Russia’s $12B Loan To One Of Africa’s Poorest Countries Was ‘An Accounting Error’

Russia’s $12B Loan To One Of Africa’s Poorest Countries Was ‘An Accounting Error’

Russian state bank VTB assigned a $12 billion loan to the Central African Republic (C.A.R.), before claiming that it was actually an accounting error.

The second largest state-owned bank in Russia blamed a glitch in its accounting software for the mistake, which it said reflected in favor of the C.A.R. instead of its intended recipient, Cyprus, according to FinancialTimes.

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The accounting forms should display the countries where the loans have been made, but the software error meant that the accounts were not linked correctly, causing the confusion, VTB chief financial officer Dmitry Olyunin explained.

The original appearance of a loan of $12 billion being offered to the African country was even more incredible due to the fact that the Central African Republic is one of Africa’s poorest nations.

The country’s entire GDP amounts to around $1.9 billion, according to the World Bank.

accounting error
Russian President Vladimir Putin and Central African Republic President Faustin-Archange Touadera. Image – AP – Mikhail Klimentyev

Since a rebellion in 2013 which overthrew the government after months of civil war, the C.A.R. has struggled to recover.

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An economic collapse and general lawlessness hit the people of the Central African Republic hard, and 80 percent of the territory in the country is still controlled by more than a dozen rebel groups, according to The WashingtonPost.

The U.N. responded to the political and social volatility by banning the sale or transfer of weapons in the country.

The government only controls around a fifth of the country, with the rebels holding power over the rest. The capital of Bangui remains under government control, thanks to U.N. security and peace keeping forces who are assisting the C.A.R. to rebuild the police force and army.

An ‘accounting error’ in favor of an ally

The $12 billion loan amount was suspicious as it would have been more than six times the GDP of the African country.

However, the link between Russia and the C.A.R. was not a surprise, as they have been assisting in rebuilding the country’s army.

The two countries have been building relations for the last year and a half, with C.A.R. President Faustin Touadéra traveling to Russia in October 2017 to sign a series of agreements, according to TheDefencePost.

Since then, Russia has been providing military support to its African ally, and with the blessing of the United Nations, is training its army and providing it with weapons.

Among the agreements signed between the two countries is a deal involving mining exploration, giving Russia access to a wealth of mineral resources in the C.A.R., including vast amounts of diamonds, gold and uranium, according to RFERL.

Russia’s official position is that it is simply trying to assist with restoring peace and stability in C.A.R. Russia stands to get access to vast natural resources from this close relationship. That may be a motivating factor for their involvement in the country.

Following the initial accounting error, VTB released an updated version of its accounts this past week, and the C.A.R. loan had been reassigned to Cyprus, according to FinancialTimes.