access bank, cbn, others culpable in subsidy fraud

7/31/2019 Access Bank, CBN, Others Culpable in Subsidy Fraud

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EXCLUSIVE: Access Bank, CBN, othersculpable in subsidy fraud

By: Idris Akinbajo

Access Bank financed the importation of about 40 per cent of the petrol brought

into Nigeria in 2011 and received, into accounts at its branches, a similarpercentage of the N2trillion the FG paid as subsidy during the period

Access Bank and other Nigerian banks played major roles in the fuel subsidy scandal of2011 and have several questions to answer, a PREMIUM TIMES investigation hasshown.

Sources at Access Bank, the Central Bank of Nigeria (CBN), and the oil industry saythat although there is no apparent focus on the role of Nigerian banks in the wholescandal, some of them, particularly the major players like Access Bank helpedperpetrate the fraud.

While N240billion was approved in the 2011 budget as petrol subsidy, Ngozi Okonjo-Iweala, Nigerias finance minister last week told the Nigerian Senate that the FederalGovernment actually paid 2.19 trillion as subsidy to petrol importers.

Following pressure on the administration by civil society and other Nigerians over theimplementation of the recommendations of the House of Representatives committee,which probed the fuel subsidy payment for 2011, the government set up two


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committees. A technical committee was first set up by the Finance Ministry, followed bya presidential committee, set up to review the work of the technical committee. Bothcommittees were headed by Access Bank's Group Managing Director, Aigboje Aig-Imoukhuede.

Investigating himself

Though Mr. Aig-Imoukhuede headed the two probes, Access Bank, which he heads, financed thebiggest chunk of fuel importation for the 2011, which was characterised by large-scalefraud, our investigation has shown.

Sources at the CBN and documents have shown that the bank financed close to 40 percent of the petrol imported to Nigeria, and for which subsidy was paid, in 2011.

Access Bank financed about 40 per cent of the deals in 2011," a top Access Bank stafffamiliar with the deal said. "So, if there was fraud in the 2011 subsidy scheme, thencompanies finance by access bank, even our bank or senior officials, perpetrated orbenefitted from 40 per cent of the fraud.

PREMIUM TIMES learnt that about 400 cargoes of petrol was imported into Nigerian in2011 with almost 160 of them financed by Access. Some of the importers financed by

Access bank include Sahara Energy, Eterna Plc, and Spog Petrochemicals Limited.

Eterna and Spog are two of the companies indicted by the House of Representativescommittee in its report. Eterna was indicted for tax evasion; while Spog, owned by

controversial Jide Omokore, a major financier of President Goodluck Jonathanselection and beneficiary of various government largesse including juicy oil blocks,acquired in questionable manners, was indicted for getting approval to import petroleven before it was registered by the PPPRA. How that was done is difficult to decipher.But Access is its long-term financier.

Mr. Omokore is also married to Angela Jones, a senior official of Access Bank, who iscurrently in charge of Wealth Management at the bank. Ms. Jones, alongside Aig Aig-


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Imoukhuede, younger relative of the Access Bank GMD, also sits on the board ofanother company, Marina Securities.

The younger Aig-Imoukhuede is a co-owner of Ice Energy Petroleum Trading CompanyLimited which was also indicted by the Lower House.

Another company owned by Mr. Omokore, Ceoti International Limited, defaulted in itstax payment, the House committee discovered.

Validating Spog

Spog Petrochemicals which was alleged in a petition to the Attorney General of theFederation in 2011 to have imported 3000 metric tones of petrol despite receivingsubsidy for 13,000 metric tonnes early 2011, came highly recommended by Mr. Aig-Imoukhuedes Access Bank.

In a letter addressed to the executive secretary of PPPRA, dated May 31, 2011 andsigned by Tope Ogunfusika and Ojeifoh Okosun, Access Bank stated that it had had agreat relationship with Spog since 2006.

We recommend the company (Spog) as being suitable for normal businessengagements with your company (PPPRA), the bank told PPPRA, in order tostrengthen the company's application to participate in the subsidy regime.

PREMIUM TIMES learnt that that letter helped shore-up the image of Spog which atthat time was almost blacklisted by PPPRA over suspicion of underhand dealings.

Access Bank made no reports

Investigations show that Access Bank, into whose accounts the Federal Governmentpaid about 40 per cent of the N2trillion subsidy, never reported any marketer either tothe CBN or the PPPRA for underhand dealings.

The bank was just interested in its money. As long as the marketers could get themoney, even through subsidy, we (Access Bank) didnt see a reason to report them tothe CBN. Though we knew many of them were not selling any products, our sourcestated.

Access wouldn't comment on its role in the subsidy regime. Our reporter triedconsistently for a week to get the bank's reactions to the facts at our disposal. Itsspokesperson, Segun Fafore, demanded an email enquiry on Thursday last week. ByThursday evening, Mr. Fafore, after receiving our emailed enquiry, called to say that thebank would respond to our enquiry on Friday. After failing to respond on Friday aspromised, Mr. Fafore did not answer subsequent calls from our reporter.

Covering-up the banks


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When the technical committee, headed by Mr. Aig-Imoukhuede, submitted its report, itidentified 17 methods allegedly used by oil marketers to defraud the FederalGovernment.

Although the report is yet to be made public, sources knowledgeable about its content

say the first method identified is the lack of evidence of sale proceeds of imported fuelwith the financing banks.

