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.

EFCC compels Sterling Bank to admit cheating customer of N10.5m

Banking relationship did certainly went awry between Sterling Bank and Great Bakis Limited, its customer that had taken several loan and overdraft facilities from the bank. This banking relationship should, under normal circumstance, have ended on a happy note had the bank shown some conscientiousness in its figure adds up.

The figures did not add […] here

OCEANIC BANK, BANK PHB AND STERLING BANK GET CBN LIFELINE

L-R: Cecilia Ibru, Oceanic; Francis Atuche, BankPHB; Yemi Adeola, Sterling

Nigeria’s version of the global credit crunch might have crystalised into a reality that may not be easily wished away. Reports from sources inside the Central Bank of Nigeria asserted that three banks in Nigeria have been given lifelines to shore up their liquidity standing. These banks according to the source are; Oceanic Bank Plc, Bank PHB and Sterling Bank. With the exception of Sterling Bank that secured a N90billion lifeline, the other two got N100billion funding in what banking industry analysts said is akin to a financial bailout for the banks.

This is coming on the heels of a meeting of chief executives of banks held on Tuesday, 15 October 2008. The high point of that meeting was the decision by the banks’ chief executives to formally request the Federal Government to intervene in the nation’s financial sector to forestall the effect of the ongoing global financial crisis on the system.

The committee of banks chief executives also agreed at the meeting 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.

Reports indicated that the bankers would have preferred the United States of America and Europe’s option where government directly intervened to inject funds into selected crisis ridden banks and, in some cases, nationalizing the financial institutions that were strategic to the main-stream banking public but whose liquidity profile had become moribund.

Sources inside the Central Bank of Nigeria informed that the CBN Governor rather opted for the fiscal management approach. The CBN, had, before the meeting of the banks chiefs, granted the banking industry a concession through a circular directive of October 2, 2008 to restructure some of their capital market exposures to December 31, 2009. Interpreted, this concession allows banks not to make provision for non performing loans and other facilities that had gone into the nation’s capital market that had taken a dive for the deeps since March, 2008.

“Apparently, the concession was not enough to stave off the simmering threat of illiquidity banks were experiencing.” The CBN source said. “In response to the appeal of the banks chiefs, the CBN offered the option of an expanded discount window operation. The key elements of the expanded discount window operation provided the opportunity for banks that need to assuage their liquidity problems to use short term financial instruments, like overnight standing facility, treasury bills, federal government bonds and non-federal government securities as collateral to secure long term funds from the CBN. You know the CBN conducts liquidity mop up of the money market by selling treasury bills and also sell bonds to financial institutions, normally, treasury bills are due in 30 days while bond are due in period ranging from 90 days to 180 days. Now, to help the liquidity problems in the banking sector, the CBN, with the expanded discount window, allows the banks to present these short term instruments which the CBN will use as collateral to provide funds for them for repayment period of 365 days.” The source explained.

This option does not seem to have been effective, the Nigeria Inter Bank Official Rate, the rate at which banks lend themselves money, have continued to increase, spiking to as high as 21 percent last week. This may not be unconnected to the fact that just a few banks are in the position to lend money to needy banks. Fortune&Class Weekly reported last week that many banks chief executives continued to troop to First Bank Plc, to negotiate and secure funding to keep their operations going.

FINANCIALBRIDGE: HOW TO DO BUSINESS WITH THE AMERICAN INVESTMENT COMPANY THAT FACILITATES OFFSHORE FUNDING FOR NIGERIAN BUSINESSES

When Patrick Fournie, Senior Advisor with FinancialBridge, Inc. made his presentation on the “Private Ownership of Modular Refineries in Nigeria: The New Trend in Building Petroleum Refining Capacity: The Financialbridge Experience” at a seminar organized by the Energy Industry Development Initiative at the Federal Palace Hotel, Victoria Island, Lagos State, this past Tuesday, 11 November, 2008, seminar participants listened with rapt attention.

Fournie presentation, was for the Nigerian and other foreign participants at the seminar, a revelation of a new vista in financing strategies on the pivot of offshore financing, he informed the seminar of how FinancialBridge is facilitating funding for a Pharmaceutical Project in Abuja, at a cost of $12.2 million and an aluminum roofing sheet & allied project at Onna in Akwa Ibom State at a cost of $6.6million. FinancialBridge, he said, is also involved in funding for an amusement park project at Isheri, Ogun State, at a projected cost of $22.3 Million, a pit quarry mining project at Oyebiyi, Oyo State at a projected cost of $7.5 million and a 5-Star luxury hotel in Abuja at a projected cost of $55.8 million.

