Basel is a quite, lovely medium-size Swiss city located where the Swiss, German and French borders meet with it's suburbs extending in the three countries. The Basel Committee is an international body based in Base,l responsible for regulating the banking system worldwide through proper supervision. The Lamborghini is an expensive luxury Italian sports car with a starting price of USD300,000.
The Basel committee has issued 3 accords, Basel I, Basel II and Basel III, all meant to help central banks across the world better manage and supervise their respective banking systems and keep it sound and safe. If you read all three accords you will never come across the name Lamborghini, and you would not expect it simply because this committee is looking after banks not cars.
If that what you think, you could be wrong. There is a link. A strong rumor in a Middle Eastern country among some bankers in this country talks about a senior corporate banking officer in one of the banks who was sacked after a series of defaults in his lending portfolio. The rumor that it is said by people who are close to him that there are 7 Lamborghini cars parked in his his get-away farm at the time he was sacked.
Regardless of the truth of the rumor, though it's strong and no smoke without fire, the point is despite the heavy details in Basel accords regarding supervising banks, there is little in all Basel accords about protecting the banking system against it's own corrupt executives. One might say but the rules, internal controls and authority matrices in place are all meant to fight corruption in banks. Yes, but they stopped short or shy of explicitly stating the potential crime and the severe action against it.
Banks also are not required to question the lending officers , put them under surveillance or suspend them if a large borrower default s. There has been many frauds and defaults that hurt the banks dearly but Management try to work it out outside the legal system avoiding any escalation that might enclave them.
Yes it will not be easy ,sometimes, to tell the difference between poor judgment and corrupt one, but this should not mean we let corrupt bank executives get away with it even if what they get is a Lamborghini delivered to the get-away farm after midnight.
Hamad S Alomar
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