WHAT CBN DISCOVERED AT ETB

How Adenuga launders IBB’s money through his bank

Perhaps the most persistent subject of suspicion in the Nigerian public space has been the nature of the business relationship between Otunba Mike Adenuga and General Ibrahim Babangida (rtd).

Adenuga owns and directly controls a massive business empire that includes Globacom, ETB, ConOil and several well heeled concerns. Ever since the 1990s when Adenuga started grabbing public attention, most Nigerians have held that Adenuga was simply one of the fronts for the very diverse economic interest of Babangida, the military General who ruled Nigeria with a mixture of guile and violence at a time when the nation’s economy enjoyed a boost of buoyancy especially during the Gulf War. Nigeria is believed to have earned $12billion within a six-month span during the Gulf War (August 1990- February 1991).

However, it would seem the closest an official connection linking Adenuga directly to Babangida as business partners was established in 2006 when the Economic and Financial Crimes Commission (EFCC) arrested and questioned Mohammed Babangida, first son of the former military president over his alleged ownership of 24 per cent shareholding of Globacom, the giant telecommunication company owned by Adenuga who was also briefly arrested by the then Nuhu Ribadu led EFCC.

But then, in what would become a characteristic of Adenuga’s engagements with enforcement authorities in Nigeria, the Bull, as he is fondly reverenced by his many admirers, took to his heels and fled Nigeria after he was granted bail. He would not return until a new Federal Government led by Mallam Umar Musa Yar’Adua took charge of the administration of the country.

THE BULL, AS HE IS FONDLY REVERENCED BY HIS MANY ADMIRERS, TOOK TO HIS HEELS AND FLED NIGERIA AFTER HE WAS GRANTED BAIL

It is now history that within the first six months of the Yar’Adua administration, Ribadu was hounded out of the EFCC and like many other matters being investigated by the agency, the matter of how Mohammed, the young man who was not known to be engaged in any form of business came about the wealth he used in purchasing his holdings in Globacom was swept under the carpet.

TRACKING THE ETB MINNA BRANCH UNEXPLAINED PAYMENTS

For an ETB’s insider, it is common knowledge that the bank branch in Minna, Niger State, must have been established to serve, especially, the needs of Babangida. According to the source, ETB’s Minna branch is located on Bosso Road, on the outskirts of the capital of Niger State and far away from Paiko Road, the city centre where most bank branches in the state capital are located.

“Of course, most of the customers that come to the Minna branch are very unusual looking people coming to collect manager’s cheques sometimes with value of up to N300million,” the source revealed.

“Most staff of ETB Minna branch have continued to wonder the kind of business the bank has with this odd looking people. When they enter the branch, every thing has to stop as the headquarters in Lagos will be directing us on how to go about making payment to these persons. Most often, we draw manager’s cheque to the value of N300million without even knowing which account to debit. The most important for us anytime any of these fellows come into the bank is just to hand over the cheque to them. It is after they would have collected the cheque that the bank headquarters would tell us to debit an internal account of the bank, that is, an account that belongs to the bank.

“We have all learnt to play dumb; of course, we know where the cheques would end up. What manner of business do we engage in Minna that we would be making such payments, sometimes up to N500million in a week. And this is not to just one person. Different people that are not known to the branch, usually come once and we don’t get to see them again. The names we get to write on the cheques are quite interesting, one would see that names were just being twisted to give them semblance of sequencing. But what can we do? We only relate to these people as directed by the headquarters in Lagos,” the source explained.
“I guess this is one of the issues the CBN/NDIC auditors were concerned with when they examined the books of the bank,” the source added.

An official of the bank that would not want his name in print, however, insisted that the CBN sanctioning of Adenuga was simply another political move by people he refused to identify.
“We don’t want to make this a media issue, we know that it is simply politics at play,” the official said.

What the CBN special examination of ETB revealed

Penultimate week, the Central Bank of Nigeria announced the result of the special examination it had conducted on the second batch of 14 banks it had performed its stress test on. The apex bank had on August 14 announced the sacking of five bank chief executives, in tow with their executive directors, as part of the outcome of the special examination of the first set of 10 banks.

