Working with CBSI seeking answers
By EDDIE OSIFELO
SOME ‘victims’ of Dr Deogratias Harorimana’s brokering business held their first consultation with Central Bank of Solomon Islands (CBSI) and its Solomon Islands Financial Intelligence Unit (SIFIU) yesterday.
Former Permanent Secretary of Ministry of Commerce, Industry, Labour and Immigration, George Kosui revealed this to Island Sun.
Kosui is helping the victims, mostly local business people allegedly duped by Deo into signing loan commitments and business agreements that have left their businesses on the brink of collapsing.
He said CBSI and SIFIU requested them to compile and submit a report of the facts relating to money laundering and violation of banking regulation allegedly employed by Deo and other authorities.
He said this is to allow CBSI and SIFIU to investigate all the allegations levelled against Deo’s controversial AIPF SI Ltd before taking the next step.
So far, a person calling himself Robert Leeson on Facebook has questioned the four percent commission AIPF has charged on loans and service fees on their clients.
He gave examples:
If client 1 takes a loan of $2 million, Deo will charge a commission of $80,000. If client 2 takes a loan of $20 million, Deo will charge a commission of $800,000. If client 3 takes a loan of $40 million, Deo will charge a commission of $1.6 million. This is the motivation why AIPF(SI) Ltd would go to any extent to secure higher loan amounts even though a client’s capacity to repay is not guaranteed.
- Who approves and regulates AIPF’s commission rate of four percent of gross approved loan amount? For financial institutions such as BSP Bank, their interest rates are regulated and approved by CBSI.
- What is the commission fee for?
- Why is the Commission rate not standardized, but instead dependent on the gross value of the approved loan?
- Why charge a commission fee when a service fee is already charged to customers? As per AIPF’s own rules, their loan brokering, capital raising, and administrative support are recognised as a service and should be included in the service fee charged.
- Does AIPF(SI) Ltd pay relevant taxes for this four percent commission they have collected from numerous clients over the past 5-8 years?
Under clause 4 of the Declaration & Instruction to Act form, the service fees will become due on completion of the required tasks.
Clients are obligated to pay such fees when they fall due. If the client is late to meet the said payment, a default penalty of seven percent of the gross fees shall apply; followed by monthly accruing interest rate of three percent until such full payment is received.
Further to that, if service fee of $100,000 and default on the payment of fees for six months; taking into account the default penalty of 7% of gross fees and monthly accruing interest rate of 3%; below will be the situation:
M1: $100,000 + (7% of $100,000 = $7,000) = $107,000
M2: $107,000 + (3% of $107,000 = $3210) = $110,210
M3: $110,210 + (3% of $110,210 = $3306.30) = $113,516.30
M4: 113,516.30 + (3% of $113,516.30 = $3405.49) = $116,921.80
M5: $116,921.80 + (3% of $116,921.80 = $3507.65) = $120,429.45
M6: $120,429.45 + (3% of $120,429.45 = $3612.88) = $124,042.33
In a matter of six months of late payment, a client would be liable to pay an additional $24,042.33 on top of the charged service fee of $100,000. If the service fee is $200,000 then a late payment after 6 months will mean a client is liable to pay AIPF(SI) Ltd an additional interest of almost $50,000.
- Why is 10% interest charged to a service provided, at a constant price? Unlike lending money where interest is being charged, service already provided against quoted price and invoice should not be charged a monthly accruing interest rate. This basically implies that the value of the service keeps on increasing by 3% every month, in addition to the 7% default penalty. This is ridiculously insane and basically another form of scam such as One Link etc.
- Who gave the approval for AIPF(SI) Ltd and which law allowed Deo (a foreign investor) to charge a monthly accruing interest rate on its services?
- How was the 7% default penalty derived and why is it very high?
- Does AIPF pay tax for the extra default penalty and interest which would not be recorded in receipts paid to third parties for their service?
- Who collects the total interest on the service fee, AIPF or the third party?
Lastly, in clause 5 of the Declaration & Instruction to Act form, clients must sign the drawdown instructions to the lender (BSP Bank) to pay AIPF fees and any other refundable amount on the first drawdown.
“Construction management” is listed by AIPF as a service and so a service fee is chargeable.
“In specific examples where construction management was also done by a company owned by Deo’s defacto and AIPF business partner, why should this specific service fee be paid directly to AIPF or its preferred construction firm by the bank on the first drawdown, instead of installments after successful completion of key milestones or phases of the construction?
“What rights do customers have to claim back any portion of the construction management service fee if the project is not complete or done properly?” Leeson asked.