Many Australians struggle to save a deposit for a home, let alone
pay for a property in full.
So how did then 22-year-old Ngouth Oth Mai manage to buy a $1.5
million property in Melbourne upfront in 2014 when he had only ever earned
welfare payments and lived in housing commission?
That is the question he must now answer in the County Court of
Victoria, where the AFP launched civil action under the Proceeds of Crime Act
(but not criminal charges).
Ngouth Oth Mai is the son of James Hoth Mai, the former chief of
staff to Sudan's People's Liberation Army (SPLA), who was sacked in 2014.
According to The Sentry, an anti-corruption watchdog set up by
actor George Clooney and activist John Prendergast, military generals in South
Sudan earn up to $65,000 a year and the wealth amassed by some of them and
their families is unexplained.
The Mai family was on The Sentry's list.
They discovered the luxury house in Narre Warren while
investigating corruption in South Sudan for a report published in 2016, War
Crimes Shouldn't Pay.
This prompted the Australian Federal Police (AFP) to start an
investigation.
The ABC has seen the affidavit that outlines the AFP's case.
Red flags
According to the document, an initial deposit of $155,171 was
wired from a bank account belonging to Hoid Establishments, a development
company in Uganda, directly into the trust account registered to the
Melbourne-based real estate agent that handled the sale in June 2014.
John Chevis, who spent 12 years working on fraud and corruption
cases for the AFP and is now an adviser on money laundering for the United
Nations, said the transaction should have been the first red flag.
"The real estate agents involved in the sale of the house in
Australia should have conducted their own due diligence on the source of the
funds, although Australia's anti-money laundering laws do not currently require
it," he said.
The AFP investigator claims the balance of the million-dollar
property and a luxury car was paid by money that was transferred from Africa
into National Australia Bank (NAB) business accounts held by a luxury car
business registered in Nguoth Oth Mai's name.
The NAB said in a statement that it conducts checks and due
diligence on all customers.
However this case raises serious questions around its banking
process.
"They should possibly have noticed that the funds travelled a
circuitous route for which there is no apparent commercial reason," Mr
Chevis said.
"Having identified these transactions as unusual, the banks
should then have sought further information on the source of the funds and
then, assuming they identified the source as illegitimate, rejected the
transactions."
Where did the money come from?
That circuitous route is revealed in the AFP's affidavit.
More than $1.5 million was transferred in five instalments from
companies located in Uganda and Kenya, sometimes going through banks in Dubai, into
the NAB business account registered to a luxury car business — Sportscars
Dealers — a company where the former general's son, Nguoth Oth Mai, was both
director and majority shareholder.
The AFP stated the company did not trade any vehicles.
The police allege the unexplained payments came from companies
owned by two businessmen, Humphrey Kariuki and Idro Taban, both known to the
anti-corruption watchdog, The Sentry.
"Records show that firms owned by these businessmen received
contracts from the SPLA [Sudan's People's Liberation Army] during Hoth Mai's
tenure as chief of staff, including Belgravia Services Ltd, Dalbit Petroleum
and LOID Investment," The Sentry said in a statement.
"LOID Investment was listed as the 'notifying party' for a
weapons shipment and that Dalbit Petroleum had wired hundreds of thousands of
dollars into the personal bank accounts of two South Sudanese generals in 2014.
"Like Hoth Mai, one of those generals also used the funds for
the purchase of a home outside South Sudan."
Centrelink benefits and tax evasion
The AFP produced Australian Taxation Office records in the
affidavit to show some members of Hoth Mai's family, who reside in Australia,
have not declared any income since 2009.
It said Nguoth Oth Mai also did not declare the property purchased
through his company's bank accounts and alleged that he evaded tax as a result.
The affidavit also explained some of the family members were on
Centrelink benefits and lived in housing commission until the million-dollar
property was purchased in 2014.
The court document contains an allegation that the luxury car
business was set up for the sole purpose of moving money from overseas into
Australia to purchase the property without alerting Centrelink.
The AFP claimed the welfare payments could have stopped if the
$1.5 million was deposited into personal accounts.
The police investigator explained the money in the NAB accounts
was also used to purchase an Audi vehicle for Nguoth Oth Mai's younger sister
before the business was deregistered on 15 September 2016.
Bank statements show the initial deposit for the luxury car was
paid by former military general James Hoth Mai, who held an account in his name
with the Commonwealth Bank of Australia (CBA).
Why didn't the banks and AUSTRAC question the movement of money
from Africa to Australia?
Who's looking out for money laundering?
Dr Mark Zirnsak, from the Uniting Church in Australia and
secretariat for the Tax Justice Network, said the case has highlighted concerns
with Australia's anti-money laundering processes when it comes to politically
exposed people, or PEPs.
"It does raise serious concerns about the health of
Australia's anti-money laundering system when it comes to people who are
politically connected," he said.
"The fact that the general's son was able to use a company to
buy a property without the bank being alerted to the fact that this was likely
to be money that couldn't be explained as legitimately sourced — that's a real
concern.
"It does also raise another issue around the regulator,
AUSTRAC, that's supposed to look after our anti-money laundering system and the
fact that they do not do any public reports to reassure the community that the
banks and other financial entities are doing a good enough job to combat money
laundering."
The Financial Action Task Force (FATF), an international body that
sets global standards for combating money laundering, recommend banks perform
due diligence on personal and business accounts that belong to anyone who does
or has previously held a prominent public position in any foreign government,
including high-ranking member of the armed forces, and their immediate family.
AUSTRAC is not in line with FATF's standards because it does not
consider a person "politically exposed" after they leave office.
That can make it easier for proceeds of corruption to be laundered
into Australia's economy and is one reason FATF delivered a scathing review of
Australia's anti-money laundering processes in 2015.
"The banks, through which these funds moved, should have
noticed that the source, and ultimate beneficiary of the funds, was linked to a
former senior ranking member of the military in a country that is known to have
issues with corruption," Mr Chevis said.
The Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services does not currently cover banking failures
with respect to money laundering and there are suggestions that maybe it
should.
"Engagement in high-risk and less-than-ethical behaviour
uncovered so far in the royal commission is almost certainly also present with
respect money laundering," Mr Chevis said.
Mr Chevis said financial intelligence units in the various
countries through which these funds moved, including AUSTRAC, should have also
been alerted to the suspicious transactions.
"They perhaps should have noticed that the source and
beneficiary was linked to a PEP and that the funds were being moved in a manner
that is a potential red-flag for money laundering," he said.
"AUSTRAC collects data on international funds transfers and
could have, if it had active surveillance in place, independently identified
that these transactions related to a PEP."
AUSTRAC said in a statement that it cannot comment on current operational
matters.
Solicitor Leath Nicholson, who represents James Hoth Mai, also
would not comment on the case, but said in a statement that his client is a
person of impeccable character and the claims made by the AFP are without
merit.
The case is scheduled to return to court in July.