BankPHB EMBROILED IN N17BILLION FRAUD SCANDAL …EFCC ARRESTS THREE DIRECTORS, IAA VICE-CHAIR

MD, BankPHB

In the past three weeks, a whirlwind had swept through the gilded offices of BankPHB. At the last count, three executive directors had been sacked in tow with an unspecified number of other management staff. At the heart of the sweeping sack in the bank is perhaps, one of Nigeria’s most sophisticated white collar fraud, involving a whopping 17 billion naira, and said to have been engineered by Mr. Funmi Ademosun, the Vice-Chairman of Investment and Allied Assurance Company (IAA).

A source at the bank confided that various sums of money totaling 17 billion naira had been parcelled through the accounts of Home Trust Savings and Loans Limited, another company where Ademosun is the chief executive.

“The sums were given out in the form of margin account targeted at shares purchase, particularly for the mopping up of the shares of IAA in the stock market,” The BankPHB insider said. “But it turned out that rather than focus on the IAA shares, Ademosun decided to diversify his investment portfolio by playing on other stocks.”

While observing that there was nothing patently wrong in the bank lending to customer for margin trading, the source observed that 17 billion naira was given out to Ademosun without appropriate management decision.

“The management of the bank as a body was not in the know of the whole thing; those involved exploited their high offices to approve facilities within the threshold of their approving authorities as executive directors for Ademosun’s scheme.”

Stock market operators that are now aware of the sums siphoned from the vault of the bank to Ademosun to target the shares of IAA reasoned that Ademosun, by virtue of his official standing in IAA was engaged in criminal manipulation of the share price of the IAA stock with the money availed him by BankPHB.

“Of course, we all suspected that something was not correct with the IAA shares. This is an insurance company with no branch except its head office branch with various analyses pointing to the fact that the whole business and administrative structure of the company were underpinned by financial engineering. Right from its private placement to its listing by introduction its 28billion units of shares on the floor of the exchange it was clear that some undercurrents were pushing the direction of the shares. It was not until we got to hear of the 17 billion naira funding of Ademosun by BankPHB that I personally understand the whole reason for the movement of the shares of IAA. The money was used to simply mop up the shares at a particular point in time and, thereafter, dump the mopped shares when the price is right,” a stock broker explained.

Troubles, however, burst on to the scene when the market decidedly headed downward, meaning that the shares of IAA would not respond to any form of manipulative manoeuvres even where billions of naira is involved. The BankPHB source said this limited the capacity of Ademosun to pay back and the scandal broke out. In clearing the mess at the preliminary stage, the management of the bank reported the case to the Securities and Exchange Commission who in turn invited the Economic and financial Crimes Commission into the matter.

“As of this week, Messrs. Solomon Omoregieva, Ahmed Kuru and Emma Abugu, all executive directors, had been quizzed by the EFCC and they had been sacked in company with some other members of the middle cadre management who were said to be involved in the scandal. It is believed that these officials compromised and fell short of their responsibility by collectively exposing the bank to a facility of that magnitude. The general belief in the bank is that these officials must have soiled their hands in the transaction,” the source added.

Nobody wants to change the winning team

Emmanuel Anyanwu

Hyra Motors introduced and markets the now popular Geely and Brilliance car brands in Nigerian auto market. In this chat with ol’VICTOR OJELABI, Mr. Emmanuel Anyanwu, the company’s sales/marketing manager, presented an expository overview of the world of Asian made vehicles.

How many years have you been working for Hyra Motors as sales/marketing manager?

I’ve been with Hyra Motors for quite a while. Thank God, Hyra Motors has been around for three years. A company which was duly registered on 13th April 2006, and putting that into consideration, within a short period of time, we’ve witnessed tremendous progress.

As a marketing manager, what has been your greatest challenge since you joined the company?

Well, the biggest challenge has been how to develop a marketing campaign, especially changing the mind-set or perception of the average Nigerians towards the Chinese automobiles. It has not been easy, going by the history and heritage of Asian cars. Most people, of course, know that before now anything out of China was probably not the best. But I can say now that in the Nigerian automobile industry, the Chinese have done well. Given the antecedent, they have just been around for less than a decade in comparison to brands that have been here for quite longer. So I had a serious challenge of building awareness for the brand I represent, that is, Geely and Brilliance Autos. It took a lot of strategic planning to reposition ourselves to, at least, win the confidence of the average Nigerian buyer.

In the last two years, what manoeuvre as a sales/marketing manager has led to your greatest achievement?

