Armies of Liberation

The US financial assessment team found efforts to counter money laundering are in their infancy, or non-existent. Parliament is stalling the bill because it will restrict the transfer of charity funds and/or to “legitimate resistance” like Hamas.

SANA’A, July 23 (Saba) – Plans the Yemeni government has taken to fight money laundering and terrorism finance and preventing the establishment of unlicensed currency exchange companies helped revive the currency exchange during the last ten years, a report has said.

The report issued by the Yemen Central Bank noted that the exchange companies number has more than doubled in a decade. This number increased from 210 to 528. The improvement came as the government introduced a new law for combating money laundering and terrorist finance that is yet to be approved by the parliament.

According to the report, the Yemen Central Bank makes it compulsory for exchange companies to present detailed information about their banking services. The bank increased these companies capital to YR 20 million to increase their annual fees to YR 1 million and the individual institutions to YR 150.000.

Numismaster

Yemen has the distinction of being the last sizable nation in the world to issue its own paper money, the first issues of this nation of at least 21 million persons not appearing until 1964. Until fairly recently paper money did not circulate and was not accepted over most of the Arabian Peninsula, and not only Yemen but also Saudi Arabia were very late in issuing their own paper money, the first Saudi notes appearing only in 1953. Well into the 1950s two different trade coins dominated the currency in these countries. One was the gold sovereign weighing 7.98 grams and minted in 22 karat (0.9167 fine) gold. Most of these were minted in Great Britain or in South Africa, but in 1951 Saudi Arabia issued a large number of gold “guineas” that were at par with the British sovereign. The other coin that saw even greater circulation was the Maria Theresa thaler, which had been struck for many years in Austria, always with a frozen date of 1780. These coins each weigh 28.07 grams (about 5 percent more than an American silver dollar) and are struck in 0.833 fine silver. Demand for these coins has sometimes been so great that strikings were occasionally made in mints situated well away from Austria. Typically about a dozen Maria Theresa thalers would have been worth a gold sovereign, but this rate varied a bit depending upon the relative values of gold and silver. In Arabic the thaler is referred to as a riyal or rial, and this is the name used by both Yemen and Saudi Arabia for their currency units.
(Read on …)

Saba

Gulf investors rescue Yemeni bank from bankruptcy

[25 April 2008]

HODEIDAH, April 25 (Saba)- Gulf investors have rescued a Yemeni bank from bankruptcy after an embezzlement of about $5 million by an employee of the bank’s branch in the province of Hodeidah.

Informed sources were quoted by the Saudi al-Eqtesadiah daily as saying that the bank’s management resorted to the Gulf investors to end the impasse in order not to repeat the tragedy of the National Bank of Yemen, which was declared its bankruptcy by the Central Bank of Yemen.

The sources said that the Gulf investors have variable rates of the bank’s capital after its board has been changed.

In Yemen, there are currently over 16 Yemeni, Arab and foreign banks.

19 billionYR is about 100,000,000 US, thats the deposits “lost”.

al-Sahwa

March 29, 2008 – A special penal court issued a decision of releasing the chairman of the Watani Bank, Dr. Ahmed al-Hamdani, on bail of YR one billion. The court headed by Judge Mohammad al-Hakimi also issued a decision of not allowing al-Hamdani to leave the country until his case is completely ended. Al-Hamdani and others are accused of squandering clients’ YR 19 billion in bank deposits.

Yemen Times:

The decision to free Al-Hamdani, who once held several ministerial positions, including minister of Agriculture & Irrigation, was issued on condition that the court resume his case on April 19, 2008. Al-Hamdani was arrested while attempting to flee the country after his bank declared bankruptcy in 2005, the first to do so in Yemen. He was then transferred to court after being charged with deceiving depositors, granting loans to irresponsible contractors and wasting nearly YR 20 billion from depositors’ funds. Similar charges were faced by other Watani bank management members, who were also released on bail.

At the most recent hearing, the prosecution provided a list of 292 debtors to the bank, who gave no guarantees yet they pay the money back. The debtors took loans amounting to YR 132,231,000.

