ANOTHER CAPITAL FLIGHT IN THE GAMBIA

Following months of report that Prime Bank Gambia will be sold, the Central of The Gambia (CBG) has come up with reports that the bank has not met its minimum capital requirement for 2012; and therefore is required to go on “voluntary liquidation”.
“The Central Bank of the Gambia is pleased to inform the general public that 12 out of the 13 commercial banks operating in The Gambia met the minimum capital requirement of D200 Million,” a release from CBG reads.

The Central Bank of the Gambia (CBG) issued a directive in 2008 increasing the minimum capital of banks in two stages from D60 million and D200 million to be observed by end-December 2010 and 2012 respectively.

Societe General de Baque Liban (SGBL), the parent company of Prime Bank (Gambia) Ltd has opted to divest its subsidiary in The Gambia, hence the decision not to augment the capital of Prime Bank (Gambia) Ltd to the required minimum capital of D200 million.

Consequently, Prime Bank (Gambia) Ltd sought and obtained the approval of the CBG to go into voluntary liquidation. Prime Bank is sufficiently liquid to meet its obligations to depositors, other creditors and any other person entitled to funds or property thereof, CBG said.

About two years ago CBG issued a higher minimum to ensure that banks are better able to withstand periods of economic and financial stress; maintains market confidence in the solvency of the banking system; imposes market discipline; provides a large cushion to absorb losses as well as protect tax payers from the risk of being called upon to bail out failing banks; and ultimately, enhances the safety and soundness of the Gambian banking system which, in turn, promotes economic growth.

Few months ago, SGBL deputy general manager revealed that they were forced to take of Prime Bank Gambia, due to certain liabilities. The bank was accused of funding international terrorism and the Hezbollah network.

“From day one we were forced to take over Prime Bank Gambia as a result of our acquisition of certain assets and liabilities of the Lebanese Canadian Bank,” said Georges Saghbini, deputy general manager of SGBL.

“We never controlled the bank, we did not do correspondent banking with the bank, it was never an affiliate of ours,” he said. The reason cited for not taking control of the African bank was the US classification of the bank as suspected money-launderer.

FACTS FROM THE US GOVERNMENT ABOUT THE BANK

WASHINGTON// – The U.S. Department of the Treasury today announced the identification of The Lebanese Canadian Bank SAL together with its subsidiaries (LCB) as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act (Section 311) for the bank’s role in facilitating the money laundering activities of an international narcotics trafficking and money laundering network, the Treasury Department announced.

This network, said the statement “moves illegal drugs from South
America to Europe and the Middle East via West Africa and launders hundreds of millions of dollars monthly through accounts held at LCB, as well as through trade-based money laundering involving consumer goods throughout the world, including through used car dealerships in the United States.” Treasury has reason to believe that LCB managers are complicit in the network’s money laundering activities. Today’s action also exposes the terrorist organization Hizballah’s links to LCB and the international narcotics trafficking and money laundering network, the statement added.
Prime Bank Gambia was among the affected Banks blacklisted by the US Treasury Department.

The Bank has been linked to money laundering, and Hizaballah, a terrorist group in Lebanon. The damning report exposes how The Gambia is steadily becoming a save heaven for terrorist groups, which used the West African country as a money laundering outlet to pursue their vicious attacks against freedom loving nations.

“This action seeks to protect the U.S. financial system from the illicit proceeds flowing through LCB and to deprive this international narcotics trafficking and money laundering network of its preferred access point into the formal financial system,” said Under Secretary for Terrorism and Financial Intelligence Stuart Levey. “Any financial institution that collaborates in illicit conduct on this scale risks losing its access to the United States.”

Treasury’s Financial Crimes Enforcement Network (FinCEN) also today filed a Notice of Proposed Rule Making (NPRM), in which it proposes prohibiting U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for LCB. In addition to these regulatory measures, the Treasury Department will work with the Lebanese Central Bank and other relevant Lebanese authorities to address the concerns highlighted by today’s action.

Links to Narcotics Trafficking and Money Laundering Network
LCB – through management complicity, failure of internal controls, and lack of application of prudent banking standards – has been used extensively by persons associated with an international drug trafficking and money laundering network to move hundreds of millions of dollars monthly in cash proceeds from illicit drug sales into the formal financial system.

LCB’s involvement in money laundering is also attributable to a failure to adequately control transactions that are highly vulnerable to criminal exploitation, including cash deposits and cross-border wire transfers; inadequate due diligence on high-risk customers including exchange houses; and, in some cases, complicity in the laundering activity by LCB managers. At least one of the individuals involved in this global drug trafficking and money laundering network has worked directly with LCB managers to conduct his transactions.

Several individuals involved in this global drug trafficking and money laundering network hold or utilize cash deposit accounts at LCB to move hundreds of millions of dollars monthly in cash proceeds from illicit drug sales into the formal financial system. They have also coordinated the laundering of these funds through key foreign nodes of the network using LCB accounts.

“The Lebanese Canadian Bank for years has participated in a sophisticated money laundering scheme involving used cars purchased in the United States and consumer goods overseas. Thanks to DEA-led operations, as well as today's Treasury action, we are exposing and disrupting this money laundering network and its connections to global drug trafficking and Hizballah,” said DEA Administrator Michele M. Leonhart.

