As SARU draft Legislation gets on board… Banking industry concerned about stolen state assets pledged for loans

Aug 14, 2016 News

By Kiana Wilburg
What recourse will banks have where assets have been pledged as collateral for a loan and are subsequently found to be recoverable under the State Asset Recovery Agency (SARA) legislation?
This worrying question was brought to the forefront by a representative of the banking community during consultations on the SARA Draft Bill on Thursday last at the Pegasus Hotel.
According to UK Asset Recovery Expert, Brian Horne, there is adequate protection in the draft legislation for cases of third party interest.
Horne, who is a Guyanese by birth, and has worked in more than 22 countries in the field of state assets recovery and the successful prosecution of the defaulters, stressed to the banking officials present at the consultations, that if the property was stolen from the state, then it remains recoverable.
He noted, however, that this would not be done in an arbitrary manner. Horne said that the bank may be in a position to argue that in good faith, it conducted the proceedings with the client and as such, would be able to seek protection under the law and recover its moneys in such a circumstance.
Legal Officer of the Guyana Bank for Trade and Industry (GBTI), Nazla Faizoul also expressed worry about the disclosure of clients’ information.
She said that the banks are a bit concerned about the extent to which they may in the future; have to divulge client’s information.
The Legal Officer said that at present, they can receive a customer information request from the Financial Intelligence Unit (FIU) as well as an Order of Court from the Special Organized Crime Unit (SOCU). Faizoul said that when the SARA Bill is passed, the resulting entity can present banks with either one or two types of orders for client information.
She noted, however, that banks would like to have the assurance that whoever is assisting SARA with investigations that they treat the information collected from financial institutions with the same level of confidentiality.
“We live in a very small country and I do note in the Bill that if we tip-off our clients, then we can be held liable and fined or imprisoned… So I wanted to impress upon the authorities that we try to limit as much as possible those who may have access to the information provided because at the end of the day it is client’s information.”
Horne assured the GBTI official that there are provisions in the act which state how the Director is to handle information from financial institutions. He said that it is expressly stated in Section 22 of the draft Bill.
The UK Expert stressed that the Director has powers which would allow him to dictate how the information from financial institutions is to be parceled out for investigation and has control over who has access to it and who is restricted from it.

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