Money Laundering: Fani-Kayode’s Trial Commences

Femi Fani-KayodeTrial commenced afresh on Monday in the money laundering charge filed by the Economic and Financial Crimes Commission, EFCC, against former Aviation Minister, Femi Fani-Kayode.

Mr. Fani-Kayode is facing a 40-count charge of laundering about 100 million naira.

The offence was allegedly committed while he served first as Minister for Culture and Tourism and then as Aviation Minister.

The trial began with the prosecution’s first witness, Mr. Okechukwu Okeke, testifying before the court.

Mr. Okeke, a Relationship Officer with First City Monument Bank, FCMB, said that Mr. Fani-Kayode’s account at the bank had become dormant.

He explained that the account was with First Atlantic Bank before it was acquired by Finbank, which was also acquired by FCMB.

The prosecution counsel, Mr Festus Keyamo, tendered Mr. Fani-Kayode’s bank statement of account between August 2008 and September 2012, but the inability to provide the bank statements between 2004 and 2008, the period during which Mr. Fani-Kayode served as minister ended the trial abruptly.

Efforts by the defence lawyer, Ifedayo Adedipe, to secure a long adjournment date for continuation of the trial was rebuffed by the judge who insisted that the trial had dragged on for too long.

Mr. Fani-Kayode was first arraigned in 2008 and since then, three judges have at different times handled his case.

Presiding Judge, Justice Rita Ofili-Ajumogobia, has fixed March 18 and 19 for continuation of the trial.

Court grants Gbenga Daniel leave to travel for medical attention

Former Ogun State Governor Gbenga Daniel on Thursday was granted leave to attend to his health issues abroad.

The State High Court hearing the case in Abeokuta ordered the release of his international passport which had been in custody of Economic and Financial Crimes Commission.

The order by the presiding Judge, Olanrewaju Mabekoje, was subsequent to a motion filed by the lead counsel to the accused, Taiwo Osipitan, informing the court that Mr. Daniel needs to urgently attend to his health in London.

“We prayed Your Lordship to ask EFCC to release the accused passport to travel for urgent medical attention in London which is his fundamental rights. We attached x-ray and medical report to the application,” Mr. Osipitan pleaded.

“There is need for defendant to go and take care of his health. We need a healthy defendant, we shall return the passport. He would not spend more than two weeks,” Mr. Osipitan held.

In response, Rotimi Jacobs, the EFCC’s lead counsel said the accused should not be allowed to go abroad for medical treatment.

But the judge ordered the anti-graft agency to release the international passport to enable the accused seek medical attention outside the country.

Mr. Mabekoje, however, ordered the accused to return to the country not later than 30th September, 2012 and within three days, return the passport to the EFCC.

Daniel owns an account allegedly used to siphon state funds.

At the hearing, a witness of the Economic and Financial Crimes Commission (EFCC) who also works with the Finbank – Omolara Akiodem – confirmed to the court that the accused is the sole signatory of an account belonging to Masterline Investment and Property Limited.

The EFCC had alleged that the company was one of Mr. Daniel’s sources of siphoning State Government’s money while in office as the governor.

The witness during cross examination told the court that since inception of opening the account in 2000, Mr. Daniel till date remains the only signatory to the account

She said Mr. Daniel between 2003 and 2009 had been signing the cheques assigned to the account, adding that on 9th September, 2005, a GTB cheque number 3037 in the sum of N10million was deposited into the account.

Similarly, on 10th February 2006, cheque number 3962 bearing the sum of N10million was paid into the account by one Adenike Ogundipe, who also on 25th April 2005 deposited N9million with cheque number 5013.

The judge adjourned hearings of the case to 15, 25 and 26 of October, 2012.

Gbenga Daniel has been facing criminal charges filed by the Economic and Financial Crimes Commission in an Ogun State High Court.


Internal fraud in Banks responsible for collapse of Capital market – CBN deputy governor

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu on Wednesday said that lending to non-priority sectors and to operators of the capital market by commercial banks in Nigeria were key factors responsible for the near-collapse of the nation’s capital market in 2009.

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu

Mr. Moghalu disclosed this while he was making a submission at the resumed hearing of the House of Representatives ad-hoc committee investigating the collapse of the capital market.

He said that the nation’s financial system would have collapsed if the CBN had not exercised its responsibility as the lender of last resort as he replied to questions by members of the ad-hoc committee on who authorised the CBN to nationalise the bank.

The CBN in November 2008, injected N602 billion into eight banks that were almost running aground.

Giving a breakdown of how some of the banks manipulated their share prices, Mr. Moghalu said that “Afribank PLC via a share buy-back arrangement manipulated its share price when it went to the stock market in 2007.”

He claimed the bank through the services of three stock broking firms bought 66 per cent of the bank’s offer using fictious name of 1,258 subscribers and at the end of the offer, they will announce that their offer was over-subscribed.

He also revealed that Finbank in August 2006 conspired with three companies incorporated by the bank to buy N2.8billion worth of its own shares between August 2006 and August 2008, adding that the bank will claim the offer was over-subscribed.

Another bank accused of the fraudulent shares buy-back was Intercontinental bank. The CBN deputy governor said that the bank bought 3.4million units of its share which constitute 29 per cent of the bank’s share value on the stock market between September 2007 and December 2009.

