By Tanu Jalloh
This piece is inspired by the trouble that has bedevilled the Peruvian economy in the last decades and how huge that hollowness has cost one of Latin America’s fast-growing economies.
The country is still a hub of the global cocaine trade and has obviously emerged as a producer of counterfeit US dollars being used across the world. It was recently tagged as the world's leading producer of forged money, after £ 21 million in fakes were seized between 2009 and 2010 alone.
INTERPOL, the world’s largest international police organisation with 190 member countries, has established that the crime of counterfeiting currency is as old as the creation of money itself. But recent developments in photographic, computer and printing technologies, along with the availability of low-cost equipment, have made the production of
counterfeit money relatively easy. Criminals often use stolen or fake identity documents in order to carry out such financial crimes.
In Sierra Leone forgery of any legal tender is a crime under the new Bank of Sierra Leone Act 2011. Section 31 (1) states that a person who - (a) falsely makes, forges, counterfeits or alters a bank note or coin that is legal tender, whether in Sierra Leone or abroad, or any cheque, security or payment card, whether denominated in Leones or in another currency; (b) possesses, transports or issues any banknote, coin, cheque, security or payment card with the knowledge that it was falsely made, forged, counterfeited or altered; (c) or manufactures, possesses or transports any plate, stone, paper, die or other object or substance knowing that it was destined to be used in falsely making, forging, counterfeiting or altering a bank note, coin, cheque, security or payment card, commits an offence and is liable on
conviction to a fine not less than one hundred million leones or to a term of imprisonment not less than five years.
(2) Banknotes and coins presented to financial institutions denominated in legal tender, whether in Sierra Leone or abroad, which are suspected to be forgeries or counterfeits, when at licensed banks and other financial institutions and other entities authorized to carry out exchange operations within the scope of their activity, shall be withheld and
forthwith sent to the authorities appointed and in compliance with any other relevant regulation of the Bank.
(3) The Bank shall seize all notes presented to it which are suspected to be counterfeited, forged or changed in value, and shall draw up a writ with the identification of the notes, their bearer, and the Bank's grounds for suspicion.
(4) The Bank may resort directly to any authority or agent for the purposes envisaged in this section.
But in a country where an army of US Dollars and Pound Sterling hawking jobless men guard the streets all day in search of customers, it should be feared that counterfeiters might just show up as street dollar traders to finish up some fakes, swapping notes for lots of real smaller-denomination dollars. Apart from bank auctions, no official data can confirm the amount of foreign exchange on the ever growing black market. Thus, it seems no amount of official control could surmount their rise in number. While it stands out as one of the post-war self-reliant commercial engagements for youths, it could be very vulnerable to such crimes as counterfeiting or forgery and money laundering.
Meanwhile Section 33 of the Bank of Sierra Leone Act 2011 states: The Bank shall assist in the enforcement of any enactment relating to the counterfeiting of the currency of Sierra Leone or any foreign currency; and a certificate of a duly authorised officer of the Bank that a document or token in question is or is not a genuine note or coin shall be
prima facie evidence of the fact in any judicial proceeding in Sierra Leone.
The above section is not unequivocal on who enforces the law relating to counterfeiting. Apparently insinuating that such a responsibility is with the police, the Bank, though with supervisory role of the financial sector, essentially only assists. Thus the latter could be tempted to play a very minimal role in preventing forgery. What it does instead could be to help with technical details in the event the police swooped on suspected counterfeiters and charged them to court.
My argument is that while we are at liberty to doubt the law enforcement agencies in fighting financial crimes, prevention systems could pay off. Such crimes are better prevented than fought.
How could forged money or counterfeiting be prevented? I have got some ideas, almost all of them seem to have been tried and tested but very superficially. For example when there was need to pay a huge and undisclosed sum of money to De La Rue to print the new resized bank notes, what did the country’s financial sector regulator do to
ensure such imminent dangers of counterfeiting and related financial crimes were minimised?
Granted that Thomas De La Rue International, a British security printing, papermaking and cash handling systems company headquartered in Basingstoke, Hampshire is a reputable firm with printing technology for over 150 national currencies. But like the Kenyan Transport Minister, Amos Kimunya, who in April 2012 questioned a 2007 De La Rue contract with his government after he felt the business was bad for their country, Sierra Leone's Finance Minister, Dr Samura Kamara was supposed to have told us some of the due diligence he took while investing on the country’s behalf.
In Kenya the minister defended the decision to cancel a currency-printing contract that had been awarded to De La Rue saying it was “disastrous”.
Testifying before the parliamentary Public Accounts Committee, Kimunya who was the finance minister at the time, said the contract design was so poor that it was deemed not to be in the interest of the country. The cancellation
of the $ 51 million tender to print 1.7 billion of new design notes for Kenya has been a major focal point for the committee which wanted to establish if taxpayers lost money when government opted to continue with the printing of old-generation bank notes.
Based on discussions he said he had held with the then acting governor of the Central Bank of Kenya, Jacinta Mwatela, Kimunya said he realised the deal was poorly thought out. The opposite dwells here in Sierra Leone. Even without due recourse to the adverse effects counterfeiting has had on the economy before the advent of the resized notes, the central bank went ahead to conduct bad business on the country’s behalf again. Let’s forget about how much was spent to print the new notes and how much in fact was printed; did the Bank Governor Dr Sheku Sambadeen Sesay and Finance Minister Dr Samura Kamara make any serious comparison to reach a sound judgement in terms of security features like durability, handiness, colour and texture and watermark of the new banknotes? The
new notes were launched on May 14, 2010 and just twelve days later a man was arrested with Le 130,000 of fake Le10,000 notes, suggesting that there were already fakes in circulation even before the resized bank notes were formally circulated.
On the occasion of the launch of the new family of resized banknotes at the Bank of Sierra Leone Staff Recreation Complex in Freetown, Dr Kamara told President Ernest Bai Koroma that “…it is a very important event in the financial history of any country to revise its currency system. New currencies are launched for various compelling reasons: to prevent the threat of counterfeiting, to save on production or issuing costs; to replace national currencies as in the case of membership in a single currency arrangement; in the event of a serious raid on the central bank; as a means of asserting sovereignty in the case of newly created states.” Interestingly, this is what the President said before he officially launched the banknotes: “Regrettably, the handling of our national currency has been poor raising great concern not only to the Bank but also to the entire nation. This has entailed high costs in replacement printing of soiled and mutilated notes. The national currency has also been subjected to increased counterfeiting particularly the Le5, 000 and Le10, 000 notes. I am convinced however, that the launching of these new notes will go a long way towards addressing these concerns.”
So when the finance minister went on to say that the currency would provide for greater efficiency in currency management, he was not being thorough. He knew that currency counterfeiting techniques had developed and grown as technology had scaled up. He also openly admitted that such a change was driven by economic and operational reasons, but he was wrong to have added that it was “therefore being given very serious scientific and sophisticated thought.” His judgement, obviously, was not informed by serious scientific and sophisticated thought.
See you next week.
