The State Bank of Mauritius (SBM) is undergoing investigations after it gave a Kenyan consortium $195.15 million through a fraudulent process.
The Central Bank of Mauritius is investigating the bank for failing to register the security for the half the loan amount disbursed not to mention the claims that the property title used as a guarantee was a forgery. Forensic experts from Ernst & Young have been investigating the matter after the Mauritian regulator called it in.
On January 4, 2018, the Central Bank of Kenya accepted the offer from leading financial services provider SBM Holdings to acquire its Chase Bank’s assets and liabilities. SBM Holdings is the parent company of SBM Bank Mauritius and SBM Bank Kenya Limited among others.
“At the moment, a line of communication has opened between SBM Holdings and the Bank of Mauritius. This is to help better understand how a financial deal of this scale could escape the vigilance of two banking executives who worked on this loan project. The Bank of Mauritius is briefed on a daily basis with regards to the investigation progress,” L’Express weekly newspaper reported.
The bank’s executives caught up in the case have since resigned. According to L’Express, the executives visited Kenya several times between May and June to regularise the property registration.
The Fraudulent Loan
Half the loan amount given was guaranteed through deposits in USD while the other half guaranteed through a mortgage was not registered, exposing the bank to a possible loss of over $90 million.
The Kenyan consortium that received this loan from SBM Mauritius reportedly supplies wheat, maize, and relief food.
“Following a number of recent press articles relating to facilities granted to a Kenyan-based entity, the board of directors of SBM Holdings Ltd wishes to inform its shareholders and the public in general that SBM Bank (Mauritius) Ltd reviews and monitors significant exposures on a continuous basis. Despite certain factual inaccuracies contained in the press articles, for reasons of banking confidentiality, no further details can be disclosed,” the bank responded to media reports implying bank officials did not comply with lending guidelines.
The media reports caused the share price of SBM Holdings at the Stock Exchange of Mauritius to drop.
In a press statement, the bank stated:
“The risk appetite of SBM Bank (Mauritius) Ltd and its credit policies are kept under review by its Credit Committee, which ensures strict compliance with Bank of Mauritius credit and lending guidelines. SBM Bank (Mauritius) Ltd notes that no breach of these guidelines has occurred. At this point in time, neither SBM Bank (Mauritius) Ltd nor SBM Holdings have any reason to expect a financial impact on the Group arising from the facilities granted.”
