EFCC TO PROSECUTE EX-GOV.ODILI OVER N100BN LOOT …N25bn Investment In Arik Air

The Economic and Financial Crimes Commission is believed to be finalizing arrangements to prosecute the immediate past governor of Rivers State, Dr. Peter Odili. To this end, the anti-graft agency has assigned its officials to validate an initial report of the agency put together after an investigative process in 2006.
At the heart of the criminal misconducts thrown up by the EFCC investigative panel in 2006 is how the then governor, Dr. Odili, actively used an associate, Mr. Johnson Arumemi-Ikhide, the man famously known to be the owner of Arik Air, to loot sums estimated to be over N100billion from the treasury of the state.
The EFCC report trails the relationship between ex-Governor Odili and Mr. Arumemi-Ikhide thus:
“Prior to becoming a major contractor to the state government in 2000, Mr. Johnson Arumemi-Ikhide was a shareholder of, and an executive director in, Negris Engineering Nigeria Limited. He worked for the company for over 18 years before leaving the company as a result of misunderstanding with other management staff, to form Rockson Engineering Nigeria Limited in 2000.
“While he was still with Negris, he provided an interface between Negris and Rivers State Government during which two major contracts were secured for the company. The contracts were the supply and installation of generating sets and transformer worth N401,016,101.00. The other contract was for the supply, construction and installation of turbine power station worth N4,256,076,000.00 in 2000.
The report notes that:
“The second contract was about 60 per cent completed when Mr. Johnson Arumemi-Ikhide left Negris and suddenly became the consultant to Rivers State on the same contract using his then newly formed company, Rockson Engineering Company Limited. The remaining payments for the Negris contract were routed through his company where the sum of N734,764,749.00 is yet to be remitted to Negris.”
The report adds that:
“The incorporation of Rockson Engineering Company Limited in 2000 immediately Arumemi-Ikhide left Negris marked the beginning of siphoning huge government fund that ran into several billions of Naira through gas turbine contract scam.”
The report highlights how several billions of Naira were transferred into accounts owned by Mr. Arumemi-Ikhide:
“Rivers State Government diverted the sum of N30,031,446,589.70 at various times to account number CA 6010914407 at Zenith Bank Plc belonging to Rockson Engineering Company Limited between January 07, 2004 and December 06, 2006. Investigations also reveals that Rockson Engineering has several bank accounts with Bank PHB, Sterling Bank Plc, United Bank for Africa, First Bank Plc, Intercontinental Bank Plc and Union Bank Plc. These banks were involved in the inflated contracts between Rockson Engineering and Rivers State Government.”
The EFCC report further notes that its investigations revealed that funds were diverted from Rivers State Government’s account to Rockson Engineering Limited, where it was transferred instalmentally between March 2005 and November 2006 from bank account number 6571020007472 with Union Bank Plc to the following companies.
a. Alpha System and Commodity Company Limited—N3,957,734,700.00
b. Sea Petroleum and Gas Company-N6,623,940,500.00
c. Peg Magreet Shipping and Trading Limited -N638,320,000.00
d. Wopat Nigeria Limited – N276,100,000
e. Dairy and Livestcok Limited – N281,000,000.00
f. Arula Investment Limited – N330,000,000.000
All totaling N12,107,105,000.00.”
The investigative report made more revelations on how Mr. Aruremi-Ikhide, who the report claims has a long lasting relationship with Dr. Odili which dates back to the 1980s, was used as the main front man for Dr. Odili.
“It has also been discovered that a parallel account called Account 2, account number 0130215431600, was opened with UBA Plc in the name of Rockson Engineering. Form 2001, when the account was opened to 2002, the sum of N12,064,988,787.61 was paid into the account from the Rivers State Government. Interestingly, Mr. Arumemi-Ikhide denied knowledge of the existence of this account. So far the sum of N12,059,602,734.20 has been withdrawn from the said account. This is clear evidence of direct looting of the treasury of Rivers State,” the report asserts.

