Ex-BSP Banker to Face Trial. Bank Forging Documents?

Post-Courier

Joshua Arlo

Garth McIlwain, former managing director for Bank South Pacific (BSP), will face trial in the National Court following a decision by the Committal Court in Waigani to commit him on two criminal charges of falsifying bank documents on a fixed floating charge against a business entity under the Yama Group of Companies.

Magistrate Sinclaire Gora said documentary evidence presented by prosecutors contained more undisputed facts which weighed heavily against him warranting a trial at the National Court to verify and test out the seriousness of these allegations. Mr. Gora reminded him that although he is committed on charges of uttering and forgery he is not guilty.

McIlwain had created and signed the fixed floating charge on May 6, 1999 against a purported loan taken out by a business entity within the Yama Group of Companies, which Mr. Yama has denied knowledge of. He is alleged of not being BSP MD at the time, nor was he an employee of BSP, therefore, had no lawful authority to sign. Various supporting documents including one from MP Peter O'Neill, a former director and chairman of BSP from 1997 to 1999 stated McIlwain was not employed by BSP. Another director on the board from 1999 to 2000 also stated the same.

After nearly seven years McIlwain and the bank registered charges with the Registrar of Companies. McIlwain argued that because the Yama Group of Companies had failed to register the charge he and the bank had taken the initiave to register it on December 1, 2006: this was to recover monies owed to the bank from the purported loan taken out. Registrar of Companies Alex Tongia, who was deputy registrar at the time the charges were signed, gave evidence that a file search confirmed it was registered years late. Mr. Tongia's evidence described this as 'highly unsual and suspicious' as it breached the Companies Act because the documents looked as though they were photocopied. Mr. Tongia's evidence which Mr. Gora read, "it appears falsified and the altered action is not proper". Mr. Tongia went on to suspect some kind of fraud. Did Yama Group of Companies create charges? "No ... Mr. Tongia's evidence is crucial and raised doubts against the defendant", said Mr. Gora.

Bank Out of Cash. Customers' Fault?

Post-Courier, Feb 9, 2011  

The shortage of cash at the Bank of South Pacific's Buka Branch has irked major businesses operating in the Autonomous Region of Bougainville.

These businesses, who have BSP accounts, cannot continue with their daily operations because of the cash crisis.

One of the copra-buying companies in Buka -- the first to come out publicly against the kind of service BSP offers was Olbert Copra Buyers.

Philip Benson, the manager for Olbert Copra Buyers said the shortage of cash is affecting his company's normal business operations.

"We deal with customers every day and directly paying out cash for their produce. The sellers are people from the villages who want to cash and we run out of cash to pay them because there is not enough at the bank". Mr. Betson said. 

"It is very disappointing for BSP, telling us that cash has run out and we have to wait until other business houses deposit, then we can perform withdrawal."

However, BSP issued a statement yesterday stating that in the Autonomous Region of Bougainville they plan to expand the Buka Branch by the year's end and open a new branch in Arawa and set up two new ATMs in Kokopau. 

"In regards to cash handling BSP charges 2 percent on cash handling. This is for every over the counter withdrawal at a branch. It should be noted that the costs of operating a branch are extremely high considering BSP has to transport money to remote locations, additional security costs from lawlessness, the need for better systems and so forth", BSP said. 

BSP said to get cash to centers such as Buka, the aircraft charter costs along in approx. K40,000 ex POM and a charter is required monthly. Then there are other associated costs such as security that goes with cash movements (armored vehicles, etc). 

"To ensure that businessmen, such as commodity buyers, get the cash to pay growers there is a lot of costs and resources involved and BSP covers these costs through cash handling fees. 

"Cash shortages are extremely unfortunate but are sometimes caused by commodity buyers who place pressure on the branch with unscheduled withdrawals. To avoid such instances, it is normal protocol for commodity buyers to ensure sufficient notice is given to branches". 

BSP encouraged their retail customers to use the SMS banking which is far more convenient, safe and accessible. 

By using ATM and EFTTOS machines in shops and using SMS banking, BSP customers can actually reduce their annual banking fees if the customer manages their banking needs correctly. 

