The Finance Ministry has launched an investigation into Islamic Bank executives who approved an unusual loan worth one billion baht to eight projects even though their collateral values were less than the amount of the loan, said a senior finance official.
The ministry set up a committee chaired by Amnuay Preemonwong, inspector-general of the Finance Ministry, and representatives from other state agencies, such as the Office of the Attorney General. (source)
The official, who declined to be named, said the committee must complete its investigation within 90 days after appointment and submit the outcome to Finance Minister Thirachai Phuvanatnaranubala.
If the committee finds grounds for fraud, the ministry will have to set up another committee for a disciplinary investigation. The authority would then consider a disciplinary penalty for any accused party before initiating the legal process.
An investigation started early this year after the Bank of Thailand noticed the unusual loan. The lack of collateral puts the bank at greater risk should the recipient default.
The central bank sent a notice to the State Enterprise Policy Office requesting Ibank's board of directors set up an internal audit committee to scrutinise the case.
The internal audit apparently found nothing wrong, though the loan would later be classified as non-performing and the bank would set up a provisional loss for it.
Ibank also faces an accusation that its loan policy is not sharia, as the one billion baht was obtained by a corporation, while Islamic rules state loans must be provided to minority or retail clients, not corporations.
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