He gave a breakdown of the non-performing loans by the eight liquidated banks as below:

  • Bank PHB – 40.86%
  • Oceanic Bank – 44.35%
  • Afribank – 47.0%
  • Finbank – 47.45%
  • Intercontinental bank – 48%
  • Equatorial Trust Bank (ETB) – 57%
  • Wema bank – 77%
  • Spring Bank – 85%

He described the banks as ‘net-takers’ that are only surviving exchanges from the inter-bank rate markets’. He added that between 2008 and 2009 “the banks were also on ‘life-supports’, surviving on sub-ventures from the CBN such as the Expanded Discount Window and Standing lending facility.

Bank Consolidation

A member of the committee, Bimbo Daramola, raised the issue on how the bank consolidation of N25 billion forced on the bank’s was the reason why the banks were involved in the round-tripping of share buy-back in a bid to rush and make the N25 billion.

Mr. Moghalu noted that it was just eight banks that were culpable of the wrong-doing and not all the banks that sort to carry-out the consolidation. “Without the consolidation, the global financial crises would have wiped out all the Nigerians bank” he said.

He added that the knock-on effects of the global financial crisis and the capital flight of $15 billion also contributed to the crash of the capital market.

Another Member of the ad-hoc committe, Representative Usman Mohammed, noted that despite the huge investment of funds into the banks, the lending rate to the real is still poor. Responding to the observation, Mr Moghalu stated that “the most important obstacle and challenge to the nation’s real sector is the absence and lack of power and not interest rate”, adding that “loans to the agriculture sector has risen from 1% to 3% in the last one year.”

He also assured the hearing that with the ongoing reforms across the nation’s economic sector, the banks will start granting more loans to the sector once the reforms kick-off.

He further explained that banks lending has increased drastically due to AMCON’s purchase of all bad loans. “Just about 5% of banks loans are now bad loans” he stated.

550 to loose jobs as FCMB acquires Finbank

First City Monument Bank, FCMB, in its acquisition bid of Finbank will today determine the fate of about 550 staff of Finbank whose services overlapped with employees of FCMB.

The 550 staff will be given the option to resign and pursue any other career of their choice through the generous severance package being worked out by the management of the two banks.

The package, apart from the financial provisions for those affected, also has counselling and training session that would enable them adapt to a new environment and possibly a small business of their own.

Giving the hint of the progress of the merger between FCMB and Finbank, Managing Director of FCMB, Mr. Ladi Balogun, said in the process of trying to achieve the synergy of the two banks, the decision was taken to close a number of branches of Finbank that were considered not to be viable. Finbank, he said, had a total branch network of 183 and 44 of these branches will be shut down based on the fact that some of them are close to FCMB branches that are profit making and those in some other places that are not profitable.

He disclosed that 320 staff of FCMB were earlier disengaged in preparation for the merger and integration of the two banks.

He said: “The bank’s customers have been fully briefed and we are engaged in what we call below the line communication with them and also communicate with them directly.

“We believe that the process has gone very smoothly. Unfortunately about 550 Finbank staff have been given the opportunity to resign, that 550 have almost unanimously taken up the opportunity of the offer to resign. That is a relatively small number when you compare to other banks that have gone through this exercise.

“We are retaining 70 per cent of the staff of Finbank, we also ensure we put in place very robust welfare package for those that will be affected. It includes training budget, which will be used to help prepare them if they want to go into entrepreneurship or if they want to continue in the banking industry; proper counselling, to make sure that the process is well managed and does not create too much shock for them. We have ensured that we have paid very healthy severance package when compared with what has been done by other banks.

“We have retained medical insurance for all employees and four children and we have allowed them to keep all the assets of the banks that they have— their cars, generators and so forth. Of course, any benefits that they are entitled to prior to this exercise, such as gratuity has also been retained. Why staff rationalization is necessary in any merger exercise that one may do is important that we do it with human face; we believe we have done that.

“We have been very pain taking in selecting that that will be affected and we believe that the number 550 was the optimum number; we believe that in terms of the labour market in the next five year this merger will create multiple jobs than it has destroyed. In the areas where we will be standing, we will still be recruiting.

“A lot of the redundancy and the branches that have been closed came about because of overlap between FCMB and Finbank branches; branches that were considered not viable and could not be turned around. These were the major driver for this closure.”

“The rational for this acquisition or merger is to increase our reach, and move us from what may be described as a fairly niche player in the retail business to a mass market player in the retail business still retaining our strength in corporate and.

“We certainly believe that the merger will create greater career opportunity for staff of Finbank and FCMB that is retained largely because; with a bigger institution you have a higher responsibility.

Finbank at the moment has 1, 800 staff as against FCMB 1,700. On the completion of the merger the new FCMB will have total staff strength of 3,000.

He said that the merger between FCMB and Finbank will be concluded by the end of June 2012. He said that FCMB in preparation for the exercise had earlier in the year disengaged 320 of its own staff.

According to the bank, the guiding principle in the selection of those to go was merit and performance. The bank said the best in the pool of staff in both banks were retained. It said that the cost of the exercise is still being worked out and that the management of the bank is engaged in discussion with the trade unions.

Finbank was one of the banks the CBN said was in grave situation and sacked it Managing Director along with four others in August 2009. It was offered for sale by CBN and FCMB had bidded to acquire the bank and was given the nod by CBN.