The SMS banking initiative allows customers to do banking 24 hours a day and seven days a week. Through SMS banking customers can transfer funds to nominated accounts, check the last three transactions, top up their Digicel mobile phones and change their PIN numbers. 

BSP has also launched the BSP Rural Initiative with new Rural Agencies already opened in six centers. The centers are Kwikila, Lufa, Henganofi, Banz, Minj and Kerowagi. 

BSP expects to open 100 Rural Agencies in the next 18 months.  

BSP Gives Us Yet Another Reason to Steer Clear

Police Arrest Top Bankers

GARTH McIlwain, one of the most respected figures in PNG’s finance and banking industry, was arrested by police yesterday.

In a new twist to the case filed by businessman and former politician Peter Yama, McIlwain and senior Bank South Pacific official Robin Flemming were taken to the Konedobu police fraud squad office for questioning yesterday afternoon.

They were then transferred to the Boroko police station, where they were charged and locked up in the cells for about an hour before they were released on K5,000 bail.

Senior police officers were unaware of what was unfolding, and refused to comment when contacted.

Police media unit officers were seeking more information on the arrest before they could brief Police Commissioner Gari Baki on the arrest.

The National could not obtain details of the charges laid against the two men, but it is understood their arrest is related to a complaint of falsifying document relating to a fixed floating charge BSP had against Yama and his companies in 1999.

The prime minister’s legal counsel, Sumasi Singin, rushed to the police station to find out what was going on when he heard of their arrest.

News of the arrests, and the manner in which the two were treated, is likely to outrage the business community.

Police had previously arrested Flemming, BSP lawyer John Maddison and private lawyer Erik Anderson for conspiracy to defraud relating to this case. The case against them was dismissed in court. Mcllwain and Flemming will appear in court any time this week.

McIlwain recently retired as chief executive officer of BSP.

He is the chairman of Credit Corporation and was at the helm of the successful merger of PNG Banking Corporation with BSP, now the leading bank in PNG and the Pacific region.

www.thenational.com.pg/?q=node/10504

Banks and Us: Employment without Wage We Didn’t Know We Were Contracting For

Stan Starygin

How many of you thought you were contracting to work without pay for your bank when you were opening an account with your bank? Right. None. Nor did I. Like all of you, I was operating on an assumption that the bank was there to keep my money safe and make it available to me upon my first request. My bank was the Bank of South Pacific (‘BSP’) and I soon realized I was dead wrong about that when I was forced to work for my bank for over a month and when I asked for pay I was told none was due.