Other projects FinancialBridge had been engaged to facilitate funding for by Nigerian entrepreneurs are the phase one of the 12,000Barrels per day modular refinery project at Eket in Akwa Ibom State at a cost of $43.7 million and the 12,000Barrels Per Day modular refinery project at Kolo Creek in Yenagoa, Bayelsa State at a projected cost of $121.3 million. A $197.5 million 18,000Barrels Per Day modular refinery project in Edo State is also one of the projects FinancialBridge is facilitating offshore funding for.

Fournie who flew into Nigeria to make further revealed how his company had structured funding and project implementation procedures for the soon to be streamed 12,000 Barrels Per Day Amakpe Refinery Project at Ikot Usekong – Eket in Akwa Ibom State and the Rehoboth Refinery, also a 12,000 Barrels Per Day Refinery Project in Yenagoa, Bayelsa State.

Fournie, who, on behalf of Financialbridge, signed a Memorandum of Understanding (MoU) appointing Energy Industry Development Initiative as its representative in Nigeria, explained that FinancialBridge is an export finance and business credit consulting firm:

“We work with U.S. and international financial institutions to provide innovative funding solutions to private companies and government agencies, including: export trade finance, project finance, public sector financing and export working capital. We are also involved in equity financing and facilitation of bridging loans” Fournie said.

“We cooperate with Project Implementation and Management Companies in ensuring effective utilization of procured funds for successful planning and execution of related projects and trade transactions.”

Highlighting its primary sources of export funding in the United States financial market, Fournie said his company’s sources include: Export-Import Bank of the United States (U.S. Ex-Im), Overseas Private Investment Corporation (OPIC) and the Export Finance Banks and Credit Insurance Companies, among others:

“Ex-Im Bank is the official Export-Credit Agency of the United States that helps create and maintain U.S. jobs by financing the sale of U.S. Exports, primarily to emerging markets throughout the world. Ex-Im Bank provides Loan Guarantees, Export-Credit Insurance and Direct Loans, in fiscal year 2007, Ex-Im Bank authorized $12.6 billion in financing to support an estimated $16 billion of U.S. exports worldwide.” Fournie said.

Perhaps, of importance to Nigerian entrepreneurs, is the revelation by Fournie that the Ex- Im Bank has approved a $1.0 billion facility to guarantee Nigerian Projects (of which $800 million is still available) despite the global financial melt down.

Explaining the process for securing offshore funding for projects in Nigeria, Fournie said:

“Under the Ex-Im Bank Guarantee Program, the Promoter is required to provide Statutory Equity Contribution of 15% of U.S. Cost Content, while the U.S. Lender funds 85% of the U.S. Cost Content utilizing the Comprehensive Credit Guarantee of Ex-Im Bank. The Project Promoter is further required to provide Local Bank Guarantee to support the 85% portion of the U.S. Loan as well as finance local In-Country Costs requirements within the overall Project Cost.The U.S. Ex-Im Guaranteed Loans have Medium Term Tenure of 5 to 7 years at Interest Rates of +/- 2% above Six Months Floating LIBOR (London Interbank Offered Rate).

Some of the projects funding prospects of FinancialBridge include Oil and Gas (Modular Oil Refineries, Gas Gathering & Processing Plants, Downstream Petrochemical Projects, Pipelines, etc.), Energy (Gas Turbines and Diesel Powered Plants), Communications (Wireless VSAT Network VoIP Telephone, Fax, High Speed Broadband Internet Systems, Cable TV, etc.) and Solid Mineral (Quarrying & Processing).

Other funding prospects are: Manufacturing and Assembly (Small and Medium Scale Plants), Construction (Pre-engineered Buildings & Facilities, Stadiums & Arenas, Industrial Parks, etc.) Agro-Business (Farming & Food Processing), Medical (Pharmaceutical Projects, Supplies & Clinics), Tourism (Amusement Parks, Hotels/Resorts, etc) and Aviation (Used & New Passenger & Cargo Aircrafts, Helicopters, Airport Development & Expansion, Avionics & Spare Parts, etc.)

Highlighting the milestones already attained with the 12,000 Barrels Per Day (BPD) Amakpe Refinery as a case study, Fournie said:

“The Amakpe Refinery is being implemented in two phases, with Phase 1 – 6000BPD Refinery Plant originally estimated to cost about $36.5 million and now revised to cost $43.7 million, including Escalation, and revised Field Erection Costs. Construction of 12KM Dual Steel Pipeline connecting Exxon/Mobile QIT and Amakpe Tank Farm is estimated at $10 million of Additional Cost. The Project is expected to start production by October 2009. Out of the current revised Project cost of $43.7 million, $26.2 million has been expended while $17.5 million is outstanding to complete full funding of the Project.

