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Peru comptroller office finds irregularities in Agrobanco loans


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Peru comptroller office finds irregularities in Agrobanco loans

An audit by the Peruvian comptroller's office on credits granted by Banco Agropecuario, or Agrobanco, has revealed irregularities in the said operations, and thus recommends administrative actions against the officials and employees involved, Gestión reported.

The comptroller's office presented two observations from the audit, which covered the period from January 2013 to December 2016. The first one, which concerns a proposed credit for the expansion of a packing plant, reveals that Agrobanco officials and staff evaluated the client's payment capacity based on an unsupported cash flow.

"The facts exposed violated the regulation of credit risk management, the regulation for the evaluation and classification of the debtor, among others," the comptroller's office noted, as it denounced a "negligent performance of the staff."

Meanwhile, a second finding on two other credit proposals discloses that their evaluation considered cash flows with inconsistencies and no support. It also did not look into possible financing guarantees for the loans, among other situations, the audit said.

Despite the omissions, credit lines worth $14.5 million were approved, "transgressing the levels of autonomy and maximum individual exposure limits of Agrobanco," according to the audit.

Due to the findings, Agrobanco's institutional control body recommended the initiation of administrative actions for the termination of the officials' and employees' responsibilities. Civil actions against the officials and control mechanisms to verify various processes in the bank were also recommended.

Peru's Congress is already looking into alleged crimes committed in the granting of Agrobanco's loans. The bank is battling a severely deteriorated loan portfolio after years of what politicians and regulators alike have described as lackluster risk management control.