NCAM: A DAY OUT WITH AUTO SALES LEGENDS OF OUR TIME IN NIGERIA

Even though there is no business existence without its challenges, there is one particular line of business in this country that takes lots of guts and down to finger pushing to get it off the ground. It is even more stringent due to the saturation of the market, even though some players belief otherwise.

The business of auto dealing is one of the most lucrative businesses that is gaining attention in the Nigeria corporate terrain. Although most auto dealers try engaging in popular brands to boost sales and recuperate the investments in the short run, it still needs the ability of a good marketing team to devise creative strategies in getting even an unwilling customer to order for the whole company!

To this end, a forum on the happenings in the auto world, tagged National Conference on Automobile Marketing, where the legends in auto sales and marketing in Nigeria would be gathered to bare out their minds, and share their success stories with budding and up coming auto marketers.

The one day event, holding at the Golden Gate Restaurant, Ikoyi, Lagos on the 26th of November 2008, will feature a platform to chat with the big shots in the industry, interactive session and a paper lecture titled ‘the Magic of Volume Sales’.

The get together which commands the presence of the likes of Chief Michael Ade Ojo, Chairman, Toyota Nigeria Ltd; Chief Molade Okoya Thomas, Chairman, CFAO Group; Alhaji (Dr.) Sanni Dauda, Chairman, Peugeot Automobile Nig Limited; Chief Williams Anumudu, Chairman, Globe Motors, Dr.(Mrs) Diezani Allison-Madueke and Prof Bamidele Badejo to mention few, is primarily targeted at auto marketers, banks and insurance companies.

With full support from the federal and Lagos state governments, the event promises to be an epoch making one.

FINANCE MINISTER PETITIONED OVER CBN REVERSAL OF BANKS’ UNIFORM YEAR END

A corporate lawyer, Mr. Roy Bassey Ukoh and a forensic accountant, Mr. Ori Adeyemo, have, in a joint petition forwarded to the Minister of Finance, protested the reversal of the adoption of common year end by commercial banks as earlier directed by the Central Bank of Nigeria.

The two petitioners said they were compelled to write to the Minister in the overall interest of the banking public and asked for the reversal of the cancellation of the uniform accounting year end for banks in Nigeria which, according to them should have started in December 2008.

Describing the earlier directive contained in CBN Circular No. BSD/DIR/CIR/GEN/VOL2/008 issued on August 25, 2008, as laudable, the petitioners insisted the CBN Governor made an unpardonable somersault of his laudable policy of making December 31 of each year, the uniform accounting year end for each bank starting December 31, 2008.

Stating that such change of policy is not in the best interest of the general public but a compromised attempt to serve the parochial interest of the banking cabal, who are the Managing Directors of the 24 banks operating in Nigeria in other to cover their apparent lapses, the petitioners argued that CBN rationalizing the cancellation of the directive to the desperate mobilization of deposits and which led to the hiking of interest rates by banks, according to the two petitioners is not accepted and grossly untenable.

“We consider both excuses given by the CBN Governor as totally unacceptable and crassly untenable. It further goes to confirm our unassailable conviction that the Nigerian banking industry is not only weak, in dire state of distress but also desperately needing surgical operations to survive irrespective of the spurious splendid financial results that these fraudulent banks churn out from time to time (in active collaboration with the CBN) all in order to continually deceive the gullible unsuspecting Nigerians to invest their hard-earned money in the thrash shares of these sinking banks.” The petitioners reasoned.

Making further assertions on the impropriety of the cancellation of the common year end for banks, the petitioners asserted that: “It is a classic endorsement that the consolidation of the banking industry which the CBN carried out on December 31, 2005 has irredeemably failed if after telling Nigerians that it now has mega-banks; these same banks are still in hot pursuit of deposits at whatever costs not also minding the fact that these same banks had gone to the capital market times without number to mobilize funds. The question now is: what has happened to all the billion of Naira mopped up by Nigerians banks from the capital market from year 2004 to date? Nigerians need to know.”

