IN JAMAICA: Scandal deepens - $665 million unaccounted for at PC bank... Audit shows wide misuse of funds of the more than 200,000 members of the bank

BY ALPHEA SAUNDERS Senior staff reporter saundersa@jamaicaobserver.com  Thursday, September 17, 2015

A special audit of the National People's Cooperative Bank of Jamaica (NPCB) has uncovered the shocking misuse of the money of the more than 200,000 members of the bank, and rampant abuse of position by those in charge at the institution, resulting in over $665 million, or 21 per cent of members' deposits, unaccounted for.

The audit, a copy of which was obtained by the Jamaica Observer, has found that lending from members' savings has reached the 50 per cent cut-off mark, and that the weaknesses at the bank have exposed the institution to high financial, reputational and information technology risks. The probe was carried out from May 13 to June 19 this year.

The audit first came up for discussion last week at a meeting of the Public Administration and Appropriations Committee (PAAC), where, under pressure from Opposition member Audley Shaw, permanent secretary in the agriculture ministry Donovan Stanberry disclosed that the probe had found that managers at the bank were granting themselves loans and approving loans for board members.

Stanberry also said monies were unaccounted for, but did not confirm Shaw's charge that those funds totalled more than $600 million.

STANBERRY… there are findings of money unaccounted for.

But now the details of the audit tell a jaw-dropping story of how that amount may have come to slip off the books. Among the many brow-raising details highlighted in the audit is how at least one loan application, from a director at the bank for $50 million, was declined in 2011 by the Development Bank of Jamaica (DBJ), but was approved by the NPCB using members' deposits.

While that application was being processed, a bridge financing loan of $10 million was granted to the director from members' savings. "The records disclosed that the loan had interest of $359,614 but was rescheduled and interest capitalised. The account reflected a principal balance of $50.359 million as at May 31, 2015," the document said.

Another example of weak internal control was the non-collection of the requisite commitment and processing fees on a $30-million loan for 179 days. more