JEDDAH, 11 March 2004 — The Ministry of Commerce and Industry has estimated that in one year in Jeddah some SR544 million in checks and promissory notes were worthless. The bad checks have caused annual losses of SR1.5 billion.
A committee responsible for trade disputes has investigated 2,158 checks and unpaid bills worth SR200 million, a report published in Al-Eqtisadiah daily said on Tuesday, quoting Muhammad Ateek Al-Harbi, director of the ministry’s office here.
“People giving bad checks have been fined a total of SR633,000,” Harbi said. The committee still must rule on the remaining disputes valued at SR344 million.
“This shows that some big fish have escaped the enforcement authority’s net,” an official at the Jeddah Chamber of Commerce and Industry said yesterday. Harbi warned that the ministry would prosecute anyone issuing dud checks in accordance with the Trade Bills Law. Under Article 118, individuals responsible for bad checks are liable to be sentenced to three years in jail and fined up to SR50,000.
Dr. Said Al-Shaikh, chief economist at the National Commercial Bank, said the enormous sum involved in the bad checks indicated how little respect people gave to checks. “A check is a legal authorization, and the facts from the ministry show that the check enjoys no respect at all,” he said.
“Obviously, the public opinion is that the enforcing authorities are not penalizing the defaulters who end up going scot-free. This jeopardizes the practice of using checks and honest people will become wary of accepting them as modes of payment,” he explained.
The Saudi Arabian Monetary Agency (SAMA) controls the system for dealing with bad checks, a Saudi British Bank spokesman said. Representatives of banks who meet regularly at the SAMA clearing house take stock of the checks and forward them for further investigation to the appropriate authorities. According to SAMA regulations, the bank accounts of those who give bad checks are canceled and the individuals penalized.
Faisal Bataweel, in charge of PR at the Jeddah Chamber of Commerce and Industry, said the chamber had a committee to deal with issues related to banking and financial transactions. The chamber has also conducted regular studies on economic issues confronting the business community. It coordinates with local banks to curb banking malpractices including the subject of bad checks.
There is a standard practice for dealing with bad checks. The person or firm receiving a bad check complains to the chamber of commerce which in turn takes up the matter with the drawer of the check and tries to settle the matter. “If this effort fails, then the aggrieved party complains to the police and further action is taken with the cooperation of SAMA,” a company general manager said.
In practice this does not happen. Complaints are not lodged with the police unless the amount involved is very large. “The person or firm receiving a bad check shows patience in dealing with the matter individually without complaining to the police. He does this to protect his business contacts and future deals,” he explained.