“The CBN Governor has always been aware that Nigerian banks have been defrauding their customers through the passage of spurious and illegal bank charges into the accounts of innocent customers thereby leaving behind unpaid debts leading to the deceitful foreclosures of collaterised assets of the customers or the settlement of bogus debts at extremely high costs. For the unfortunate ones, it has always been a tale of woes leading to the collapse of businesses, ill-health and sometimes paying the ultimate price of untimely death. To worsen matters, whenever a report of the nefarious and illicit actions of the banks is brought to the attention of the CBN; an illegal referral is made by the CBN to the committee of Ethics & Professionalism which is a sub-committee of the Bankers’ Committee made up wholly and exclusively of bankers with nobody protecting the interest of bank customers thereby making banks judges in their own case.” The petitioner further asserted.

Making further allegations, the petitioned observed that: “Another very important point to deliver is the fact that the CBN Governor is in the knowledge that banks have surreptitiously been stealing Federal and State Governments funds through non-remittance of 10% Withholding Tax on declared dividend as well as interest on deposits, 5% Value-Added-Tax (VAT) as well Personal Income Tax yet have blatantly refused to call them to order knowing fully well that by virtue of Section 3.2.5 of the CBN Monetary, Credit, Foreign Trade & Exchange Policy Circular No. 37 of January 02, 2004, it is the responsibility of the CBN to collect these deductions from the banks for and on behalf of the Federal Government of Nigeria within seven days of collection. The various excess and spurious bank charges clandestinely laid into the accounts of both arms of government all in a bid to defraud in billions of Naira cannot also be wished away.”

“As investigative accounting consultants, we are in the knowledge that the books of these Nigerian banks have all along been cooked and spiced accordingly in order to present fake excellent performances. A veritable way of doing this is to aggressively mobilize deposits at the adopted scattered year ends and also to temporarily put a stop to lending when the accounting year end of banks is near.

“The banking cabal has also made it a point to be shifting deposits among themselves in order to help out each other and they are aware that a uniform accounting year-end will put a final stop to this unwholesome malpractice.

Alluding to one of the reasons the common year end would have done the banking industry some good the petitioners observed that: “Nigerians will recall that prior to the announcement of the uniform accounting year end for banks; every bank in Nigeria was always celebrating any achievement that they can think of from the mundane to the unimaginable. At that time, it was commonplace to find banks celebrating best bank with highest deposit base, the first bank to deploy certain banking software in Nigeria, the first bank to hit the trillion Naira asset base, the bank with the highest turnover and all what not. However, we note that with the announcement of the common accounting year-end, all this rubbish has stopped.

“We must not forget the so-called compromised ratings given to banks by the foreign rating agencies based on the falsified financials published, which these banks would then celebrate as if they have won the football world cup. It was either the banks were awarded A+++++ or AAAAA or some stupid figures by their collaborating foreign rating agencies without looking at facts behind the figures published.

“We wholly support this uniform accounting year-end for banks since it will enable Nigerians and the whole world to be able to separate the chaff from the grains but this laudable and well-thought-out policy by the CBN is being killed before it is born and therefore every attempt must be made to stop the unwarranted and self-serving shift or cancellation of the uniform account year-end.”

“It cannot be disputed that the capital market in Nigeria has lost over N3.5 trillion due to depression with the Nigerian banks accounting for over N2 trillion thereof. You will also admit that this was what led the CBN to issue a guideline allowing the banks to reschedule margin accounts by at least one year. We sadly note that even with this understanding, the CBN is yet to fully inform Nigerians as to the extent of the loss incurred by the banks as a result of their participation vide gambling with depositors and investors monies in the capital market.

“Our submission is that with the full implementation of this uniform accounting year-end policy by the CBN; Nigerians will be able to know the healthy banks from unhealthy or dead-woods because as things currently stand, the adopted scattered year-ends gives latitude for fraudulent and creative accounting manipulations, which undoubtedly amounts to corrupt malpractices which the CBN is now advocating and encouraging through the back door.

“It is an understatement to say that if you are allowed to have your way by shifting or out-rightly canceling the uniform accounting year-end of these banks, you would have succeeded in postponing the doomsday, which would eventually come considering the whole lots of unwholesome and unprofessional malpractices being daily perpetuated by these banks unrestrained.