Eh, I give all the glory to God who makes man what he is. Well, one particular act that I consider my greatest achievement is my resolution from day one not to give up on Chinese brands. And since I’ve decided not to give up, then I can look back and say thank God for the resilience, the steadfastness and focus. That is the most striking achievement, the fact that I didn’t give up on the Chinese brands.

How have the sales of your brands been like?

In fairness to you, what we’ve achieved less than three years, is probably what someone else has done in five to 10 years with the popular brands. And for this, I don’t want to take credit for it, but to God. We put up many strategies, but victory came from the Almighty. Permit me to be a bit spiritual because that is the ultimate. You know, sometimes you can plan so well, but it is still only God that gives you the grace to succeed. If we compare our stand, I mean in this our gestation period to what was obtainable by most popular brands, I think we’ve done very well.

We have something that most people are becoming very used to, which is the way we deal with them, taking care of their vehicles in terms of maintenance and any other necessary repairs.

In essence, you are saying that facilities like after-sales service attract or help increase your sales volume?

Three things are responsible for the growth of our sales volume, one is the fact that we are appropriately priced. We have offerings that are competitive in price for its range in its category, I can beat my chest to say they are about the most affordable four door salon cars in Nigeria. But that is not the key reason why we’re experiencing growth in sales. I also mentioned the fact that our after sales services are the best; no wonder, we were declared the best new automobile company in year 2007/2008. Of course, there is this other part of us that is becoming the toast of everybody. The parts of our vehicles are just the most affordable. You see, three things make a very good auto deal: performance, after sales service and affordable price. If you can’t buy the car, there is no point thinking about the pleasure you cannot afford.

What about durability?

Durability is all about performance. It is all encompassing. Performance in terms of the car performing below specification, if a car could do XYZ, that is, talking about the basic features. And of course, we look at the fact that this car has been on the road for three years without anybody complaining. Now, I know of some brands, I would not mention their names, which came into this country that couldn’t survive two years. I remember people telling us that in less than a year, all your cars would be off the road. As I speak, our cars have been on the road for much longer.

Aside from Geely and Brilliance, what other brands are in the company’s portfolio?

For now, we deal only in Geely and Brilliance, talking about the saloon cars. But we also have in the pipeline other brands we would be showcasing very soon. These are all other categories of vehicles…

Can you be more specific?

Yes, we are looking at some other categories like truck, saloon cars, and any other category that would attract you to us.

And don’t you think the commitment in trying to sell the Geely and Brilliance would wane, if you digress into selling all these categories you mentioned?

No. You see, Geely and Brilliance having done so well, we would leverage on our expertise. We look at the human resource angle to our business. We have gotten the best hands, satisfying the maxim of the right people in the right place. We also have the will and the determination to move the industry forward. We aren’t just in the business to make profit, we are in the business to add value to basic operations as far as the marketing of automobile is concerned. And that is why we are already in some other West African countries. Our ultimate objective is not just to sell cars, we want to deploy the expertise in technology of those who have been in this thing for decades.

Despite the good looks of Geely and the claims of your marketing department, some users still complain about the durability of some interior components like the door knobs and fragile backrest. What is your take on this?

Well, I am very surprised to hear these because these are not complaints that I’ve documented. If customers do complain, I document it, I don’t know how this complaint came about and where. But between you and I, what we are realistically aware of in terms of customers’ complaints, is that if they travel out of Lagos, they weren’t sure if they would get an outlet to service their vehicle. And we quickly put up more service centres to cater for this. But for the door knob and the rest, I stand to be corrected, there has never been any record on those. No Geely door knob has fallen off and no headrest as dangled as you said. We are in Nigeria where anything is possible, people say all sorts of things because they don’t want competitors.

Okay, all said and done, let’s talk about the new bride, Geely CK2. What makes it worth the noise?

Well, Geely as a brand is worth the noise. And for the new Geely CK2, it gives us joy to have in the stable another version. CK2 1.3GL is an improvement on the former CK 1, which is our fastest selling model because it meets the requirement of an average Nigerian. Bearing in mind the purchasing power, the new Geely is just some few thousand naira above the CK 1. Then, looking at the structural improvement, there are lots of changes. When you look at the interior of the car, the quality of the materials that have been used is much better than what it used to be. The fabric used is easier to clean, while the body boasts of impact repelling material. The CK 2 comes with a lot of things which take the car to the level we can say it is satisfactory.

What is your market projection for the car?