The committee in charge of investigating the bank, after the Central Bank of Yemen (CBY) took control of it in late 2005 when it failed to fulfill its financial obligations, distributed nearly YR 6.5 billion, accounting for 39 percent of the bank’s total debts and deposits, to depositors. The court of appeals’ preliminary section sentenced Al-Hamdani in March 2006 to two years in prison and other management members to eight months each, but the defendants appealed the verdict.

In June 2005, deposits of customers and other banks in Watani bank totaled YR 22,604 million, while contractor debts did not exceed one third of the sum, contrary to the bank’s announcement that unpaid debts resulted in its bankruptcy.

Statistics released by the bank prior to its closure revealed that interest for the first half of 2005 amounted to YR 149 million. 34% is the liquidity rate at the bank, 8.93% is the bank’s capital efficiency rate and 25% is its liquidity rate in the Central Bank of Yemen.

An interesting report, no laws, not one prosecution. The one account closed out of 144 required that I wrote about in 2005 is still the only account closed in 2008. The report was generated from the visit of the FSAT team last year.

US Embassy: UNSCR 1267 Compliance

In response to UNSCR 1267 in September 2003 and the Yemen’s Council of Ministers’ directives,
the CBY has issued a number of circulars (most notably 75304 and 75305) to all banks operating in
Yemen, directing them to freeze the accounts of 144 persons, companies and organizations on the
1267 consolidated list, and to report any findings to the CBY. The CBY has issued updated circulars
to banks after updated 1267 information is passed from the Yemeni Embassy in Washington or
Consulate in New York through the Ministry of Foreign Affairs and is voted on by the Cabinet.
However, it takes approximately one month for the list to be distributed by the Yemeni Embassy in
Washington, D.C., reviewed by various ministries in Yemen, and received by the CBY. The CBY
hand delivers the list to its financial institutions. To date, only one report on a blocked account has
been filed, which was hand-delivered by the bank to the CBY. In addition, Yemen has yet to take
any action against or freeze the assets of Sheikh Abdul Majid Zindani, despite his February 2004
addition to the 1267 list…..

In addition, the FSAT team noted a number of areas of concern that should continue to be monitored. These include: a largely unregulated money exchange service sector including both currency exchange and fund transfer services; limited capacity to monitor and control risks in the NGO sector to terrorist financing and financial fraud; and a non-bank informal banking sector that is in the beginning stages of increasing bank penetration. In addition, there are bureaucratic delays in implementing UNSCR 1267.

Parliament blocked the passage of the new legislation because it would hinder financial support for the Palestinian resistance.

al-Motamar:

The Central Bank of Yemen (CBY) sold $122 million to currency exchangers last week to meet market demand for hard currency, said Ahmed Dameem, Deputy Governor of the CBY. The demand for dollars now exceeds the available supply because Yemen imports nearly 95 percent its food from abroad.

The CBY says it will continue to monitor the market and take necessary action to maintain currency stability, including drawing on its reserves of foreign currencies now exceeding $7 billion from inflated oil prices. However Officials at the CBY are concerned that intervention in hard currency will become a regular event and cause further economic problems for the Riyal.

According to the CBY, they sold $1.077 billion during 2007 to protect the value of the Yemeni riyal, a decrease from $1.122 billion sold in 2006. Dameem defended the action, saying that “selling dollars to the market is a successful way to protect the value of the riyal against hard currencies. This monetary policy has been confirmed as a useful policy by all of the international financial institutions. The value of annual imports to Yemen is around $5.8 billion, which creates a shortage of foreign currency.”

Some economists criticized the intervention as irresponsible saying that the Bank should preserve a low interest rate environment conducive to domestic investment. They claim that this would stimulate an increase in exports and sources of foreign currency income.

Mohammed al-Afandi, chairman of the Yemeni Strategic Studies Institute, explained that the economic policy applied by the bank is faulty because it doesn’t allow for the expansion of the productive capacity of the Yemeni economy. “According to its mandate for preserving exchange rate stability, the Central Bank of Yemen is responsible for correcting that shortage by selling foreign currency on the market,” said Dameem. “Yemen’s foreign currency income is generated predominately by oil revenue, held by the Central Bank.”

