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For Reckless Loan Approvals… Audit Report Slams Rokel Bank

Rokel Commercial Bank

Rokel Commercial Bank, a bank with 65% shares owned by the Government of Sierra Leone is once again in the spotlight for approving loans to customers without following due processes guiding lending policy which stipulates that ‘all non-personal borrowing customers will be required to submit audited accounts for facilities above Le. 200 Million.’

According to the 2019  report submitted by the Auditor-General, management of the bank headed by Dr Ekundayo Gilpin breached lending policy of the bank by issuing loans to customers without obtaining recent audited financial statements to determine whether the institutions making the loan request have good financial standing.

In the absence of this, however, the bank was issued unaudited financial statements. According to the audit report, the following customers obtaining loans from the bank without submitting recent audited financial statements:

Name of customerDate issuedApproved amount (Le)Balance as at 31st December 2019 (Le)
BSB International27/06/20199,500,000,000.007,888,125,953
PEE CEE & SONS23/10/20193,000,000,0002,927,123,086
CSE30/05/20174,000,000,0002,001,599,422
Builders Enterprise28/06/20193,000,000,0002,806,194,414
Pavi FortUnknown750,000,0001,954,678,292
Aberdeen Water Taxi03/10/20191,919,943,1651,916,361,511

But in the Managing Director’s submission to the Audit Service, Dr Ekundayo Gilpin said for BSB International, they attached a copy of the audited financial statement for the year ended 31st December 2018. He however could not produce the document.

In the case of Pee Cee & Sons, Dr Gilpin explained that the customer’s facility was extended for 3 months on the 23rd October 2019 to provide the customer with ample time to submit all necessary documentation (including their audited financial statements). Thus, the facility was last reviewed and limit approved in 2018. He maintained that the bank obtained Pee Cee & Sons’ audited financial statements for the year ended 31st December 2019, and they are in the process of reviewing the facility.

For CSE, the bank expounded that they are an international road construction entity maintaining a presence in various countries. The audited financial statement is for the group, whilst the individual branches in the various countries prepare a management account. And the review of customer’s credit capability is based on an assessment and confirmation of their outstanding payments owed by the Government of Sierra Leone for work already completed.

Trying to defend them, the bank’s management argued that Builders Enterprise was a newly registered business established less than a year before the granting of the facility. And their review of customer’s credit capability was based on the account performance and credit history that the bank maintained for a sister business in which the proprietor of Builders Enterprise was an active partner.

On Pavi Fort, he said they relied on the Customer’s audited Financial Statements for the year ended 31st December 2017, and confirmation of their outstanding payments owed to them by the Government of Sierra Leone for work already completed were used in assessing customer’s credit capability.

The same went for the Aberdeen Water Taxi. The MD said it was also a newly registered business established less than a year before the granting of the facility. He said the review of customer’s credit capability was based on the account operations of another sister account, customer’s level of a stake in the business and its cash flow.

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