29 March 2014

Rwanda: Workers Defraud Central Bank of Rwf63 Million, Prime Suspect On the Run

Barely a week after a new report indicated that there was an increase in fraud cases in the banking sector, it has now emerged that the National Bank of Rwanda (BNR) lost millions of francs to the vice early this year, according to bank officials and the Police.

The report; "Global profiles of the fraudster; White-collar crime - present and future", released on Tuesday in Kigali by KPMG, a global audit, tax and advisory services firm, warned of increasing rate of fraud in the local banking sector.

Although one person has been arrested in connection with the fraud that reportedly involved an "unknown" number of BNR staff, the main culprit is on the run, the Police added.

John Rwangombwa, the Governor National Bank of Rwanda, said the central bank lost Rwf63 million from the deposit accounts over an unspecified period. He, however, called for calm, saying the situation was under control.

Police declined to divulge details, saying it could jeopardise investigations. They said the file of the suspect in Police custody had been forwarded to the Prosecutor General's office for further action.

Rwanda National Police spokesman ACP Damas Gatare told The New Times yesterday that the prime suspect is believed to have fled to Uganda, adding that they are working with the Police in Uganda to track him down for apprehension.

He, however, assured the public that they have a unit in charge of financial crimes that will continue to deal with such cases.

"The Financial Crimes Unit is working round the clock to ensure safety of depositor's money and also see to it that those who get involved in fraud are apprehended," Gatare said.

BNR said the fraud could have been committed between January and February.

Justin Rurazi, the central bank ICT department director general, said the suspected fraudsters manipulated the bank's internal security system before stealing the cash. Rurazi added that the bank system, installed over 10 years ago, was outdated and vulnerable to sophisticated criminals.

"The system has not been upgraded for long, meaning that it could easily be manipulated. However, following the scam, we are now installing a new system that meets international standards. It is expected to start operations next month," Rurazi said.

He said the bank switched to a modern system, T24R12, which "is functionally-rich, proven, with an integrated core banking system". Rurazi said the new system will allow the bank detect and prevent any kind of fraud before it takes place.

He said the system will also be able to streamline human resource, general accounts management and enterprise aspects from core banking, currency, client management, trade and finance components.

The previous system did not have this capacity, which Rurazi said created loopholes for the fraudsters.

"The first phase of the system is already running and we are currently installing the second phase which we hope will be ready by April 21," Rurazi said in an interview yesterday.

About six months ago, workers at one of the commercial banks stole Rwf32 million from the bank's coffers.

Experts and bankers say the law against fraud is still lenient and needs to be strengthened. A person convicted of fraud is jailed for about one to three years or pays a fine of between Rwf2m and Rwf5m, or both.

The report indicated that 61 per cent of fraudsters are employed by the victim organisations, while 70 per cent of frauds are committed by the perpetrator colluding with others from outside.

Last year, East Africa Bribery Index showed that local banks ranked sixth most corrupt institutions in the country.

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