Business community has welcomed the new law that will crack down on check fraud in the country with jail terms and public exposure. The new law comes as the courts in the Kingdom are currently considering 12,000 cases of potentially bad checks issued across the country over the past three years, to the tune of a staggering SR10 billion. A further 6,000 cases still have to be resolved by various bureaus tasked with settling commercial disputes. An informed source believes that of the 12,000 court cases still pending, 30 percent should have already been resolved by the Jeddah courts. The source said that in one case involving a real estate deal, a man issued a bad check amounting to SR3 billion. He is currently serving a jail sentence in Jeddah General Prison. Abdulrahman Bin Rashid Al-Rashid, Chairman of the Board of Directors of the Chamber of Commerce and Industry in the Eastern Province, said the decision made by the Council of Ministers this week to crack down on the problem with penalties of jail terms will help to restore the credibility of the check system in the country. Al-Rashid was referring to a Cabinet statement Monday that ordered the imprisonment of anyone found guilty of issuing a bad check and to have their names published in local newspapers. All such acts are to be investigated by the Commission for Investigation and Prosecution (CIP) before being referred back to the authority concerned for a final ruling. The relevant authority is to resolve disputes within 30 days. The Saudi Arabian Monetary Authority (SAMA) is also to introduce procedures for the prompt issuing of objection papers by banks when unable to cash checks. Article 118 of the Commercial Papers Law No. 37 issued in 1964, stipulates that any person who is found guilty of issuing a bad check or who draws a check that does not belong to him or her shall be sentenced to either three years in prison, a fine of SR50,000 or both. Crown Prince Sultan Bin Abdul Aziz, Deputy Prime Minister, Defense and Aviation Minister and Inspector General will amend Article 118 which will bring into law the new penalties for those found guilty. Meanwhile, a source at the Ministry of Commerce has declared illegal the practice of some companies, which market their products in installments, to have customers sign checks as a guarantee for the entire value of the products. A ministry source said that the legal definition of a check is a written order instructing a bank to pay a sum of money to a designated person. “By doing this, they change the legal status of the check into a mere guarantee document. This strips the check of the legal purpose for which it was created,” the source said.