In other words, though the banks paid for the imported petroleum products, themarketers probably sold the products behind the banks, diverted them, or did not evendo any importation. The total sum for the unaccounted products according to thecommittee is N158billion.

This finding was however faulted by senior bank sources including top officials of thecentral bank of Nigeria (CBN), Nigerias banking regulator.

"Who did the banks complain to that there was no evidence of sale? Since the subsidymoney was paid into the marketers accounts with the banks, why didnt the bankscomplain to the CBN or even PPPRA that they had no evidence that any product wassold, a top CBN source said.

The truth is we know they were all involved in the scheme, they are just trying toexonerate themselves.

Another bank source made reference to the membership of both the technicalcommittee and the Presidential committee as reasons the committee would never indictor reveal the roles of the bank. Apart from Mr. Aig-Imoukhuede, who heads both

committees, there are two other top bankers on the two committees: Sola David-Borha,the MD of Stanbic IBTC; and Onyinye Ahuchogu, a Deputy Director at the CBN, aremembers of the two committees.

How can you want to investigate a sector where banks played a crucial role, and youappoint heads of the same banks to lead the probe. Can they ever probe themselves, atop CBN source queried.

Ignoring the banks

Nigerian banks, described by a top industry source, as very complicit if thorough

checks are done, have been overlooked by previous probes of the subsidy scam,including the technical committee.

It is not only Mr. Aig-Imoukhuedes committees that avoided the complicity of the banksin the scandal, the House of Representatives committee, which did a live telecast of itsprobe, and whose report has been widely acknowledged as thorough, also overlookedthe banks.


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We focused more on the marketers and regulators," a member of the House committeetold PREMIUM TIMES. "But while investigating, we knew there was no way they couldexclude themselves from the scam. I just dont know how they escaped our view. But Ican assure you, they are complicit.

Analysts believe that without the banks, there wouldnt have been a basis for subsidypayment for most of the oil marketers in the first place. They provided the finances andnow, sources say, the banks, which industry sources say are as complicit as themarketers and the regulators are going to exclude themselves from the probe again.

How the banks get involved

After securing petroleum import licence from the Petroleum Products Pricing andRegulatory Agency (PPPRA), an oil marketer approaches a bank to finance the deal.

The bank bids for forex (foreign exchange) for you from the central bank on the basis

that you obtained a license, a top official, of a major Nigerian bank, involved in theenergy sector said, while explaining the process to our reporter.

The bank also opens a letter of credit (LC) with the offshore oil supplier or its bank, fromwhom the Nigerian company is buying the petroleum product. The bank then providesevidence of financing to the PPPRA. The evidence will contain the volume of productpaid for, volume imported, and so on.

In order to ensure the marketer does not default in payment, and does not divert theproducts, the bank ensures that both the subsidy sum to be paid by the PPPRA, and thefee to be paid by local purchasers of the imported fuel are paid into the oil marketers

account domiciled with the bank.

The truth is the banks cannot claim not to know that there is fraud going on.Sometimes, we (the banks) even partake in it, a senior banker said.

There is no way a marketer will divert a product we have paid for without us knowing.Sometimes, we even appoint people to help us monitor the imported product at the tankfarms, he said.

Sources in the oil industry also confirmed what the bank officials said.

Do you think a bank will use its own money to pay for a product and let one marketerdo what he likes with it? They learnt from their earlier mistakes during the banking crisis.Most of what goes on is with their knowledge, a top oil industry source, who did notwant her name mentioned for fear of victimization, stated.

However, it is not only the Access Bank and other commercial banks which should beinvestigated on the subsidy scam; even the CBN was culpable.


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See no evil

The CBN, Nigerias apex bank andfinancial regulator, looked away while marketers were colluding with bank officials todupe the nation, investigations reveal.

In at least one occasion, the PPPRA wrote to the CBN when it suspected that some oilmarketers were playing pranks, submitting suspiciously fake bank documents, inprobable collusion with the affected banks, in order to claim subsidy payments.

In a letter dated February 1, 2011, received by the CBN on the same day and directedto the director in charge of trade and exchange, the PPPRA told the CBN that itreceived documents from the indicated marketers as part of the requirements forsubsidy claim.

In line with the policy of transparency, the Agency deemed it necessary to request theverification of authenticity of the attached documents from the CBN, the letter stated;the word, authenticity, was in bold fonts. The documents suspected to be fake andsent to the CBN included Form M, Letters of Credit, and Evidence of Bank Finance.

Investigations at both the CBN and the PPPRA revealed that the CBN never respondedto the request.

That was a trying period, particularly for the banks involved. We (the CBN) didnt wantanything that would further erode public confidence in the banks. That is why we didntrespond to that request. Nobody knew all these (the fuel subsidy scandal) would

happen, a top CBN official said.

Following our email enquiry last Thursday, Ugochukwu Okoroafor, CBN's director ofcorporate communications, said (in an email) on Friday that the apex bank wouldrespond to our enquiry this week. Mr. Okoroafor is however yet to respond to ourquestions on the various roles of the CBN in the 2011 subsidy regime.


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Despite the apparent complicity of the banks however, the fate of the mismanagedtrillions of naira and the expectations of Nigerians is still being managed by Mr. Aig-Imoukhuede and his other bank colleagues in the Presidential probe panel.

Anyone expecting any justice from Aigs panel is deceiving himself. He will never indict

himself or his colleagues. With that committee, President Jonathan has dashed thehopes of Nigerians on the fuel subsidy scandal, a top CBN source stated.

access bank, cbn, others culpable in subsidy fraud

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