Lots of official numbers don’t add up. The CBY on the verge of bancrupcy? And a Watani update:

Yemen Post:

In a statement released last Saturday, the Yemeni Commercial Bank (YCB) announced that its 2007 net profits rose to over YR 1.2 billion instead of YR 933 million in 2006.

The bank added the net profit for each share in 2007 was just YR 273 dropping from 365 achieved in 2006, adding its total assets rose to YR 64 billion against YR 41 billion recorded by the end of 2006.

According to the statement, the customers’ deposits increased to reach YR 51.5 billion by the end of 2007 after they were just YR 35 billion during the same period of 2006. Further, the loan interests rose, accounts and treasury bills rose to YR 2 billion against about YR 2 billion recorded by 2006.

Economists doubted the numbers announced by the YCB owned by businessman Mohammed Ali Al-Royishan, one of the senior importers of wheat and flour. They also stressed it is one of four Yemeni banks on the verge of bankruptcy and also expressed their surprise at the announced figures especially with net profits of depositors. (Read on …)

There are 143 bank accounts in Yemen that were identified by the UN’s 1267 committee in 2003 as associated with terrorist entities. Yemen is obligated to freeze them, and it has not. So what is this, a committee to discuss ways to combat money laundering and terror financing? Or are they going do it already?

Almotamar.net – A government draft law under parliament consideration was approved Monday and stipulates the formation of a national committee for combating money laundering and financing of terror in Yemen. The committee is composed of representatives for the ministries of Finance, Justice, Interior, foreign Affairs, Trade, and the Social Affairs in addition to the National Security Apparatus, , Monitoring and Audition, the Central Bank, Banks society, Investment Authority and the Federation of the Chambers of Commerce and Industry.

The committee is to undertake a number of duties especially related to proposing policies, preparing regulations pertaining to combating the financing of terror and money laundering and facilitation the exchange of information among the parties the committee is composed of.

Yemen Post

Such a move is also prompted by the low state subsidies allocated in 2008 budget and discussed parliament recently. Compared to 2007 budget, the government reduced the subsidies 25 percent with YR 309 billion instead of YR 418 billion in 2007.

Yemen Times

- Yemen’s external debts increases by US$ 341 million

The Central Bank of Yemen has stated that Yemen’s external debt has increased from US$ 5.47 billion in 2006 to US$ 5.811 billion in 2007, with an increase of US$ 341 million, out of which US$ 291 is new loans borrowed from the International Development Agency (IDA). The Central Bank has also stated that the bank’s foreign reserves has increased from US$ 7.545 billion by the end of 2006 to US$ 7.762 billion by the end of 2007.

- Yemen’s crude exports fall by 23 percent in 2007

According to official sources, Yemen’s income from crude oil exports has decreased from US$ 4.013 billion in 2006 to US$ 3.087 billion in 2007, due to a decrease in production of 33 percent. Oil production in 2007 has decreased to 42 million barrels compared to 64 million barrels in 2006.

Yemen Observer

The Parliamentary committee of Commerce and Industry refused an amendment of the trade law presented by the government last Sunday.

The amendment was to be applied to article number 22 of the 2004 Commerce Law, proposing that foreign traders be permitted to trade their commodities freely on the Yemeni markets.

The proposed amendment of this article was presented by the government in response to Parliament’s recommendations following the price hikes of wheat due to the monopoly being practiced by Yemeni wheat traders and brokers.

However, the committee of commerce and industry rejected this amendment after consulting businessmen members of Parliament and other Yemeni businessmen who insisted on keeping the current article that dictates allowing foreign traders to market their commodities to the Yemeni markets only in cooperation with a Yemeni partner.

The government insisted on the amendment of this law so as to meet the criteria of joining the World Trade Organization and to end the monopoly being practiced by some Yemeni businessmen on certain commodities, particularly wheat, sugar, rice and milk.

Saba Bank owned by Islah?

Almotamar.net – The Yemeni Congregation for Reform (Islah) Party had last moth culminated its efforts aimed at hindering the process of development in its adoption and support for anti-national actions by an attack launched by its representatives at the parliament against amendment of the law of Islamic banks and the commercial law.

