Nigeria: EFCC docks Microfinance Bank’s legal adviser

The Economic and Financial Crimes Commission, EFCC, on Friday arraigned the Company Secretary of E-Barclays Micro Finance Bank Limited, Abuja, Oby Onwukeme before the Federal High Court, Abuja on a one-count charge of obstructing justice.

Mrs. Onwukeme was alleged to have willfully declined to furnish the Commission with account information of one of her customers, Paulinus Enendu of Pamadas and Sons Limited who was being investigated for obtaining money under false pretence and issuance of dud cheque to the tune of N4.2 million.

She had, despite repeated appeals and citing of Section 38 (2) (a) of the EFCC Establishment Act which relates to the crime of obstruction, maintained that her client’s lawyer wrote and informed her not to disclose the information to the Commission.

The charge reads; “that you Oby Onwukeme being the Legal Adviser and Company Secretary of E-Barclays Micro Finance Bank Limited on or about the 21st day of January, 2013, at Abuja, within the jurisdiction of the Federal High Court of Nigeria, did willfully obstruct the officers of the Economic and Financial Crimes Commission in the exercise of their powers to seek and receive information on Account Number 4010074168 belonging to Pamamdas & Sons Limited, and thereby committed an offence contrary to Section 38 (2) (a) and punishable under Section 38 (2) (b) of the Economic and Financial Crimes Commission (Establishment) Act 2004”.

She, however, pleaded not guilty prompting the prosecution counsel, Maryam Ahmed to ask for a date for trial.

However, counsel to the accused person, C.O Achilike presented an oral bail application which was not opposed by the prosecution.

The judge, Adeniyi Adetokunbo, granted the accused person bail on self recognition, but stated that she must produce two passport photographs, an ID card and an undertaking signed by the Managing Director of E-Barclays Microfinance Bank, Kingsley Onuorah, to produce her when needed by the court.

The judge adjourned the case to July 8 and 9.

SOURCE: Premium Times

Bank boss denies being investigated by EFCC

By Yinka Oladoyinbo, Nigerian Tribune -

The chairman of Allover Microfinance Bank Limited, Dr Ayo Akinyelure, on Sunday, said he had never been investigated by the police over the withdrawal of the licence of the bank by the Central Bank of Nigeria.

He also said there was never a time that officials of the Economic and Financial Crimes Commission (EFCC) invited him on the development.

Akinyelure, who is a leading candidate of the Labour Party (LP) for the Ondo Central Senatorial district, while reacting to a publication in the media, said the bank was a legal entity that should not be mixed up with him.

According to him, the withdrawal of the licence had already been protested against, as it was done erroneously since the bank had complied with the conditions of the apex bank.

He argued that his political opponents wanted to use the withdrawal of the licence to tarnish his image and whip up sentiment over the coming senatorial election.

He, however, challenged the people to come to the public if they had any information that could affect him in the election instead of hiding under the action of the CBN.

The LP chieftain explained that all the conditions for the withdrawal of operational licence of microfinance banks as stated by the CBN did not apply to the bank.

A copy of the protest letter made available to newsmen reads: “That up till the time of pronouncement of CBN, we still open our doors to business and have been honouring our financial obligations to our customers as at when due.”

Akinyelure, however, said following the directive of the CBN that the bank should recapitalise with N99.7 million, the management had injected N103 million into the bank.

He said: “Ayo Akinyelure is a legal entity; Allover Microfinance is also a legal entity. If my political opponents want to face me, let them come to the public if they have any information about any fraud or wrongdoing perpetrated by me instead of hiding under the erroneous action of the CBN.

“I am a sound and professional accountant. We set up the bank in 2008 to help small businesses to grow and I have never taken from the depositors’ fund to enrich myself. So, there is no basis for the police or EFCC to investigate me.”

Microfinance Banks:Association wants self-regulatory framework, ethics code

The National Association of Microfinance Banks (NAMB) has called for an institutional framework for self-regulation of the industry.

The President of the association, Mathais Omeh, also advocated the creation and enforcement of a code of ethics for microfinance banks to eliminate charlatans and promote global best practices Omeh, who made the call while speaking with the news Agency of Nigeria (NAN) in Benin on Monday, decried the bad image of microfinance banks, resulting from the activities of illegal operators and scammers. He said the association would fish out illegal operators and members of the association who engaged in fraudulent activites with a view to sanitizing the industry.

“The association would undertake to fish out and report illegal operators of microfinance banks and members of the association who engage in fraudulent, unethical or below-the counter services that are not approved by the Central Bank of Nigeria (CBN) and major regulatory authorities.

“The association is embarking on a strategic partnership with the CBN and other security operatives such as Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC). “The National Executive Committee (NEC), behind close doors has held several strategic planning meetings to develop a cushion for sustainable microfinance banks to meet the objectives of poverty alleviation in the country,” Omeh said

In his contribution, Jude Nosagie, the first Vice President of the association, said:“The association is in a hurry to enthrone best practices in the industry; to gain high visibility on global network of microfinance bank associations and stakeholders.