“We cannot but state once again that the financial state of these banks is in sordid state and the earlier that the CBN and the banks come clean to tell Nigerians the truth the better.” The petitioners concluded.

CEMENT PRICE WAR STARTS NEXT WEEK: OTEDOLA TO SELL AT N700 PER BAG, JIMOH IBRAHIM NICON CEMENT ON THE WAY

Who holds the Ace?

Who holds the Ace?

When the Federal Government approved licenses for 13 Nigerian firms to import bagged cement into

Nigeria, the Government’s stated intension was to put an end to short supply and ensure the crash of price of the product in the country. Yet, most Nigerians would not still believe the prospect of a crash in price of cement, because, according to cross section of Nigerian residents in Lagos State, when prices of commodities go up in the country they don’t often come down.

Some suggested that a cartel had perfected its stranglehold on the supply side of cement that no matter what measure the government puts in place, as it had over the years, the strong cartel had always found a way to undercut supplies thereby sustaining high prices for the essential building material.

This state of helplessness may, from next week, start changing with the direct involvement of Mr. Femi Otedola to get involved on the supply side and manufacturing of cement. According to a source close to the Epe-Lagos State born businessman who had made a name for himself in the petroleum downstream sector, Otedola’s first shipment of his Otedola Portland Cement (OPC) would be launched sometime next week with a strong identification with Nigerians desires to be able to buy cement at affordable price.

“I can surely tell you that OPC is about being offered to Nigerians and in the character of chairman (Otedola) the product has to be affordable. I think the retail price that is been considered for the 50kg bag of cement is N700. That is about 40 percent slash from the current market price. Chairman believes that this price slash will help break the backbone of the monopolistic cartel that had dominated the cement market for a long time.” The source that is directly involved in the landing of OPC confided in FORTUNE & CLASS.

Otedola has a record of price dumping, a business model that another source in his Zenon Oil & Gas Company said, has by and large, impacted on the mass of Nigerians.

“For Otedola, a little profit is better than huge gains. You remember he blazed diesel price slash in Nigeria when the petroleum product became so scarce and expensive. It is simply about adding value for Nigerians who are in dire needs of products that are, otherwise, common goods but had now turned essential because of the activities of monopoly inclined operators.” The source said.

“I can tell you that we are planning an elaborate launch of Otedola Portland Cement starting from Mushin, the densely populated suburb of Lagos which would symbolize the populism appeal of the cement.” The source directly involved in the cement landing explained.   

 “Even beyond this, I can also reveal to you that Chairman is putting finishing touches to selling petrol at his AP stations for N59. You can expect this in the next six weeks. This would naturally force competitors to also reduce price for the benefit of Nigerians.”

Coming on the heels of recent rapprochement between Otedola and Barrister Jimoh Ibrahim, Chairman of the NICON Group, might have also persuaded the lawyer businessman to consider diversifying into cement manufacturing in the country.

“The idea is to flood the Nigerian market heavily.” The source informed. “What Chairman told Barrister Ibrahim is that if he comes into the supply side he would also be helping to make cement available to Nigerians at affordable prices. I am aware that very soon Barrister Ibrahim will be announcing the arrival of NICON Cement.”

TALE OF SIX ROGUE COMPANIES BEHIND PETROLEUM PRODUCTS ROUND TRIPPING AND THEIR GID FATHERS

You heard of petroleum marketing companies being investigated for round tripping petroleum products and still fleecing the nations of billions of naira through deceptive request for refund from the Petroleum Support Fund?

Yes, investigation is on-going and as we go to press, we have it on good source that six smalltime marketers have been fingered for detailed investigation, and well, for your ears only a former top notch in the Federal Government recently relieved of his high office, plus another one, who was part of the regulatory agency.

