OFFSHORE FINANCING: NIGERIAN BUSINESSES FUNDED THROUGH US EX-IM BANK

Ex-Im Bank offers a range of financing solutions for Nigerian buyers as part of the US Government programme to expand trade between the United States and sub-Saharan African countries. These programmes offer Nigerian businesses increased access to working capital, while protecting their United States’ suppliers against commercial and political risk, and the ability to offer financing on competitive terms.

Using Ex-Im Bank’s medium-term insurance policy, RZB Finance LLC insured the sale of newspaper printing press equipment worth $2.8 million. This deal allowed Vanguard Media Ltd of Nigeria to purchase the equipment from Webleader International Inc.  Fidelity Bank in Nigeria guaranteed the transaction.

Impex of Doral, Inc. located in Miami, Florida, was able to sell disposable products valued at $100,000 to its customer, Everyday Supermarket Ltd of Nigeria. A multi-buyer, small business insurance policy was approved in April, 2006 by Ex-Im Bank in order to support this transaction.

Via a bank letter of credit policy, Sovereign Bank of Boston, Massachusetts was able to accept a letter of credit from First City Monument Bank Plc of Nigeria on behalf of Balog Technologies, Nigeria for the purchase of computer components and peripherals.  This transaction, approved in April, 2006, supported this sale valued at $250,000 by Max Group Corp. headquartered in Los Angeles, California and ASI Corp of Fremont, California who supplied the equipment.

DWD International Ltd of Houston, Texas through the use of Ex-Im Bank’s multi-buyer, small business insurance product was able to execute a deal with its customer, Intercontinental Bank, Plc of Nigeria.   This transaction, approved in April, 2006, supported the sale of an air conditioning system valued at $250,000.

Through Ex-Im Bank’s letter of credit policy, Sovereign Bank of Boston, Massachusetts was able to accept a letter of credit from Intercontinental Bank of Nigeria.  This allowed the sale of a dredge valued at $593,000, from Baltimore Dredges, located in Baltimore, Maryland to its customer, Dynamic Energy and Marine in Nigeria.  This transaction was approved in May, 2006.

Via an Ex-Im Bank multi-buyer, small business insurance policy, House of Cheatham located in Stone Mountain, Georgia, was able to sell $100,000 of health and beauty aids to CITEX Holdings Ltd of Nigeria.   This transaction was approved in May, 2006.

Ex-Im Bank approved a request from Sovereign Bank, Boston, MA, for a five-year, medium-term guarantee in the amount of $5,000,000 to support the sale of transportation equipment to Sonic Global Resources Ltd, a company located in Nigeria. This shipment of buses will be used to start the first public transportation service in the country’s capital city of Abuja. The primary source of repayment will be Oceanic Bank who has provided a local bank guarantee for this transaction.

Through Ex-Im Bank’s short-term, multi-buyer comprehensive insurance policy, ABRO Industries, Inc. of South Bend, Indiana was able to execute a deal with its customer, Coshcharis Motors Limited of Nigeria.  This transaction, approved in June 2006, supported the sale of new ABRO branded automotive/industrial supply products valued at $10,000,000.

Via an Ex-Im Bank multi-buyer, small business insurance policy, House of Cheatham located in Stone Mountain, Georgia, was able to sell $100,000 of health and beauty aids to Kuddy Cosmetic International of Nigeria. This transaction was approved in July 2006.

Through Ex-Im Bank’s letter of credit policy, Sovereign Bank of Boston, Massachusetts was able to confirm a letter of credit from Intercontinental Bank Plc of Nigeria.   This transaction, approved in May 2006, supported the sale of wheat and other grains valued at $10,000,000 to Intercontinental Bank’s clients, Flour Mills of Nigeria; Honey Wells Flour Mills Ltd and Unikem Industries Ltd by of Wayzata, Minnesota and Wilton, Connecticut, respectively. Cargill and Louis Dreyfus.

Through Ex-Im Bank’s small business multi-buyer insurance policy, Bluefield Associates of Ontario, CA was able to execute a deal with its customer, Diplomat Investment Products of Nigeria.  This transaction, approved in October 2006, will support the sale of cosmetics and toiletries valued at $100,000.

Through Ex-Im Bank’s short-term single sale policy, Robert & Pat Engineering of Newtown, PA was able to execute a deal with its customer, Coastal Equipment Sales Ltd of Nigeria.  This transaction, approved in November 2006, supported the sale of used trucks and heavy construction equipment valued at $45,000.

