EXCLUSIVE: Stanbic, Zenith, Access Bank, et al caught in massive money laundering

An Ernst and Young report in possession of Starrfmonline.com indicted the banks, hence the sanctions by the Bank of Ghana (BoG) after uncovering the massive rot in the transfer of foreign exchange from Ghana through commercial banks.

In a mind-boggling report sighted by Starrfmonline.com, hundreds of millions of foreign exchange in dollar, Euro and Pounds Sterling were transferred out of the country between October 2013 and November 2014 without the banks observing compliance of the Foreign Exchange Act.

Consequently, the BoG had descended heavily on some of the banks with the imposition of pecuniary penalties against them.

Starrfmonline.com has in possession copies of letters from the Central Bank to five commercial banks informing them of the imposition of penalties totalling GHc6,658,740 on them “in a bid to ensure that banks respect the rules with regard to compliance with the Foreign Exchange Act.”

Stanbic Bank topped the list of offending banks with a fine of GHc5,423,370 followed by Access Bank with GHc748,000. The rest were Universal Merchant Bank, GHc204,780, Zenith Bank ,GHc174,000 and Societe Generale Ghana Limited, GHc 108,590.

TRANSFERS
Transfers made through Stanbic Bank at various periods in 2014, according to the documents, totalled $87,239,000, $1,309,000, €3,071,000 and €46,000 , £1,240,000 and £18,000.70.

For Access Bank, the total transfers were $387,000, $6,000, £2,000,000 and 30,000.

With respect to Universal Merchant Bank, the transfers were $12,420.000, $186,000.3, €272,000, €4,000.08; £45,000; and £0.675,000.

For Zenith Bank, the total figures were $2,039,000; $30,585,000; €784,000; €11,000.78; £40,000, and $0.6,000. And with regards to Societe Generale Ghana Limited, the transfers were $1,616,000; $24.000.24; €18,000; €0.27; £1.000.40, and £2,000.1.

The report comes at the time the government has been working to clamp down on money laundering, which it believed contributed to the depreciation of the Cedi against the major currencies. It would also add to the President’s fight against corruption and efforts to seal loopholes in revenue generation.

INVESTIGATIONS
The revelations followed preliminary investigations conducted by the BoG into transfers of foreign exchange, and a special audit of forex transactions conducted by renowned Chartered Accountants and Management Consultants, Ernst and Young, on behalf of the Central Bank.

“The findings of both teams indicate that the transfers were not supported by the relevant documentation in contravention of the Foreign Exchange Act 2006, Act 723 and the accompanying guidelines,” the letters to the offending banks, dated June 9, 2015 and signed by Franklin Belyne, Head, Banking Supervision Department of the BoG said.

REMEDIES
The Central Bank appeared to have tampered justice with mercy by refusing to apply the remedies under the law, which were either suspension on revocation of the banks’ foreign exchange operations.

“You may recall the remedy available to the Bank of Ghana under the Foreign Exchange Act 723 for such violations is either suspension or revocation of your foreign exchange operating license, either of which can be very disruptive of your operations.

“After careful confirmation of the foregoing and in a bid to ensure that banks respect the rules with regard to compliance with the rules the Bank has decided to impose a pecuniary sanction,” the BoG letters said.

To prevent any delays in payment of the fines, the central bank said it had advised the head of its banking department to debit the accounts of the offending banks.

Following the sanctions against the banks, Starrfmonline.com gathered from reliable sources that the Bureau of National Investigations (BNI) will revive the case involving Kessben Shipping Lines.

Last year, the CEO of the company, Mr Kwabena Kesse was arrested and arraigned before court for money laundering but the state later dropped the charges.

AUDIT OBJECTIVE
According to the report of the special audit undertaken by the Ernst and Young, the objective of the exercise was to access whether foreign exchange transfers/payments made on behalf of key customers of selected commercial banks were backed by adequate supporting documentation.

OTHER FINDINGS

The findings mentioned in part that between October 2013 and November 2014, transfers made in US Dollar were much higher than all the other currencies. The figures were $11,955,701,335, £225,495,785, and €904,049,794. It revealed that six banks contributed to 53 per cent of the transfers, They included Stanbic, Barclays, Fidelity, Ecobank, Zenith and Standard Chartered.

INADEQUATE SUPPORTING DOCUMENTS
It mentioned one other finding as inadequate supporting documents for some of the transfers initiated.

“Instead, we noted customers signing undertakings to provide Bills of Lading and related documents within 90 days. Some of such had still not been provided after the lapse of the 90 days from the fate of such transfers,” the report said.

It continued:”There were also instances where the amounts transferred were in excess of the invoices provided as support for those transfers. “There were also instances where the amounts transferred were in excess of the invoices provided as support for those transfers.”

DIFFERENCES IN DATA
Again the report said there were differences between BoG data and data obtained by the banks in respect of foreign transfers. The auditors submitted that they also noted inconsistencies in the information presented to the supporting documents reviewed.

Besides, the auditors noted multiple transfers supported by same invoices.

TRANSFERS FROM FREE ZONES ENCLAVE
According to the report, 78 of the samples selected for testing at Societe Generale were not supported. “Management indicated to us that these transfers were in respect of companies in the free zones enclave and so did not require supporting documentation of transfers.”

The total amounts transferred were $20,243,369.82 and €32,584,344.83. They said they found instances in 19 banks where bill of landings were not sighted for 681 transactions.

CUSTOMER FOREIGN CURRENCY OFFSHORE ACCOUNTS
On Customer Foreign Currency (CFC) offshore accounts, the report said, “we noted from our review of samples selected that a number of transfers were made from the CFC accounts of the customers.”

“From discussions with key personnel of the banks, there was no requirement to obtain documentation for transfer from customers’ offshore accounts. From the samples reviewed, we noted that the total transfers from offshore accounts amounted to $765 million, €10.2 million and £1.2 million respectively,” the report stated.

The auditors recommended to the BoG to access the effectiveness of application of rules around the operation of the CFC accounts in the industry to ensue that funds credited to those accounts were truly offshore income.

“This will eliminate or at least minimise the risk of “orally generated funds bring transferred abroad without supporting documentation through the use of the CFC a counts,” it explained.