While he was still with Negris, he provided an interface between Negris and Rivers State Government during which two major contracts were secured for the company. The contract were the supply and installation of generating sets and transformer worth N401,016,101.00. The other contract was for the supply, construction and installation of turbine power station worth N4,256,076,000.00 in 2000.

In direct reference to how Arik Air was funded and established, the report explains:
“It has also been established that Arumemi-Ikhide, the business partner of the Rivers State governor, is the owner of ARIK AIR LIMITED. He used money received from the Rivers States Government to acquire all the assets and aircraft of the company estimated to be worth over N25billion.”
Further establishing a direct link between Dr. Odili, Mr. Arumemi-Ikhide and Arik Air, the report submits that:
“The political and business relationship between Dr. Odili and Mr. Arumemi-Ikhide has become more obvious since the former’s declaration to run for the Presidency. Investigations conducted at various hotels, such as Transcorp Hilton, Le Meridien, Sheraton, etc; in Abuja revealed that the Odili Campaign Organization made bookings worth N130million through his campaign management team. The money came directly from the accounts of Arik Air Limited. The origin of the money is linked directly to Mr. Arumemi-Ikhide for Dr. Odili’s campaign.

To be concluded next edition.

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Investigation Reveals Where Bank Loans Went Bad

searching-manA Fortune&Class in-house panel of experts has, after a review of the bad loans accrued to the five banks currently under the Central Bank of Nigeria’s direct supervision, submitted that the Federal Government holds largest liability in repayment to the banks. The committee of experts nonetheless observed that the figures made public by the CBN also affirmed that the affected bank officials must have been heavily involved in unethical manipulation of the stock market even as the panel agreed that the banks, indeed, tried to play their economic role of financial intermediation by providing a big chunk of their facility for real sector activities.

The conclusions of the panel’s review may put the lies on the generalized opinion prevalent in the public place of the bulk of the five banks financing going into loans for stock market trading and the importation of petroleum products.

The panel reports that 51 per cent of the N747,000,000,000 alleged bad loan, approximated at N375,487,000,000 was given out by the banks to the real sector. The classification of the real sector, in the consideration of the panelists includes activities in construction, manufacturing, imports of raw materials for industries, farming and telecommunications.

Interestingly, the panel reports that a mere 22 per cent of the N747billion bad loan aggregated at N163billion can be attributed to the stock market while N218billion, about 27 per cent of the bad loan has been tracked to have been borrowed by players in the oil and gas sector.

The Case For Union Bank

barth ebongTaken on individual profiling, Fortune&Class panelists submit that the sanctioning of Union Bank managing director should raise questions because of the five banks under the CBN’s thumb, Union Bank’s hope of recovering its bad loan is more assured because the bulk of the bad loans atissue are facilities given to entities in the real sector.

Of the total N73.582billion bad loan attributed to Union bank N66billion summed up to be loans to the real sector. The bank’s only stock market related bad loan is the N1,291,737,218 granted to GMT Securities.
In the same vein, the bank’s only outstanding to the oil gas sector is the N6,251,658,228 taken by Zenon Oil and Gas. Panelists argue that Zenon has a higher likelihood of paying up because of its track record in the oil and gas sector.

It is not, however, a shared optimism, as in the hope of recovery of the bad loan from a company like Femi Otedola’s owned Zenon when compared to the N28.5billion Oceanic Bank is expecting Rahmaniyya Global resources, a company in the petroleum products marketing sector, to repay it.
Rahmaniyya’s operations are reportedly hampered at the moment.

Crosscheck of operations at the Apapa depot of the company shows that not much activities are going on there. A senior staff of the company confides that operations have been hampered because of the company’s huge indebtedness to banks. The official took time to protest that the company’s situation became bad because an appreciable percentage of the loans secured at commercial banks were usually given out as kick backs to officials of the banks where the loans originated from.