Through Ex-Im Bank’s letter of credit policy, Sovereign Bank of Boston, Massachusetts was able to confirm a letter of credit from Intercontinental Bank Plc of Nigeria. This transaction, approved in November 2006, supported the sale of a hydraulic crawler crane valued at $275,000 to Onne Port in Nigeria, by Pioneer Equipment Company.

Through Ex-Im Bank’s short-term multi-buyer comprehensive policy, Bondo Corporation of Atlanta, GA was able to execute a deal with its customer, Tagbo Technologies Ltd of Nigeria.  This transaction, approved in November 2006, supported the sale of automotive paint and after market products valued at $200,000.

Under the recently established $300 million Nigerian bank facility, Ex-Im Bank approved a request from M&T Bank, Baltimore, Maryland for a five-year, medium-term guarantee in the amount of $3,954,132 to support the sale of a thermal oil recovery system to Specialty Drilling Fluids Ltd., a company located in Nigeria. The primary source of repayment will be Access Bank Plc. The exporter is Brandt, of Houston, Texas.

Ex-Im Bank approved a request from Diebold Global Finance Corporation, Canton, Ohio for a five-year, medium-term guarantee in the amount of $5,000,000 to support the sale of Automatic Teller Machines to The ATM Consortium Ltd – a consortium of Nigerian banks. Under the recently established $300 million Nigerian bank facility, Diamond Bank Plc guaranteed this transaction.

Ex-Im Bank renewed a $10,000,000 short term single buyer policy for Abro Industries of South Bend, Indiana to sell automotive/industrial supply products to its customer, Coscharis Motors Ltd. of Lagos, Nigeria.  This comprehensive policy is used to support sales to Coscharis for its Nigeria, Ghana and Ivory Coast subsidiaries and was approved in November 2006.

Under the $300 million Nigerian bank facility, established in 2007, Ex-Im Bank approved a request from HSBC Bank of London for a five-year, Medium-Term Comprehensive Guarantee in the amount of $9,337,522 to support the sale of oil drilling equipment to Drillog Petro Dynamics Ltd., a company located in Nigeria. Diamond Bank Plc guaranteed this transaction and would be the primary source of repayment. The U.S. exporter is Halliburton Energy Services of Houston, Texas.

Through Ex-Im Bank’s Multi-buyer Small Business Policy, House Of Cheatham of Stone Mountain, Georgia was able to execute a deal with its customer, Kuddy Cosmetic International of Nigeria This transaction, approved in November 2006, supported the sale of health and beauty aids valued at $150,000.

Through Ex-Im Bank’s Letter of Credit Policy, Citigroup Global Projects of New York, New York was able to establish a $2,500,000 short-term credit limit with Intercontinental Bank Plc of Nigeria. This credit line enabled Citibank to confirm letters of credit issued by Intercontinental Bank, which will go to support the sale of various U.S. goods and services to multiple Nigerian buyers.

In April, 2007 Ex-Im Bank provided short-term insurance policy to Impex of Doral, Inc. of Miami, in support of their sale of disposable products valued at $100,000 to Everyday Supermarket Limited of Lagos, Nigeria.

In April, 2007, Ex-Im Bank approved a request from Sovereign Bank of Boston, MA for a five-year, medium-term comprehensive guarantee in the amount of $1,630,028 to support the sale of two Dragon Series Dredges to H S Petroleum, a company located in Lagos. There were several corporate guarantors on this transaction. The U.S. exporter is Baltimore Dredges, LLC of Baltimore MD.

Xechem Pharmaceutical Nigeria Limited of Abuja, Nigeria received pharmaceutical manufacturing and laboratory equipment from several U.S. suppliers including American Plastics Technologies, Inc. of Shiller Park, IL, Fisher Scientific Company of Suwanee, GA, and the Nitra Group of Aventura, LF. This $9,389,000 loan was supported by a guarantee from the Bank PHB of Lagos, Nigeria, and the loan was provided by UPS Capital Business Credit of Hartford, CT. Ex-Im Bank provided a five-year comprehensive guarantee to the lender.

