Court demands Watani Bank compensate customers [Archives:2006/934/Front Page]

April 3 2006

SANA'A, April 3 ) The State Security Specialized Penal Court demanded officials of Watani Bank for Trade and Investment repay depositors who lost funds when the bank collapsed a few months ago.

At its Sunday session, the court heard lawsuits filed by depositors against Watani Bank. The depositors' lawyer said Watani's management conspired with the bank's legal accountant to issue annual reports containing false data, adding that such data was contrary to that indicated by internal reports released by the Central Bank of Yemen (CBY) committee.

He added that Watani's false reports aimed to con customers and gain their confidence by concealing the bank's deteriorating financial status. Such conduct is punishable under the law.

The state's lawyer confirmed that the CBY is involved in the case because it granted Watani permission to perform banking activities without meeting business requirements stipulated by Banking Law No. 38, which states: “The paid capital of any bank must not be less than one million Yemeni Riyals.”

In 1999, the CBY approved Watani's budget until 2001, despite many violations associated with it. It continued approving Watani's budget until 2004, despite the bank's declining financial status resulting from performing activities without limit.

The depositors' lawyer urged the court to hold Watani Bank's governor, its management board and its legal accountant accountable for releasing reports containing false data. He demanded the court withhold Watani's assets in the CBY, keep them in the court's treasury or invest them to earn interest for Watani customers.

He also requested the court oblige the CBY to explain Watani's financial status and assessment of it, as well as extract guarantees from the CBY until returning deposit amounts to customers. The court released two suspects jailed on commercial guarantees.

In the past few days, depositors have threatened to stage official protests and sit-ins at the Cabinet and Parliament. They vowed to hold sit-ins at the Presidential Palace if their issues remain unconsidered in order to claim what they lost due to Watani's bankruptcy.

Watani Bank collapsed last December, announcing its failure to fulfill its financial obligations to its customers as stipulated by Articles 43, 44 and 46 of 1998's Law No. 38 concerning banks and financial institutions. The CBY decided to enact firm measures against the bankrupt bank and end its officials' authority.