Where Oceanic Bank May Lose Out

cecilia ibruAs a stand alone, Oceanic Bank’s loans are locked into the real sector, that is about N122billion of a total N278.2billion. The worrisome aspect of the bank’s bad loan portfolio, as it were, would be the N56billion exposure to the stock market. This figure aroused much concern because just six companies, as recorded, were found worthy enough to enjoy margin loan from the bank. The panelists reasoned that what the figures suggest is that officials of the bank merely decided to employ the services of this small number of stockbrokers to help it exploit the stock market.

The panelists also submit that the larger percentage of Oceanic Bank’s expected repayment from the bad loans tracked to the oil and gas sector of about N100billion hold no prospect of recovery in consideration of the track records of most of the entities that secured the loans.

Intercontinental Bank shares the same fate that may befall the recovery efforts of Oceanic Bank. With N34billion outstanding from just seven stock-broking houses most of which have continued to dispute the figures in the public domain.

Bad Loan Recovery Challenges For Intercontinental Bank

akingbolaAs in the case with Oceanic Bank, all of the brokerage houses involved have protested that the loan accounts were opened jointly with the banks. Some even complained that they never received any cheque book on the account that was in the joint names of the brokerage house and the bank.

In different letters of protest forwarded to the banks, some of these brokerage houses had hinted at being asked to engage in stock market manipulation by the bank. One of such protest letters written and forwarded to Intercontinental bank which Fortune&Class got a copy, reads:
“…Your bank also included clauses in the contract that gives you the sole right to decide which stock can be purchased and when such can be sold. The records presented to us even show that some of the shares purchased with the margin loan included the stock of your bank.”

The letter from the lawyer tells of more worrying aspects of the margin loan where it notes that:
“Our client mentioned the fact that they never solicited the loan but rather your bank approached them with the offer of the loan…even as their accounts were debited for the processing and management fees for the transaction before they had even had any opportunity to review or sign the offer letter.”
For our panelists, it is issues like these that may stunt efforts to recover the bad loans for Intercontinental Bank. This is besides the crisis of the Federal Government non-payment of petroleum products subsidy differentiation to oil marketers that secured a large part of the N79billion loan that was used in importing petroleum products into the country.

‘Afribank played big in the Stock Market…sure to lose big’

sebastineNot even the EFCC Chairman can yet fathom how the five companies that Afribank granted about N60billion to trade the stock market, would pay back their exposure in the current lacklustre stock market.

Whose interest was the bank management advancing by farming out the huge sum of N60billion to just five entities? Again, it is believed that the bank played big in the stock market to forward its interest. “That N60billion cannot be recovered in the short term,” one of our panelists said.

Finbank Liberal Lending Policy

okeyOf the five embattled banks, Finbank Plc profiles a liberal lending culture. Though we can’t say for certain how the loans were collaterised, the fact of farming out its loan to a larger number of borrowing entities compared to other banks in the bad loan quagmire, suggests that recovery of debt may be easier Finbank.

The bank’s total non-performing loans as calculated by the CBN is approximated at N42.4billion. Of this, about N15billion was borrowed out to 83 operators in the real sector. This is just as the total sum of N11.1billion bad loan accruing from stock market activities, was granted to nine entities with the highest calculated to still owe about N3billion.

The same liberal lending policy shows in the figure of the loans repayment of N14billion from 17 entities in the oil and gas sector.

The Sector That Is Sure For Repayment

Our panel of experts are of the opinion that bad loans accrued in the real sector may easily be recovered because of the quality of collaterals that would have been provided before approval to draw down. This, however, excludes any insider related dealings.

Compared to loans to the real sector, recovery of bad debts accrued from stock trading activities may be considered hopeless in consideration of the state of the Nigerian stock market, the macro-economic environment and the harsh realities of the global economic meltdown. The collaterisation of loan assets in margin loan is linked to securities purchased, the lender is, however, supposed to dispose of with the securities in the open market when prices go below an agreed threshold. But it turned out that these banks didn’t effect the power of cashing the securities by selling off when the prices of the securities slid below the agreed threshold. Thus, the lenders are left with collaterised securities that are way below the worth of the loans.

