Tajikistan: Fraud Uncovered at State Bank

Tajikistan’s anticorruption agency says it has uncovered an alleged embezzlement scheme at state bank Amonatbank, suggesting the crisis gripping the country’s lending sectors extends beyond just the lack of liquidity. 

The deputy chairman of the Agency for State Financial Control and Combating Corruption, Davlatbek Hairzoda, said last week that the scheme has cost the government 31.6 million somoni ($4 million). Four bank employees are under investigation.

The timing is unfortunate since dwindling faith in the country’s private banks in Tajikistan has been driving many people to move their money to an institution perceived as being underpinned by state support.

Amonatbank chief executive Ruhullo Hakimzoda revealed last month that the banking crisis has compelled many state and private enterprises to move their business to his bank.

In the first half of 2016, Amonatbank’s client base for salary payments and bank card services increased by 20 percent, Hakimzoda said. No surprise there since workers whose wage packets are serviced by banks like troubled private lender Tojiksodirotbank have experienced severe complications in getting hold of any of their cash.

“Besides that, Amonatbank has seen an 11.8 percent increase in deposits, which is mostly accounted for by an outflow from other banks,” Hakimzoda said.

More customers has not translated into profits. Hakimzoda said losses in the first six months of the year came in at 6 million somoni ($760,000).

Also last week, Finance Minister Abdusalom Kurboniyon spoke with unusual bluntness about what he openly described as a banking crisis. The National Bank has in the face of overwhelming evidence tried to dismiss such alarmism.

“There is one problem with the banks, and the economy in general. The banking crisis is the result of bad and incompetent management in the banks themselves. Instead of developing banking activities and running their businesses properly, they are putting up buildings, plants and factories. As a result, they have ended up in this situation, exposing the entire country’s financial system to risk,” Kurboniyon said.

There is a paradox here. President Emomali Rahmon incessantly trumpets his government’s supposed achievements in expanding the economy. This message is enabled by the likes of the International Monetary Fund, whose practice in Central Asia is to by and large take official growth figures at face value. Accordingly, gross domestic product growth for Tajikistan is estimated by the IMF at 3 percent this year and 3.5 percent in 2017. What should logically follow from that is that investing in construction and industry under such propitious conditions would lead to easy returns for banks, but something in the chain appears to have broken down. In reality, the failure of the banks is far more complex than Kurboniyon suggests and has much to do with poor corporate governance and the inevitable factor of corruption.

Turning to the vexed issue of recapitalization of distressed banks, Kurboniyon ruled out the option this time around, as happened with Agroinvestbank in 2012.

Tojiksodirotbank’s death march continues unabated. Last week, it reduced the weekly limit on the amount that customers could draw with their cards from $50 to around $25. Things are a little better at Agroinvestbank, whose ATMs give out between 500 and 2,000 somoni ($63-250) daily, granted they have any cash in them.

Tajikistan: Fraud Uncovered at State Bank

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