The two laws which the parliament approved their amendments, and according to economists including some from Islah leaderships are a practical step for giving opportunity to foreign investment to participate in the process of development by breaking the commercial and investment monopoly at the banking sector both the Islamic and the commercial.

At the parliament meeting that discussed the amendment of the Islamic banks law the Islah MPs were changed into advertising boards demonstrating the advantages of the existing Islamic banks specifically Saba Bank that is owned by the Islah party.

The government proposal to the parliament on amending the commercial law for allowing foreign investors to practice trade in Yemen without the condition of a Yemeni partner has also aroused resentment of the Islah MPs who supported the trade and industry committee calling for confining the trade without a Yemeni partner to trading with wheat, flour, rice and sugar.

Thus the Islah party proves to be lacking of any national vision towards many of the major issues related to development and stability and works hard to be a stumbling stone before endeavours for the homeland’s progress.

Saudi Arabia, Russia Yemen’s biggest creditors by far.

Yemen Observer

External Yemeni debt, the debts that Yemen owes to foreign countries, increased to $5.620 billion by the end of July 2007, compared with $5.469 billion at the end of December 2006, according to the official report issued by the Central Bank of Yemen. The amount Yemen currently owes other countries equals some 34 percent of its Gross Domestic Product.

The Central Bank report listed Yemen’s debts to member states of the Paris Club as follows: $1.242 billion to Russia; $233 million to Japan; $99 million to the US; $87 million to France; $24 million to Italy and $26 million to Spain.The Paris Club is an informal group of financial officials from 19 of the world’s richest countries which provides financial services such as debt restructuring, relief and cancellation to indebted countries and their creditors.

The report showed that debt to non-members of the Paris Club is also large, having reached $978 billion. It includes debts of $318 million to the Saudi Fund; $164 million to the Kuwait Fund; $154 million to Kuwait Deposits; $170 million to China; $34 million to Korea; $79 million to Algeria; $35 million to Poland and $17 million to the Iraqi Fund. (Read on …)

Yemen Observer

The Cooperative Agriculture Credit Bank has announced that it will open a new branch in Jeddah, Saudi Arabia. “It is the first branch of the CAC Bank, or any Yemeni bank for that matter, to open outside of Yemen,” said Salah al-Basha, secretary of the CAC bank board.

Al-Basha said that the bank will open the branch once permission has been granted by the Saudi government. “We presented an application through the Yemeni and Saudi High Councils, and it had been proposed on our application to open a new branch in Saudi Arabia.”

“We have received many requests from expatriates there to open a Yemeni bank,” al-Basha said. “Now we are completing the launching procedures and budget of the CAC bank branch according to Saudi laws.”

CAC bank has agreed to open an Islamic bank in Yemen in partnership with the Doha National Bank, according to Hafadh Fakhar Ma’ayad, chairman of CAC regional bank, who added that this move wouldo offer increased credit services to clients and help to develop the national economy.

CAC Bank has branches in all governorates and most Yemeni districts which offer bank services to all citizens.

Cabinet discuses implementation of foreign supplied projects

[20 November 2007]

SANA’A, Nov. 20 (Saba)- Cabinet discussed in its meeting held on Tuesday a report of Ministry of Planning and International Cooperation over level of implementing projects supplied by foreign loans, aid, gifts and donations for the year 2006 and the first half of 2007.

The report shows that during 2006, Yemen has got soft loans for financing development programs and projects with a total value of $ 331 million and funding facilitations worth $ 1.1 billion have been allocated for a number of projects in fields of electricity, roads,agriculture and irrigation and other fields.

The report also pointed out that the total value of the loans Yemen has got during the first half of 2007 estimated at $ 295. 5 million has been allocated to sectors of technical and vocational education, social security, poverty alleviation, constructions, transport, health and agriculture.

It showed that the total value of current loans of different sources is $ 2.902 billion and the used of them are only $1.115 billion.

The cabinet stressed on concerned ministers to have necessary measures for gearing up carrying out hampered projects especially in fields of electricity, public works and roads, environment and water.

YO Treasury bills restrict the developmental role of the banking sector, which the Central Bank of Yemen is trying to apply, according to Dr. Abdullah al-Sanafi, chairman of the Central Organization for Control and Auditing.

