Angry MPs passed recommendations calling on the Assembly’s Budgets Committee to investigate allegations that some officials made such illegal profits.
But they eventually passed their budgets for 2007/2008. CBK came under fire for its policy on consumer loans, saying it failed to act promptly to stop local commercial banks from exploiting debtors, which resulted in aggravating the debt problem.
They also alleged that some CBK officials of establishing investment companies under the names of their relatives and that they misused their relationships with local banks to obtain loans to build malls.
They also charged that there was a "conflict of interests" between some CBK officials and a number of money exchange and investment companies. Finance Minister Bader Mishari Al-Humaidhi welcomed the formation of a committee to probe the allegations.
CBK Governor Sheikh Salem Abdulaziz Al-Sabah however stressed that CBK has taken a number of punitive measures against some of the commercial banks and investment companies. He said that between 2001 and June, CBK has taken 275 measures against those institutions that ranged from cautions to fines.
Since the middle of 2004, CBK has collected some KD. 2.3 million in fines from commercial banks and investment companies for a number of violations. Commercial banks paid from their accounts KD 18.5 million to rectify "certain (illegal) practices" it committed since the start of the year, he said.
Sheikh Salem said that local commercial banks have taken legal measures against only 8,000 loans which means that the number of debtors facing difficulty repaying is very small. MPs however praised the bank’s shrewd monetary policies, especially its recent decision of pegging the dinar against a basket of currencies after four years of pegging it to the US dollar.
They said the decision will safeguard the national currency’s purchasing power and help stabilize the country’s economy. Regarding KIA, which is managing state assets exceeding $ 200 billion, MPs criticized the authority’s investment policies and charged that its director Bader Al-Saad has benefited one of his relatives through one of the KIA-held funds. Saad strongly denied the accusation and other charges. He said KIA has made huge profits during the past four years. These amounted to KD 16 billion for the Reserve Fund for Future Generations (RFFG) and KD 8 billion for the State reserves.
He also denied that KIA had incurred losses through the difference in currency exchange rates and stressed that KIA achieved a net profit of KD 1.5 billion in this field. MPs passed a recommendation calling on KIA not to use liquor in its hotels and resorts outside of Kuwait.
