Bank plagued by flaws
AN independent audit into the National Development Bank last year exposed flaws in its “internal control, systemic legacy issues and conflicts of interest” prompting the sacking of its acting managing director.
This was revealed yesterday by Commerce and Industry Minister William Duma who said it also involved senior executives of the bank.
As a result, he said acting managing director Moses Liu was sacked last month and replaced by Aaron Underdown.
Liu, when contacted for a comment, said he would provide one “at an appropriate time”.
Duma told The National yesterday that the bank board members raised the concerns after the audit conducted by PricewaterhouseCoopers (PWC) in April last year.
“The NDB board has been concerned with its performance and of the systemic legacy issues which have plagued it over an extended period of time,” Duma said.
He said the audit “highlighted systemic internal control failures with risk, compliance and delegated lending authorities in the bank’s credit department and deficient governance which contributed to conflicts of interest”.
“As a result of weak internal controls and systemic failures, the level of loan provisioning and loan losses was highlighted as abnormal and well above industry standard,” Duma said.
He said there were situations where money was advanced without following rules and procedures.
The auditors pointed out that poor credit decisions and the management’s inability to manage the loan portfolio had resulted in a number of significant write-offs whereby operating cash flows from normal course of business have been negative for an extended period of time”.
It added that the NDB “has a high-cost structure with operating expenses running at 90 per cent of income which the executive management failed to reduce”.
In 2015 and 2016, expenses were running at over 100 percent of income which greatly impacted the operating profit of the Bank.
It said the NDB’s declared net profit over recent years was mainly a result of recoveries of bad debts, in which the bank did not adequately provide for or failed to recognise these loans as impaired.
Duma said the board members were forced to “write off and increase the level of provisioning on the loan book to reflect the true state of affairs inside and put in internal control systems and procedures to mitigate these risks”.
Underdown is the bank’s executive manager risk and compliance.
He will be acting managing director until a permanent appointment is made.
17 comments
Duma, you have no public credibility to your name. You were implicated in many saga’s such as the Manumanu land deal etc… For you to instigate the removal of persons of high esteem with a credible record smells very fishy. NDB has grown from strength to strength under the leadership of Maru and Liu.
Duma, needs to clean his back yard Mt Hagen Main market and the town who are selling marijuana and smoking under the tree all around Mt Hagen. If he can not manage his own people then I don’t think he is a leader?
Stealing and killing in Mt Hagen town, day light bag snaking, when will he control? Came out public that he is a leader but in his town he is a peanut, Not fit to be a leader and don’t understand how Hagen central have voted in for all this years.
WHAT A SHAME ?
That’s all part and parcel of the PNG corruption story.
Audit conducted by PWC last year April reveals corruption in that institution as stated by Minister William Duma. As minister responsible Duma should sack Moses Liu or sidelined him from performing his duties. William Duma kept his mouth zipped and did not take any action. Moses Liu is a no nonsense man and William Duma sees him as a hard cell to crack. Now that K200 million SME money is now parked in there, Duma knows very well that he wont have any changes to stick his dirty fingers in there knowing very well how tough Mr Liu is. For his easy access to get in there, Duma has to knock off the barrier that hinders him and he exactly did that by terminating the hardworking papua new guinean who has grown this institution from nothing to where it is today. People of this nation know who William Duma is and he has done it again on very hard working and commited man. What a corrupt politician.
Yomo Long,
What you have stated is very true.
Mr William Duma has already had a dream of stealing those K200 million and found it very hard to have access while Mr. liu was the MD so thats the only reason WD kicked hard working PNG off from the chair.
Mark my words, within next 3 months ,money in there would have all gone as per WD’s evil plan.
Nothing Sinister about that.
An independent manager should be appointed outside NDB to fix and grow the bank to its intended purpose.
Based on the audit report and recommendations- investigate and start arresting all parties involved in corrupt deals, terminate those who lack performance.
There are genuine businesses who can do business and repay loans in turn make money for the bank but due to this issues and wantok system genuine investors are crippled.
Anything coming out of WD can not be believed. Should we believe him this time?
Investigate those responsible based on the audit report arrest those culprit.We don’t seem to learn our lessons. Recruit people on merit who have track record of managing similar institutions making them profitable.Maski lon paper bosses with certificates and little to prove.
While I’m trying to make sense of Niugini Biomed Ltd, Here is another saga orchestrated by highly questionable individuals.
Can we give this beautiful country a break PLEASE?!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I’m too old! It history repeating itself.
I recall the Dev Bank’s predecessor was a fiasco too. Saw all sorts of rorts happening.
Loans given out like candy and no chance or repayments.
But HELL that was 40 years ago. has nothing changed in the Independent nation?
PNG politician and their cronies too smart to track down any funds given to any firm and to collect it again for personal benefits. This is PNG, no justices can hold them accountable and its got it delay system to let the time goes by leaving the stone unturned.
This is the reason why our election system and leadership watchdogs must ensure credibility is established and maintained starting with political leadership.
This is simple Corruption. William Duma and PMJM need to come out clear. This story I do not believe.
I am really mad with these few minority greedy and selfish leaders. How long we praying for good leaders and yet every leader goes under same umbrella colored with name steal.Liklik mani mipela kisim long fortnight yupela kisim long tax, please do something good for us and our children.You can tell lies to us but our good and great God is watching and you will give account of your evil actions.
And so it goes on and on and on! PNG people whether you like it or not the rot started when you gained your independence from Australia.
The money disappeared from day one and has continued ever since, ask your self this one question! How is it that every Prime minister of this country are now multi millionaires? Answer is they were not when they came to power but it didn’t take long to find ways to misappropriate as much money as they could get there grubby hands on and they are still doing it.
You can’t have thieves investigating thieves! Corruption is ingrained into PNG culture and no amount of educating will fix it. Name one Department that is not corrupt, i doubt whether you will find one.
No matter how one tries to justify one’s actions there will always be questions asked because of past experiences and occurrences. We hope there are no hidden motives behind this latest developments at the NDB.
Comments are closed.