Al-Sanafi warned the government against continuing to use treasury bills as a means to maintain economic stability. They have many negative effects on the national economy, in particular, causing the banking sector to neglect its developmental role, especially in terms of investment.

Even though Yemeni monetary policy has achieved many successes in previous years, by maintaining economic stability through a variety of ways— such as buying treasury bills — the cost of these bills is reflected in many economic burdens, such as the high domestic debt, which has become one of the main sources of pressure on the budget, he said. (Read on …)

Yemen Observer:

The government ordered the assets of the Watani Bank debtors to be confiscated last Sunday and their rights to leave the country to be waived.

Prime Minister Ali Mujwar is the official charged to take action against the civil debtors to the Watani Bank, which announced its bankruptcy December 2005. Yesterday Mujwar sent Abdullah al-Olfi to the Minister of Interior, Dr. Rashad al-Alimi and Attorney General, to confiscate the debtors’ properties, freeze their and their relatives’ bank accounts, and publish their names in all media outlets. (Read on …)

Or not so shocking, depending on how you look at it.

Al-Motamar: – An economic report mentioned Wednesday that the total of the unified budget of the commercial and Islamic banks in Yemen has achieved a rise by 2012% last August compared to the same month last year.

The report said the total amount of the unified budget of commercial and Islamic banks rose to 24.7 billion riyals to clime to 187.2 billion riyals last August against a rise of 11.9 billion riyals in July this year.

The report also pointed out that the foreign assets of those banks amounted to 290 billion riyals compared to 278.9 billion riyals, recording a rise by 4% in the compared period. The total reserves of those banks amounted to 2.4 billion riyals by 1.5% until August 2007.

On the other hand the deposit certificates dropped in August to 103.4 billion riyals compared to 107.2 billion riyals last July.

Yemen Observer

Yemen’s foreign currency reserves increased to $7.663 billion the during the third quarter of this year 2007, compared to $7.291 billion during the same period last year, according to an official report issued by the Central Bank of Yemen.

The Central Bank’s balance sheet stood at YR1.587 trillion at the end of September 2007, compared to YR1.486 trillion at the end of September 2006. The banking sector’s net foreign assets increased to YR1.713 trillion at the end of September 2007, compared with YR1.609 trillion at the of September 2006.

The monetary supply increased to YR1.475 trillion in September 2007 compared with YR1.252 trillion in September 2006.

The consolidated balance sheet of Islamic and commercial banks rose to YR1.205 trillion at the end of September 2007 compared with YR980 billion at the end of September 2006. Banks’ external assets rose to YR292 billion at the end of September 2007 compared with YR260 billion at the end of September 2006.

The value of private bank deposits with the CBY also increased to YR969 billion at the end of September 2007, compared with YR949 billion at the end of August2007.

The report stated that the production of government exports of oil fell to $ 2.78 billion (the average price of a barrel of oil was $66) during September 2007, compared with $3.211 billion (with an average price of is $65/barrel) in the same period of 2006. The report said that the cause of this decline was a decline in oil production during January- September 2007 to 31 million barrels, against 49 million barrels during the same period in 2006, a fall of 36 percent.

What a hardship on an already starving people.

Yemen Times: SANA’A, Sept. 26 — A recent report by the Arab Unity Economic Council has stated that inflation in Yemen was ranked the highest among all Arab countries, averaging 15.5 percent during 2006. The Report stated that Yemen is among ten Arab countries which has experienced rapid inflation. However, Yemen’s inflation of 15.5 percent is almost double that of UAE’s inflation of 7.7 percent, which was described as having the second-highest inflation after Yemen. (Read on …)

hmmmm, they are going to rob a bank to get funding to carry out terrorist attacks?

YO:

Security authorities are taking strict precautions to protect official banks and financial companies in Yemen, in the wake of warnings that Al Qaeda or other terrorist groups could attack them in the next couple of weeks, said Deputy Minister of the Interior Mohammed al-Qawsi.

“The ministry has received information about new terrorist attacks that target financial institutions, and has warned all banks and called for increasing security around the bank,” said al-Qawsi.

He added that the terrorist groups are getting ready to carry out a robbery to get funding for their acts. “We enhanced security forces around banks to stand against this,” said al-Qawsi.

