Update: I've managed to secure copies of the Ernst and Young Report on TIBC and the Hibis Europe Report on Awal Bank. You can find the relevant posts here and here.
In case you've missed it a reader has posted an interesting comment to my post about the arrest of the former CEO. He noted that the AlGosaibis are asserting that The International Banking Corporation had no real business but was merely a front for embezzlement.
That of course would explain then why a zero or near zero return is expected on the outstanding debt.
However, tt does raise some very serious questions since such a scheme would require a lot of work.
Assuming normal auditing procedures, TIBC's auditors would verify the existence and terms of major assets and liabilities through "confirmations" written requests sent to counterparties in which they are requested to reply in writing confirming the existence of an asset or liability and its terms. While no auditor confirms 100% of assets and liabilities (unless it is an extraordinary situation), it should confirm a large enough number, a number sufficient for it to come to the conclusion that the financials fairly represent the company's condition.
Taking AlGosaibis' allegations at face value, this would imply a rather extensive conspiracy. TIBC's records would have to contain addresses where the conspirators could take delivery of or intercept the confirmations. The individual confirmations would then have to be sent back to the auditing firm and the signatures on them would have to match those in TIBC's records. Similarly, as part of the Kingdom of Bahrain's financial crimes legislation, TIBC should have due diligence files on each of its customers (even those receiving loans) which contain documents substantiating the existence of the customer. TIBC's auditing firm has a reputation of being fairly conservative in its approach and by some accounts is the most conservative of the big three firms on the island - at least in relation to its interpretation of IFRS standards.
It will be interesting to learn more.
Hopefully, the individual who posted the comment will follow up with more comments.
Anyone else out there with an opinion or insight is encouraged to add his or her voice to the discussion.
And, finally, just a note that the statements attributed to AlGosaibi are at this point their charges in ongoing legal cases, which have not yet been judicially determined.
Posts
No comments:
Post a Comment