Ordinarily, banks allocate funds from savers to borrowers by way of loans, significance of which is immeasurable. To confirm the huge importance attached to banks, the following laws have been enacted to govern the regulations of banks in Nigeria. ‘Banks and Other Financial Institutions Act (BOFIA) 1991 (as amended) and the CBN Act 2007, being the foremost. Other legislations that assist with the regulations of banking include– ‘Companies and Allied Matters Act (CAMA) 1990’; ‘Nigerian ‘Deposit Insurance Corporation Act 2006’ – establishing NDIC; ‘Foreign Exchange (Monitoring & Miscellaneous Provisions) Act 1995’; ‘Financial Reporting Council of Nigeria Act 2011’; EFCC (Establishment Act 2002)’- establishing EFCC; Investments and Securities Act 2007’ – establishing the Securities and Exchange Commission (SEC); and ‘Asset Management Corporation of Nigeria Act 2010’ – establishing AMCON.
But banks in Nigeria, especially the commercial banks are second to none among the sectors that aid and abet the corruption scourge in the country. Below are few ways they conspire to undo the country:
Safe Custody Service of Articles by Banks
In the case of safe custody service, the customer keeps certain valuable article such as shares, securities, jewelries, academic certificates, and so on with the bank for the purpose of safekeeping the article. For this service, the banker collects commission depending upon the size of the article and the period for which the article is kept.
The articles are either kept in sealed envelopes or in locked up boxes, while the banks issue receipts to customers for the safe-keeping.
But foreign currencies are being warehoused this way in the banks. It is not new, it has been in practice right from the military days. For instance, a lieutenant-colonel from Kano kept a large box for safe-keeping with one of the first generation bank before the alleged botched General Diya-led coup in 1995.
After he was arrested, interrogated and forced to declare his belongings, some soldiers’ swamped on the bank at about 5 pm demanding for the box kept on safe-keeping by the lieutenant-colonel. The box which was marked ‘content unknown’ in the bank’s register was stuffed in full with foreign currencies.
This service of the banks is still in use till tomorrow to hide the stolen funds of public officials in Nigeria and it is difficult to trace by anti-graft agencies.
Banks’ Sundry Suspense Accounts
Banks ordinarily maintain some accounts in their own names where miscellaneous items are recorded, e.g. infrequent transactions involving customers, cheques yet to mature for payment are posted/recorded. The balance of these accounts can run into billions.
Many banks indulge in maintaining such accounts for some highly placed men and women, especially for both serving and retired public servants.
Here, the accounts are opened for the person but neither in his name nor his proxy’s name or in the name of his firm. Sundry suspense accounts do not require issuing of cheque leaves for withdrawal. All that is demanded of him is simply to tell his account manager how much he wanted and the bank passes its entry and withdraws the money for him. Such accounts are only known and managed by the banks top management member. Of course, it is similar to the coded account of the Swiss banks.
The banks render this dubious services to conceal such customers’ identities under the pretext that they are banks’ suspense accounts, perhaps to shake off tax authorities and anti-graft agencies from such accounts, some of which held illicit assets from criminals, traffickers, arms dealers and other outlaws. These banks rake so much profits doing business with those people who stole from the country and that includes some of the most notorious con artists and those funding insurgencies and criminalities in the country. The banks help those questionable characters to conceal their wealth despite the banks knowing their sources.
Opening and Operation of Ghost Accounts
An account which is opened in the name of an individual, firm or group of individuals should accordingly receive payments in the same account name and particular account number. The erstwhile pension were carried out this way; an account was opened for instance in the name of say, ‘Sule Obi Ayo’ with account number – 1234567899. Staff of an agency of government in connivance with the bank continue to warehouse payments in hundreds of thousands of naira into the same account number by merely varying account names, such as Sule Obi Ayo, Ayo Obi Sule, Obi Sule Ayo and so on. About 25 to 30 vouchers or pension allowances are paid into one account number, to the extent one N20m to N30m are paid into one pension account in a month.
A normal banking procedure requires that only one salary figure from a government agency is allowed into an employee’s account in a month, the bank remits excess vouchers or moneys being payment into the same account number to the agency of government, but banks in Nigeria did otherwise in respect of pension embezzlements without sanction.
Take for instance, a first generation bank in 2012 graciously owned up to the fact that some of its staff indeed connived with three staff of the Accounts Department of the Federal Civil Service Commission (FCSC) to steal N110 million meant for the payment of pensioners
The Federal Civil Service Commission (FCSC), which is charged with the recruitment of staff for all federal ministries, departments and agencies was caught up in the multi billion Naira pension scam which rocked some federal establishments in the country in 2012.
While retirees and pensioners were dying on queues undergoing various verification exercises purposely designed to frustrate their collection of their entitlements, some top government officials at the Federal Civil Service Commission were nabbed for stealing and sharing the funds meant for the payment of the pensioners.
However, the Economic and Financial Crimes Commission (EFCC) charged the officials who shared the sum of N110million meant for the payment of FCSC’s retirees before an Abuja High Court.
They are the then Acting Director of Finance and Accounts, Alhaji Hassan Mohammed Tukur, the Chief Accountant, Mr. Babatunde Bisuga and another staff in the Accounts Department, Mr. Mohammed Ndakupe.
Investigations however showed that the embezzlement of the pension fund was aided by corrupt officials of the first generation bank who collaborated with the FCSC officials to perpetuate the fraud.
