THERE are indications that charges could be brought against anyone found to be criminally liable in the mismanagement of members’ deposits and breach of operating standards at the National People’s Co-operative Bank of Jamaica (NPCB), that has been uncovered by a Government-ordered audit.

Chairman of the Agricultural Credit Board (ACB) Hugh Graham said that whilst no evidence has been found so far on which to bring criminal charges against any member of the management or board of the NPCB, the possibility could not be completely ruled out as the probe into the operations of the institution goes into its second phase.

Graham was speaking with the Jamaica Observer on Friday, following a press conference at the Ministry of Agriculture, where portfolio minister, Derrick Kellier sought to defend charges of inaction by his ministry in the messy situation that has unfolded at the NPCB.

The ministry ordered the probe, prompted by the complaints of the ACB,

of glaring operational irregularities at the agricultural loan bank through which the Development Bank of Jamaica (DBJ) offers loans to small farmers.

“This is not the first time the PC Bank has run into problems and we have had to have intervention from this ministry, the AC Board, and the Development Bank of Jamaica,” Graham told the briefing.

At the same time, as the ACB in partnership with its allied agencies, seek to cauterise the bleeding at the bank, Graham said that the limit for delinquency has been cut from 180 to 90 days. Loans have been capped at $15 million where the source of financing is members’ deposits, and those over $15 million are to be referred to the ACB for approval. The audit shows that up to $180 million had been accessed by one client to build townhouses.

Graham also told the Sunday Observer that the Department of Cooperatives and Friendly Societies, although it had threatened to de-register the bank, has extended the current registration period to November 11, 2015.

The agriculture minister, who was insistent that he did not drag his feet in moving to act on the alarms raised by the ACB, said the ministry’s approach now is to stabilise the situation at the NPCB and continue the audit to “get an even more fulsome picture of what is happening”.

Several directors have been suspended and it is unclear when a new board will be convened. For the time being, the operations of the 36-branch institution has been subsumed by the ACB. Among the key recommendations of the auditors is that the management of the bank must provide the relevant information to fully substantiate members’ deposits, and that lending from savings must cease until there is an improvement in the ratio to below 50 per cent of the savings portfolio of the bank.

Still, Kellier told journalists on Friday, that the ministry is satisfied that the bank is not in breach of the loans to savings ratio which now stands at 53 per cent.

According to the audit, total loans outstanding as at May 31 this year was $2.8 billion, $509 million, or 56 per cent of which were DBJ-funded loans. But head of the DBJ, Milverton Reynolds said the the bank is satisfied with the performance of the DBJ loans.

“We don’t have any issue with the PC Bank loans there at all,” he stated. Reynolds said the bank had however thought it prudent to suspend loans to farmers through the NPCB while it awaits the outcome of the ongoing investigations. “There needs to be clarity. And also, we wanted to be sure that plans were going to be put in place to address the issues raised. We are still awaiting the final outcome of the report and we will be guided accordingly,” he stated.

At the same time, Reynolds said the development bank was satisfied with the steps taken so far to deal with the situation at the NPCB. “For us, the PC bank remains a very important institution and we are therefore committed to ensuring that it becomes a viable financial institution,” he said, giving the assurance that the DBJ would work with the ACB and the ministry to ensure that a proper corporate governance structure is put in place.

The audit also calls for an enterprise risk management function to be implemented in keeping with specific international financial reporting standards aimed at risk management and fraud deterrence. Also, it has been recommended that the number of times people, particularly those who are connected to the bank, are allowed to have their loans rescheduled must be capped at two with approval from the ACB.

Among the alarming details of the probe is the repeated rescheduling of a $30-million loan to a director, despite substantial amounts being outstanding on the original facility. The person also submitted a cheque for payment that was subsequently dishonoured by the bank because there were insufficient funds in the individual’s account to cover the cheque. That loan was last rescheduled in July 2014, and at the time of the audit, had approximately $7 million in arrears.