Through the use of an Ex-Im Bank medium-term loan guarantee, HSBC Bank Plc of New York, was able to provide financing to its client, A. O. IYERE Motors & Co, Ltd of Nigeria. This transaction, approved in June 2007, supported the sale of used Mack trucks and spare parts valued at $1,500,000. Capital Trailer & Equipment Co, Inc, located in Montgomery, Alabama was the supplier. This transaction was supported by a guarantee issued by Union Bank of Nigeria, under the recently established Ex-Im Bank Nigerian banking facility.

Ex-Im Bank approved a request from UPS Capital of Windsor, Connecticut, for a five-year, medium-term guarantee in the amount of $11,000,000 to support the sale of petroleum refining equipment to Amakpe International Refineries Nigeria.  The primary source of repayment will be Sterling Bank of Nigeria.  The U.S. exporter was Ventech Engineers Inc., of Pasadena, Texas.

Ex-Im Bank approved a request from HSBC Bank Plc of New York, New York, for a five-year, medium-term comprehensive guarantee in the amount of $13,117,330 to support the sale of advanced Logging While Drilling (LWD) technology and equipment to Drillog Petro Dynamics Ltd., a company located in Nigeria. Diamond Bank PLC of Nigeria issued a local bank guarantee to support this transaction.  The U.S. exporter was Halliburton Energy Services of Houston, Texas.

Through Ex-Im Bank’s Multi-buyer Small Business policy, Olson Inspection Services Inc of New Orleans, Louisiana executed a deal with its customer, Chevron Nigeria Ltd. This transaction supported the cost of inspection and consulting services valued at $1,000,000.

Via an Ex-Im Bank Multi-buyer Small Business policy, Strength of Nature LLC of Savannah, Georgia was able to sell $20,000 of cosmetics and hair care products to Kuddy Cosmetics International, Ltd in Nigeria.

Through the use of an Ex-Im Bank Medium-term Loan Guarantee, M&T Bank of Buffalo, New York was able to provide financing to its client, Karlflex Fisheries of Nigeria. This transaction supported the sale of three used fishing trawlers valued at $2.6 million, Mr. Vic, Incorporated located in Bayou, Alabama was the supplier. This transaction was supported by a guarantee issued by AfriBank, Nigeria under the Ex-Im Bank Nigerian Banking Facility.

Under the established Nigerian Bank Facility, Ex-Im Bank expedited the approval of a request for a Medium-term Loan Guarantee to First National Bank of Omaha.  The financing from First National Bank of Omaha supported the purchase of 45 used Mack trucks in the amount of $3.4 million by Roadmarks, a company located in Nigeria. Zenith Bank provided a local bank guarantee on this transaction and is the primary source of repayment. The U.S. exporter was Global Truck and Equipment Information of North Miami, Florida.

The Pioneer Equipment Company of Jacksonville, Florida exported $3,030,762 worth of new and refurbished rock crushing equipment to Japaul Oil & Maritime Services, Plc in Nigeria.  Assured through Ex-Im Bank’s Medium-Term Loan Guarantee policy, Sovereign Bank lent the money to Japaul Oil & Maritime Services’ bank, Intercontinental Bank PLC of Nigeria, was the guarantor.

Ex-Im Bank guaranteed a medium-term loan for $321,499 to purchase communication broadcasting equipment.  Electronics Research, Inc of Chandler, Indiana and BSW of Washington, DC exported the equipment to Megalectrics, LTD of Nigeria.  M&T Bank lent the money to Megalectrics with Diamond Bank, PLC of Nigeria as the guarantor.

Ex-Im Bank guaranteed a long-term loan that involved over 16 suppliers.  The $19,634,327 transaction allowed the suppliers to export an aluminum can manufacturing facility to GZ Industries of Nigeria.  Fidelity Bank, Nigeria, provided a local bank guarantee to support HSBC’s loan.

e-Gold Directors Convicted

Three directors of E-Gold, in addition to its Gold & Silver Reserve parent company, indicted in April 2007 of running a platform that have become a haven for criminal activities like processing investment scams and payments for child pornography on Thursday, 20 November, received their sentences. However, a United States of America federal judge decided last Thursday not to impose a prison sentence on the senior directors of E-Gold. Instead each of them was sentenced to three years of probation and 300 hours of community service with some fees to be paid.

Gold & Silver Reserve CEO, Douglas Jackson, who faced a maximum sentence of 20 years in prison and a $500,000 fine was spared the heavy fine because, according to his attorney, he’s deeply in debt. Thus he was sentenced to pay only $200 fine with 300 hours of community service time of supervision.

