By Emeka Okoroanyanwu
Ever wondered why Nigerian banks continue to roll out stupendous profits at the end of every financial year, irrespective of the country’s parlous economy?
Yes, even if we discount the bit about creative accounting, bubble funds, insider deals, and the buffer that both the CBN and the NDIC continue to lavish on some wobbly banks, the truth remains that many of the banks are actually ‘doing well. In fact, so well that at the end of the financial year just before the Covid-19-induced economic meltdown, a major investor in one of the first-tier banks was said to have smiled home with about N7.5 billion as a dividend.
One does not need to dig too far to unearth the possible sources of such boundless ‘profit’ in an economy that is supposed to be depressed – where the real sector is virtually comatose.
When was the last time you received a debit alert from your bank for a service you never requested for, nor utilized? Most likely, very regularly.
How many times have you given up after futilely trying to get your bank to reverse a debit for a failed POS transaction? Ever wondered why many of the banks curiously insist that you physically visit their branches before they can return your money? Or why they keep asking for POS receipts as evidence, even when their system clearly shows the money did not reach the intended destination or was debited multiple times? Where do such unreversed debits end up?
Those are the little trickles of funds that translate into a massive ocean of profit after tax that the banks declare year after year, even though businesses they claim to finance are all going under and the national economy is not faring any better.
THE REAL DEAL
Incidentally, what the banks pinch off individual accounts is almost inconsequential when placed side by side the organised corporate heist they unleash on the accounts of state governments, ministries, government departments and agencies.
While individuals and the organised private sector might closely monitor transactions and sundry deductions and charges to their accounts with the banks, the same is not always true of accounts of governments and government agencies, which the banks fall over themselves to secure. For Nigerian bank chiefs, state government accounts have, therefore, continued to provide ready sources of cheap, and usually unearned profits. It’s an organised rip-off. And no state government is spared.
MEMORIES OF A NIGER DELTA STATE
A few years ago, precisely, during the early days of the 2015 set of state governors, a financial forensic expert engaged by the then richest Niger Delta state to audit the state government’s accounts with Zenith Bank came out with a mind-blowing revelation: the bank had creamed off tens of billions of Naira, in illegal deductions and charges, from the various accounts of the state government domiciled in the bank.
The consultant, who had a standing agreement to be paid a sizeable percentage of whatever money he would recover from the bank, was already salivating over his expected commission, when he dragged the bank to the relevant Central Bank committee, to begin the process of recovery.
That was before everything went awry.
No sooner had the process begun with the CBN than the same South-south state, which had commissioned his firm for the job, withdrew from the case. It wrote to the apex bank dissociating itself from the consultant and his ‘suit’ against the bank.
Without the backing of the state (the official account holder), the consultant had no locus standi to continue the case against the bank. The petition, therefore, died a natural death.
On what may have transpired, the consultant, who was then making a case for the payment of his professional fee (and some compensation for the unilateral cancellation of the contractual agreement with his firm), alleged that the bank chiefs probably struck an under-the-table deal with some officials of the state.
According to him, having been confronted with the likelihood of a huge refund, the bank reached out to key government officials, probably offered them a mouth-watering amount, and got away with paying less than 5% of the actual amount due to be refunded to the state. The amount was accepted as ‘full and final settlement’, while the dealing officials allegedly smiled to their private bank accounts.
That same settlement template appears to have been carried over to Imo State, where the current state administration is believed to have already acquiesced. Unfortunately, Imolites appear to have blown the whistle on the alleged fraud. And the ghost of the scandal is refusing to be buried.
THE IMO DEBACLE
A consortium of nine Deposit Money Banks (DMBs), allegedly in collusion with corrupt government officials, have been accused of having defrauded the Imo State Government of over N112.8 billion.
The alleged rip-off is said to have been perpetrated through overcharges on loans and overdrafts.
The Nigerian Xpress was reliably informed that the banks perpetrated the fraud through granting of bogus overdraft and loans to the state government with the active connivance of some state government officials, while the money thus creamed off, was split between the banks and some highly placed persons in the Imo State Government.
Sources said that the bulk of fraud was perpetrated during the eight-year tenure of Senator Rochas Okorocha as governor of Imo State.