Same is the extant downside of the oil and gas sector. With consistent sliding petroleum product prices and the unwillingness of the Federal Government the only buyer of petroleum products in Nigeria, to pay up the difference between the landing cost of petroleum products in the country and the price at which the marketers are mandated to sell to retailers, the expectation of bad loan recovery from the entities in these sector may be challenging.

Who Is Paying Up

The Economic and Financial Crimes Commission has said that it had so far recovered a sum of N25.5billion out of the N1.143 trillion of total non-performing loans of the five banks.

The break-down of recovered debt and the banks are as follows; Intercontinental bank N7, 736, 571, 744.19; Finbank.N1, 590, 417, 332.05, AfribankN7, 551, 121, 378.69, Oceanic bankN8, 033, 481, 868.65; Union bank N659, 240, 400.78.

Executive Directors Took N5bn Unsecured Loans Each

More troubling revelations have continued to emerge from the banking industry in the wake of the sack of five bank chiefs and members of their senior management cadre. Some top banking industry staff have started talking of the justification of the action of the Central Bank of Nigeria’s Governor, Sanusi Lamido Sanusi to sanction the affected bank chiefs and their senior management cadre because of their connivance to fleece the bank.

Specifically, the entire management board of one of the banks is said to being investigated by the CBN to ascertain how each Executive Director got approval of N5billion loan facility.

IBRU FAMILY RECRUITS SENATE LEADERSHIP, PRESIDENT’S WIFE TO SAVE CECILIA

Vol 2 Issue 31 magazineThe Ibru family reportedly threw all its influence and moneyed privileges into the battle to mitigate the public embarrassment of Mrs. Cecilia Ibru, sacked Managing Director of Oceanic Bank and wife of the patriarch of the Ibru’s clan, Olorogun Michael Ibru.

Details emerging in the wake of the sudden appearance of the erstwhile Managing Director of Oceanic Bank at the office of the Economic and Financial Crimes Commission (EFCC) last Wednesday, indicate that the wife of the Chairman of the Ibru organization was advised to beat a tactical retreat to allow the family deploy its massive goodwill in the nation’s political arena to stave off the prospect of an embarrassingly long detention for Mrs. Ibru by the EFCC.

Knowledgeable insiders to the horse trading that led to the eventual emergence of the woman fondly revered as the Nigeria’s first lady of banking, confided in Fortune&Class Weekly that the Ibru family pulled all the plugs through the Senate and the Presidency to get certain assurances from the EFCC before Mrs. Ibru was given the green light to submit herself at the EFCC.

“Seriously, we have only heard about the ingenuity of the Ibru family in making money, but I was a witness to another aspect of their lives these past days when I experienced their ability to move around and lobby office holders to intervene in the roiling crisis that had claimed one of their own, Mrs. Ibru. It’s not as if you saw any of the Ibrus physically, but there were many people lobbying on her behalf especially at the Senate,” the source said.

“You know, the second day after the Governor of the Central Bank of Nigeria, Sanusi Lamido (Sanusi) made those earth shaking pronouncements about sacking five bank chief executives, the President left the country in company with his wife, Turai. The next level of authority, in the real sense of it, at that time, was the Senate. And it was to the Senators that the Ibru lobbyists took their battle to get political pressure to be applied on the EFCC boss to provide lighter treatment and shortened detention for Mrs. Ibru. The fulcrum of the argument of the lobbyists is that the Central Bank of Nigeria was making a mountain out of a mole hill by its decisions to sack the bank managing directors and their arrest by the EFCC.

“The lobbyists pleaded with the leadership of the Senate to prevail on the Chairman of the EFCC, Mrs. Farida Waziri, to make a commitment to making Mrs. Ibru’s detention before taking her to the court as short as possible.

“Of course, they got sympathetic ears in the Senate. The Senate leadership made overtures to the Chairman of the EFCC who insisted that Mrs. Ibru must first surrender herself to the anti-grafts agency before she could determine the next step.

“Hajia Binta Turai, wife of President Umar Yar’Adua also played a peripheral role in the Ibru EFCC saga. Two of the first lady’s friends were drafted to talk to the EFCC Chairman to provide a soft landing for Mrs. Ibru, the source said.