In a statement made to the EFCC, the bank’s Business Development Manager said that the bank compromised the procedure for opening an account by government’s agencies.
According to him, the bank ought to get a letter from the Accountant General of the Federation before FCSC can open a new account.
“With regards to Account No 4062040010584 (where the stolen money was domiciled), there was no approval of Accountant General of the Federation. Using our discretion, we; myself and my boss, used previous approval of the Accountant-General of the Federation, since it is in the same name of FCSC.
The procedure of opening a public sector government account in any bank requires authorization from the Accountant General plus mandate from the relevant commission or agency.
He further told investigators that opening of the fraud account was duly authorized by his boss at the bank, a Deputy General Manager.
EFCC later also invited some management staff of Unity Bank for allegedly bribing one Ahmed Inuwa Wada with N18 million in orders to retain the Police Pension account.
EFCC had on Aril 2, 2012 arraigned the Atiku Abubakar Kigo (director of the Police Pension Office), Ahmed Inuwa Wada and four others on 16 count-charge for allegedly defrauding police pensioners to the tune of N32.8 billion.
Specifically in count ten of the charge EFCC said ‘’ that you Ahmed Inuwa Wada was alleged to have collected the “sum of N18 million without consideration from Unity Bank Plc whom you knew to have connection with your official function to wit maintaining a pension account with the said bank and you thereby committed an offence punishable under section 119 of the penal Code Act..
And in count 11, EFCC said also “that you AHMED INUWA WADA between February, 2011 and June 2011 at Abuja being a public officer accepted from the Unity Bank Plc. a gratification in the aggregate sum of N18 million which was not your lawful remuneration as a reward for retaining the Police pension account with the said bank and you thereby committed an offence punishable under section 115 (ii) of the Penal Code Act”.
In a proof of evidence just filed before a Federal High Court in Abuja by EFCC in the trial of Dr. Sani Teidi Shuaibu, a former Director, Pension Administration in the Office of the Head of the Civil Service of the Federation for looting N4.56 billion pension fund, the anti-graft agency showed how some banks and bank staff participated in the commission of the crime against pensioners.
The commission said that in one breath, the findings of their investigation team showed that N98.5 million was traced to 32 ghost pensioners. Yet the fraudulent payments were made from the office of the head of civil service of federation through Fin Bank.
While the EFCC indicated in the said proof of evidence that the another first generation Abuja bank branch manager confessed to have remitted N146.8 million to Mrs Chidi through his firm’s account with the bank , he admitted in addition to have received N7.3 million for been a conduit pipe.
He confessed to have used his accounts for collecting the sum of N221.5 million for fictitious contracts from head of service.
Multiple Exchange Rates Regime
Section 2 of the Central Bank of Nigeria Act, 2007 provides that ‘’the principal objects of the Bank shall be to – (a) ensure monetary and price stability’’.
Section 16 of the Act says also that ‘’the exchange rate of the Naira shall be determined, from time to time, by a suitable mechanism devised by the Bank for that purpose. Sections 35 & 36 provides respectively that ‘’the Bank shall make public, at all times, its monetary policy rate’’ and ‘’ (1) The Bank shall be entrusted with Federal Government banking and foreign exchange transactions’’. Let’s see how these objects and functions are observed in breach:
On May 24, 2016, CBN announced a flexible and multiple market model, which implied a floating exchange rate regime.
By this development, the interbank foreign exchange market, which was dead before then was revitalized on unrestricted exchange rate basis, while the Bureau de Change (BDCs), would continue their operations, thus creating multiple exchange windows.
A flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand. But CBN went ahead to create multiple official exchange rates, including N305/$1 as fiscal parameter. It uses this to supply cheap foreign exchange to companies in key sectors of the economy, including fuel importers, as well as excise duties charged by Nigeria Customs Service, and applied by other government departments.
Experts say the N305/$1 exchange rate understates the naira equivalent of dollar revenue into the Federation Account. The Lagos Chamber of Commerce and Industry (LCCI) director-general, Muda Yusuf said, ‘’A forex regime that perpetuates a rent economy would not serve the cause of economic advancement. It creates opportunities for corruption, resource misallocation, impedes the inflow of investment and creates transparency issues in the allocation of forex.”
WWWWWThe Emir of Kano, Muhammadu Sanusi, on September 2, 2016 said, ‘’You don’t need to be an economist to know that any system that allows you to sit in your garden and with a telephone call make N1 billion without investing a kobo, that system is wrong’’.
One can go on and on in the serial and endless manner the banks have turned themselves as corruption conveying belt in the country. It has been argued that no one can tame corruption without starting with himself, and then movWWe on to the banks and the judiciary to get things right.
Senate on November 4, 2019 summoned the Central Bank of Nigeria Governor, Godwin Emefiele to appear before to explain why it applied multiple exchange rates for disbursement of funds for to partly execute the Lagos-Ibadan Expressway, Second Niger Bridge, Abuja-Kano Expressway, East-West Road and Mambilla Hydro Project. The multibillion-dollar projects are being funded with the Nigeria Sovereign Investment Authority.
According to Senate Committee on Finance Chairman, Senator Solomon Adeola, the contracts for the projects were denominated in naira but the CBN exchange rate for the disbursed fund was N325 to a dollar instead of the official rate of N305.
“This committee will like to see the contract documents for these projects and why the exchange rate for the dollar to naira was at N325 to a dollar instead of the official rate of N305 in a government to government transaction for these key infrastructure projects’’, Adeola said.