Billions in GNCB loans to local businessmen may be lost to the public treasury - banking sources

http://www.stabroeknews.com/index.pl/article?id=56523023

Billions in GNCB loans to local businessmen may be lost to the public
treasury - banking sources
Stabroek News,
Friday, June 22nd 2007

Efforts to recoup billions of dollars in loans to private sector
businessmen by the now defunct Guyana National Cooperative Bank (GNCB)
over more than three decades are continuing amidst increasing
indications that the debt collection process will fall short of
recouping many if not most of the outstanding amounts.

The GNCB, Guyana's first indigenous commercial bank, closed its doors
in 2003 amidst public charges of irregularities in the lending process
that may have left several loans unaccounted for. Since that time a
special debt collection unit has been working to secure the repayment
of at least some of the loans even though it is now widely accepted
that the efforts of the unit are unlikely to be enough to ensure that
all the monies are repaid.

While the full amount of the outstanding loans is probably unknown even
to the debt collection agency Stabroek Business understands that some
borrowers have several loans totaling hundreds of millions of dollars,
while scores of others have tens of millions of dollars in outstanding
loans. Most of the loans secured from GNCB were disbursed during the
1970's and 1980's to businessmen in the rice, manufacturing,
agriculture and agro-processing sectors. Some of these businessmen are
reportedly still operating in the local private sector while others are
said to have either emigrated or wound up their businesses.

Sources in the banking sector have told Stabroek Business that the debt
collection unit has been seeking to encourage defaulters to repay their
loans voluntarily but has moved to the courts against some large
defaulters who have shown no inclination to pay. This process, however,
is reportedly being stymied by the sloth of the legal system.
Additionally, this newspaper understands that many of the defaulters
may no longer have assets that can be levied on once judgments are
secured in court.

Stabroek Business understands that some of the defaulters may even have
been able to secure subsequent loans from other commercial banks
currently operating in Guyana.

With the debt collection unit reportedly scheduled to close its doors
in a matter of months informed sources say that the authorities have
now all but given up on recovering the bulk of the loans and are simply
focusing on recovering as much as it can.