecuting the English Proceedings. 

But in a 16 May 2022 ruling, Judge Jabber Alide denied him his prayer. 

And in a witness statement for the UK court case filed on 24 May 2022, Osman accuses Mussa, who he claims worked for Victoria Forex Bureau in Lilongwe for five years from 2000, of running a loan shark business in Malawi.

“When I read the case documents, in the Malawi proceedings, it became clear that the Claimant was loan sharking at high compound interest rates on a monthly basis to businesses and people in Malawi. Then I became aware, through certain people who I do not wish to name, that he attempted to mediate through community arbitration/mediation.   

“My family is very well known and highly regarded in Malawi. I believe the claimant is trying to create pressure on me to resolve this matter through community arbitration/mediation. The Malawi Asian community does not generally deal with disputes through the court and instead try to resolve matters through community arbitration/mediation in a traditional way,” he says.

Osman claims Mussa has been to every community in the southern region and central region of Malawi, attempting to get community mediation in order to resolve his illegal money dispute claims in relation to the court proceedings.  

“I believe he is abusing the court system in Malawi by adding me to his personal and business disputes in order to create a community mediation/arbitration settlement, and now he is trying to do the same thing in England,” he says. 

Last year, being represented by Excellence Law Partners, Mussa filed a second Malawi court case, filed at the Commercial Division, Principal Registry of the High Court under case number 359 of 2021, with Osman as the sole defendant.

Mussa is claiming K3 billion, plus interest and loss of business on the grounds that Osman was owner/shareholder/director/manager of Victoria and that in 2015, he deposited various sums of money with Osman/Victoria for the purpose of him then lending those sums to the Mussa Defendants in Malawi. 

The total amount he is claiming is in the range of K8 billion.

“The Mussa Defendants confirmed that they had received the loans through me/Victoria, but later stated that they had never received any such monies. I deny being involved in these alleged loan matters,” Osman says in his filings. 

Osman also denies having any obligation to provide an account of the monies allegedly given to him, and further denies causing any loss of damage suffered by Mussa.

“I instructed my Malawi solicitors, Ritz Attorneys, and on 28th October 2021, they filed a defence to the claim. Again, it is in short form, but the essential grounds were that: at no time was I acting in my personal capacity. Insofar as monies passed through Victoria (which is absolutely denied) it was the correct defendant rather than me. I denied receiving any instructions or money from the Claimant or being aware of his business dealings with the Mussa Defendants; the claim against me was vexatious,” says Osman.  

And in an interview with PIJ, Moshin Mussa, the managing director of both Mussa Nurmahomed and Phazi Industries, painted Zakir Mussa as a deranged maniac obsessed with defrauding and tainting the image of reputable Malawian businesses and families.

“We have an extortionist on the loose. He is a fraudster and an extortionist who is on a fishing expedition to extort reputable businesses in Malawi,” he said. “I have never taken a penny from him. We are a small community and he was offering money to everyone, hoping that someone would commit.”

Moshin told PIJ that he met Zakir Mussa, to whom he is not related, when the latter came to Malawi around 2016 and offered to broker financing for Malawian Asian businesses at a commission.

“But when we conducted due diligence on him, we discovered that, in the UK, he was working as a mere shelver at Tesco, he was living off social welfare and that his finances did not support the business model that he was proposing,” he said.

We have in our possession two payments: a 10 October 2019 National Bank cheque of K275,435,000 from Phazi Industries and a 31 July 2019 NBS cheque number 000753 from Mussa Nurmahomed worth K275,625,000 in favour of Zakir Mussa as part of repayments for the said loans. We also have seen a copy of the contract that Moshin and his brother Mohammed signed for the loans. The agreements were signed on October 1, 2018.

But Moshin claims that Zakir was meant to avail the funds as per contract.

“The contract clearly says Zakir was to avail the funds. The funds were not immediately released. As for the cheques, they were collateral that he would cash if he had provided the financing. So my question is, why did he not deposit the cheques? Because he did not do what we agreed?” 

When we asked why, if Zakir is an extortionist as he claims, has taken up the issue with various courts in Malawi, the UK, and the European Union court, Moshin describes the UK businessman as a loner.

“He is on a fishing expedition. What does he have to lose? He doesn’t have any acquaintances, and he has no people to protect,” he said. 

Moshin says the fact that Zakir has been sending him threatening messages while the court case is ongoing goes to show that he is someone who is not stable.

“But we are not worried because, in Malawi, justice takes its course. You can’t beat a seven-penal Supreme Court. As corporate and dignified business people, we don’t go to the media. We let the courts do their job.”

Apart from suing the Mussa Defendants, Mussa is also claiming £178,941 repayments and interest from Cape Town-based Consort Commercials director Ashraf Karim as well as £160,000 from Subash and Vishal Patel of Deekay Suppliers who he claims directly benefited from the loans to the Mussa Defendants.

“In respect of your conduct concerning several payments that were made into your Isle of Man offshore Company’s Barclays bank. Account Name: Consort Commercials Account number 20772569 Sort Code 20-26-74 as per instructions from Mr Zubair Osman Gani Issa of Victoria Forex Bureau Ltd, my clients made electronic transfer slips for every transaction which Mr Zubair OG Issa and his nephew Mr Mohammed Hanif OG Issa confirmed at that time but now failing to account. I urgently seek repayments of the sum paid into your Business offshore bank account, plus damages and interest.