The Yemeni Central Bank received a verbal warning from the Ministry of the Interior, stating that there might be an attack against the bank from al-Qaeda, said a source at the YCB, who preferred to remain anonymous.

“The Interior Ministry informed us to increase our security personnel to be ready for any attacks, but we in the Arab Bank take these precautions all the time, and security forces made sure of our security and were satisfied,” said Nasser Ghazi of the Arab Bank

”We have gotten used to taking the statements and the threats of al-Qaeda seriously. They are known to do whatever they said, in spite of the security cautions the governments took, such as what happened in the USA, Britain, and Spain,” said Mohammed Abu-Khalid, a political analyst.

There are two explanations for why Al Qaeda publishes threats before taking real action to hack into the accounts of the banks, said Abu-Khalid. “The first one is to distract the government from their real goal. It may be the banks are not their real goal. The other explanation is that Al Qaeda wants to make a statement that it comes back to Yemen so powerfully, more than before. Also, it is able to penetrate all the security procedures that the authorities might take.”

The Counter Terrorism Unit still continues its investigation of the perpetrators of the terrorist attacks that took place last Month in Mareb, which killed two Yemenis and eight Spaniards, said sources in Abyan.

There is a campaign to look for the terrorists in the rural villages, using the military helicopters, said security sources.

To further increase security, the Minster of the Interior started enforcing the new law banning weapon-carrying in Sana’a and in the main cities, which was issued last Thursday.

“We have taken 890 pieces of weapons, most of which are Kalashnikovs. Four hundreds were caught in Sana’a,” said al-Qawsi. The detained weapons will be referred to the judiciary to determine their destiny, he said.

Only certain people identified in the law are allowed to take bodyguards with their own hand guns. “But if those bodyguards are caught with guns while they are not during their missions, they will be jailed and their guns will be confiscated,” said al-Qawsi.

“Some 69 percent of the crimes in the cities are due to weapon carrying,” said al-Qawsi, “And the reasons for the killing are stupid, but because people uses guns, murders happen.”

Almotamar.net – Judicial source said Friday the appeals section at the Specialised Criminal Court has fixed Saturday a date for holding the first sitting for trying chairman and members of the Watani Bank board of directors.

The source clarified to almotamar.net that the general prosecution appealed the preliminary verdict passed on 13 of last March as the punishment was not proportionate to what is stipulated in the law, demanding for inflicting the severest punishments in the case of embezzlement and betrayal of trust by chairman and members of the bank board of directors and facilitation for themselves and others control on money and savings of contributors and depositors estimated at more than YR19 million.

The first instance section in Sana’a under chairmanship of Judge Najib al-Qadiri issued its verdict on 13 March 2007 against the defendants with imprisonment of the first accrued in the bank embezzlement case Ahmed Ali Hamoud al-Hamdani for two years and he would be responsible for loans and facilities granted without guarantees.

The verdict also included the imprisonment of four other defendants in the case for eight months each and gave one year imprisonment to other three of the condemned in the case.

The prosecution has accused 11 defendants, 9 of whom from the board of directors of the bank, charging them with betraying trust and facilitating for themselves and others putting their hands on funds of the Watani Bank for Trade and Investment. Those funds were from savings of contributors and depositors and were estimated at more than YR 19million.

Yemen Observer

Yemen’s dependence on oil revenue to balance the demand and supply of hard currency in the market poses a grave danger to the Yemeni riyal, say economic experts. This dependence could destroy the value of the riyal against foreign currencies. The policy of the Central Bank of Yemen to protect the value of Yemeni riyal, which involves selling oil revenue to the market, is the only way the government has to defend Yemen’s currency, which is very hazardous, said the experts.

“It is a big error if the government depends on the reserves of oil to protect the value of the riyal, especially when we know that Yemen’s oil production declines from day to day, as officials have said,” said Professor, Taha al-Fosail, an economist at Sana’a University. “The bank pumped more than $200 million into the market to save the riyal’s value against other hard currencies during the last two months,” said Dr. Mohammed al-Maitami, the Executive Director of General Union of Chamber of Commerce. (Read on …)