KAMPALA, Uganda — Equity Bank and Stanbic Bank are facing accusations of facilitating a gold scam that led to a Canadian investor losing $1.7 million, according to a report by The Investigator, a Ugandan authoritative news website.
The scandal has raised concerns about the integrity and vigilance of Uganda’s financial watchdogs and the vulnerability of the financial sector to scams.
According to the report, Clifford M. Potter, the Canadian investor, allegedly transferred the funds to Stephen Bairukanga, a renowned fraudster, under the guise of a legitimate gold transaction.
The transaction, which took place between 2019 and 2022, involved Potter making 30 money transfers to different bank accounts, which the bank allowed Bairukanga to instantly withdraw at an alarmingly questionable speed.
“It has been established that the above-named fraudster (Bairukanga) was able to access USD 568,456 and USD 101,667 respectively, remitted by our client into his bank accounts in the bogus gold transaction, only through the dishonest assistance of the bank which facilitated him to instantly draw cash, in total disregard of the FIA regulations,” writes Muwema & Co Advocates, Potter’s attorneys.
The lawyers’ letter, which is an intention-to-sue notice, accuses the banks of ignoring anti-money laundering regulations and failing to verify the source of the funds.
“It is sad that the bank facilitated the above fraud by failing to comply with the anti-money laundering regulations [that] require reporting of the suspicious transactions to FIA (Financial Intelligence Authority),” writes SSP Waiswa Ayubu, the Ag. CID Commander at Kampala Metropolitan Police base, in a letter to both banks.
The police have summoned the officers in charge of the transactions at both banks to explain their actions.
The incident has also raised questions about the effectiveness of Uganda’s financial regulatory framework in preventing such scams.
As the story unfolds, the banking industry and potential investors alike are left questioning the integrity and vigilance of Uganda’s financial watchdogs, and whether justice will be served to prevent such devastating scams in the future.
This scandal not only sheds light on the vulnerabilities within the financial sector but also serves as a stern warning to investors and financial institutions to exercise heightened due diligence.
In their mission and vision statements, Equity Bank claims “To be the champion of the socio-economic prosperity of the people of Africa” by offering “inclusive, customer-focused financial services that socially and economically empower our clients and other stakeholders” via providing “inclusive financial services that transform livelihoods, give dignity and expand opportunities”!
In Stanbic’s case, they boast of being “the leading financial services organization in, for and across Uganda, delivering exceptional client experiences and superior value.” The holding company also claims to aim at being the “leading financial services provider in, for and across Uganda, delivering exceptional client experiences and superior value.”
However, the accusations leveled against both financial institutions tell a different story.
The modus operandi of the scam involves fraudsters like Bairukanga using gold-plated metal bars, nuggets, or powder to dupe their victims, majorly foreigners.
They show their prospective buyers samples of genuine gold which are positively evaluated before entering into sale agreements. Buyers easily fall into a trap of making huge profits and hence make money transfers.
It, however, sometimes takes time for the victims to realize they have been conned. This is because upon the transactions, they take a little longer to receive their consignments at the agreed destination, which normally is by shipping and, on rare occasions, by air.
The fraudster also engages them with several pieces of paperwork which mostly include tax documents which consume a lot of time.
“We would like to appeal to all prospective buyers in the gold industry, to purchase gold from authorized dealers, with valid trading licenses to conduct business. They can also seek guidance from the Ministry of Trade And Industry, the Department of Mines and Geological Surveys, The Uganda Investment Authority, and the Police Minerals Enforcement Unit, before transacting in any minerals. This will save them from the financial and legal consequences they face out of fake mineral scams,” Fred Enanga, the outgoing Police Spokesman, had warned sometime in November last year.
Now, Potter’s lawyers of Muwema and Company Advocates are tasking the banks to take responsibility.
“As a result of abdication of (your) duty, your bank is aiding and abetting fraudsters to extort and steal from unsuspecting local/foreign investors who are lured into supposedly legitimate gold deals which turn out to be a sham,” writes the lawyers to both banks respectively, in their intention-to-sue notices.
The conundrum leaves the banking industry and potential investors alike questioning the integrity and vigilance of Uganda’s financial watchdogs, and whether justice will be served to prevent such devastating scams in the future.