Drug Kingpin Ayman Joumaa and his Lebanon-based drug trafficking and money laundering network, along with several other individuals, have used LCB to launder narcotics proceeds – as much as $200 million per month – as part of this international money laundering network.

In this criminal scheme, the proceeds are laundered through various methods, including bulk cash smuggling operations and use of several Lebanese exchange houses that utilize accounts at LCB branches. On January 26, Treasury designated Joumaa along with nine individuals and 19 entities in his network as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act).

Links to Hizballah

According to U.S. Government information, Hizballah derived financial support from the criminal activities of Joumaa’s network.
LCB managers are also linked to Hizballah officials outside of Lebanon. For example,

Hizballah’s Tehran-based envoy Abdallah Safieddine was involved in Iranian officials’ access to LCB and key LCB managers, who provide them banking services. LCB’s other links to Hizballah include LCB’s subsidiary, Gambia-based Prime Bank, which is partially owned by a Lebanese individual known to be a supporter of Hizballah.

Hizbollah was designated by the Department of State as a Foreign Terrorist Organization (FTO) in October 1997 and as a Specially Designated Global Terrorist (SDGT) under Executive Order (E.O.) 13224 in October 2001.

Background on LCB

LCB is based in Beirut, Lebanon and maintains a network of 35 branches in Lebanon and a representative office in Montreal, Canada.

Originally established in 1960 as Banque des Activities Economiques SAL, it operated as a subsidiary of the Royal Bank of Canada Middle East from 1968 to 1988 and is now a privately owned Lebanese bank. LCB offers a broad range of corporate, retail, and investment products, and it maintains extensive correspondent accounts with banks worldwide, including several U.S. financial institutions. As of 2009, LCB’s total assets were worth more than $5 billion.

LCB has a controlling financial interest in a number of subsidiaries covered by today’s 311 action, including LCB Investments SAL, LCB Finance SAL, LCB Estates SAL, LCB Insurance Brokerage House SAL, Dubai-based Tabadul for Shares and Bonds LLC, and Prime Bank Limited of Gambia. LCB owns 51 percent of Prime Bank, while remaining shares are held by local and Lebanese partners. LCB serves as the sole correspondent bank for Prime Bank.

Background on Section 311

Section 311 grants the Secretary of the Treasury the authority to identify a foreign jurisdiction, institution, class of transaction, or type of account as an entity of “primary money laundering concern.” The Secretary can then require domestic financial institutions and financial agencies to take certain “special measures” against the entity of primary money laundering concern.

Meanwhile, according to the New York Times “The complaint against the Beirut-based Lebanese Canadian Bank was filed under a rarely used provision of the Patriot Act that allows the Treasury Department to publicly identify financial institutions considered “primary money laundering concerns” and then move to restrict their business dealings in the United States.”

The bank denied knowledge of any wrongdoing, saying in a statement that it would “fully cooperate and coordinate with the relevant regulatory authorities in an effort to demonstrate the integrity and transparency of its operations.”
The move comes at a time when Lebanon, a Middle East banking hub, is struggling to overcome one of its worst political crises in recent history, and could exacerbate tensions between the United States and Hezbollah, a powerful Shiite Muslim movement.

Drug Enforcement Administration officials said the complaint culminated a five-year investigation involving agents in Colombia, West Africa, Europe, the Middle East and the United States. The officials said it shed light on the ways that terrorist organizations increasingly relied on the illegal drug trade to help finance their activities, the paper reported.

“As the number of state sponsors of terror go down, and other financing streams dry up, drug trafficking is filling the void,” said Derek Maltz, the D.E.A. special agent in charge of the investigation.

During a news conference, Stuart A. Levey, a treasury under secretary, described an elaborate global clunkers-for-cash kind of scheme in which senior managers at the bank used its connections to financial institutions like exchange houses around the world to help launder money for Ayman Joumaa, whom the Treasury Department has declared a drug kingpin. Mr. Levey said Mr. Joumaa, whose assets in the United States were frozen last month by the department’s Office of Foreign Assets Control, moved shipments of cocaine from Colombia through West Africa to buyers in Europe.

The bulk cash from those sales was deposited into accounts at the Lebanese Canadian Bank, and then wired to used car dealers in the United States, who would buy vehicles and ship them to West Africa or other overseas destinations to be sold, the complaint said.

Mr. Levey said that the bank also helped Mr. Joumaa wire money to collaborators in Asia, who would buy consumer goods that were shipped for sale to countries in Latin America.

It is unclear, treasury officials said, how much of the profits from those sales was used to support Hezbollah, which the United States formally designated as a terrorist organization in 1997.

Mr. Levey said several bank officials were linked to Hezbollah officials outside of Lebanon, including in Iran and Gambia.
Lebanese officials close to their country’s robust banking sector said that though the bank was owned by a Maronite Christian, several members of its board — including senior Shiite leaders — and more than half its employees were Shiites either sympathetic to, or supportive of, Hezbollah. They said the bank’s main clients were Lebanese businessmen who worked in Africa, a majority of them Shiites.