“Put simply a fraud has been perpetrated and given that the above payments were made direct by my clients into your UK Bank Account and these sums have never been accounted for, it is reasonably inferred that you are part of the conspiracy along with Mr Zubair OG Issa, Victoria Forex Bureau Ltd to defraud me.

“I have already taken all the directors of Mussa Nurmuhammed, Phazi Industries Ltd, Victoria Forex Bureau Ltd and his UK Agents to Malawi High Court Commercial Division and The High Court of Justice, Business and Property Courts of England and Wales, Business List (Chd), Birmingham District Registry,” reads the claim letter to Karim.

In the letter to the Patels, Mussa demands repayment with respect to numerous cash and electronic transfer payments which were made for the purchase of goods, equipment, and machinery by Mussa Nurmuhammed and Phazi Industries Ltd through payments made through Osman.

“This letter is being sent to you for your attention in accordance with payments made by Mr Zubair OG Issa and Mr Mohammed Hanif OG Issa from my GBP Sterling Acc with them.” 

The payments were made between October 2014 and July 2017.

In an interview with PIJ, Vishal Patel of Deekay Suppliers said he was shocked when he received the letter of claim from Mussa as he has never transacted any business with him.

“I don’t know him. I have never talked to him, nor have I ever met him. What I know is that he has a problem with OG and Moshin Mussa regarding money issues, but I don’t even know the whole story. He tried to contact me, but I didn’t even reply because I know that it does not involve me.

“If my name is there, ask him to give you a copy of the payment,” he said.

OG Bank Case, A Tip of the Iceberg 

According to an independent financial expert who has worked in the banking sector for close to 20 years, Limbe is the hub for money laundering and illicit financial dealings.

“Although you have highlighted the OG Bank case, it is just the tip of the iceberg. There are many more traders in the Limbe area who run similar schemes to varying degrees,” he said.

True to his claim, PIJ’s investigations unveiled a money laundering case, documented as Republic vs Silaji Shiraz, Criminal Case No. 1192 of 2020 in the Senior Resident Magistrate Court sitting in Blantyre.

The case points to a larger money laundering and forex laundering scheme among the Malawian Asian community. 

In this case, a Malawian Asian businessman Yasir Haj Yusuf, who owns a shop at Mahnoor Premises in Limbe, accused his ‘runner’, Kanjedza resident Silaji Shiraz of swindling him of K19 million that he had been sent to withdraw from the bank. Shiraz claimed he was robbed of the cash at gunpoint as he walked out of the bank.

When the case came to court, Shiraz documented how he had been running forex deals for him for the past year.

In one account, Shiraz narrates how he and his friend Shafi shuffled US dollars and Kwachas for their client in the Blantyre area. 

“I took my passport and bag which I used to carry when going to play football and met Shafi behind the Mybucks Banking Corporation car park. Shafi was in the car with another person who was unknown to me. Shafi and the unknown person left me in the car and went out.

“A few minutes later, Shafi and the unknown person came back to the car with an envelope full of foreign currency in the sum of 25,000 United States Dollars (hereinafter to be referred to as “US dollars”). Thereafter, the unknown man left with the car and Shafi and I walked on foot to some house with a black gate in Kanjedza Township close to Limbe CCAP Church. An Indian man alighted from the said house, and Shafi introduced him to me as Mr Yasri Haj Yusuf. Shafi passed on the envelope with 25,000 US dollars to the complainant, who took the same into the house. 

“On another occasion, Shafi called me again and instructed me to take my passport and laptop bag and go to the complainant’s house in Kanjedza. He informed me that the complainant wanted to send me on some errand. When I arrived at the complainant’s house in Kanjedza, Shafi and Yusuf gave me a bag of money amounting to K28,000,000. The complainant called another unknown person and advised him that Shafi and I will meet him in Blantyre.

“Shafi and I boarded a minibus with K28,000,000, and we disembarked at the Ginnery Corner bus stage and went into the flyover. Shafi called some unknown person and advised him that we were in the flyover. Shortly, an unknown man came to the flyover with an envelope, and Shafi instructed me to give him the money that was in the bag. The unknown man counted the money, put it into his bag and handed over an envelope to Shafi. Shafi handed over the envelope to me and advised me to “learn” the job by counting the money that was in the envelope. I counted the money that was brought in the envelope by the unknown man, and it amounted to 18,000 US dollars. Thereafter, we boarded a minibus back to the complainant’s house in Kanjedza.”

Over time, Shiraz told the court that he transacted in more than 15 forex dealings for Yusuf, some worth more than K100 million per excursion. 

“The complainant used to send me to the bank to change Malawi Kwacha into US dollars. He also used to send me to find more passports from my friends to facilitate these foreign currency transactions. 

“On one such transaction, I managed to deal in US dollars worth $18,000. On other occasions I have handled the complainant’s similar transactions worth K43,000,000, MK53,000,000 and K23,000,000 just to mention a few,” he said. 

When confronted with this case, RBM said they only became aware of the case when PIJ sent it to them. 

“RBM, together with other Law Enforcement Agencies, will investigate the allegations and/or revelations from the said case,” RBM’s Ndege said.