The Botswana Stock Exchange (BSE) listed bank, Standard Chartered Bank said it did nothing wrong when it approved transactions between Botswana Development Corporation (BDC) and a controversial Chinese glass company, Shanghai Fengyue.
The bank was responding to Botswana Guardian inquiries into how it allowed unlawful guarantees that oversteps the parameters of BDC Board. This follows reports from Parliamentary Special Select Committee on the inquiry on BDC glass manufacturing project in Palapye, which indicates that in December 2009, BDC and Fengyue made “curious” payments to individuals in which in some cases caught the curiosity of Standard Chartered Bank of China.
“The establishment of the Letter of Credit in question and all transactions thereunder were effected with due compliance to international and country laws, regulations, credit procedures and with the full knowledge of both the applicant and the guarantor,” the bank spokesperson, Tumi Ramsden told Botswana Guardian in an email.
However, the enquiry shows that when Fengyue Glass Manufacturing Botswana made a Letter of Credit in the cumulative sum of P22 million to Jack Hajibey and William Wu Mong Seng, Standard Chartered Bank of China “raised serious queries" about Wu Mong Seng credibility to receive US$1.5 million or P9.7 million in commission. It is the conclusion of the Parliamentary committee that the local bank failed to exercise judgement and advised BDC.
The bank is "required by both international and local laws and regulations to maintain strict confidentiality about customer/client information except where disclosure is permitted by the law.”
One of Standard Chartered Bank employees, Phillip Setiko indicated to a Parliamentary Committee that his counterpart in Asia was worried about the seemingly unlawful transaction. BDC is being investigated for allegedly inflating prices at the multimillion Palapye glass project and venturing with an inexperienced Chinese company. The P500 million project is currently suspended.
Listed on the main board, Standard Chartered is one of the biggest retail banks in the country and the oldest with a market capitalisation of P2.9 billion. A banking source says the bank contravened international transaction laws.
Standard Chartered is 75 percent owned by Standard Chartered Holding (Africa) BV, with the Motor Vehicle Accident Fund holding 10 million shares or 3.36 percent. Other minority shareholders include Stanbic nominees (BIFM) with 2.48 percent and BOMAID with 0.17 percent. The bank closed flat on Wednesday with a share price of 1000 thebe per share.
By press time, it was not clear whether the central bank would summon the listed bank over BDC financial irregularities.