We are looking at over 200 per cent growth in volume because as we speak, the orders we have on ground is about 90 per cent before the final unveiling.

And what do you think is responsible for that?

Actually, as I told you, when you give people what they want, they always want to say ‘thank you’ by being dedicated to the brand. We’ve won the confidence of the average Nigerian users. We’ve represented ourselves very well in giving cars that have performed well, that are durable, the parts are affordable. What else do you expect the man to do but to commend you as far as automobile is concerned. So they are saying, ‘hey! Hyra Motors, we stick to you,’ because the troubles they’ve gone through in the past, Hyra Motors has been able to fill that gap. Nobody wants to change the winning team.

How many cars did Geely sell globally in 2008, and what fraction of it accrued to Hyra in Nigeria?

At this point, it’s like somebody is asking how much profit you made last year. Anyway, Geely has done very well. From the Far East to core Asia, to Europe and Africa, Geely has been able to do well over 45,000 units. And then you see, for us in Nigeria, we are proud to say our contribution to that is commendable compared to the chance we have.

How do you intend establishing dominance of your brands in luxury sport car segment?

The main thing is that we are not driven by passion that is not traceable to reality, but one that is traceable to reality. We would always try not to be left behind in the technology advancement of our auto industry.

Will you allow Nigerian reviewers to test drive your cars?

Sure, we do. In fact, a team of journalists left my office a while ago, and they were here to test drive one of our new models. Well, I believe it is necessary to establish all the parameters, whether it is on emission or transmission. Due to the bad state of most Nigerian roads, whatever facts that might have been recorded for any vehicle, will definitely be attacked by the Nigerian context, which necessitates the need for Nigerian auto journalists to test drive.

What is the company’s corporate service to your customers for the support given over time?

We’ve shown tremendous appreciation to customers in the area of sponsorship by taking part in what they do.

As a dealer and user, what are the challenges one faces in the process of owning a car in this country?

Well, it is very unfortunate that the major challenge people face is that of finance. Now that people desire brand new cars, their paycheck is not brand new. But we have a stop gap measure which is not tailored to satisfy individuals, because you have to be very careful not to incur bad debt. It is called the Hyra Auto Leasing Facility for corporate bodies. We allow them to make down payment of 40 per cent on the value of any car they want, then we spread the balance over six months. This facility is currently being enjoyed by corporate bodies that don’t want to tie their cash from the acquisition of their cars.

And the result?

It has paid off. More orders are coming in, although we have to screen them. All you need is to present a copy of your Certificate of Incorporation, guaranteed from your directors and some other arrangements. The main thing is that at the end of the day, with the presentation of your post dated cheques, you get your facility.

Investment guide for 2009: diversification

Last week we started the discourse on the forces of risk and return as the two major factors every investor who intends to succeed in the investment world in 2009 must come to terms with. I had explained the weaknesses and strength in the different classes of assets. This week we will be looking at how to create a balanced investment portfolio through good diversification.

You’re almost certainly familiar with diversification, but it is also one of the most misunderstood investment concepts.

Diversification is one of the most commonly discussed topics among all types of investors-from those just starting out to the largest money managers on Wall Street. The reason: “Diversification is, without question, one of the keys to your success as an investor, “But you must employ it correctly”

As an investor, it’s crucial to ask yourself two important questions about your portfolio: Am I truly diversified? And am I taking advantage of all the strategies at my disposal to capture the full range of diversification benefits?

True diversification

The basic idea behind diversification is simple: Don’t put all your eggs in one basket. That said, simply owning a large number of stocks or other investment doesn’t automatically make you diversified. The key, is to spread your capital across a wide variety of asset classes and asset styles that have fundamentally different risk and return characteristics.

Such investments typically behave differently from each other during a market cycle-bonds often perform well during periods of stock market weakness, for example, while some international shares might rally when the Nigerian market falls.

By combining different types of asset classes, you can enhance your portfolio’s return potential, while simultaneously lowering its overall level of risk.

These advantages can be especially important for investors looking to preserve what they’ve earned. For example, consider an executive whose wealth is concentrated in his or her company’s stock. “The same stock that makes an investor wealthy can also damage that wealth if it runs into trouble, as within the past six months with many companies and CEO’s” If one of your goals is to preserve your capital, diversification is an absolute must. Feelers reaching us have shown that the world’s richest men are not immune to the mess caused by the financial crisis because of poor diversification. It was recently carried in a national daily that virgin Nigeria might be running into cash flow troubles; this is a company that Richard Branson would have easily assisted in times past if the cash was there.

