A number of stakeholders in the Botswana financial market are calling for the withdrawal of Standard Chartered Bank’s trading licence following revelations that the bank was involved in shady foreign currency trading.
The Bank of Botswana (BoB) last month launched an investigation into the operations of Standard Chartered Bank of Botswana (Stan Chart) following suspicions that the bank was involved in fraudulent foreign currency trading.
BoB deputy governor last month summoned representatives from the treasury departments of all local banks to his office where he questioned the integrity of some banks’ foreign currency traders, saying the Central Bank had detected incidents of “unethical” trading.
BoB immediately launched an investigation into Standard Chartered Bank’s operation. In a written response to a Sunday Standard questionnaire, BoB’s Public Relations Officer, Chepete Chepete, stated that, “with reference to your queries on currency trading, the Bank of Botswana confirms that a domestic commercial bank was involved in off-market currency bidding in August this year. Upon detection of this incident by the bank, immediate action was taken. The incident was also investigated thoroughly at the highest level by the commercial bank concerned. Based on the information obtained by the bank, this was an isolated incident. The bank wishes to confirm that the incident did not have any impact on the currency market or the general economy of Botswana.”
Following its preliminary investigations, BoB has banned a Standard Chartered bank’s junior employee of the Treasury Department from ever bidding on the foreign currency market. The Central Bank is understood to be considering serious punitive measures against the bank. Sources have ruled out the possibility of a fine against Stan Chart, saying it would be “silly to fine a bank” because they can always dip into their huge coffers.”
Sunday Standard is informed that BoB’s ban on a Stan Chart junior staff member is threatening to open a can of worms and expose corrupt practices of one of Botswana’s financial market’s most closed and insular subcultures. The international foreign currency, or forex, market, which is only partially regulated by the Bank of Botswana, involves millions of pula in transactions every day. Unlike markets for stocks, bonds and commodities, it operates around the clock without central headquarters through a loose network of traders connected via telephones and computers.
Even in more developed countries, the market has long been vulnerable to fraud and a favourite of comparatively low-level operations by the Mafia.
It is understood that the Standard Chartered Bank’s junior staff member who has been banned from forex trading claims that he was acting from instructions from his seniors who benefited personally from the unethical trading and is demanding millions of Pula from the bank as compensation for his ruined career. The employee is understood to have engaged a private attorney whose name has been passed to The Sunday Standard to negotiate a huge payout with the bank to buy his silence. The staff member is allegedly threatening to go to the central banks with more information on the questionable trade if his demands are not met.
The Standard Chartered Bank would not comment on the allegations. The banks Public Relations Officer, Thabi Letsunyane, referred all inquiries to the central bank saying this was a “regulatory issue.”
Meanwhile, the central bank is understood to be continuing with its investigation and is working on strengthening the Bank of Botswana Act to be able to deal effectively with such cases.