Police are investigating top executives and junior staff at Centenary Bank over allegations of stealing Shs3.5b in forex exchange deals.
A scandal, which the police say appears to involve a syndicate, has been ongoing since 2019, but worsened last year during the lockdown, according to preliminary findings.
Detectives were told that some employees have been selling forex currencies to individuals at a rate lower than that sanctioned by their employer, Centenary Bank, and pocketing the differences, leading to financial losses in excess of Shs3.5b.
In response to our inquiries, the bank issued a statement last evening confirming the investigations but declined further comment.
“Centenary Bank is aware of the information relating to purported foreign exchange fraud at the bank. The matter is still under investigation by the relevant authorities and a conclusive report is yet to be made,” Ms Beatrice Lugalambi, the bank’s general manager for corporate communications and marketing, said in the statement.
She added: “Our Bank continues to maintain a zero-tolerance to fraud policy and remains committed to ensuring the safety of all the transactions conducted by our bank.”
Earlier, Centenary Bank managing director Fabian Kasi told this publication that “no report [of the investigations’ findings] has come to me yet”.
Directorate of Criminal Investigations spokesperson Charles Twiine, confirmed that inquiries are ongoing and said all persons of interest in the case have been interrogated and statements recorded.
“Yes, we are investigating fraud related to fictitious forex trading in the bank. We have recorded statements from both the witnesses and potential suspects. We are looking at fraud, financial losses, theft and unauthorised access,” Mr Twiine said yesterday in an interview.
Fraud is one of the major headaches in the banking sector. According to the Police Annual Crime and Traffic Safety report of 2020, which was released on Monday, banks lost Shs2.4b and only Shs10m was recovered.
Mr Twiine said the fraud was detected by the bank and they suspect it involved connivance between its high-level executives and lower cadre employees.
“Financial experts are carrying out a financial analysis purposely to apportion crimes to individuals, who were part of the fraud,” he said.
Police investigations indicate that the fraud involved tellers, bank managers, top back office executives and auditors.
A source in the bank said a top executive worked with middle-level staff who would send money to bank tellers and then it would be withdrawn by their accomplices across the counter.
The accomplices within the bank would then clean the books of any traces of the fraud.
Mr Twiine said the money that the suspects drew was proceeds of the bank, but not from clients’ accounts.
“There are suspects who are claiming that they were told by someone to carry out illegal activities. They will be individually held liable as we pursue those who allegedly ordered them to do illegal acts,” he said.
Fraud at Centenary Bank
Centenary Bank, like several other financial institutions in Uganda, has been grappling with workers who are stealing money from customers and that of the bank.
In December last year, six Centenary Bank employees were charged in court with conspiracy to defraud the bank and unauthorised disclosure of bank information.
It was alleged that they conspired by deceit or fraudulent means to defraud Shs152m from Centenary Bank account no. 5020008320 held in Isingiro branch.
Centenary Bank Bwaise branch Officer Steven Zziwa, the branch assistant manager Diana Musisi Namubiru, the branch supervisor Nasir Doka, and other workers, including Oscar Mukombozi, Annet Nalumansi and Hassan Kintu Musoke, were remanded to prison.
Fraud in financial sector
According to the Annual Crime and Traffic Safety report 2020, Uganda lost money or property valued at Shs11.5t just only in economic crimes, translating into Shs32b being stolen every day last year. This is an increase from a Shs297b loss due to economic crimes in 2019.
The fraud in the financial sector has been massive and prompted worried Uganda Bankers Association to fund procurement of equipment and training of police officers investigating economic and cyber-crimes.
About Centenary Bank
Centenary Rural Development Bank Ltd is a financial services provider in Uganda that is engaged in commercial banking. It is the third largest bank after Stanbic and dfcu banks. The bank offers loans, savings, investments, checking and debit cards to more than 1.4 million customers through a network of 69 branches and 172 ATMs. It also plays a role in microfinance, helping rural farmers, small traders, importers, exporters, and manufacturers.
Centenary Banks was founded in 1983 and was registered as a full-service commercial bank in 1993. Its headquarters is in Kampala.
Revenue: Shs417.04 billion (2016)
Net income: Shs109.91 billion (2016)
Total assets: Shs2.32 trillion (2016)
BANK STATEMENT ON ALLEGED FRAUD
“Centenary Bank is aware of the information relating to purported foreign exchange fraud at the bank. The matter is still under investigation by the relevant authorities and a conclusive report is yet to be made. Our bank continues to maintain a zero-tolerance to fraud policy and remains committed to ensuring the safety of all the transactions conducted by our bank.”