David was needed in another country and he was unable to attend the second meeting of the CAA Bank. John had no choice but to attend alone for the second meeting. Sam was a minor shareholder of FT Trading Ltd and he held a company director portfolio. David did not want Sam to interfere and wanted John to act on his behalf during his absence. It was at one incidence, one of the property belong to David being sold without his presence by John, entrusted by David under a legal document of Power of Anthony. Generally there were two main categories of Power of Anthony (PA), the general and the specific. He gave John the general PA with no stimulation of time limit and with a clause of until recalled.
CAA Bank, the meeting room, the bank officer started the meeting “Sam is a director but non active, his list of properties most likely unable to cover his other business activities. David is active and locally, he does not have any properties except only some of the share holdings but those companies the share he held are heavily indebted to the banks.” John “I thought David has some properties in foreign country and he has accounts with your bank there” The bank officer refuted “He did not! He just place some fixed deposit to secure overdraft facilities over there!” John had nothing to say and the bank officer continued “John, frankly speaking among the banking circle, you are ok; you are carrying some weight so long it concerns management!”
The determination to granting credit facilities from the banks to their customers, generally there were two criterions. The credit facilities were adequately covered up by the client’s properties. The second, the clients had strong management teams and the bank felt secured that all credit facilities would efficiently utilized and at the end of the day, they would all fully paid, principals and interests.
The bank officer “John, I am and I need to protect my bank interests, properties as security for your case, it is clearly not enough. As for the other, the teams of management criterion, frankly speaking, I do have full trusts to you; you are leading the best teams. I have no doubts about it” He paused and posed a serious question to John “John, let us be frank and please do be fair to me, the way I see, David is the only one expertise in marketing, what happen if something happen to him and he is no more with us? After all he is nearly 70 years old?”
John was fully appreciated the reasoning posed by the bank officer, turning down David credit facilities application was unavoidable. David was a key man of FT Trading Ltd, no David, there won’t be any FT Trading Ltd. Especially those free lane agents, they were David best friends. Acquiring contracts would be an issue, the total market deals were concluded at 80% from the free lane agents.
FT Trading Ltd was still functioning well even without the credit facilities from the bank, the LCs by itself, generating working capital. May be it was such a situation that David was not really taking seriously about the credit facilities application. David called up and John was in the head office at his room “John, the bank rejected our application right?” John “Yes they have their standard procedure to follow” David “Well, we no need their money, we can survive!” John asked “Why don’t you ask Sam for assistance?” David “I know but then he will used it as an bargaining assets in the board meeting” John did not getting more in details as he knew he won’t be able to get the right answer.
Documentary disclosed to John as he was in the position as financial controller. It was once an error of telexing. It was one of the masters LCs in his possession instead of transfer LC from the wrongly telexed master LCs. It was very common practice, using the master LC and transfer out portions of the master LC to a number of transferred LCs to a number of suppliers/manufacturers. John discovered David used the master LC to trap 50% of profit to his other Company at foreign country. The reduced total amount of 50% less of transfer LC forwarded to local FT Trading Ltd which Sam was a minor shareholder and a director.
It was days before salary and wages payout time, John was once again routinely busy to gather all information for the payouts and arrangements for other payments, suppliers and expenses thereafter. It was monthly issues and it must not be anything getting in the way.
John was online to Bob, the bank manager “Bib, I have lodge in for you three LCs, have you process them? It is going to be our payouts days, just in days, round the corner” Bob “Yes Sir, Mr. John your demand is my command, consider they are done!” Finishing his cheeky remarks, he remembered something else and said “John your other proceeds from the earlier LCs, the fund already in your account and waiting for your further instruction”
Excess fund in the account and it was estimated they could be idle in the bank for a few days. It was one of the option that the fund be sent out to the money market and earn a few days interests or the other option of sitting duck earn nothing but for the bank to earn some interests from it. John “OK, how much the rate prevailing now?” Bob “It is a good rate these few days, the money market is having tight liquidity, you could earn up 2% to 3% per annum, I will ask my officer to look out a good rate for you for the next few hours”
Three LCs were submitted by John and he wanted to be financed under the ECR. The fund provided under ECR was from Central bank channel through commercial bank to manufacturers for export products and services only. The interests charged were very low and it was 50% lower than commercial banks rate. The ECR drawdown of the LCs, it was 20% of the total value of the LC and it was cash advances for working capital and it was released immediately when the LC was submitted. 60% of the total value of the LC was for suppliers for the raw material needed for the particular LC. The remaining of the 20% of the total value LC minus all bank interests and charges would only released to the manufacturers when the LC matured and goods were exported and paid by the customers.
