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NEW LAW BITES BANK BOSS…Criminal attempt regretted

Little did the Executive Secretary of the Association of Commercial Banks, Mr. Philip Swarray realize that the new banking laws he contributed to, which was passed in Parliament known as the Banking Act of No. 14, 2011 and other related Acts put in place to stabilize the Banking Industry would have bitten him harder than expected. All flimsy excuses he advanced to attract sympathy from his colleagues that he committed the acts of forgery and fraud unknowingly, which according to him was as a result of the sad news he received about the death of his mother that turned him into amateur fraudster, not a celebrated one with wealth of experience did not save him from the hammer.

He was shown the exit door with plans by members of the Association to institute criminal action against him that would change his get-rich-quick mentality through criminal means to one that would make him a symbol of emulation in the industry. Had it been in the past, Mr. Philip Swarray would have been giving a pat on the back and told to go home and not to repeat the action.

These kinds of practices by senior officials in both the Banking and financial markets accounted for the fall and collapse of several Banks in the country, to which the National Development Bank(NDB), International Bank of Trade and Industry(IBTI), Bank of Credit and Commerce(BCCI) suffered greatly and depositors lost millions of Leones, foreign currencies and the like. Salaries of government employees paid into their accounts disappeared with the Banks and till date, most of the depositors have not been able either through the Central Bank, the regulator or other means to retrieve what was their legitimate property.

The First International Bank is where this writer has faced a bitter experience

Previous Banking Acts including the 2000 Act were not tough weapons to protect depositors accounts, nor were they reliable instrument that could be used to prevent imminent disaster or the collapse of Banking Institutions in the Country. Unlike the Banking Act No. 14, 2011 and the Banking of Sierra Leone Act No. 15, 2011 that give strength, teeth to the Central Bank to act, penalize and dictates the pace of operations of Commercial Banks. In line with International Best Practices (IBP), Commercial Banks in Sierra Leone are forced to comply with contemporary Banking standards, all in a bid to protect not only the name of the institution but also depositors accounts and to prevent frauds, forgeries, pilfering and the establishment of fly-by-nights financial and capital markets.

Among other things, the Banking Act No.14, 2011 and Bank of Sierra Leone Act No.15, 2011 make provision for the acquisition of licenses to operate a financial institution and also provides strong platform for the maintenance of market and price stability, further; and probably what looks like a shocker is that these Acts give total autonomy and independence to both the Governor and the Central Bank as well. Political interference that used to be the order of the day could now be seen as a thing of the past. Section 6 of the Bank Act No.14, 2011 gives undisputable and absolute control to the Governor. Though that could be viewed as a novelty to Sierra Leone, however; it should also be seen as vital for the development of the industry in the country, which could be interpreted to mean also, that Sierra Leone is not lacking behind in global challenges relating to the operations of the industry.

The revised Anti Money Laundry Act 2012 recently passed by Parliament has powers to criminalize Anti Money Laundering activities and establish what is known as an Independent Financial Intelligence Unit, which would be headed by a Director. This no doubt is another milestone and when achieved would give confidence to donor organizations and investors coming to the country to do genuine business. President Koroma has the task to appoint a Director for this arm of the sector. Under the Sambadeen Sesay Administration, there is also a Credit Bureau Reference Act 2011.

This Act makes provision for the establishment of credit references, a condition for credit reporting and other related matter. The scenario is no more the same with the Central Bank, whereby its traditional role is limited to reserve bank, or monetary authority that manages the state’s currency, money supply and interest rates, or to oversee the Commercial Banking System, or the power of monopoly to increase the nation’s monetary base, and prints the national currency, which usually serves as the nation’s legal tender.

It is a known fact that the primary function of a Central Bank is to manage the nation’s money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent Commercial Banks and other financial institutions from reckless or fraudulent behavior.

Any social science student knows that Central Banks have generally three main objectives or functional roles, which are price stability, subject to the monetary regime in current operation, for example the gold standard, a pegged exchange rate or inflation target; financial stability, and to foster financial development and support the state financing needs during times of crisis, but in normal times to contain misuse of a state financial powers. Developments in the industry have tripled these traditional roles or functions and the intervention of technologies have put the institution in a more restless position as it moves with the time to capture trends in the global financial and capital markets. In Sierra Leone, despite the many advantages and opportunities provided to employees of Commercial Banks, yet they are not living a life that makes them a suspect of depositors’ accounts.

Mechanisms put in place checkmate their activities. Some of these mechanisms are cameras hanging over teller’s head, giving account of funds disbursed to pay out to customers at the end of the day and more. ATM facilities are monitored on a daily basis to prevent theft and forestall incidents that do occur with other Banks in places like the United States of America, France, and United Kingdom and more, where news of ATM machines are paying more than what a customer(s) intended to withdraw at a giving time. Such incidents are frequent with Chevy Chase Banks, Bank of America and others. Not that the industry in Sierra Leone is without fault or 100% perfect in operation, but indicators have shown that progress is being made that is ushering sanity, confidence and promoting competition among the Commercial Banks. Those days have far gone when customers trek to the banks to check account balance and deposit money.

It is now the reverse; the banks now go to customers, collect their deposits and issue them with payment receipts. Internet banking, despite poor signal connectivity in the country is also practiced. However, with all these prospects and developments in sight there are rooms for improvement. Some Banks still have some bad eggs in their midst. There are reports of short changing and pilfering of customers’ money at the First International Bank (FIB). In the past, it was rampant, thus instilling fear into the minds of customers. This writer has been a victim of such fraudulent act which led to the closure of his account.

Another customer, Alhaji Karim has a sad story to tell about how a teller defrauded him when he went to withdraw money from his account. He was aware of the theft after leaving the Bank; another customer had her account closed immediately she became aware of the practice. The story is endless, even past Managers of the Bank are guilty of this criminal activity

(More on FIB and other Banks next issue)

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