A real case of how a bank's internal staff in the loans department made off with over Ugx. 500m in fictitious loan applications and occassioned loss to the bank.
Here is how it was done:
1.This fraud involved several loan officers.
2.They obtained loans through fictitious clients’ accounts.
3.The loan officers would make a fictitious client, complete the loan application documents, and submit to the bank for approval.
Since the fraudulent staff is also the reviewer of the loan application, the loan would be approved. Thereafter, funds would then be advanced or disbursed to the fictitious bank clients. You guessed, small loan amounts were involved; they had no genuine collateral security. The fraudsters were so smart that they would make these applications at up-country branches where majority of the people lack land tittles. So what they would do, is to forge an LC 1 letter, and move around the village take photographs of the farm and house and attach to the loan application!