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How Emefiele used proxies to acquire banks – CBN investigator

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…says ex-CBN gov sold banks without payment evidence, recommends lenders’ forfeiture to FG

Report reveals how former apex bank boss approved interest-free loans for cronies

The report of the special investigation into the activities of the Central Bank of Nigeria has accused the immediate past governor of the apex bank, Godwin Emefiele, of using ill-gotten wealth to acquire banks for himself through proxies.

According to the report, Emefiele used proxies to acquire Union Bank of Nigeria for Titan Trust Bank Limited, as well as Keystone Bank without any evidence of payment.

As a result, it recommends that the Federal Government should reverse the sale of the banks and also take them over.

The special investigator, Jim Obazee, had on Wednesday submitted the report of his investigations into the acquisition of Union Bank and Keystone Bank to President Bola Tinubu in two separate letters dated December 20, 2023.

This is coming on the heels of findings by the investigator that Emefiele illegally lodged billions of naira in public funds in no fewer than 593 bank accounts in the United States, United Kingdom and China without the approval of the apex bank’s board of directors and the CBN Investment Committee.

Obazee found out that the ex-CBN governor lodged £543,482,213 in fixed deposits in UK banks alone without authorisation.

Emefiele, who is currently in the Kuje Custodial Centre, is being prosecuted for N1.2bn procurement fraud.

Obazee, who was appointed special investigator in July, submitted his final report tagged, ‘Report of the Special Investigation on CBN and Related Entities (Chargeable offences)’ to the President on Wednesday.

He had earlier submitted an interim report on the probe of the CBN and related entities on December 9.

In his letters to the President, Obazee said he had completed his investigation into the illegal acquisition of Union Bank by Titan Bank, and was on the verge of recovering the two banks for the Federal Government.

He stated in his letter to the President, “When we carried out the investigation, we discovered that some persons were used as proxies by Mr Godwin Emefiele to set up Titan Trust Bank and acquire Union Bank therefrom, all from ill-gotten wealth.

“We were able to secure some documents and investigation reports will lead to the forfeiture of the two banks to the Federal Government. We have completed our investigation on this acquisition and have also held meetings with the relevant parties except for Mr Cornelis Vink, who is currently hospitalised in Switzerland.

“Otherwise, we are on the verge of recovering these two banks for the Federal Government.”

During the probe into the UBN acquisition supervised by the Emefiele-led CBN, Obazee explained that he requested the apex bank to furnish him with the details of the deal.

Findings indicate Titan Trust Bank sought the CBN’s no-objection to its proposed consolidation with UBN, excluding its United Kingdom operations via a letter dated October 25, 2021.

In the letter, TTB stated that the consolidation was being contemplated in four phases via acquisition of 91.5 per cent of the issued shares of UBN; mandatory tender offer for the remaining UBN shares; buyout of any share that were not voluntarily sold to TTB on the MTO; and merger of TTB and UBN with UBN as the surviving entity.

The TTB letter also stated that the consolidation was to be funded via a combination of debt and equity.

The CBN in a letter dated March 9, 2022 granted no-objection to TTB’s requests to obtain a $300m facility from Afrexim Bank as well as capital injection of $175m from two existing shareholders of TTB, Luxis International DMCC and Magna International DMCC.

The TTB, via a letter dated June 3, 2022, informed the CBN that it made the payment of the purchase consideration to the selling shareholders on June 1, 2022, and thus completed the acquisition of 93.41 per cent of the issued shares of UBN.

According to the investigator, the TTB sought approval for the mandatory takeover of the remaining 6.59 per cent of UBN shares vide a letter dated October 14, 2022.

The MTO was reportedly triggered by the successful acquisition of 93.41 per cent of the UBN shares and TTB was granted a no-objection to acquire the remaining 6.59 per cent shares through a letter dated October 24, 2022.

On November 2, 2022, the TTB officially launched the MTO, offering to acquire the remaining shares and the MTO concluded with the TTB purchasing an additional 0.64 per cent of the issued shares of UBN, thus bringing its total shareholding to 94.05 per cent.

To approve a scheme arrangement between itself and the holders of the balance of 5.95 per cent shares not yet bought by the TTB following an order of the Federal High Court, the UBN convened a meeting on June 13, 2023.

This was expected to result in the transfer of the outstanding UBN shares to TTB.

The investigation report noted, “The process to acquire the remainder of 5.95 per cent of the issued share capital of UBN by TTB is ongoing through a court-ordered scheme of arrangement between itself and the holders of the balance of 5.95 per cent.

“TTB stated that its ultimate objective is to acquire 100 per cent of the total outstanding shares of UBN.”

Further investigation showed that TTB is owned by Luxis International DMCC and Magna International DMCC, said to be based in Dubai, United Arab Emirates.

The two firms were said to be owned by Vink Corporation Middle East FZC, which is controlled by Cornelis Vink.

However, efforts to verify the corporate status of Luxis and Magna in Dubai failed as they did not have a physical presence in the Arab country as claimed.

“This contravenes Section 3(5) of the Banks and Other Financial Institutions Act, 2020. Accordingly, they are not supposed to be allowed to operate or acquire a bank in Nigeria,” the report declared.

It stated, “The special investigator probed the activities of the TTB and discovered that there is a mysterious shareholder who has given interest-free long-term loan to (with no fixed repayment schedule) to the entities mentioned above (Luxis International DMCC and Magna International DMCC). This mysterious shareholder is believed to be Mr Godwin Emefiele.