Next Topic: The Old Van - Squabbles of the Board
CAA Bank, the meeting room, the bank officer started the meeting “Sam is a director but non active, his list of properties most likely unable to cover his other business activities. David is active and locally, he does not have any properties except only some of the share holdings but those companies the share he held are heavily indebted to the banks.” John “I thought David has some properties in foreign country and he has accounts with your bank there” The bank officer refuted “He did not! He just place some fixed deposit to secure overdraft facilities over there!” John had nothing to say and the bank officer continued “John, frankly speaking among the banking circle, you are ok; you are carrying some weight so long it concerns management!”
The determination to granting credit facilities from the banks to their customers, generally there were two criterions. The credit facilities were adequately covered up by the client’s properties. The second, the clients had strong management teams and the bank felt secured that all credit facilities would efficiently utilized and at the end of the day, they would all fully paid, principals and interests.
The bank officer “John, I am and I need to protect my bank interests, properties as security for your case, it is clearly not enough. As for the other, the teams of management criterion, frankly speaking, I do have full trusts to you; you are leading the best teams. I have no doubts about it” He paused and posed a serious question to John “John, let us be frank and please do be fair to me, the way I see, David is the only one expertise in marketing, what happen if something happen to him and he is no more with us? After all he is nearly 70 years old?”
John was fully appreciated the reasoning posed by the bank officer, turning down David credit facilities application was unavoidable. David was a key man of FT Trading Ltd, no David, there won’t be any FT Trading Ltd. Especially those free lane agents, they were David best friends. Acquiring contracts would be an issue, the total market deals were concluded at 80% from the free lane agents.FT Trading Ltd was still functioning well even without the credit facilities from the bank, the LCs by itself, generating working capital. May be it was such a situation that David was not really taking seriously about the credit facilities application. David called up and John was in the head office at his room “John, the bank rejected our application right?” John “Yes they have their standard procedure to follow” David “Well, we no need their money, we can survive!” John asked “Why don’t you ask Sam for assistance?” David “I know but then he will used it as an bargaining assets in the board meeting” John did not getting more in details as he knew he won’t be able to get the right answer.
Documentary disclosed to John as he was in the position as financial controller. It was once an error of telexing. It was one of the masters LCs in his possession instead of transfer LC from the wrongly telexed master LCs. It was very common practice, using the master LC and transfer out portions of the master LC to a number of transferred LCs to a number of suppliers/manufacturers. John discovered David used the master LC to trap 50% of profit to his other Company at foreign country. The reduced total amount of 50% less of transfer LC forwarded to local FT Trading Ltd which Sam was a minor shareholder and a director.
It was days before salary and wages payout time, John was once again routinely busy to gather all information for the payouts and arrangements for other payments, suppliers and expenses thereafter. It was monthly issues and it must not be anything getting in the way.
John was online to Bob, the bank manager “Bib, I have lodge in for you three LCs, have you process them? It is going to be our payouts days, just in days, round the corner” Bob “Yes Sir, Mr. John your demand is my command, consider they are done!” Finishing his cheeky remarks, he remembered something else and said “John your other proceeds from the earlier LCs, the fund already in your account and waiting for your further instruction”
Excess fund in the account and it was estimated they could be idle in the bank for a few days. It was one of the option that the fund be sent out to the money market and earn a few days interests or the other option of sitting duck earn nothing but for the bank to earn some interests from it. John “OK, how much the rate prevailing now?” Bob “It is a good rate these few days, the money market is having tight liquidity, you could earn up 2% to 3% per annum, I will ask my officer to look out a good rate for you for the next few hours”
Three LCs were submitted by John and he wanted to be financed under the ECR. The fund provided under ECR was from Central bank channel through commercial bank to manufacturers for export products and services only. The interests charged were very low and it was 50% lower than commercial banks rate. The ECR drawdown of the LCs, it was 20% of the total value of the LC and it was cash advances for working capital and it was released immediately when the LC was submitted. 60% of the total value of the LC was for suppliers for the raw material needed for the particular LC. The remaining of the 20% of the total value LC minus all bank interests and charges would only released to the manufacturers when the LC matured and goods were exported and paid by the customers.
Next Topic: The Old Van - Squabbles of the Board
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