Mrs. Ibru had, as part of her battle to stop her arrest and detention, dragged the Central Bank of Nigeria and its governor, Sanusi Lamido Sanusi before a Federal High Court in Abuja over her compulsory removal from office, demanding the sum of N50 billion for “exemplary, punitive and aggravated and general damages.”

The EFCC, however, declared Mrs. Ibru and Mr. Erastus Akingbola of Intercontinental Bank wanted on Sunday, 23 August, after failing to honour invitations for interrogation, sequel to their sack on August 14 along with three other bank MDs, Mr. Sebastine Adigwe of Afribank, Okey Nwosu of Finbank and Bartholomew Ebong of Union Bank.

A statement issued by EFCC Head of Media and Publicity, Femi Babafemi, explained that Ibru and Akingbola “are wanted in connection with fraudulent abuse of credit process, insider trading, capital market manipulation and money laundering running into billions of Naira.”

Investigation Reveals Where Bank Loans Went Bad
akingbolaA Fortune&Class in-house panel of experts has, after a review of the bad loans accrued to the five banks currently under the Central Bank of Nigeria’s direct supervision, submitted that the Federal Government holds largest liability in repayment to the banks. The committee of experts nonetheless observed that the figures made public by the CBN also affirmed that the affected bank officials must have been heavily involved in unethical manipulation of the stock market even as the panel agreed that the banks, indeed, tried to play their economic role of financial intermediation by providing a big chunk of their facility for real sector activities. (read more)

Three Nigerian Banks break into Forbes List of World Biggest Companies

The year 2009 is rather an unlikely year for any Nigerian company… continues here.

Intercontinental Bank leads in Standard & Poor’s corporate Nigeria rating

Standard & Poor’s (S&P) world’s leading international credit risk rating agency, has assigned ngA+/ngA-1 long and short term Nigeria national scale ratings to Intercontinental Bank Plc, the first to be assigned to any corporate organization operating in Nigeria.

These ratings according to the statement by S & P in London last weekend, affirm Intercontinental Bank’s creditworthiness despite operating in an environment characterized by high economic risks.

S & P had earlier pronounced the bank’s international rating as BB-, which is the highest for any Nigerian bank just as Nigeria’s sovereign rating is also capped at BB-.

According to the statement, Intercontinental Bank’s funding and liquidity profile is robust with a large liquid asset cushion. The loan-to-deposit ratio measured 60% at August 31, 2008 and cash and money market instruments accounted for 40% of total assets.

S&P’s credit analyst, Mathew Pirnie, said “Intercontinental Bank is a Tier 1 Nigerian bank with good presence in the high-end corporate, commercial, public and retail sectors. It was the first bank to reach the Nigerian Naira 1 trillion deposit mark, due to a strong retail deposit portfolio”.

Although the analyst raised concerns about Nigerian economy, he was of the view that Intercontinental Bank’s good capital position, strong market position, and a robust funding and liquidity profile, will mitigate the concerns.

Fitch Ratings had earlier affirmed Intercontinental Bank Plc’s National Long-term ratings at A+. The interpretation according to analysts is that the bank is a low risk financial institution. The agency also affirmed the bank’s international rating at B+, which is the highest for any Nigerian bank as at date.

Intercontinental Bank was declared “Bank of the Year”, recently in London. The Bank emerged tops after rigorous analysis of its financial and business profile along with other banks in Nigeria.


The award is a confirmation of a similar recognition by other reputable international organizations such as African Banker Magazine, and the World Bank/International Monetary Fund Annual Daily which declared Intercontinental Bank African Bank of the Year and Financial Brand of the year respectively, at the spring meeting of the World Bank/IMF in Washington DC, USA

The bank has evolved into one of the largest and most diversified financial services institutions in Nigeria. It also boasts of over 300 branch network spread across the country, linked by cutting-edge IT infrastructure.

Submitted by Emeka Anaeto, Head, Corporate Communication, Intercontinental Bank