A senior official from the Bank of South Sudan confirmed that Stanbic Bank credited Air Afrik Aviation $7.2 million in 2016 but then withheld it, citing insufficient funds in a nostro account. The airline has claimed damages after its leasing contract was terminated due to the freezing of these funds. Mr. Chan contested the bank’s actions during a court hearing, stating that the nostro account was unrelated to the funds in question.
A senior official from the Bank of South Sudan (BoSS), Mr. Chan Andrea Chan, has confirmed that in 2016, Stanbic Bank credited the accounts of Air Afrik Aviation with $7.2 million, yet withheld the funds, citing insufficient resources in the associated nostro account. Mr. Chan explained that the transactions in question were unrelated, asserting that Stanbic’s claim regarding the nostro account did not justify their actions. During his testimony, Mr. Chan, who holds the position of Director of Financial Markets at BoSS, argued that Stanbic Bank should have delayed the transfer to Air Afrik’s account until they ensured that the nostro account had adequate funds. This measure was necessary to establish any connection between the beneficiary and the nostro account. Mr. Chan expressed that the delay in the crediting process, taking approximately three days, and the subsequent freezing of funds led to substantial financial losses for the airline, forcing the cancellation of a crucial leasing contract with the government of South Sudan worth $20 million. He stated to Justice Nixon Sifuna, “A nostro account generally handles funds for different transactions.” The controversy arose after Air Afrik Aviation lodged a lawsuit against Stanbic Bank in 2018 for an alleged breach of banking regulations following the unsolicited reversal of the credited funds. Stanbic Bank rebutted the allegations, maintaining that the action occurred because they discovered the original credit note lacked adequate funding from the South Sudan government.
This issue involves a legal dispute between Air Afrik Aviation and Stanbic Bank regarding a significant financial transaction. In 2016, Stanbic Bank provided a credit of $7.2 million to Air Afrik, which was subsequently reversed due to claimed issues with the corresponding nostro account. The ramifications of this decision led to Air Afrik facing difficulties in honoring a plane-leasing contract with the South Sudanese government, prompting the airline to seek damages due to lost opportunities and incurred expenses. The concept of a nostro account plays a vital role in this case, as it represents how domestic banks manage foreign currency transactions. The testimony provided by Mr. Chan serves as a critical foundation within the legal proceedings, clarifying the roles and responsibilities of the parties involved in the banking transaction.
In conclusion, the case highlights significant contention surrounding banking practices and the handling of funds associated with international transactions. Mr. Chan’s testimony brings to light the intricate relationships between banks, accounts, and the obligations owed to clients which, if mishandled, can lead to grave financial repercussions. The ongoing legal proceedings will determine the legitimacy of Stanbic Bank’s actions regarding the withholding and subsequent reversal of the funds, and whether Air Afrik is entitled to compensation for its losses.
Original Source: www.theeastafrican.co.ke
