Major African bank faces forex lawsuit

An important African bank is facing a lawsuit after one of its customers took it to court over an alleged financial loss.

The Bank of Africa, which operates across the African continent, has been accused of a host of different crimes against Jaffery Forex Bureau Ltd, a Ugandan company.

Jaffery accuses the Bank of Africa, which was its forex dealer, of being responsible for losses totalling over $26 million, and has filed a lawsuit accusing the Bank of fraud, breach of fiduciary duty and unjust enrichment.

According to Jaffery, the firm’s bank accounts were tampered with without their permission. Jaffery claims that staff in the Bank’s treasury office decided to engage in proprietary trading with the firm’s cash without first asking permission or indicating its plans.

This, according to the firm, meant that Jaffery was placed under investigation. Jaffery’s accounts were later shut down by the Bank of Uganda, which is Uganda’s central bank.

Proprietary trading refers to a decision by a bank to use customer deposits entirely for its own investment purposes instead of investing it on behalf of the client for a fee.

These alleged Bank of Africa activities took place between November 2015 and February 2016.

Back in May 2016, the behaviour – supposedly of Jaffery – was described by the Bank of Uganda as being in contravention of several laws.

It even made a public announcement detailing what it believed were Jaffery’s crimes.

“The action was taken because Bank of Uganda established that Jaffery Forex Bureau was engaged in unlicensed business activities contrary to the provisions of the Foreign Exchange

Act, 2004 and the Foreign Exchange (Forex Bureaus and Money Remittance) Regulations,

2006,” it said in a statement.

“Jaffery Forex Bureau is henceforth closed and, therefore, not permitted to transact any

business prescribed under the Foreign Exchange Act, 2004.

“The public is warned that whoever deals with the Forex Bureau, its proprietors or directors

in relation to foreign exchange or money remittance business does so at his or her own risk,” it added.

However, the most recent court documents indicate that there may have been more to the case than meets the eye.

The lawsuit, seen by local media in Uganda, alleges that the Bank of Africa had honed a complicated system for trading with Jaffery’s cash and then ensuring their tracks were covered.

They “would take Forex possessions of the US dollars against Uganda Shillings, British Pounds, and Euros, and then conceal these transactions by booking corresponding deals that looked genuine and supported by deal tickets through a Forex Bureau (thus Jaffery Forex Bureau)”, the documents read.

“The deal would then be settled on the customer’s accounts and new ones booked, but it could not affect the customers’ account balances.”

Five people, in particular, have been named as individual suspects in the case. They are, or were, all employees of the treasury department of the Bank of Africa.

The Bank of Africa is an important institution in the African financial system, and it operates in twenty countries on the continent.

Chris Lee

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