Standard Chartered Bank would not respond to charges that it should be held liable for millions of Botswana Development Corporation (BDC) funds which have leaked into the wrong pockets.
The Telegraph investigations have turned up information that BDC executive managers bonded BDC to guarantees in favour of Standard Chartered Bank to secure the Fengyue Glass Company (Botswana) letter of credit.
It has since emerged during a forensic audit that BDC managers committed BDC without the approval of the board and were able to get away with it because the bank did not insist on a board resolution as is normal practice.
One of the terms of reference of the forensic audit was to establish whether Shanghai Fengyue “had provided a performance bond as required by the terms of the EPC contract and the letter of credit held with Standard Chartered Bank Botswana”.
The forensic audit revealed that Standard Chartered Bank released the loan money to Fengyue Glass Company (Botswana) even though the joint venture partner ÔÇô Shanghai Fengyue Glass Company China ÔÇô had not secured a performance bond. Securing a performance bond was a precondition set out in the loan agreement.
Another loan condition that was flouted was releasing the money even before Shanghai Fengyue Glass British Virgin Islands, the joint venture partner, had provided equity contribution.
The report stated that “payment should not have been effected from the letter of credit until BDC had obtained proof that the EPC contractor (Shanghai Fengyue China) had a performance bond in place and, secondly, that Shanghai Fengyue British Virgin Islands had made all necessary equity payments”.
The Telegraph has been informed that the bank released the loan amount even though it was aware of the loan conditions between the two partners, ostensibly on account of the strength of the BDC balance sheet.
At the time of going to press, the loan money secured from Standard Chartered bank had been all used up and BDC was trying to raise more funding even as Shanghai Fengyue had still not honoured their side of the conditions of the loan agreement.
Standard Chartered Bank would not respond to the charges. In a written response to a Telegraph questionnaire, the bank’s head of Public Relations, Ithabeleng Letsunyane, stated that “as you would appreciate, it is not appropriate for us to discuss customer information for reasons of confidentiality”.
“At Standard Chartered, our customers are very important to us and we are committed to working closely with them and the regulators as appropriate,” said Letsunyane.