The Tribune

• Four ‘management level’ executives affected

• But chairman says separate from fraud probe

• Police have ‘very good leads’ over cheques

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Mortgage Corporation’s (BMC) chairman yesterday said the suspension of four “management level” executives is “definitely not linked” to a separate probe into fraudulent cheques.

Patrick Ward, who declined to go into details on either matter given that investigations are ongoing, told Tribune Business the state-owned lender was “not treating them as related issues” with the Royal Bahamas Police Force (RBPF) leading the probe into forged cheques issued in its name.

Refusing to name the four persons who have been suspended, aside from saying that several names circulated on social media are “not accurate”, Mr Ward confirmed that those affected are part of the Bahamas Mortgage Corporation’s management team.

“I can’t go into too much detail,” he said, also declining to reveal the reasons for the suspensions. “It could be that they are reinstated, and I wouldn’t want to jeopardise that. But I can tell you it’s definitely not related to the cheques. 

“I can tell you that at this point we’re not treating them as related issues. That’s as much as I can say. I might be able to say more in about a week’s time.”

Mr Ward, who is also Bahamas First’s president and chief executive, confirmed that the police are leading the investigation into the appearance of fraudulent cheques, issued in the Bahamas Mortgage Corporation’s name and drawn on a Bank of The Bahamas’ account, which have already resulted in two prosecutions being brought before the Bahamian courts.

Disclosing that the police have “some very good leads” on who might be involved in the scam, he added that he was confident the Bahamas Mortgage Corporation “has a good handle” on the fraudulent cheques situation after improving its internal financial controls and processes in recent years.

Mr Ward, though, acknowledged that the state-owned lender remains “very concerned” about its potential exposure to the loss of thousands of dollars, adding that the matter exposed the need to be “a lot more vigilant” when it came to issuing and accounting for cheque payments.

Confirming that the fraudulent cheques investigation was ongoing, Mr Ward told this newspaper: “That’s in the hands of the police at the moment, and they have some very good leads as to who’s involved. To the extent required we’re co-operating with the police on that.

“We’re very concerned. It’s a pattern we’ve seen take place with other government and non-government entities. It means we have to be a lot more vigilant around control processes, and around the issuance and reconciliation of those cheques. As a result of that, we were able to navigate some attempts to negotiate those fraudulent cheques appearing in the recent past.”

Mr Ward said “the fact it’s become public makes it easier” to combat because staff at banks and other financial institutions, as well as the public, will be alerted to the issue and are now set to apply greater scrutiny to cheques bearing the Bahamas Mortgage Corporation’s name.

“We don’t know what else is out there, and if persons attempt to do it in the future, with the news getting out that’s a disincentive for persons to try and do it,” he added. “We don’t know how many instances are out there that have not been brought to light, but at this point we’re fairly happy we have a good handle on the situation.

“We are obviously going to be concerned when we have instances where this sort of event occurs, but I’m confident that we have better controls in place than we did several years ago. You cannot reduce this to zero, but we have better controls in place now.”

Asked why the Bahamas Mortgage Corporation had not sought to eliminate the use of cheques given the increasing switch to online and digital banking, Mr Ward replied: “We are trying to move more to electronic transfers, but there are still people in circumstances where negotiating cheques is the best option and, in some cases, the only option.”

The Central Bank’s recently-released 2020 annual report highlighted that cheques accounted for almost two-thirds of the total value of payments fraud detected in The Bahamas last year.

“Disaggregated by type, cases involving debit cards accounted for 68.6 percent of the total at 2,276, with an associated value of $0.9m (17.9 percent of the total value),” the Central Bank said. “Credit card fraud represented 29.8 percent of the total cases for a corresponding value of $1m (19.9 percent of the total value).

“As the usage continue to diminish, the cheque fraud cases represented a marginal 1.6 percent of all reported instances, but the associated value was almost two-thirds of the corresponding total ($3.2m). The survey revealed that 95.9 percent of fraudulent cases were reported in New Providence, where the majority of bank customers also reside.”

For 2020, the use of cheques contracted by 35.9 percent to 1.4m following a 9.8 percent decline the previous year. The collective value of check payments fell by 36.3 percent to $4.6bn, contrasting with the prior year’s uptick of 0.2 percent to $7.2bn.

Two cases involving fraudulent Bahamas Mortgage Corporation cheques were brought before the courts last week. Tyrone Wilson, 35, was fined $7,000 and placed on 18 months’ probation after he confessed to being in possession of one forged cheque in the amount of $73,500 bearing the name, Affordable Trucking.

However, Anwar Stubbs, 29, denied charges that he was in possession of a second $80,000 fraudulent cheque made payable to himself, and that he tried to cash it at Bank of The Bahamas’ Carmichael Road branch.