Advertisement

Oracle Corporation’s Flexicube core banking system has been compromised in Zimbabwe in a scandal that has rocked the country’s financial services sector.

28 employees of Nedbank Zimbabwe – a local unit of Nedbank Group of South Africa – have been arrested for allegedly swindling the bank of around US$1,1 million through an elaborate scheme of swopping depositors’ United States dollar bank balances with electronic money.

Court documents show that the culprits manipulated Oracle’s software.

“During the period extending from 15 October 2018 to 9 March 2019, the accused used Denomination Exchange Platform in the Flexicube core banking system, which is designed for exchange of similar currencies only, that is to say, they put in bond cash inflows and took out US dollars cash, thereby prejudicing the bank of foreign currency and as a result of the accused’s actions, the complainant suffered an actual prejudice of US$1 119 974 and nothing was recovered,” reads part of the papers.

The forex scandal, which could be sector-wide, could be one of the factors fueling the country’s illegal foreign currency market as it is believed that the Nedbank tellers traded the ill-gotten forex on the parallel market while pocketing the difference because at the time Zimbabwe had a peg on its fiat local currency to the US dollar of 1:1, while trades on the black market were at a rate of between 3,5 to 4.

Government discarded the peg at the end of February 2019.

Indications are that the scandal occurred in the six months period between October 15, 2018 and March 9 this year.

The scandal is likely to have greater negative consequences for the country’s banking system than Oracle Corporation as the latter has a disclaimer clause over inappropriate use of its software.

Zimbabwe’s banking sector has over the last decades been blighted by a number of scandals, which has lowered public trust in the sector.

Corruption in the local financial services sector has appeared in many scandals involving money laundering, funds misappropriation, rate rigging and wrong lending practices.

The latest scandal will worst affect initiatives by the Reserve Bank of Zimbabwe (RBZ) to encourage the public to deposit US dollars in Nostro Foreign Currency Accounts (FCAs).

In 2018, the RBZ directed financial institutions to separate Nostro FCAs from RTGS (Real-Time Gross Settlement) accounts last year, with Nostro FCA balances currently hitting circa US$700 million from $130 million in mid-October last year.

But with the monetary authorities having introduced an inter-bank foreign currency trading platform in February, banks have been struggling to meet industry and individuals’ foreign currency requirements.

Leave a Reply

Your email address will not be published. Required fields are marked *