The National Bank of Ethiopia and the Federal Police Commission are to investigate the country's commercial banks to detect the extent of frauds using forged travelers cheques. Repeated frauds to withdraw dollars from different commercial banks using forged cheques have prompted the two institutions to investigate the scams and to work out possible preventative strategies, a source from the police commission said.

Police detained two individuals in February allegedly trying to withdraw close to four million dollars from the Commercial Bank of Ethiopia. A foreigner was also detained in September, 2009 while trying to withdraw 12 amounts of 500 dollars from the same bank using a forged travelers cheque, according to the source.

Ethiopians' involvement in the fraud is one of the factors that led the institutions to the new investigation of all commercial banks, said the source. According to him, banks are required to show travelers cheques they have received and made a payment on over the last year.

The investigation is expected to reveal if any other fraudulent cheques have been cashed within the last year and to trace the source and place of the forgery, he said.
The fraud is a particular problem given the serious foreign currency shortage. Currently, NBE has stocked 1.7 billion dollars in reserve, which can support approximately 1.8 months of the country's imports.

Due to this fact, importers have a serious challenge in obtaining letters of credit and even Ethiopian travelers to foreign countries are forced to buy foreign currency from the black market.

The foreign reserve shortage has also created an opportunity for corrupt dealing between importers and bankers. Awash Bank recently suspended some employees in relation with an alleged offense of asking for a kickback from customers who approached the bank to open a letter of credit.

Currently, a committee of the bank is undertaking an investigation in preparation for legal action.

Source: CapitalEthiopia