Following the discovery of the high scale fraud, the government of former Governor Emeka Ihedioha, on June 6, 2019, set up a Financial Advisory Committee (FAC) headed by former Director-General of Debt Management Office(DMO), Dr Abraham Nwankwo, to resolve the issue of financial infraction that occurred in the state.
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The committee had as part of its terms of reference to:
*Ascertain and document the locations of, and balances on, all bank accounts operated by the Imo State Government, its ministries, departments and agencies as of May 29, 2019;
*Review all financial transactions and, where necessary, carry out a forensic audit to ascertain sources of funds and the application of same and
*Review such disbursements/applications of states resources, to ascertain the propriety of levies charges on accounts, interest payment of loans and deposits, year applicable authorization etc.
The Imo State Government, upon the recommendation of the Committee, engaged the services of 10 consulting firms, for a detailed, professional and expedited completion of the task.
After four months of work, and an extensive review of the bank accounts, a report was presented to the then-governor on December 1, 2019.
VOODOO FIGURES AND BANK CHARGES
However, after the examination of the accounts of the state government with the nine banks, it was discovered that the sum of N74,602,631,560.46 was fraudulently charged against the state government. The committee, therefore, asked the banks to refund the money to the government as physical amount involved in infractions and attendant penalties.
In addition, the sum of N38,221,701,806.96 was also to be claimed to cover the principal sum and attendant penalties arising from the aggregation of debit entries to the state account without proper narrations and for which no explanation was provided to the Financial Advisory Committee despite repeated demands.
THE CASE AGAINST ZENITH BANK
While a total sum of N112,824,333,367.42 was claimed against all the banks concerned, one bank’s infraction stood out. Zenith Bank alone was said to be involved in the infraction to the tune of N73,281,899,828.66 (Seventy-Three Billion, Two Hundred and Eighty-One Million, Eight Hundred and Ninety-Nine Thousand, Eight Hundred and Twenty-Eight Naira and Sixty-Six Kobo) of the primary amount, including another of the secondary amount of N38,221,701,806.96 (Thirty-Eight Billion, Two Hundred and Twenty-One Million, Seven Hundred and One Thousand, Eight Hundred and Six Naira and Ninety-Six Kobo), totalling about N111.503 billion.
ENTER UZODIMMA
However, before the government of Emeka Ihedioha could act on the committee’s report, it was removed through a Supreme Court of Nigeria judgment of January 2020. The case was, therefore, handed over to the government of Senator Hope Uzodimma to look into.
CURIOUS SETTLEMENT
After several months of correspondences and negotiations, involving the consultants, representatives of Hope Uzodimma-led Imo State Government and Zenith Bank PLC, the sum of N27.093 billion was irrefutably established against Zenith Bank as minimum recoverable amount, but surprisingly, out of that amount, only N3,000,000,000.00 (Three Billion Naira) was reportedly paid to Imo State as full and final payment by the bank.
It is not clear what happened next, as the staffer of Zenith Bank, who was in charge of its operations in Owerri when the alleged fraudulent acts were perpetrated, was surprisingly appointed the commissioner for finance and coordinator of the state economy by the government of Senator Hope Uzodimma.
The question many, including members of the committee, are now asking is: why has the bank, which had been found to deliberately defraud the state by booking and recovering a loan that was unrequested and not disbursed (even charging interest on the fictitious loan, amongst other infractions), not been reported to the Central Bank of Nigeria and Economic and Financial Crimes Commission (EFCC), but instead is being retained as banker to the state.
Equally curious is that the infractions contained in the report (and which warranted the inquest instituted by Ihedioha, in the first place) were also committed against Imo State Government under the stewardship of another former staffer of Zenith Bank who was equally appointed commissioner for finance in the Governor Rochas Okorocha administration.
The Committee has noted, in a petition to the Speaker of the Imo State House of Assembly, that most of the bank charges against the state were far more than that allowed by the extant banking regulations and guidelines underscoring the incestuous relationship between the then commissioner of finance and his former employer.
In the petition, the committee said it believes a great injustice has been done to the state and needs to be given due attention and remedied.
WAITING ON IMO STATE HOUSE OF ASSEMBLY
Although the petition to the Imo State House of Assembly was copied to former governors of the state, chairman of the Imo council of elders and other key stakeholders, the lawmakers have yet to take any worthwhile step towards remedying the situation. The Nigerian Xpress investigations revealed that the legislators might be observing the body language of Governor Uzodimma to determine its next line of action.
