Stanbic Bank Accused of Wrongfully Withholding $7.2 Million from Air Afrik Aviation
A senior Bank of South Sudan official disclosed that Stanbic Bank withheld $7.2 million from Air Afrik Aviation, citing insufficient funds in a nostro account unrelated to the transfer. This action led to significant contractual implications for the airline, which has filed a lawsuit against Stanbic for damages after a leasing agreement was terminated. Stanbic contends that the reversal was justified due to a lack of sufficient funds in the credit note from the South Sudan government.
A senior official from the Bank of South Sudan (BoSS) has revealed that Stanbic Bank improperly withheld $7.2 million from Air Afrik Aviation, citing insufficient funds in a nostro account associated with the transaction. Mr. Chan Andrea Chan, who is currently the director of financial market departments at BoSS, clarified that the funds should have been released despite Stanbic Bank’s assertions of a funding shortfall in the nostro account, which has no relevance to the direct transfer of funds. Mr. Chan’s statements were presented during a court case in which Air Afrik is suing Stanbic for freezing the funds, claiming that this action led to the termination of a $20 million leasing agreement with the South Sudan government. Mr. Chan stated that Stanbic should have refrained from crediting the airline’s account until their nostro account reflected sufficient funds. He emphasized that the issue is a matter between Stanbic Bank and BoSS regarding banking practices. Critically, Mr. Chan asserted, “I reiterate that the nostro account had no connection with the subject transaction for the transfer of $7.2 million; these are issues to be dealt with between Stanbic and BoSS.” Furthermore, it was revealed that the reversal of the funds significantly impacted Air Afrik, as it prevented the airline from meeting its obligations under a plane leasing agreement established in 2014. Mr. Chan detailed that Stanbic Bank did not reject the credit advice but took three days to credit the airline’s account after receiving the advice. He posited that, had the funds been insufficient, Stanbic should have either returned the funds to BoSS or ensured their nostro account was adequately replenished before proceeding with the crediting of Air Afrik’s account. The airline contends that Stanbic’s actions constituted a breach of banking regulations, leading them to seek damages for their losses following the termination of the leasing contract they had with the Ministry of Defence of South Sudan. In turn, Stanbic has denied the claims, asserting that the reversal occurred due to the credit note failing to indicate available funds from the South Sudan government, thereby not permitting the use of its funds.
The dispute between Air Afrik Aviation and Stanbic Bank revolves around the handling of a significant financial transaction for a plane-leasing contract with the South Sudan government. The Bank of South Sudan facilitated the transfer of $7.2 million to Air Afrik, which was subsequently reversed by Stanbic Bank due to alleged insufficient funds in a related nostro account. The ramifications of this action led to substantial financial consequences for the airline, affecting its contractual obligations and prompting legal action against the bank. The case highlights issues of banking practices, regulatory compliance, and the responsibilities of financial institutions in managing transactions involving foreign accounts.
In summary, the ongoing legal battle between Air Afrik Aviation and Stanbic Bank underscores critical issues in banking practices and regulatory compliance. Mr. Chan Andrea Chan of BoSS has confirmed that Stanbic Bank’s claim of insufficient funds in a nostro account was unfounded regarding the $7.2 million transfer. This incident not only precipitated significant operational challenges for Air Afrik but also raised questions about the responsibilities financial institutions bear in handling transactions related to international contracts. The court’s determination will hinge on the interpretation of banking regulations and the specifics of the financial relationship between the involved parties.
Original Source: www.theeastafrican.co.ke