Three chief executives of banks were given the boot in the second batch of 14 banks and that included the CEO of ETB, curiously, in a move far away from the sanction earlier imposed on the group of five banks on August 14, the CBN went behind the veil to specially treat Adenuga with the same sack sanction applied to his CEO. A non-executive director should under normal consideration be of little consequence to the running of the bank.

Though the Central Bank of Nigeria is yet to inform the public of ETB’s specific breaches of its rules or those for which Adenuga was removed from the board, a source with the apex bank informed Fortune&Class Weekly that the CBN identified Adenuga as the all pervading influence in the day to day management of the bank.

But perhaps, more worrisome to the auditors from CBN and the National Deposit Insurance Corporation that examined the books of ETB were the various unexplained payments made directly from internal accounts of the bank to various people through the Minna, Niger State branch of the bank. The unexplained payments, according to the CBN source, have over the years, run into billions of naira.

Volume II, Issue 18

This week on the June 08, 2009 edition of Fortune&Class Weekly:

• FIRS bars ETB, Spring Bank, Wema Bank – The Federal Inland Revenue Service (FIRS) has barred three banks from collecting taxes and other revenue due to the federal government on its behalf.

The banks, Equitorial Trust Bank (ETB), Spring Bank and Wema Bank were given the marching order because they refused to accede to the request by the FIRS to sign the mandatory collection agreement, a source in FIRS has confided in Fortune&Class.

According to the high level source in the revenue collection agency, the FIRS have had to introduce the mandatory collection agreement as a legal contract between it and financial institutions that desire to serve as collection agencies for it (FIRS). (read more)

Who Is In Charge Of The Stock Market? Daisy Ekine, SEC DG, Moves To Tame NSE DG, Okereke-Onyiuke

The demutualisation of the Nigerian Stock Exchange has become the standard issue to determine the agency that wields ultimate authority and control on the Nigerian stock market. Simply put, demutualisation means that the Nigerian Stock Exchange transforms into the equivalence of a quoted company with its share available to the investing public for subscription and trading.

The imagination of the investing public had been excited since since October last year when  the Director-General of the NSE, Prof. (Mrs.) Ndi Okereke-Onyiuke announced that there would be a demutualisation of the Exchange, announcing in the same breathe that she and seven senior officials of the NSE are to retire voluntarily.

According to the DG of the NSE, at a February 2009 press conference, the Council of the NSE had appointed Accenture, the global management consulting, technology services and outsourcing company to help with the demutualization and transformation of the Exchange to become profit making, she explained at the press conference that “ we have to re-orientate and transform the management and staff (of the Exchange) to look at the Exchange as a profit making company like First Bank, Unilever, Japaul and even our own Central Securities Clearing System.” …

Bank Managers Divert Customers To Black Market Lenders

Chukwuma Soludo, fmr CBN Governor

Some branch managers of commercial banks in Nigeria have become lending authorities by themselves, a Fortune&Class investigation has revealed. The activities of these managers, according to the investigation, has led to the emergence and thriving of a black market for lending which, however, has become a source of worries and consternation for customers who are protesting how they are being exploited by the black market lenders.

For each bank branch, there is the unofficial lender, operated by the branch manager with the connivance of some other bank branch officials. When a customer approaches the branch with a request to raise fund for a business, the customer is as usual, confronted with a long list of requirements to be considered before loan application is approved. …

Agagu is Arrow-Head of SW 8, Wema Bank New Core Investor

Segun Oloketuyi, Olusegun Agagu

It has been reported that barring any unforeseen circumstance, Mr. Segun Oloketuyi, an executive director with Skye Bank, may soon be named as the new group managing director of Wema Bank Plc following the successful acquisition of 27 per cent controlling shares by new core investors, SW8 Consortium, in the bank.

Until recently, officials of the bank and regulatory agencies involved in the ownership structuring of banks in the country have decidedly kept sealed lips on the individuals and interests involved in the SW8 Consortium.

To sate the going curiosity of investors that desire to take position in the bank, Fortune&Class reveal that Dr. Olusegun Agagu, former governor of Ondo State is the arrow head of other mainly political personalities behind the SW8 Consortium.