The six companies were said to have found influential moles at the Nigerian National Petroleum Corporation and its marketing arm, the Petroleum Products Marketing Company (PPMC). Know how the deal works? Here is an abridged detail; these six secure product allocations from PPMC, move in vessel to load products that were already imported into the country, make a foray to the high sea, then turn around, head for Nigeria and berth at designated PPMC ports as if they just brought in fresh supplies from wherever. The scheming round trippers off-load and well, after processing their paper, apply for fund from the PSF. For that effort, the former big man in government goes home with N25million on every successful returns made by his sea farer round tripping marketers.

Avail yourself a brief on what PSF is all about:

 The Federal Government established a petroleum support fund effective January 2006 to stabilise the domestic prices of petroleum products against volatility in international crude and products prices. A substantial amount of that by government schedule will go for kerosene subsidy, thereafter, whatever is left on a monthly basis will go for petrol.

 

The fund, which is domiciled in the Central Bank of Nigeria (CBN), available for companies and depot owners licensed by the Department of Petroleum Resources (DPR), the disbursement of the fund to marketers importing petroleum products follow collation of product figures in all refineries, jetties and depots located in various parts of the country.

 

Now, let’s do some comparison: None of the six companies,  prime suspects, are importers, “they don’t even have loading bays,” our very knowledgeable insider says.

ANOTHER BANKING CRISIS IMMINENT!: MOVE YOUR MONEY TO STRONG BANKS…EXPERT ADVISES

Mr. Ori Adeyemo, a Forensic Accountant and crusader for best practices in the banking industry, has warned that the Nigerian banking industry is facing an imminent collapse unless urgent and reasonable measures are taken by the Federal Government to curtail the slide into what he described as anarchy and chaos. 

“By the nature of my job, I am privy to the fact that the books of most Nigerian banks have been in very bad shape over a long time, not minding the spurious financial returns that they post to deceive gullible Nigerians from time to time.

“I am aware that anytime the year end of a bank is months away some banks stop all lending activities to embark on aggressive mobilization for deposits and engage vigorously in short-term inter-bank placements in order to jerk up their balance sheets.  I am aware that it is at this point in time that spurious bank charges unashamedly suddenly appear in the account of the customers if only for the purpose of declaring huge profits to the shareholders at the next Annual General Meeting (AGM).”

Questioning the survival strategy of the affected banks at declaring huge profit while yet not engaged in lending activities which is supposed to be the primary activity of a commercial bank, Adeyemo said: “I reliably gathered that some banks no longer lend money to their customers, this is a palpable sign of distress just as some do not lend beyond three months maturity period.  Now, with their stupendous overhead to defray on a monthly basis, how are they supposed to cope? Most banks have lost huge sums to the stock market while actively engaged in trading their shares. That was when most Nigerians wrongfully thought that the stock market was a ready treasure till.”  

In a review of how banking activities had impacted on the downturn in the capital market and had also thrown banking industry into worries of losses of huge sum, Adeyemo explained: “Over the past few months when the obvious slide in the stock market started, investors have lost not less than N3.5 trillion as a result of the depression in the market.  I understand that the loss came about from the maturity of the credit facilities which were taken by investors to buy FirstBank Plc public offer from other banks for which various collateral security such as share certificates, landed properties, etc; were deployed.  It must also be stated that FirstBank Plc returned over N600 billion of unallotted shares after holding the funds for over eight months at a paltry five per cent  per annum interest rate.  Meanwhile, the aggregate of charges which customers would have borrowed the returned funds from other banks cannot be less than 25 per cent  per annum.  The effect is that at the expiration of a credit facility, a demand is made on the investor to pay up or sell off the shares by the exposed bank thereby leading to a supply glut in the market as desperate investors simultaneously besiege the market looking for how to dispose various shares.  The net effect is a continuous loss of value on a daily basis.

“The investors who operate margin account with these banks are worse off since the exposed banks would have been mandated to dispose of the collaterised shares once the price drops to a threshold usually set at about 130 per cent of purchase price not minding the initial equity contribution made by the customer.