Let me spin a yarn. I became a BSP client in 2009 and over the course of a year had accumulated a fairly significant amount in my account at that bank. When I was leaving PNG I was still expecting another payment which would be made to my BSP account once I was gone. I went to BSP and informed them of that by providing all the necessary information along with my signatures to effect a transfer of my funds once the final payment was made. I was assured that BSP had all the necessary information and that transferring the funds at a later date upon my request would be a cinch. I left assured of that. About two months later when I requested that the transfer be made I was told that it would be made the next day. I started patiently waiting for my money to arrive. I waited a week (it normally takes 2-3 business to make an international transfer) before I contacted the bank again. I contacted the bank again. No reply. Then again, to the same effect. Then I began emailing the bank on a daily basis which elicited no reply. I began thinking out of the box and decided to contact my friends in PNG to have them call BSP. Two of them did. One could not get any relevant information (although assured me he had spoken with a number of BSP employees); the other was given another email at which to contact the bank. I did so the same day I received it. No reply (I received a reply to that email a whopping 3 business days later regardless of the fact that my friend explained the urgency of the situation and the pressure on me to resolve it; the bank employee in question obviously did not see how the urgency of my situation caused by his bank’s error merited his undivided attention). Having received no reply from another BSP officer, I contacted the BSP Customer Service which replied to my email a day later. By then I had waited 2 weeks for my transfer to be effected. BSP took another 3 days to effect the transfer (not to get it to me, just to get it out of their bank) for which I gave very specific bullet-point instructions designed for any reasonable person to follow with ease. BSP, alas, was not that reasonable person. Once I received confirmation of the transfer from BSP I realized their error and immediately (within the hour) informed them of it. BSP told me that the transfer was at that time irretrievable and that I was to correct their mistake by sending out another transfer. I, naturally, protested as every transfer costs money and I wasn’t paying for another transfer which I wouldn’t have needed, had BSP followed my very straightforward instructions. I spent another few days arguing my case with the bank until they finally relented and recognized their mistake along with the mistake of having been 2 weeks on the original transfer request. When I received the second transfer I realized that it was I – not BSP -- who paid the intermediary and receiving bank fees which I would have incurred only once had BSP followed my instructions and sent all my funds in a single transfer. By then it would have been close to 3 ½ weeks of my daily communications with BSP. I conservatively calculated the time spent by then and emailed BSP a compensation request of 40 hours calculated at my professional rate. BSP informed me that it was not their policy to make such payments (I wonder if it is their policy to not respond to their customers’ emails and not effect the transfers they have confirmed; but I disgress). Let’s take a look at this more closely: (1) BSP owed me a service (which comes from the bank’s obligation to make its customers their funds available upon request) which it confirmed (by promising a transfer the next day) but which it never delivered; (2) I diligently provided all the necessary informed to effect the transfer the completeness of which BSP never disputed which makes this entire situation “not my fault”; (3) BSP acknowledged in writing (emails on file with me) that its services failed on two occasions and that they were fully responsible for this situation; (4) BSP failed to act expeditiously when they were informed of their mistakes; (5) I spent a work week’s worth of my own time (40 hours); (6) it is generally understood that if any entity engages a person for that period of time, it pays that person a salary or a fee (unless that person expressly declares that he or she is willing to work without pay (which I didn’t do)). You would probably be curious to find out what BSP’s response to this elaborate argument was. Well, they basically said that other banks in PNG had delayed international transfers for 2 weeks (mine has been delayed up to now which is 2 months as I have never received my transfer in full and don’t consider the transfer process complete until I receive ALL my money, not just most of it) and … got away with that (i.e. never compensated the person injured by their mishandling of the transfers). This is not a chat with a friend over a beer. This is the official response of one of PNG’s largest bank to my request. I tried to explain to BSP that two wrongs do not make a right but they were very convinced that it did and told me that they had already apologized for their bank’s mistakes and took up the tone with me as if I was asking for something completely unreasonable. Well, what am I missing here? If you are late on your credit card bill or go into overdraft, will your bank accept a ‘sorry’ instead of the payment of a penalty? Will your bank accept a ‘sorry, I should have set money aside for the mortgage payment last month instead of buying a new car’ when you can’t make a mortgage payment? Ludicrous, isn’t it? When we owe banks, they expect hard cash – or a line of credit obtained elsewhere which for them means one thing – hard cash – on a specified date. When we miss that date, they do not think twice about us while forever ruining our credit history (thus making it very difficult or impossible to borrow from other banks and otherwise financial institutions), they take away the stuff we bought and call it ‘repossession’, they throw us out of our homes and call it ‘foreclosure’, they take away our children’s opportunity to get an education and call it ‘insufficient co-signatory support’. In situations like this we often think, “what if the shoe was on the other foot?” This letter gives you an example of what BSP does when the proverbial shoe is on the other foot and the bank owes us and not the other way around. The problem here is that banks like BSP often get away with this behavior (I am sure that BSP was telling me the truth – other banks did get away with the same thing which doesn’t make it right) and trample our rights, dignity, and the overall fairness of the system we expect. They get away with this because we don’t expose their behavior and don’t demand what is rightfully ours. The system will not adjust itself unless we demand that it do. These demands can be made on public forums or directly to the bank, or better yet the relevant PNG government regulatory authority (which can strike fear into banks much better than anything other means we can employ) but regardless of where they are made they must be made lest we want to go through life as servants of the banks, as opposed to their equal partners. Quoting an influential US social protest band, “it has to start somewhere; it has to start some time; what better place than here; what better time than now”. If you are reading this letter in your newspaper, this means that at least you have a free press in PNG that is not controlled by corporations and that is a good start.

Content of this site is coming; in the meantime, avoid using Bank South Pacific (BSP) to the extent possible