Q&A – 12 September 2016
Systematic fraud in bank account
I trade in second hand clothing in Dar es Salaam. Since late 2009, there has been systematic monthly debits of amounts in my bank account. These went unnoticed because of the high volume of transactions and the amounts that were debited which were exactly the same as the amounts which we were depositing on certain days which led our accountant to believe that these were normal bank reverse transactions which would then again be re-reversed. After we went for audit, we realized the fraud and demanded that the bank refund the funds. The bank has also refused to give us copies of the cheques that were used to transfer these fraudulent amounts; informally we however managed to get these cheques and it is quite apparent that the signatures are distinguishable. Our lawyers seem to indicate that since the bank has clearly written on its statements that any claims against it should be made within 30 days, and since we have not claimed until recently, we don’t stand a good chance against the bank. What should we do?
BD, Dar
You have employed a very weak and slippery accountant, perhaps not an accountant at all. The concept of debits and credits is the first concept that one learns when he or she enters accounting school. We are not sure how your accountant thought that a debit was a reversing entry that would subsequently be re-reversed, and not check that it had been re-reversed. The qualifications and efficiency of your accountant is not the subject matter of this question but we found it prudent to raise.
Back to your question. Banks offer a service which is to honour their customer’s cheques when drawn upon an account in credit or within an agreed overdraft limit. If the bank pays out cheques which are not the account holders, they are acting outside their mandate and cannot plead the account holders authority in justification of their debit to the account.
The general rule is that in the absence of fraud by the account holder, the risk of payment on forged cheques is on the bank. In your instance, the issue is that the bank has limited its exposure to 30 days after which the bank does not want to be held liable for such frauds. This is a self imposed period, not a statutory period, within which an account holder is required to get back to the bank. It seems like the fraud in your account has been going on for many months and that your accountant has been quite unprofessional and negligent in reconciling the entries. On the other hand, you can claim that the bank has paid on a totally different signature. The questions still remains- do you get caught out by the 30 days period? This is debateable depending on the facts of each case and there is no direct authority on this. Case law in other countries suggests that the account holder has a very good chance of recovering against the bank. We opine with that and suggest you pursue the bank for your funds. An issue that may crop up is that of vicarious liability; you have also been negligent and the Court may reduce the amounts it awards taking this into account.
You claim the bank is not giving you the cheque leafs that were used in the fraud. The bank owes you a duty to release details relevant to your account. The cheque leafs fall under this category and to demand copies of them is your right. The banks do charge for this, and rightly so, and if that is the case of their denial ie your refusal to pay them to go into their back office and look for the older cheque leafs, then you cannot claim that they are refusing.
A last point. You should also check the forms you filled out when you opened the account. It is there that you entered into a contract with the bank. Whilst most banks in Tanzania give you 30 days to respond to them in case there is any fraud in your bank statement, such 30 days notices are not captured in your agreement and are only printed on the bank statement. If that is the case, it implies it is not a term you had agreed to and this may further assist in strengthening your case against the bank.
Consequence of defective affidavit
We made an application at the High Court where the other party raised an objection on the affidavit we filed. It was a very minor omission in that the affidavit did not show the place and date at which it was sworn. Whilst the application did have merit, the Judge said there was no application before him and did not entertain the matter. What should we do? Is the Judge biased?
OI, Dar
You are undermining the role of an affidavit in pleadings. An affidavit is a declaration of facts that is made voluntarily by the declarant before an officer authorized to administer oaths. The affidavit must be confined to such statements as the declarant is able of his own knowledge to prove but may also contain statements of information and belief with grounds stated thereon.
Apart from the statement declaring the facts, an affidavit also must contain a verification clause, a jurat and signature of the declarant. Without these an affidavit is rendered incurably defective.
In your case, the jurat was defective which is a certification that states when, where and before what authority the affidavit was made. Sadly the absence of the date and place at which the affidavit was sworn hence renders it incurably defective and usually entails in your application to be struck out.
Since there was no application before the Court because there of a defective affidavit, the Judge naturally cannot entertain you. On the facts we do not see how the Judge was biased; we suggest you refile the application in Court.