Diversification is a useful technique that can reduce overall portfolio risk and volatility. Diversification neither ensures against a profit nor protects against a loss. Each investment type has different investment and risk characteristics. Bonds, treasury bills, treasury certificates and other money market instruments have fixed principal value and yield if held to maturity. Bonds have market risk, interest rate risk and credit risk. Stocks can have fluctuating principal and returns based on changing market conditions. The prices of small company stocks or penny stocks generally are more volatile than those of large company stocks this is evidenced by the significant losses witnessed in the insurance sector of the Nigerian stock exchange in 2008.

Asset allocation

One of the most effective ways to diversify an investment is with asset or fund allocation, and it is a good way to help smooth out volatility in your portfolio.

How does asset allocation work? Different asset classes (such as stocks, bonds, properties) may respond differently to the same market conditions. This means if one part of a diversified portfolio does poorly it can be buffered by other investments that do relatively better. In other words, asset allocation helps spread the risk over several investments. The key to asset allocation is investing in assets with dissimilar performance. While the scientific and measurable investing principles of asset allocation are sound and are well proven, up until recently the process required some detailed mathematical calculations.

A properly diversified portfolio within the Nigerian economic terrain should include investments in a variety of industries and asset classes such as cash, stocks, government bonds, fixed annuities, insurance policies, real estate, and personal business endeavours. A Detail study of these different classes of diversification for a Nigerian investor will form the focal point of our discussion in the next edition.

HOW TO GET HELP FOR YOUR RETIREMENT PORTFOLIO

One of the most popular Nigerian Capital Market promoters and eventually the most beneficial investment facilitator, was over heard telling one of his client some times during the heat season of the capital market price crashed that the faith and successful investors employed in building fat portfolio is hundred times more deeper than those deployed by a believer to make heaven.

What an irony, but to be candid with the notable investment analyst there is no better way to counsel an investor building a retirement portfolio on stock that is endangered by market fall.

One of the most difficult advices any Pension Consultant can give to a client using today economic indices will be difficult suggesting to client this period to anchor their Retirement Option on Stock Investment.

But in all, it is still very glaring that the capital market over a longer period have always proven to be the most reliable source of wealth creation to retirees.

But looking into other investment windows I can say that there are three key major drivers to a mans wealth as a retiree includes what he earn?, how he spend his pay-packet or take home? And what he keeps and plan for his old age.

While some even believe that maximizing ones earning power is unarguably the most important driver to wealth, the more cash you have coming into your pocket the more chances you have in deploying it.

As the nation economy is in red, with the inflation rate going at nautical miles eroding into the sweat of investors it is advice that the only place or the wisest thing to do now is to seek wise counsel from men who had a deep knowledge of the market.

In a moment like this the only person capable of giving the right advice and the best person whom I can only take his advice for investment decision is the only man who I know has lost money in such session of the market once bitten twice shy, once a connoisseur is always a connoisseur.

So taking the wise counsel of one of the world acclaimed investment writer with deep understanding of market fluctuations, Michael Sincere in his book “101 Investment Lesson From Wizard of the Wall Street” wrote that it is very hard getting competent, experienced, and objective financial advisor that will create investment plan that will sooth your purpose.

Michael Sincere was a scion of the first generations of Wall Street Stockbroker, a company where he eventually worked and garners the experience he has been sharing with savvy investors through his book.

In finding solution,from notable market experts on the misfortune that hits him when he lost all his investment during a market recession.

Among his findings from the secrets of the pro’s on how to play a bullish and the winning strategies for winning in a bearish season where the lessons he packaged in the bestselling book.

For any investors who want to run with the bull without losing their shirts, must remember that when you get informed financially you’ll be deformed. don’t forget the FOUR unbeatable suggestions on how to get help in a receding economy also made by Michael Sincere which includes:

[1] Hiring or engaging an investment advisor.

[2] Enlist or Join an investment Club.

[3]Practice by making paper trading.

[4]Attend classes of financial seminars.

This is the most appropriate moment for clever investors to adjust their portfolio to reflect the circumstances around the market from one style to the other rigidity and panic will not help.

Patience has so many rewards slow and steady brings out the stars and discipline is the first rule of the game in a depress economy.

Remember that if past performance is not a guarantee of future result, investing in Stock involves risky and the market is more volatile than other forms of investment always be very careful that you have a thorough understanding of the investment objectives, risks, management fees, charges and the expenses before investing.