“NAMB will not be a hiding place for dishonest practitioners, appropriate committees would be set up to monitor the activities of microfinance banks.

“The present leadership in Microfinance banking Industry must do everything possible to control the bad image the public has about microfinance banks.

“However, NAN reports that the Nigerian Deposits Insurance Corporation (NDIC) is currently conducting an existence check on microfinance banks in the country and would soon emerge with existence checks report.(NAN)

When fraudsters take over micro finance banks

Written by Ben Atonko, Kayode Ekundayo & Chris Agabi, Sunday Trust –

“Customers have been threatening and harassing us. Some of us have been serially arrested and detained by the police on the instructions of these aggrieved customers.” These were pathetic words from the lips of Pool Achir Samuel who worked as marketer for Koffy Multipurpose Cooperative Society in Abuja. The cooperative society which opened business on the third floor, Suite 5, Noble Shopping Complex, Area 10, Garki Abuja, in November 2008 abruptly closed its doors in December last year and has never opened since then.
The fund manager which claimed to have been registered by Abuja Municipal Area Council (AMAC), Federal Capital Territory (FCT) closed its doors on 10 December 2009 with the promise to reopen on 11 January 2010.

Our reporter who visited the place last week and peeked through, reported that he could see only dust-covered plastic chairs and desks. Samuel said valuable items including a television set, a desktop computer and water dispenser had been moved out of the office before its final closing.

Though it is difficult to come up with the exact amount of money the cooperative society scooped, 10 marketers who worked for it reported their individual collections amounting N4,267,661. Seventeen marketers were on roll. This is not to talk of the amount remitted by the remaining seven marketers the society recruited in that Noble Shopping Complex alone and those who came on their own to pay fixed deposits.

In a petition to the Economic and Financial Crimes Commission (EFCC), the 10 marketers maintained that the cooperative society’s branches in Gwagwalada, Abaji, Dei-dei and Zuba (in FCT) and Ilorin in Kwara State are not functioning.

Samuel said he had suffered greatly in the hands of aggrieved customers. He said since they (customers) cannot find the managers of the financial institution, they (marketers) who worked for the cooperative have become target for revenge by the aggrieved depositors.

He said the General Manager of the society whose name he only knew as Jude would not pick calls. “The only way to make him respond is through text message,” he stated noting that the man keeps promising to return but no one sees him.

He said managers of Noble Shopping Complex have asked Jude to come and renew his rent which was due last month but he said he is having some financial constraints. That he promised to come back when he might have disposed some assets and raised money from them.

The cooperative society’s website www.koffyng.com shows the company’s incorporation number as RC:11464. The Management link on the top menu of the society’s website is curiously disabled. Efforts to get to the list of managers of the company were unsuccessful. The menu gives only Products, Home, About us, Goals, Products, Customers, Investments and Contact us.

Ironically, the society claims it “…came to being out of desire to harness our abundant human and material resources for the creation of wealth for mankind. Consequently help in poverty reduction and eradication. Also to cultivate the habit of thrift culture.” But now, those who deposited their money and those who worked for the society are telling a different story.

As at the time of filling this report, EFCC had not acted yet.

Another case

Integrated Microfinance Bank (IMFB) was one of the “most seen successful” microfinance banks in Lagos. With branches in 24 states and over 700,000 clients in its kitty, its Managing Director and CEO, Simon Akinteye prided himself as one of the finest bankers in Nigeria, “winning” awards here and there, riding one of the most expensive cars. But today the story has changed.

In August 2009 when the global financial meltdown was staring the nation in the face, Akinteye told journalists in Lagos that his bank was not doing badly. According to him, what was happening to IMFB was a function of the global meltdown at the time.

He explained, “The entire financial system is going through a phase and that phase is confidence. But the microfinance industry in Nigeria is young, and issues have always been: will the banking public have confidence in microfinance? When the global financial crisis persisted, with this recent crisis in our banks and other issues, we noticed panic withdrawals in our bank. It’s not because they need the money but because they are afraid.”

Following panic withdrawals, he said the bank had concluded plans to re-enforce its operational activities with at least N1.1 billion to meet its customer obligations and shore up confidence of depositors.

Akinteye said with the injection of about N1.1 billion into the bank, the bank would be more than ready to satisfy all customers’ requests and keep its loans running because its capital base would not long hit over N4.4billion.

The discussions he said were almost complete with at least two foreign core financiers who would take a minimum of 20 percent equities in IFMB adding that the process of regulation would also complete soon and an extra ordinary general meeting would be called so shareholders could ratify the move taken by the board.

He also said IMFB was adding value to the economy. “We have direct staff of about 3,000 and in the last two years, we have disbursed aggregate loans of more than N10 billion to about 82,000 grassroots people,” he once maintained.

IMFB he said expanded from four states to 24 states in 2009 with 700,000 clients.

Few weeks after these claims, the bubble burst, the bank customers flooded the headquarters of the bank at Adeniyi Road, Ikeja Lagos to collect their hard-earned money only to discover that the office gate was under lock and key. Even as at yesterday, the gate was still locked while thousands of customers have been left alone, licking their wounds.

