BoN fiddled as SME Bank was looted

TILENI MONGUDHI
March 17, 2024

THE Bank of Namibia has reported auditing firm BDO Namibia to the Public Accountants’ and Auditors’ Board (PAAB) in a complaint dealing with the auditor’s alleged conduct, during its stint as the now defunct SME Bank’s external auditors.

Observers, however, point out that the central bank’s move was academic and aimed at avoiding taking responsibility for its own inaction in the case. 

This assessment is also supported by findings made by the Supreme Court last week.

“Kindly note that the Bank is aware of the judgement delivered and will take time to study the contents of the judgement,” said Bank of Namibia spokesperson Kazembire Zemburaka about the damning remarks made by the Supreme Court judges regarding BoN’s inaction. 

 

Asked if it is true that BoN reported BDO, when it did so and what necessitated this particular complaint?

“The Bank is unable to disclose details of this nature,” said Zemburuka who added that the central bank’s responses around SME Bank-related cases, are comprehensively dealt with in its court submissions in the case. 

New information, including last week’s Supreme Court judgement dealing with the collapse of the bank, point to BoN having been asleep at the wheel while the SME Bank was being looted. 

PAAB’s chief, Zaa Nashandi on Friday confirmed that “a complaint relating to the audit conducted at SME Bank in 2016 by BDO was received by our Investigations Unit during March 2020”.

Nashandi further added that PAAB’s investigation into the matter is ongoing. However, details of the case cannot be divulged during an ongoing investigation.

Kazembire Zemburuka, BoN director for Strategic Communication and International Relations

This means it took about four years since BoN took charge of the SME Bank and two years since the judicial commission of enquiry into how the bank failed, for BoN to take its 2016 concerns about BDO’s conduct to PAAB.

“Due to client confidentiality and ongoing litigation, we are not in a position to comment on this matter,” said BDO Namibia managing partner Charl Celliers. 

Law enforcement sources told The Issue that it took BoN more than 12 months to figure out the fact that money was being stolen from the SME Bank. BDO allegedly alerted the central bank to red flags surrounding the N$196 million, the SME Bank claimed it had invested in South Africa.

This matter was also addressed in the Supreme Court judgement which also criticised BoN for its inaction when dealing with the SME Bank.  

 

The Supreme Court found that at least N$247 million was looted from SME Bank over the period leading up to the BoN takeover, March 2017. The central bank eventually applied to place the bank under provisional liquidation in July 2017 and the liquidation was made final on 29 November 2017. 

“Quite how this systematic looting of a registered bank was able to proceed over such a sustained period raises questions concerning the efficacy of the regulation and supervision of SME Bank by BoN,” read the judgement.

The Supreme Court judges further stated that it took BoN more than six months to address concerns raised by BDO over questionable investments totaling N$196 million, invested in South Africa. Despite these concerns raised, it took the central bank more than six months to take charge of the SME Bank on 1 March 2017.

Charl Celliers, managing partner of BDO Namibia

This article was produced in partnership with Integrity Namibia

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