About 16 people and companies with connections to Malawi have been mentioned as having illicitly maintained bank accounts in the Switzerland-based subsidiary of HSBC Bank amounting to $16.1 million (about K7.5 billion).
This has been disclosed through an investigation by the International Consortium of Investigative Journalists (ICIJ) using information which a former information and communication technology (ICT) employee of HSBC leaked to the institution.
Swiss banking system laws assure clients of secrecy and act as a haven for individuals who evade tax in their countries of origin and has recently come under attack for shielding criminals and corrupt politicians.
However, none of the people mentioned holds a Malawian passport or is a Malawian national.
There was no response from ICIJ when queried on the details of the individuals and companies connected to Malawi.
According to the report, about 10 of the accounts are numbered, which means they have no names attached to them. About 20 are linked to offshore companies while the rest are linked to individuals.
The data was collected from accounts opened between 1988 and 2006, but the highest number of accounts were opened between 2003 and 2006 of which close to 14 have been active during the same period.
Although lowly ranked at 143 out of 200 countries with the largest dollar amounts in the Swiss bank accounts, Malawi has received a notable mention because of how much the money in the accounts could have contributed to the country’s gross domestic product per capita, which stood at $266 in 2007.
Reacting to the development, economist and Innovations for Poverty Action country director Thomas Chataghalala Munthali said Malawi needs to start seriously enforcing optimal collection of domestic revenue to survive economic turbulence.
Said Munthali: “One way is to crack down on illicit financial outflows that go untaxed. For the record, Malawi loses between $150 million (about K71 billion) to $275 million (about K129 billion) in tax revenue in a year due to money leaving the country illicitly.
“I think it is high time the Malawi Government joined the international community, especially efforts being championed by the World Bank, in dealing with this problem by sharing information across countries on taxes being paid by corporations across countries to check on transfer pricing and to strengthen the capacity of the Financial Intelligence Unit to clamp-down on money laundering and illicit financial flows by individuals.”