Financial and banking experts have identified five main reasons behind repeated fraud cases, fraud on banks and escaping their money outside the state, most notably the existence of a loophole in the banking system related to the absence of effective and binding credit reporting, along with the absence of a central risk-monitoring body with the right to hold each bank accountable when loans are concentrated in specific companies .
The experts explained to «Emirates Today» that there are other reasons, which are the possibility of lending to related or related companies without auditing their financial position, in addition to lending based on the name, relationships or others, in addition to not using the capabilities of artificial intelligence in monitoring and auditing.
opening
In detail, analyst and financial expert Mohamed Ali Yassin said that there are several reasons behind the recurring cases of fraud and flight with bank funds outside the country, foremost of which is a gap in the banking system related to the absence of active and obligatory credit inquiry and taking decisions based on it, as well as the lack of a central authority to monitor Risks operate in a federated manner that has the right to hold each bank accountable when the loans are concentrated in specific companies, as this may be a strong blocking wall to prevent the recurrence of such cases by counting loans and knowing their ratios and for any companies given in detail, and holding banks accountable at the same time.
Another reason, Yasin added, is that the capabilities of artificial intelligence are not used for monitoring and auditing.
Multiple companies
On the subject of the NMC health care group, Ben Yassine, there are loopholes exploited by the group, which is the ability to borrow from more than one company that is related to one form or another without the attention of any of the lending banks.
He added that there are more than 15 companies belonging to the group, some of which were established in the UAE and others outside the country or in free zones, and their names were borrowed, considering that this is a clear fraud.
Payment and default
For his part, the financial expert and tax agent, Mohamed Helmy, said that loans and facilities carry with them the risk of non-payment and non-defaulting, pointing out that the faster the financing and borrowing approvals and the ill-considered decisions, the greater the percentage of these risks in a way that cannot be controlled, pointing to This applies to cases of granting loans to companies whose owners flee after a period of bank money.
“Therefore, it is the duty of banks (risk management and credit management) to strive to reduce the losses that banks can be exposed to or avoid these risks and potential losses,” Hilmi added, indicating that there are several reasons that lead to this, including strong competition between banks, where This is evident in the purchase of debts without attention to the availability of financial and banking ingredients, in addition to the use of financing for purposes other than those for which funding was granted, as well as insolvency and bankruptcy, and the lack of information devices that have the expertise and competence to be able to show the reality of the customer and his position in the market.
Guarantees
Other reasons that Helmy identified for potential bank losses upon lending include insufficient guarantees that the customer provides to the bank, which are considered a safety valve in the face of any risks to the loan, in addition to the lack of seriousness of the study submitted on the loan required before approval, and the lack of credit risk analysis In terms of management, market, conditions and guarantees surrounding clients or banks.
Helmy added that there are other reasons that are not following the loan with clients and monitoring the violations that occur from time to time, in addition to using the loan or the types of facilities provided for other than the purpose for which the loan was granted, in addition to spending the granted loan in one payment in most cases.
Solvency
In turn, a senior banker at a bank not exposed to the "NMC" group, who preferred not to be named, said that "the banks lent to the group based on its name, relationships, and the prizes it obtained without looking at the fact of its financial solvency, and this is one of the reasons for the banks' involvement."
He added, "This must stop immediately in all banking transactions, as the risks must be evaluated based on the real situation and in light of the guarantees that cover the loans."
He stated that «the loan papers of the group were arranged in a certain way that enabled them to obtain the approvals of the chief executives of the banks and members of the boards of directors in the risk and compliance committees, and other committees.
The most famous cases of bank fraud
Black Magic Scam
One of the most famous and weird cases of fraud and fraud that resulted in the loss of money of $ 242 million (about 888 million dirhams) from Dubai Islamic Bank in 1995, was the theft of a person from a Mali named, Futanga Sissoko, convinced the bank manager at the time of his ability to multiply the money by magic, This led the latter to undertake 183 transfers of Sisoku accounts around the world between 1995 and 1998.
The bank did not recover any of these funds, nor did the fraudulent thief be punished and he was not imprisoned.
- The Indian case, Patil.
In 2000, the Indian, Madhav Juphai Patel, better known by the name "Patel", was able to obtain one billion and 200 million dirhams from 13 banks to provide forged documents that enabled him to obtain financial facilities from those banks, and fled abroad.
- Exposure to the Saad and Al-Gosaibi groups
The total of Saad and Al-Gosaibi groups in 2009 reached more than 34.6 billion riyals ($ 9.3 billion) from more than 100 local, regional and international banks, where 30% of these loans were obtained from Saudi banks, and 40% from banks in the GCC countries The other, and 30% of international banks, seven of the 13 local banks at the time disclosed loans worth 4.1 billion dirhams.
The 5 reasons
Absence of active and binding credit reporting.
The absence of a central bank that holds banks accountable for concentrating loans in specific companies.
- The ability to lend to related or related companies without auditing their financial position.
Lending based on name, relationships, or others.
- The capabilities of artificial intelligence are not used for monitoring and auditing.