Reid Jackson, Douglas Jackson’s brother, and E-Gold director Barry Downey were each sentenced to three years of probation, 300 hours of community and ordered to pay a $2,500 fine and a $100 assessment fee each. Online sources say the maximum fine E-Gold and Gold & Silver Reserve faced could have been $3.7 million, but because neither company could pay that much, they were fined $300,000 with the condition that $10,000 be paid on Monday, with further monthly payments to start in May 2009.

E-Gold and its corporate affiliate, Gold & Silver Reserve Inc. had, each, pleaded guilty to conspiracy to engage in money laundering and conspiracy to operate an unlicensed money transmitting business. The principal director of E-Gold and CEO of Gold & Silver Reserve Inc. (Gold & Silver Reserve), Dr. Douglas Jackson, 51, of Melbourne, Fla., pleaded guilty to conspiracy to engage in money laundering and operating an unlicensed money transmitting business. E-Gold’s other two senior directors, Barry Downey, 48, of Baltimore, and Reid Jackson, 45, of Melbourne, each pleaded guilty to felony violations of District of Columbia law relating to operating a money transmitting business without a license. E-Gold, Gold & Silver Reserve and the three company directors were charged in an indictment returned by a federal grand jury on April 24, 2007.

Interestingly, when Douglas Jackson acknowledged the company was under investigation in 2004, the illegal activity still went on with E-Gold, the company during trial ascribed this to bad legal counsel, which convinced them the site does not have to be licensed as a money transmitting business. The court accepted the argument of Downey that he was unaware of the company’s need for a license, even though he is a practicing lawyer.

The defendants argued they made every effort to cooperate with investigators while the prosecutors questioned the use of E-Gold’s cooperation as the directors’ tried to circumspect government investigation.

In addition to the fines and prison sentences, each of the defendants agreed that E-Gold and Gold & Silver Reserve will move to fully comply with all applicable federal and state laws relating to operating as a licensed money transmitting business and the prevention of money laundering which includes registering as money service businesses. Also, as part of the plea agreement, the businesses will create a comprehensive money laundering detection programme that will require verified customer identification, suspicious activity reporting and regular supervision by the Internal Revenue Services’ (IRS) Bank Secrecy Act Division, to which the Financial Crimes Enforcement Network delegated authority according to federal regulations. E-Gold and Gold & Silver Reserve will hire a consultant to ensure their compliance with applicable law and hire an auditor to verify the companies’ claims that all transactions are fully backed by gold bullion.

Under federal law and District of Columbia law, in addition to other jurisdictions, the E-Gold operation was required to be licensed and registered as a money transmitting business. However, according to information in plea materials, the E-Gold operation functioned as a money transmitting business without registering with the federal government and without a license in the District of Columbia. Because these businesses and individuals illegally failed to register and follow applicable regulations under federal and District of Columbia laws, the resulting lack of oversight and required procedures created an atmosphere where criminals could use “e-gold”, or digital currency, essentially anonymously to further their illegal activities.

Specifically, according to information contained in plea materials, the E-Gold operation provided digital currency services over the Internet through two sites: www.e-gold.com and www.Omnipay.com

“By failing to comply with money laundering laws and regulations, the E-Gold operation created an environment ripe for exploitation by criminals seeking anonymity in conducting online transactions,” said Acting Assistant Attorney General Matthew Friedrich. “This case demonstrates that online payment systems must operate according to the applicable rules and regulations created to ensure lawful monetary transactions.”

“The operations of E-Gold Ltd. and the other defendants undermined the laws designed to maintain the integrity of our financial system and created opportunities for criminal activity,” said U.S. Attorney Taylor. “Because of the successful prosecution of these defendants, digital currency providers everywhere are now on notice that they must comply with federal banking laws or they will be subject to prosecution.”

The case was investigated by the U.S. Secret Service, IRS Criminal Investigation and the FBI. The case was prosecuted by Assistant U.S. Attorney Jonathan Haray of the U.S. Attorney’s Office for the District of Columbia, Senior Counsel Kimberly Kiefer Peretti of the Criminal Division’s Computer Crime and Intellectual Property Section and Laurel Loomis Rimon, Deputy Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with assistance from the Criminal Division’s Child Exploitation and Obscenity Section. William Cowden of the U.S. Attorney’s Office Asset Forfeiture Unit assisted with forfeiture issues involved in the case.