Agagu served as Minister of Power in ex-president Olusegun Obasanjo’s cabinet between 1999 and 2003 and was elected Governor of Ondo State in 2003. Agagu re-election for a second term was, however, challenged this year by Dr. Olusegun Mimiko who eventually secured the rulings of both the election petition tribunal and the appeal court panel that asserted that Mimiko was the rightfully elected Governor of the State.

ADENUGA’S EXPATRIATE DIRECTOR RESIGNS FOR FEAR OF NIGER DELTA MILITANTS

Mr. Pandanam, an Indian expatriate who holds a high ranking office in Dr. Mike Adenuga (Jnr) Equitorial Trust Bank (ETB) was not intended on leaving Nigeria in a hurry. The Indian, who, until he left Nigeria in a hurry, was the bank’s Regional Services Director, decided to bid farewell to his job at ETB when he was posted to the Port Harcourt office of the bank.

Inside sources in ETB informed FORTUNE&CLASS Weekly that the expatriate was shocked by the posting to a city which he claimed is the hotbed of militant activities in the Niger Delta. The sources further confided that Pandamanam made strenuous efforts to appeal to the management of the bank to reconsider the decision to post him to Port Harcourt.

“We even heard that he made efforts to get Otunba Adenuga to persuade the management to rescind the decision on account of the risks an expatriate working in the Niger Delta region of Nigeria is exposed.” A source said. “He also argued that he did not have the millions of naira kidnappers in the Niger Delta region are likely to demand for and, as such, he should be saved from the imminent danger he will be exposed to by the transfer to work in Port Harcourt.” The source explained.

Nobody was, however, persuaded with the pleas of the expatriate: “The management had the backing of Otunba on the posting and it was affirmed to him again that he should proceed to resume in Port Harcourt. But when he realized he could not convince anybody in the top hierarchy of the bank’s management, he tendered his resignation and left the service of the bank. I understand he packed his belongings and moved out of the country.” The source added.

THEY SAY ADENUGA’S WISH TO SIGN OFF ETB SUFFERS SET BACK

Perhaps some ETB staff that were in the know of the negotiation of the acquisition of the bank by FirstBank were excited at the prospect of changing boss from the authority of Otunba (Dr.) Mike Adenuga to the structured management of FirstBank. Feelers from the bank owned by Adenuga indicated that some staff members were really perturbed when months after the very discreet discussion between ETB and FirtBank hit the dirt.

Background sourcing indicated that Adenuga is intent at concentrating on his money spinners, the telecom and oil and gas ventures in his vast business empire and considered the relinquishing what they claimed to be the troubles of running his ETB to the banking giant.

 Some of the staff considered this a momentary set back though.

WONDER BANKS DEPOSITORS REFUND…CBN WAITS ON 17 RECEIVING BANKS FOR PAYMENT

The Central Bank of Nigeria has commenced the final processes to refund sums of money deposited by investors in pyramid schemes operating as fund managers that had, since July this year, declared as illegal fund managers by the Investment and Securities Tribunal (IST).

The CBN had in a letter of 15 October, 2008 signed by T.A Ikuyeju on behalf of the CBN’s Director of Banking Supervision, had given 17 commercial banks a maximum seven days, last week, Wednesday 22 being the last day, to forward to it (CBN) the account details of 28 companies now referred to as wonder banks.

The details of the account requested by CBN to assist it determine the status of all the investors’ fund according to the memo include the account numbers, number of accounts held, branches they were opened, names and addresses of the signatories to the accounts, the balances as at 4/12/07; 31/12/07 and 30/9/08.

The 17 Banks which also include a non banking financial institution that were listed as being repositories of funds from the wonder banks are: Access Bank, Diamond Bank, ETB, First Bank, FinBank, Guaranty Trust Bank, Stanbic IBTC, Kakawa Discount House Limited, Oceanic Bank, Sky Bank, Spring Bank, Sterling Bank, Union Bank, United Bank for Africa, Unity Bank, Wema Bank and Intercontinental Bank.

However, the prospect of a speedy verification of investors’ status by the CBN may be limited by the ability of the commercial banks to forward the account details of the wonder banks to the CBN as directed.

A source in the CBN told FORTUNE & CLASS Weekly by Thursday last week that about ten of the commercial banks were yet to properly hand over the details as required.

