Monrovia — The chairman of the Senate Committee on Public Accounts, Amara Konneh, has raised issues with the Central Bank of Liberia (CBL) for the sheer display of total disregard for the country's monetary policy, by issuing guarantees for liabilities in the purchase transactions of two commercial banks operating in the country.
According to the Gbarpolu County senator, the CBL issued guarantees for the non-performing loans, advances, and deposits assumed by Sapelle International Bank Liberia Limited (SIBLL) and Global Bank during their purchase transactions without the involvement of the National Legislature.
There have been reports of alleged bankruptcies of the two banks, something which prompted purchase transactions and ownerships.
His claims were contained in a communication addressed to the Plenary of the Senate and read during Thursday, July 11 regular session at the Capitol Building in Monrovia.
Senator Konneh maintained that the CBL failed to follow proper procedures, including legislative approval, prior to issuing the guarantees.
"I present my compliments and I would like to bring to your attention the recent allegations involving the Central Bank of Liberia (CBL) issuing guarantees for liabilities in the purchase transactions of two commercial banks without following proper procedures, including Legislative approval. The liabilities on which the guarantees were issued are due."
Reasons for acting
He emphasized that in an effort to maintain stability in the financial sector of the country, the CBL claimed to have issued the guarantees on non-performing loans, advances, and deposits assumed by SIBLL and Global Bank during their purchase transactions, the issuance of carte blanche guarantees by its Board to cover losses at insolvent commercial banks requires an immediate investigation.
"Reports indicate that SIBLL has depleted its reserves with the CBL, while Bloom Bank lost a court case and is facing demands for payment from the plaintiff. Furthermore, there are active lawsuits against Bloom Bank."
Senator Konneh stated that as the custodian of Liberia's monetary policy, the CBL is not intended to be a charity institution in the name of financial stability.
No legal backing
According to him, there is no legal backing that justifies for authorities of the CBL, including the Board to issue guarantees without the acquiescence of the National Legislature.
"The Board (of the CBL) had no right to issue these guarantees without the proper involvement of the Legislature. Our Constitution and laws provide proper procedures for addressing the issuance of guarantees, which should include the Executive and Legislature."
Senator Konneh reminded his colleagues that the tenure of a few members of the board of the CBL expires today, July 12, and as such, the Senate should request President Joseph Nyuma Boakai to extend their stay by two weeks for the sake of investigating the matter.
He observed that the departure of the few Board members whose tenures expired would impede the progress of any investigation into the matter.
Paying Kailondo's money
Justifying the significance of his call to investigate the matter during the session, Senator Konneh disclosed that the action taken by the CBL clearly shows how some public institutions (which he did not name) are just crediting and issuing guarantees without coming to the National Legislature for approval.
He recalled a situation where the SIBLL acquired the DN Bank (which previously acquired FIBANK) during past administrations.
He said as part of efforts to maintain financial stability following the takeover, the CBL issued guarantees for the liabilities of the bank committing Liberia's reserves in the case of default or financial disputes.
Senator Konneh recalled a similar situation with the Global Bank, and a lawsuit instituted and won by prominent Liberian businessman George Kailondo. Mr. Kailondo is the Chief Executive officer of Kailondo Petroleum Incorporated.
In April 2022, the Judge of Criminal Court 'C', Ciapha Carey, ruled in favor of Liberia Mr. Kailondo in his $3.5 million lawsuit filed against the Global Bank Liberia Limited.
The bank was indicted by the Liberia Anti-Corruption Commission (LACC) for financial crimes.
A unanimous verdict was handed down by the 12-member jurors in favor of Kailondo. The verdict stemmed from an indictment issued on the management of Global Bank Liberia, through their Managing Director/Chief Executive Officer (CEO), Rotimi Sangodeyi, and all their authorized personnel for the commission of the crime of theft of property and misapplication of entrusted property.
The bank was held liable for transferring and disposing of monies intended for the use by the owner, Kailondo Petroleum Incorporated, represented by its Manager, Cllr. George B. Kailondo.
The indictment indicated that between 2014--202, CEO Sangodeyi and others, having influenced and authorized the withdrawals, transfers, deduction of commissions and fees from the (escrow and current) accounts of Kailondo Petroleum Incorporated, bearing account numbers 103010204953, 103010108930, 103020104523 and 10302012015198, in both currencies (USD and LRD), without the authorization of the company's CEO, Cllr. Kailondo, in several amounts totaling US$3,460,422.93 and L$6,245,800.00.
It also noted that between the period July 31, 2019 and December 31, 2019, the government, through the LACC investigation established four debit transactions, totaling US$90,385.11, which was processed by the Global Bank management, with the narration, "Debit Interest", without any source document authorizing the debits.
Global bank was found guilty for violating Title 26, Section 15:56 of the Statutory Laws of the Republic of Liberia, and peace and dignity of the Republic of Liberia.
The bank, through the CBL, has already paid the amount of US$705,744.78 amounting to 25% of the US$3.5m expected to be paid to Mr. Kailondo.
"The money paid to Mr. Kailondo came from our reserves; it did not come from the reserves that come from the reserve that the Central Bank is withholding for Bloom Bank because Bloom Bank does not have enough reserves to operate."
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A call for Board members to stay
Senator Konneh stressed that the Senate must help ensure that the few Board members who were at the CBL when the decision was made to enter into Liberia's reserves to pay liabilities for the two commercial banks be made to remain at the bank until the probe is conducted.
"Since this contradicts the law, we need to make sure that they avail themselves for this. This 55th Senate needs to hold people accountable for their actions to ensure the integrity of our institutions, especially an institution as crucial as the CBL. The CBL does not have any right or whatsoever to issue guarantees in the name of financial stability without consulting with us either through committee or directly through the Senate Plenary."
Meanwhile, the Plenary of the Liberian Senate has mandated its committees on Banking and Currency and Judiciary to report back following the return of Senators from their second annual break.
A motion for the action to be taken was filed by Montserrado County Senator Abraham Darius Dillon.
The alleged action of the CBL has the propensity of depleting Liberia's reserves. It also threatens the country's financial stability in the wake of numerous challenges confronting its citizens.
CBL's latest issuance of guarantees for the non-performing loans, advances, and deposits of commercial banks is becoming habitual.
The act may continue as a gamble of the country's financial reserves if members of the national Legislature, especially the Senate allow the matter to be swept under or treat it as a regular "business as usual" thing.