It was however learnt that the erstwhile CEO, Akinteye is currently in Akure, Ondo State. It was gathered that he has opened another microfinance bank under a new name. These are few of the numerous cases of collapsed financial institutions in Nigeria.

Currently, there are 930 microfinance banks operating in the country with 205 of them based in Lagos. But most of them recorded failure. For instance, IMFB, Milestone MFB, Bristol MFB, KFC MFB and Unique MFB are just five among other failed microfinance banks.

CBN’s worries

The Central Bank of Nigeria (CBN) last month said it would liquidate any microfinance bank engaged in fraudulent practices and hand over its operators to the Economic and Financial Crimes Commission (EFCC).

The apex bank has been putting notices, alerting the general public to the prevalence of illegal operators in the financial sector.

CBN said: “There has been an upswing in the activities of unscrupulous people parading themselves as fund managers/finance companies to swindle members of the public of their hard-earned funds. Unfortunately, many people out of ignorance have fallen victim of the activities of those illegal instructions.”

CBN said promoters of these illegal institutions are however, migrating from one part of the country to the other and continue to enjoy patronage from unsuspecting members of the public.

“Consequently, members of the public are hereby advised to ensure that they confirm the status of any company offering alluring incentives and interest rates on deposits/investment from the CBN or SEC before entrusting their money with them,” the bank warned, adding, “…anyone that patronizes the unlicensed institutions does so at his or her own risk.”

When contacted, the head of corporate communications, CBN, Mal Mohammed Abdullahi acknowledged that CBN had been inundated with complaints by victims of these fakes especially in the Micro Finance Bank (MFB) area.

He said both CBN and the Nigeria Deposit Insurance Corporation (NDIC) had in March begun examination of the banks stressing that 350 MFBs have been audited. All this is meant to determine the real number and financial conditions of the MFBs.

Mr Olufemi Fabanwo, the CBN Director, Other Financial Institutions Department (OFID) on Sanctions, had told the News Agency of Nigeria (NAN) in Lagos that CBN would expose such fraudulent operators.

Fabanwo said if any of the five failed MFB operators is found to be fraudulent, he or she would be handed over to EFCC or any other anti-graft agency. According to him, for microfinance banks that are still solvent, but needed management experts, there will be some kind of special restructuring.

He said NDIC had conducted examination on 150 microfinance banks while the apex bank had carried out similar examination on some microfinance banks in 2009. “All licensed microfinance banks are dully insured by the NDIC and NDIC will step in after the comprehensive report has been compiled,” he said.

The CBN chief, however, assured customers of the failed microfinance banks that their money deposited with the banks is in safe custody. This clearly runs contrary to the notice CBN has been placing in newspapers. CBN warns that anyone who is duped by the so called finance mangers will have themselves to blame. This point was particularly stressed by the head of corporate communications.

Experts query CBN, NDIC

Frank Ogiamien of Partfinder Securities blamed the striving of illegal financial operators on the weakness of the regulators. “What is happening now is direct indictment on our regulators such the Central Bank of Nigeria, SEC and NDIC. The agencies have failed in their capacities as the main regulators to supervise the financial sector effectively. Clearly, what has happened over time was that operators have not lived up to expectation,” he said.

He said a new regulation is required to monitor the activities of the microfinance banks and other financial organisations in the country.

Managing Director of Technoglass Mr John Aluya told Sunday Trust that “from the inception of microfinance banks, they were not well structured. CBN needs to look at them so they can have sufficient capital base. You can’t run a bank when you don’t have enough money to pay out to customers. In my understanding, the microfinance banks don’t have enough capital base to function and support SMEs.”

Chief Executive Officer, Fresh Field Asset Management Limited, Abuja and former Spring Bank Regional Director, North, Abdulrasheed Abubakar said no truly asset management company can engage in fraudulent acts.

“Those people are not asset management companies; they are credit and thrift societies. For you to be registered as an asset management company, you would need at least N20 million capital base. You would also need to register with the Securities and Exchange Commission,” he explained.

He noted that cooperative and thrift societies are able to swindle people because they don’t have any relationships with their clients but asset management companies survive based on their relationships with their clients.

According to him, the job of asset management companies demands high level integrity, trust and confidentiality.

On the CBN warning, he said CBN has started well by warning the general public about the fraudsters. But beyond the warning, CBN also needs to educate Nigerians on activities of these fraudsters.

“The general public needs to question these people. Ask them how they intend to generate the bogus interest they promise,” he noted.

When will regulators strike?

It was gathered that it is not only unregistered financial bodies that are duping the general public. Even the so-called registered ones are in the game. A lot is expected to be heard after CBN and SEC might have concluded their examinations.

Meanwhile, as CBN continues to sponsor its newspaper advertorials, warning the general public about the prevalence of illegal operators in the financial sector, helpless Nigerians are daily ripped off by the charlatans.

Many have already gone down with broken hearts after losing huge savings.