A senior official from the Bank of South Sudan has claimed that Stanbic Bank improperly withheld $7.2 million from Air Afrik Aviation, leading to significant financial losses for the airline and legal action against the bank. The claim is based on alleged insufficient funds in a nostro account that was unrelated to the transaction, raising questions about banking practices in South Sudan.
A senior representative from the Bank of South Sudan (BoSS), Mr. Chan Andrea Chan, has confirmed that Stanbic Bank credited $7.2 million to Air Afrik Aviation’s account in 2016 but subsequently withheld these funds citing insufficient balances in the airline’s nostro account, which, according to Mr. Chan, had no relevance to the transaction in question. The nostro account, which is a bank account held in one country by a bank or financial institution in another, is argued by Mr. Chan to not be a factor in the dealings between BoSS and Stanbic Bank. During his testimony in a court case where Air Afrik is suing Stanbic for freezing the funds that were originally credited, Mr. Chan emphasized that Stanbic should have either maintained the frozen amount until sufficient funds were established in the nostro account or have promptly returned the funds to BoSS. In his view, this situation should be regarded as a banking practice matter and not involved with the airline’s transaction. The withholding of funds reportedly led to the cancellation of a $20 million lease contract with the South Sudan government due to the airline’s inability to meet its contractual obligations created by the lack of funds. Furthermore, Mr. Chan described the actions of Stanbic Bank as questionable, asserting that it took the bank three days to process the funds into the airline’s account after receiving credit advice, and that the institution’s course of action regarding the funds was improper. Air Afrik has been seeking compensation for the damages incurred as a result of the lease contract termination, alleging that the bank breached proper banking protocols by managing the funds incorrectly, while Stanbic maintains that they reversed the transaction based on the realization of funds availability from the South Sudan government.
The situation surrounding the funds withheld from Air Afrik Aviation by Stanbic Bank highlights significant issues within banking practices and regulations in South Sudan. In 2016, a substantial amount of $7.2 million was credited to the airline’s account to facilitate a leasing agreement with the South Sudanese government. However, the reversal of these funds by Stanbic has led to a legal dispute, bringing into question the operational integrity of banking procedures in the region. This case showcases the complexities of international banking transactions, particularly concerning nostro accounts and the communication between banking institutions and their clients.
In summary, Mr. Chan Andrea Chan’s testimony sheds light on the financial disputes involving Air Afrik and Stanbic Bank, particularly revolving around the handling of a $7.2 million credit. The resulting legal proceedings emphasize the critical importance of transparent banking practices, especially in an operational environment as complex as South Sudan. As Air Afrik seeks reparations for the consequences of fund withholding linked to their leasing contract, the case underscores the necessity for banking institutions to adhere strictly to established procedures to maintain trust and reliability in financial transactions.
Original Source: www.theeastafrican.co.ke