“UPS Capital/Ex-Im Bank Loan of $10.3 milion is being disbursed to Ventech, based on P&M Construction Progress Payment while Amakpe Refinery has fully paid required statutory Equity Contribution and continues to pay the Counterpart Funds. Akwa Ibom State Government Investment of $8.5 million has also been applied to the Project

“As at June 27, 2008, Ventech achieved 50% Mechanical Completion of the Refinery Plants and Machinery Fabrication, which was certified by visiting representatives of the Department of Petroleum Resources, including Mr. M.D.B. Ladan-Head Downstream, Mr. O.A. Adeleke- Assistant Director, Dr. D.M.E. Eradiri- Chief Environmental Officer, Mr. Oyedele Sangobowale and Mr. Hussaini Basaka-Site Representatives. Based on this development, Amakpe Refinery has qualified to receive $1.2million Security Deposit earlier paid to DPR as a requirement for revalidation of related Refinery Construction License.

“Sterling Bank has approved additional $9.3 million Loan Facility for the Project. Amakpe Refinery is planning to issue 15,000,000 Shares of Common Stock of the Company for sale to Private Investors. The Private Placement is being packaged by Financialbridge and Sterling Bank for issuance by Sterling Capital Markets (Issuing House).

To start -up the process of obtaining required funding, a Company is required to retain the services of Financialbridge which will develop a Bankable Business Plan that will satisfy U.S. Export Financial Market requirements and procure the Project Loan.

The retainership will further cover service coordination of Project Loan Packaging and Procurement that will involve the Borrower and the U.S. Lender. The U.S. Lender will underwrite the submitted statutory documentation leading to Loan approval, following which the Lender will request the U.S. Ex-Im Bank for issuance of Political Risk and Medium-Term Insurance/ Comprehensive Credit Guarantee before disbursement of related Loan. The process of underwriting the Loan through approval and disbursement could be concluded within 45-90 days after the U.S. Lender receives the complete statutory documentation as outlined.

Financialbridge be responsible in carrying out tasks that will result in the successful procurement of U.S. Loan for the implementation of the project which include: Conduct of Feasibility Study and preparation of Bankable Business Plan that will satisfy U.S. Export Financial Market requirements. The Business Plan will be concluded within 30-45 days from receipt of Engagement Fee, Data from Market Research as well as Borrowers information. The draft of the Business Plan will be forwarded to the Company for approval and possible input before production of final Document.

FinancialBridge also processes Due Diligence, Approval and Disbursement of Project Loan within 45-90 days of the U.S. Financial Institutions receiving and underwriting complete statutory documentation from the Nigerian company.

If required, Financialbridge can also be engaged to Package and Instrument Private Placement of Shares of Common Stock of the company to raise additional funds through Private Equity Investment, utilizing a local Nigerian Bank as Issuing House.

The Funds raised through the Private Placement could be applied to fund Local Project Site Development and In-Country Costs as well as required Equity Contribution, etc.

The Nigerian company shall be responsible for the following within the requirements for successful Loan Procurement, including: Obtaining Nigerian Bank Guarantee for 85% or 75% of the total U.S. Loan amount to fund the Project, depending on the Ex-Im Bank or OPIC requirement.

Securing all required Permits and Licenses from Nigerian Regulatory Authorities, submission of three years audited financial statements of the Nigerian bank as certified by a renowned accounting firm. Provision of Equity Contribution of 15% of total U.S. costs content within the overall Project cost for U.S. Ex-Im Bank Guaranteed Loan to be added to 85% of total U.S. cost content as Loan, or 25% as statutory Equity contribution of total Project

Confirming Energy Industry Development Initiative’s (EIDI) relationship with FinancialBridge, the organisation’s Chief Executive Officer, Mr. Tom Obaseki said FinancialBridge has already shown interest in facilitating funding for some project ideas it had forwarded to FinancialBridge.

“As we speak, we have forwarded project proposals for the establishment of 5-7 MMSCFD Modular Gas Gathering, LPG and Lean Gas Production Plant in Nigeria, the establishment of Integrated 55MW Power Plant, Natural Gas Gathering and LPG Processing Project in Nigeria and for Development of Pre-engineered Medical Clinic & Diagnostic Centers, Pharmaceutical Project and Customized Medical Trailers & Boat Clinics, complete with Outreach Medical Technicians Training Support.” Obaseki explained.

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.