Billions of Leones in Limbo at Sierra Leone Commercial Bank

The audit discovered the bank gave out loans to highly indebted individuals, companies and politically exposed persons.


The Sierra Leone Commercial Bank (SLCB) is one of the state-owned banks the Governance Transition Team (GTT) reported was not in any good financial position as at the time President Julius Maada Bio took up office. The GTT report noted that SLCB lost Le29.7 billion as bad debt given to most politically exposed persons (PEPs).

One may think that after incurring such a huge loss to the state, the bank should have put stringent measures and policies in place to change the narrative, but that seems to not be the case as the Auditor General’s Annual Report of 2020 once more exposed how the SLCB continues to dish out loans to politically exposed persons and other individuals and companies incapable of discharging their financial obligations.

The report notes that the SLCB made a loan loss provision of Le12 billion and the only response the bank’s managing director could provide is: “additional loan loss of Le12 billion noted”.

A loan loss provision is a cash reserve a bank creates to cover loans that are most unlikely to be repaid.

The auditors found out that SLCB disbursed a loan of Le4.9 billion to politically exposed persons in violation of the enhanced supervision directives issued by the Bank of Sierra Leone (BSL). They further revealed how SLCB gave out a loan of Le8.3 billion to a non-creditworthy customer, Pavi Fort Construction Company. The auditors found out that Pavi Fort was already indebted to four other commercial banks the sum of Le40 billion, and that SLCB had written off Le3.7 billion of Pavi Fort’s debt.

In addition, the auditors observed credit facilities totalling Le8.4 billion were approved without adequate security and noncompliance to BSL’s enhanced supervision directives, posing serious risks to the financial status of the bank. See full details below.



  • Additional Loan Impairment Provisioning

Going through the provisions for bad and doubtful debt as at 31st December 2019, we observed that adequate provision had not been made for 15 accounts. The bank therefore made an additional loan loss provision of Le12 billion. We recommend that the bank should adhere to the prudential guidelines issued by the central bank in respect of loan provision.

Official’s Response

The Managing Director in his response said: “additional loan loss of Le12 billion noted”.

Auditor’s Comment

Our recommendation was not implemented. Therefore, the issue remains unresolved.

  • Facility given to non-creditworthy customer

A loan of Le8.3 billion was issued to a customer (Pavi Fort). The customer was seriously indebted to the banking industry of Sierra Leone to the sum of Le40 billion from four other commercial banks. The sum of Le3.7 billion had been written off according to review of the credit reference report obtained from the Bank of Sierra Leone. We recommended that management should ensure proper credit evaluation of potential borrowers, and lending funds should be allocated to prime (creditworthy) customers and must comply with provisions of the New Banking Act of 2019 and the prudential guidelines.

Auditor’s Comment

There was neither a response from management, nor an action taken to implement the recommendation. The issue therefore remains unresolved.

  • Facilities with no/inadequate collateral

Clause four of the enhanced supervision directives issued by the Bank of Sierra Leone requires all collateral for loans/renewals of existing credit facilities should cover at least 125% of related exposures. We however observed that some of the facilities granted with total exposure amount of Le8,397,077,190 and total value of collateral amount of Le66,000,000 were not adequately secured according to the enhanced supervision directives in order to protect the bank’s exposure.

We recommend that the credit risk department should ensure adequate and tangible security (perfected legal title) is obtained to cover exposures. All non-secured facilities should be pursued and regularised going forward to minimize the exposure of the Bank. The Bank should also comply with the enhanced supervision directives issued by the Bank of Sierra Leone in order to avoid any penalties or fines.

Official’s Response

The Managing Director in his response said: “we confirm that we hold properties as collateral security for the customers in question and properties duly valued. In future, we shall take into consideration the enhanced supervision directives of Bank of Sierra Leone to cover at least 125% to cover exposures. We reiterate that we will take into consideration the directives of Bank of Sierra Leone to cover at least 125% to cover exposures going forward”.

Auditor’s Comment

No evidence of verification and valuation reports were tendered to the auditors. The issue remains outstanding.

  • Approval and enhancement of new loans to politically exposed persons (PEPs)

New credit facilities to the tune of Le4,956,014,474 were granted to PEPs. This infringed on the directives of the Bank of Sierra Leone’s clause one (1) of the enhanced supervision. The clause prohibits the bank from undertaking among others, lending to politically exposed persons, government related persons/entities and government backed facilities.

We recommend that management should ensure all directions and or sanctions imposed on the bank are followed.

Official’s Response

The Managing Director in his responses said: “these facilities are granted to the current sitting members of parliament whose salaries and allowances are paid directly into their bank accounts. We also hold Employers Guarantee signed by the Accountant-General’s Dept. We also wish to note that Kalleone Group is not a PEP related account. Management will ensure compliance with the BSL directives or obtain clearance for any future credit to PEP”.

Auditor’s Comment

Our recommendation was not implemented. The matter is therefore unresolved.


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