Fraud in Agricultural Development Bank

PANAMA’S Agricultural Development Bank (BDA) is the latest entity of the previous government to come under scrutiny with audits exposing overruns on land purchase, embezzlement and unsecured receivables.
After nearly six months of the administration of President Juan Carlos Varela irregularities were detected in granting loans by the state bank.

 La Prensa reports that research reveals the purchase of overvalued properties such as the acquisition of a property in the province of Chiriqui which was obtained for a $1 million dollars. Three months later, the BDA did an appraisal: its actual cost was $350,000
The granting and repayment of loans in Chepo, Panama have also been investigated. Producers paid their loans, but they were never recorded.
“When the producer paid their share of the loan, the money was diverted to a private account that belonged to bank officials” says Ricardo Solis, the new CEO of the bank.
The diversion of $150,000 was detected, but given the lack of administrative controls it is possible that amount was exceeded.
In the province of Los Santos a loan of $5 million was disbursed with the loan repayment coming from the selling of the future harvest. Seeding was not done but funding was not canceled, said Solis
“All this happened because they did not go to the fields to verify the crops or agricultural activity for which funding was requested,” the official said.
Another anomaly revealed by audits was bribes to expedite the disbursement of loans. 28 cases were detected, and the officers involved were dismissed from the bank. They are under investigation by the competent authorities, Solis said.
Atthe bank, a procedure that can be done in three steps, became nine. “We found 2012 appropriations that had not yet been approved.”
Until last July, when the Varela administration began, only $12 million had been loaned. In the subsequent three months signatures were streamlined and $9 million was disbursed.
Research continues, says Solis, and “it is expected that in the first quarter of 2015 the exact numbers of frauds and the names of those involved will be known.
The BDA managed a budget of $89 million in 2014. Of the $40 million earmarked for loans only $21 million were disbursed.
The portfolio receivables totaled $22 million.
The main cause of the decline in credit disbursement, according to producers, was the “bureaucracy that previously reigned in the state financial institution”.
Solis recognizes this failure, and the short-term goal is to reduce the disbursement of funding to a maximum of 30 days. Until recently loans lingered between two years and a minimum of nine months.

In fiscal year 2015, the BDA will have a budget of $72 million. Of this total, $36 million will be used to fund agricultural, livestock programs, agro credits and agrotourism of micro, small and medium producers.
The rest will be used for operating expenses, improvement of 34 branches, buying vehicles and office equipment.
The the BDA’s leading loan portfolio is the livestock sector, followed by agriculture. The rest of the funding is distributed in other activities, including fishing, purchase of machinery and infrastructure.
The state bank lends at an interest rate of 0% for certain crops and dairy farming. The rest pay 2% interest, but many producers prefer to go to private banks where interest rates are between 3% and 4%, but the process is more expeditious.
Planting cycles do not wait, and to get loans on time is crucial