Bank of South Sudan Official Confirms Stanbic’s Withholding of Airline Funds

A senior official from the Bank of South Sudan revealed that Stanbic Bank withheld $7.2 million from Air Afrik Aviation, citing insufficient funds in a nostro account. This action led to the termination of a vital plane leasing agreement with the South Sudanese government. Stanbic’s claims were refuted by Mr. Chan Andrea Chan, emphasizing that the nostro account had no relevancy to the funds in question.

A high-ranking official from the Bank of South Sudan (BoSS) has confirmed that Stanbic Bank credited Air Afrik Aviation with $7.2 million in 2016 but subsequently withheld these funds, citing insufficient balances in their nostro account. Mr. Chan Andrea Chan, who currently holds the position of Director of Financial Markets at BoSS, addressed these issues during testimonies in a legal dispute between Air Afrik and Stanbic Bank. Mr. Chan stated that despite Stanbic’s claims, the nostro account was unrelated to the funds in question that were meant for the airline. He emphasized that Stanbic should have refrained from crediting the airline’s account until there was affirmatory funding in the nostro account, which is typically used by domestic banks to hold foreign currency in foreign banks. This situation has led to significant financial consequences for Air Afrik, including the termination of a plane leasing contract with the South Sudanese government.

The case revolves around a financial dispute between Air Afrik Aviation and Stanbic Bank, centering on a payment of $7.2 million that was credited to the airline’s account but later reversed. The reversal occurred after Stanbic Bank cited a lack of sufficient funds in a nostro account, which it claimed necessitated the cancellation of the transaction. Air Afrik has filed a lawsuit against Stanbic for this action, arguing that the funds were essential for fulfilling a leasing agreement signed in 2014 with South Sudan’s Ministry of Defence and Veteran Affairs. This has prompted scrutiny regarding banking practices, regulatory compliance, and the obligations of financial institutions in such transactions.

In summary, the dispute highlights critical challenges in financial transactions between banks and aviation companies, particularly regarding the handling and accountability of entrusted funds. The assertions made by Mr. Chan challenge Stanbic Bank’s rationale for reversing the transaction, implying a disconnect between the bank’s actions and the proper financial protocols. The outcome of this case may serve as a precedent for similar disputes in the banking sector.

Original Source: www.theeastafrican.co.ke