“Though we have not yet started in-depth analyses of the details the banks have sent to us, our preliminary review shows that most of the details are not updated as we required, which may slow down our job.”

The source informed that the CBN is willing to quickly dispense with the refund to depositors in view of the CBN Governor’s empathy with unfortunate investors that had their money tied down in the wonder banks.

While sounding optimistic of the capacity to conclude the verification within the shortest possible time, the source, nonetheless, explained that many depositors in wonder banks may not be able to get a refund of their deposits.   

 “The officials that sieved through the claims of wonder banks submitted to the inter-agencies committee set up by the government to receive petitions and claims by Depositors earlier in the year found that many of the depositors, in fact, deposited their money through agent investment schemes that were not among the 28 that the IST froze their accounts in December, 2007. For this category of depositors there is little the CBN can do to refund their money because their claims and the details available with the CBN will not match.” The source said.

Besides, the source further warned of the possibilities of confusion arising from the mismatch of details forwarded to the inter-agencies committee by depositors and those available to the CBN through banks and the wonder banks operators.

“I think it is important that depositors track the operators so that they can help them put their documents together properly. This is to enable them (depositors) present reasonable explanations to the officials that would handle the verification if it turned out that there were mix-ups in the details like names, dates deposits were made, bank branches payment were made and the authenticity of the receipts they collected after submitting their tellers to the wonder bank operators. The fact is that we have realized that there are different receipts for same transaction types for some particular wonder banks.” The source confided.

Wonder banks had flourished over a period of three years up till about November last year on the tempting offer of making more than 500 percent returns of deposits to participants in what investment experts describe as pyramid schemes clothed in exotic investment propositions like Forex Trading, Fixed Odd Betting and hedge fund investment.

Most participants in the schemes were persuaded of the legitimacy of the schemes because the operators presented the scheme as a joint venture between them (wonder banks) and commercial. Mostly, a participant was required to pay directly into a designated bank account in the name of the wonder bank domiciled with a reputable commercial bank, usually with a customized teller.

The Securities and Exchange Commission had, in response to public outcry when the wonder banks started failing in their payment dues, usually qualified as profit on deposit in an operational week, clamped down on their operations and instituted a suit against them in November 2007, accusing them of soliciting, advertising and inviting the public to deposit funds with them.

The 28 wonder banks on trial before the IST are: Art Master & Co. Ltd; Cyber International Ltd; Fortune Access Interlinks Network; Gold Power Unique Services Ltd; Gorutrans Nigeria Co. Ltd; Interglobal Investment Ltd; Money Field Ltd; New Freedom Diversified Investment Ltd; Open Gate Multipurpose Investors Ltd; Orion Express Global Services Ltd; Pennywise Investment Ltd; Positive Move International Nigeria Ltd; Precious Golden Profile; Real and Cool Wealth International Ltd; Shola Olanrewaju Ayinke (Sefteg Nigeria Company); Silvertrust Global Investment; Successpoint International Investment Ltd; Torid Investment Ltd; Treasured Fund Assets Ltd; Vikel Petroleum Ltd; Wealth Concepts Global Ltd; Wealthgage Multibiz Int. Ltd; Wealth Interlink Agency Ltd; Wealth Solution Ltd; Wealth Transfer and Logistic Ltd; Wilson O. Wilson (Doing business in the name and style of Wilamas Ventures); Wisdom Investments Nigeria Ltd; and Nospetco Oil and Gas Ltd.

THEY SAY ADENUGA’S WISH TO SIGN OFF ETB SUFFERS A SET BACK

Perhaps some ETB staff that were in the know of the negotiation of the acquisition of the bank by FirstBank were excited at the prospect of changing boss from the authority of Otunba (Dr.) Mike Adenuga to the structured management of FirstBank. Feelers from the bank owned by Adenuga indicated that some staff members were really perturbed when months after the very discreet discussion between ETB and FirtBank hit the dirt.

Background sourcing indicated that Adenuga is intent at concentrating on his money spinners, the telecom and oil and gas ventures in his vast business empire and considered the relinquishing what they claimed to be the troubles of running his ETB to the banking giant.

Some of the staff considered this a momentary set back though.