A senior BTA Bank (BTAS) executive said his signatures were forged last year and used to backdate documents in the months the Kazakh lender sought to staunch a capital deficit that forced its second debt restructuring in December, according to three people directly familiar with the matter.
The official, who served on the bank’s management board, filed a complaint after discovering the fraudulent use of his electronic signatures in May 2011, the people said, declining to be identified because the information isn’t public. Citing commercial confidentiality, BTA declined to confirm or deny the existence of any complaint or internal investigation.
The allegations raise questions about the bank’s controls and oversight following state takeover of the country’s biggest lender before its default on $12 billion of debt in 2009. Almaty-based BTA proposed a second restructuring in December to stave off bankruptcy and failed to make an interest payment on its July 2018 dollar bonds in January.
Kazakhstan’s state-owned wealth fund Samruk-Kazyna injected 883 billion tenge ($6 billion) to raise BTA’s equity capital in 2009 and 2010, the equivalent of about 4 percent of gross domestic product. BTA, which also defaulted in April on $5.2 billion of so-called recovery notes, predicts its capital shortfall may reach about $6 billion by the end of 2012, compared with a January estimate for a deficit of $5.1 billion.
Samruk-Kazyna’s press service referred all questions to BTA Chairman Anvar Saidenov and Chief Executive Officer Erik Balapanov. The existing system of using electronic signatures by board members at BTA makes impossible any unauthorized use or unsanctioned third-party access, the bank said in an e-mailed statement on June 1.
The bank’s rules allow management-board members exclusive use of electronic copies of their signatures. The executive complained his name was used to sign about 30 documents, which contained a total of about 500 individual items, in two instances over a combined period of about eight minutes, two of the people said.
Documents were backdated to March 2010 during the period signatures were allegedly forged last year, according to the people. One of the documents fraudulently signed with the executive’s name granted an over-limit grace period until December 2015 on a loan to a construction company, the people said.
A group of creditors said in a Dec. 30 letter to BTA, the Kazakh central bank and Samruk-Kazyna that the bondholders were “surprised and disappointed by the significant failures of Samruk-Kazyna and the central bank to exercise shareholder and regulatory control and oversight over the affairs on the bank since the initial restructuring.”
Graft is pervasive in Kazakh banking, with every seventh borrower paying a bribe to secure a loan, the Sange research center in Almaty said in a poll released in February. BTA was ranked as the country’s fifth-most corrupt lender in the survey, with customers often encountering demands for kickbacks or requests for repayment ahead of schedule.
BTA has blamed its previous management for failures that preceded the state takeover, filing a series of civil suits against ex-Chairman Mukhtar Ablyazov and ex-Chief Executive Officer Roman Solodchenko and claiming they took more than $5 billion from the bank using fake loans, backdated documents and offshore companies. Both men have denied any wrongdoing.
In April, Kazakhstan reopened criminal cases against three BTA managers who were accused of “large-scale embezzlement as part of an organized group and misappropriating property entrusted to them,” according to the Prosecutor General’s Office.
A vote by everyone present is required for BTA’s management board to make decisions, with a final tally entered into the record, the bank said in an e-mailed reply to questions.
The technological procedure of using electronic signatures has several layers of protection that require the sanction or direct participation of the vote-wielding member of the management board, according to BTA. The lender’s information system also precludes unauthorized access to data systems and employees’ personal computers, it said.
Writing in the December letter, BTA creditors warned that the bank’s proposal for another restructuring will cast a spotlight on internal controls and corporate governance.
“You should of course be aware that the operations of the bank will be the subject of heightened scrutiny,” the creditors wrote.
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