Bank of Namibia wins appeal over forfeiture of Chinese firm’s US$115 000

Bank of Namibia deputy governor Ebson Uanguta has won a Supreme Court appeal about a decision by the central bank to order the forfeiture of US$115 000 in a foreign currency bank account of a Chinese-owned close corporation.

The Supreme Court at the end of last week upheld an appeal against a High Court judgement dating from December 2022 and dismissed an application by the close corporation Vincent & Tiffany Construction to have the forfeiture of US$115 000 in a foreign currency account of the close corporation declared invalid and set aside.

The Unitrd States US currency in Vincent & Tiffany Construction’s account with a local commercial bank was the equivalent of about N$1.63 million when Uanguta issued an order for the forfeiture of the funds to the state in July 2021.

Deputy chief justice Petrus Damaseb, who wrote the Supreme Court’s judgement, recounted that the sole member of the close corporation, Ke Wang, opened a foreign currency account with Standard Bank Namibia in January 2016. On the same day the account was opened, Wang deposited US$115 000 into the account, declaring it as “export proceeds”, and attempted to have the entire amount transferred to a company in China.

That triggered regulatory concerns with Standard Bank Namibia, which flagged the transaction with the Bank of Namibia.

An official of the Bank of Namibia thereafter notified Standard Bank Namibia that the central bank’s exchange control department had grounds to believe the funds in the account had been acquired in contravention of the Exchange Control Regulations of 1961, and directed that the US$115 000 may not be withdrawn. According to a Bank of Namibia official, Wang offered a bribe to him during a subsequent meeting that was arranged to give the close corporation’s representative an opportunity to explain the source of the funds in its account.

As a result of the alleged offer of a bribe, Wang was criminally charged and prosecuted in the Windhoek Magistrate’s Court, but was acquitted in March 2021.

Near the end of May 2021, the Bank of Namibia’s board of directors was updated about Wang’s matter. The board was informed that Wang purported to be a foreign exchange dealer and accepted US dollars from Chinese citizens planning to return to China, with a promise to pay them in Chinese currency, and that he subsequently deposited the US$115 000 in a foreign currency account authorised exclusively for institutions or individuals in the tourism sector.

At the same meeting, the board approved the forfeiture of the US$115 000 to the state.

Uanguta issued a forfeiture order in July 2021.

In terms of the Foreign Exchange Regulations, the minister of finance has the power to attach money which they on reasonable grounds suspect to be held or dealt with contrary to the regulations. The Foreign Exchange Regulations also authorise the finance minister to declare any money held in contravention of the regulations forfeited to the state, Damaseb noted in the court’s judgement.

The finance minister’s powers under the regulations have been delegated to the Bank of Namibia since March 1991.

Challenging the forfeiture in the High Court, the close corporation alleged that Uanguta lacked the authority to issue the forfeiture order.

The High Court found that the Bank of Namibia did not clearly authorise Uanguta to have the funds forfeited to the state, and as a result ruled in the close corporation’s favour.

The Supreme Court, however, has now found that Uanguta carried out a decision of the central bank’s board, and that it was not Uanguta who decided that the funds should be forfeited.

The High Court should have accepted the central bank’s version that it was established that the close corporation contravened the Exchange Control Regulations, Damaseb said.

Chief justice Peter Shivute and acting judge of appeal Dave Smuts agreed with Damaseb’s judgement.