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The Auditor General’s Report of 2021 discovered that the Sierra Leone Commercial Bank (SLCB) has been issuing huge loans to certain people and institutions without the requisite collaterals, opening the bank to very high risk if the people default in their obligation to the said loans. Even when asked to provide evidence of collaterals for the said loans, the bank was unable to do so, as a result, the Auditors noted that the issue remained unresolved.
See details below:
5. SIERRA LEONE COMMERCIAL BANK LIMITED – 2020
3.5.1. No Collateral Valuation Reports:
Collateral property should be valued by a professional valuer in order for the bank to determine the maximum credit facilities they can grant a customer. During our review, we noted that the Bank had approved facilities for Whitepole Limited for Le2.4 billion without reassessing the value of the submitted collateral. We recommended that the Bank should obtain the valuation report regarding the collateral security provided by the customer; and to ensure that it is properly valued by a professional appraiser.
Official’s Response:
The revaluation report had been obtained and is available for verification.
194 Auditor’s Comment:
The valuation report for Whitepole Limited was not submitted. The issue is unresolved.
3.5.2. Non-compliance with the Bank’s Risk Acceptance Criteria:
We observed that a facility of Le17.8 billion was granted to Jolaks Manufacturing during the year. The required documentation (Financial Statement) for prior approval, was not submitted. We recommended that Management should strictly follow applicable preapproval documentation, as minimum standards, in the lending process.
Official’s Response:
The Bank maintains audited accounts for customers.
Auditor’s Comment:
During the verification, the audited Financial Statement for Jolaks Manufacturing was not provided. The matter is therefore unresolved.
3.5.3. Non-Compliance with the Bank’s Lending Procedures:
During the course of our audit, we observed that the Bank was not in possession of original mortgage securities for customers who were granted the facilities. From review of customers’ files, we noted that these facilities had been secured with legal mortgage as indicated in the facility letter, but the Bank was not in possession of these legal mortgages for Bradcorp Global Development and International Construction. We recommended that Management should ensure adequate and tangible security is obtained to cover the exposures.
Official’s Response:
The two highlighted accounts are already collateralised with proper securing arrangements and documentation. Others had been sent for registration, but we do have a challenge with the slow pace of registration at the Registrar General’s Office. We will continue with our follow-up until we get the registration process of outstanding collaterals completed.
Auditor’s Comment:
During the course of the verification, we noted that Bradcorp Global Development did not provide any collateral for the loan of Le10.2 billion; whereas, the International Construction did not provide collateral security for its loan. This issue is unresolved.