“It is a hidden truth that the hitherto astronomical rise in the price of the shares in the Nigeria Stock Exchange is as a result of price manipulations by banks.  These banks I understand give money to stockbrokers who they mandate to transact in the shares of the sponsoring banks thereby jerking up the price sequel to the bank entering into the market to source for fresh funds.  For example, a bank may give say N1 billion each to five stockbrokers to be trading in its shares.  These stockbrokers are given a target to meet within a specified period of time, say six months prior to a public offer.  The brokers then set out to buy and trade in the bank’s shares in the market in order to create an artificial scarcity thereof leading to a continuous upscale in market price.  After say six months, when the price would have risen to the desired height, the bank would then announce its entry into the market with fanfare whilst discounting the new offer price after the shares would have been put on technical suspension.  There and then, you will see gullible Nigerians rushing over themselves to buy these over-priced shares with huge funds secured from the banks.

“Now, with the loss of value of shares at the Nigerian Stock Exchange, banks have lost a lot of money but they are keeping quiet about it.  Also, the money which they lent to customers for the purpose of margin account has been wiped away having drastically dropped to a dismal level of say 20 per cent of initial purchase price.  In other words, these banks cannot even sell the collaterised shares as doing so will erode whatever security that they can rely upon since the share certificates have become worthless papers.  The banks too cannot bully the margin account customers to defray their debt whilst charging interest at an illegal default rate.  If the total loss of value in the stock exchange is N3.5 trillion, then the contribution of the banks alone cannot be less than N2 trillion being the most active players

“Is it not curious that at this point in time no bank can tell their percentage of risk exposure? This helps the banking public to know which banks are in good standing and which ones are not.”

Last week, after a period of assuring Nigerians that all was well with their banks, chief executives of banks decided to formally request the Federal Government to intervene in the nation’s financial sector to forestal the effect of the ongoing global financial crisis on the system.

Meeting under the aegis of the Committee of Banks’ Chief Executives, the bankers agreed to request the Federal Government to intervene in the nation’s financial market through a package of measures similar to those introduced in developed countries and that the Central Bank (CBN) should continue to support the interbank money market.

In response to the request for bail-out from government by the banks chief executives, Adeyemo observed: “I am not against bail-out of the banks that we have in Nigeria. My worries border on the unethical conducts of the banks that rather than focus on dispensing professional banking service would rather be engaged in all sorts of things like printing, security guards, stock-broking, estate developing, recharge card sale, telephone handset vending, etc; while neglecting its core functions of banking.  The bail-out will certainly salvage the economy while at the same time reinforce citizens’ confidence.  However, I am against allowing some of the present day fat-cat cocky executives from benefiting from their fraud and corrupt malpractices after ruining their so-called vast empires.

“I can tell you that things have become so bad that some ranking officials of some banks have started moving their own deposits away from their own  banks to some of the first generation banks. On the whole I see that just about six banks of the 24 operating banks would cross the healthy mark if a thorough examination of their books is conducted today. So, I need to warn Nigerian depositors to start conducting their own due diligence on their  banks.

“Depositors should start asking questions, they have to interact with other customers to know how the bank is attending to them. Do they have issues with facilities, are their issues with immediate payment of withdrawals and others.”

Adeyemo said in the light of saving depositors’ fund, he subscribes to a Federal Government initiated bail-out of the banks, but has his own suggestion on how it should be applied: “I subscribe to the Federal Government buying preference shares of maximum 30 per cent into the banks on a temporary basis of say a five-year period. The FG must not, however, attain majority shareholding in the banks.  This way, the board of the affected bank would be restructured with the Federal Government’s representatives on the board on a minority scale.  The Government may then sell off their investment as situation improves.”

Adeyemo noted with regrets that if the National Assembly had heeded his warnings when he petitioned it to probe banks, perhaps the present time reality would have been avoided: “It is a sorry case that the chicken is coming home to roost so shortly.  I candidly recall that it was in November 2007 that I forwarded two petitions to both the Senate and House of Representatives warning that with the present bad and precarious financial state of health of these banks, there was a need to institute a probe into their activities, otherwise the Federal Government may be required to bail them out in due course.  This petition led to the probe of the banking industry in May/June 2008 until the probe process was compromised.  I believe that if the probe had been conscientiously and painstakingly executed, maybe we would not find ourselves in this mess.”