Cotecna to lose billions in Aya Brothers botched loan
Collateral managers, Cotecna, could be saddled with a bill worth billions of shillings following the disappearance of tonnes of wheat and coffee they were supposed to have verified and against which the Aya Brothers borrowed millions of dollars.
By Charles Bwogi
Collateral managers, Cotecna, could be saddled with a bill worth billions of shillings following the disappearance of tonnes of wheat and coffee they were supposed to have verified and against which the Aya Brothers borrowed millions of dollars.
According to media reports, PanAfric Commodities owned by the Aya Brothers, is alleged to have contracted a $20m loan from a South African-based bank using the wheat in its warehouses in Uganda as collateral. The bank contracted Swiss-based Cotecna collateral management firm to do the evaluation of the produce and to confirm receipt of the said commodities on whose basis they went ahead to advance the loan to Aya Brothers.
However, on inspection by Cotecna officials two weeks ago, it was discovered that what was actually in the warehouses were husks and not wheat as assumed and claimed by Aya Brothers.
During the audit, it was also discovered that coffee belonging to a sister company was also missing.
Cotecna officials did not deny or confirm the full details of the story.
“During a routine audit two weeks ago, we ascertained there were differences between our records and physical stocks.
“We are currently working with stakeholders to inquire and find out how it is so,†said Matthieu Delorme Cotecna’s vice-president collateral management.
Delorme said his company only deals with physical stocks and was not in position to put a value to the extent of the discrepancy in physical terms.
One of the Aya Brothers, Mohammed Mohammed Hamid, however, denied any scandal existed.
“What was written in the media is a baseless fabrication intended to destroy my name. Maybe from my competitors who are using the paper to tarnish my name,†he said.
However, sources familiar with such deals said for the wheat stocks to have disappeared, one cannot discount the possibility of collusion by Cotecna.
“The fraud can only happen under two circumstances; that is collusion between Cotecna employees and Aya Brothers, or negligence on the side of the Cotecna inspectors,†the source said.
The source said the problem was compounded by the fact that it is the borrower (Aya Brothers) who pay the collateral manager not the bank which contracted him.
“This means that the collateral managers, not Aya Brothers, are to cover the bank loss because they were contracted by the lender to ensure that the produce staked by Aya Brothers for the loan is actually there,†the source said.
He said Cotecna being an international collateral manager with proper insurance protection might throw the burden to their insurers.
“Cotecna has a professional indemnity insurance cover, which protects it from losses resulting out of negligence or acts of dishonesty on the part of its employees.
“So I believe it will be covered on that basis,†said the source.
He said Cotecna has a Geneva-based global insurance policy for all its world- wide operations.
Cotecna is one of the world’s leading trade inspection, security and certification companies.
It has been in the global inspection industry for over 30 years.
Its head office and several of its offices around the world are ISO 9001:2000 certified and Moody Certificate No. 200202361.
Ends
Collateral managers, Cotecna, could be saddled with a bill worth billions of shillings following the disappearance of tonnes of wheat and coffee they were supposed to have verified and against which the Aya Brothers borrowed millions of dollars.
According to media reports, PanAfric Commodities owned by the Aya Brothers, is alleged to have contracted a $20m loan from a South African-based bank using the wheat in its warehouses in Uganda as collateral. The bank contracted Swiss-based Cotecna collateral management firm to do the evaluation of the produce and to confirm receipt of the said commodities on whose basis they went ahead to advance the loan to Aya Brothers.
However, on inspection by Cotecna officials two weeks ago, it was discovered that what was actually in the warehouses were husks and not wheat as assumed and claimed by Aya Brothers.
During the audit, it was also discovered that coffee belonging to a sister company was also missing.
Cotecna officials did not deny or confirm the full details of the story.
“During a routine audit two weeks ago, we ascertained there were differences between our records and physical stocks.
“We are currently working with stakeholders to inquire and find out how it is so,†said Matthieu Delorme Cotecna’s vice-president collateral management.
Delorme said his company only deals with physical stocks and was not in position to put a value to the extent of the discrepancy in physical terms.
One of the Aya Brothers, Mohammed Mohammed Hamid, however, denied any scandal existed.
“What was written in the media is a baseless fabrication intended to destroy my name. Maybe from my competitors who are using the paper to tarnish my name,†he said.
However, sources familiar with such deals said for the wheat stocks to have disappeared, one cannot discount the possibility of collusion by Cotecna.
“The fraud can only happen under two circumstances; that is collusion between Cotecna employees and Aya Brothers, or negligence on the side of the Cotecna inspectors,†the source said.
The source said the problem was compounded by the fact that it is the borrower (Aya Brothers) who pay the collateral manager not the bank which contracted him.
“This means that the collateral managers, not Aya Brothers, are to cover the bank loss because they were contracted by the lender to ensure that the produce staked by Aya Brothers for the loan is actually there,†the source said.
He said Cotecna being an international collateral manager with proper insurance protection might throw the burden to their insurers.
“Cotecna has a professional indemnity insurance cover, which protects it from losses resulting out of negligence or acts of dishonesty on the part of its employees.
“So I believe it will be covered on that basis,†said the source.
He said Cotecna has a Geneva-based global insurance policy for all its world- wide operations.
Cotecna is one of the world’s leading trade inspection, security and certification companies.
It has been in the global inspection industry for over 30 years.
Its head office and several of its offices around the world are ISO 9001:2000 certified and Moody Certificate No. 200202361.
Ends