“The special investigator requested the supposed owner of TTB and ultimate acquirer of Union Bank of Nigeria, Mr Cornelis Vink, to submit proof of funds, internationally verifiable bank statements (from incorporation of the entities to date), and the shareholder that gave interest-free loans to the two entities separately, names, nationality, source of fund, proof of fund, bank statements) as well as relationship of the entities with Mr Andrew Ojei, Jerome Shogbon, Rahul Savara, Winston Odeh, Adaeze Udensi, Ekene Louis, Godwin Emefiele, Macombe Omoile, Tunde Lemo, Mudassir Amry, Faruk Gumel, Oluremi Oni, and Vink Corporation Middle East FCZ together with the details of the shareholder that also gave Vink Corporation interest-free loan and your good self.

“A letter came from Union Bank of Nigeria claiming he is sick and can only come to meet with the special investigator or submit the documents requested when he gets well by the end of September 2023. As of today, December 20, 2023, we are yet to hear from him nor receive any of the requested documents.

“We are informed that they want to seek a political solution. The special investigator is of the view that the TTB and UBN be recovered by the Federal Government, strengthened and sold in the nearest future.

“A meeting was initially scheduled for December 5, 2023, with the Board of Directors of the two banks by the CBN Deputy Governor for Financial System Stability to close out discussions on this matter. The meeting has been postponed.”

On the alleged acquisition of Keystone by Emefiele through proxies, the investigator explained that sometime in 2017, the Asset Management Corporation of Nigeria moved N20bn to Heritage Bank and on the back of that, the bank granted N25bn loan to the promoters of Isa Funtua/Emefiele Group’s acquisition vehicle to buy Keystone Bank and the loan was further backed by the shares of the bank.

Upon acquisition, Keystone reportedly returned the N20bn to Heritage Bank as placement and Heritage thereafter repaid AMCON from the cash flow so created.

The report read in part, “When the loan granted by Heritage Bank to Isa Funtua/Emefiele’s acquisition vehicles matured with outstanding balance, the MD of Heritage Bank, which was then in serious liquidity crisis, called for repayment. Unfortunately for the shareholders of the bank, the Funtua/Emefiele group could not repay.

“Consequently, the MD of Heritage Bank got his lawyers to write to the bank on two occasions threatening to take over Keystone Bank based on the shares they had pledged as security.

“After much pressure from him, Keystone Bank created internal loans of about N50bn between June and October 2019 and moved the proceeds to repay Heritage Bank on behalf of the shareholders.

“Before this, Godwin Emefiele as governor of the central bank had mounted pressure on the bank for these loans to be created within Keystone Bank on behalf of their group.

“However, the MD of the bank at that time resigned due to the consistent pressure from him and the shareholders to comply.

“The next in command, the deputy managing director, who subsequently became the acting MD, also resigned within three months for the same reason.

“Thereafter, an executive director, who then became the acting MD, took his vacation to avoid pressure for the approval of the loans. Unfortunately, the GM, Risk Management (Mr Tijjani Aliyu) and GM, Corporate Banking (Mr Niran Olayinka) approved the loans (about N50bn) while he was away and moved the proceeds to Heritage Bank for the repayment of the shareholders’ loans. The above loans, which are not being repaid currently, have total outstanding balance in excess of N64bn.”

The investigation also found that the credit approval memoranda were passed by the two GMs to the bank’s chairman, Alhaji Umaru Modibbo, who gave the final approval for disbursement, adding that the process bypassed the Management Credit Committee, Board Credit Committee and full board before disbursement.

“As a reward, the two GMs were immediately appointed executive directors, while one of them became the MD over the acting MD, who used to supervise him. The internal loans so created are not being serviced and have gone bad,” Obazee submitted.

The investigator informed the President that he had commenced the interrogation of the AMCON managing director on the acquisition of both Polaris and Keystone banks besides Arik Air, Aero Contractors and financial reporting by AMCON.

The AMCON MD was said to have told the investigator that “the N898bn liquidity support into Polaris Bank is not part of the SPA, which it should” and that “the N50bn paid for the transaction by the preferred bidder is not received by AMCON.”

Obazee said a preliminary review of the case showed that “Keystone was acquired for free as did Polaris Bank and the special investigator should liaise with the CBN to recover these two banks to the Federal Government of Nigeria.”

Counsel for Emefiele, Matthew Bukkaa, SAN, could not be reached for comments on the allegations levelled against his client.

He had yet to reply to a message sent to him on the matter as of the time of filing this report.

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CBN’s renewed focus on diaspora remittances: Ki ni big deal? – Toni Kan

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My friend, Paul, is Jamaican. He has a strong Jamaican twang that sometimes leaves me wondering what he is saying.

Paul and I met at our local pub in London and bonded over our mutual love for crossword puzzles. When he was about 12, his mother left Jamaica for the US and Paul’s life changed as he became a “barrel baby”.

The term “barrel children” was coined by Dr. Claudette Crawford-Brown, a lecturer at the University of the West Indies and it refers to children who receive food and clothes and money from parents who have migrated abroad in search of greener pastures.

Psychologists have spoken of the negative effect this can have on “barrel children” who may harbour feelings of abandonment but economists focus on the impact on the Gross Domestic Product (GDP) and wider economy because diaspora remittances from economic migrants are a huge source of economic empowerment for the people and country they leave behind.

In Nigeria we know of children, parents, spouses and sundry family members who make weekly visits to pick up funds sent by loved ones via Western Union or Moneygram.

Diaspora remittances were in focus in the last week of October in Washington as Yemi Cardoso, Governor of the Central Bank of Nigeria made a series of disclosures and announcements on the sidelines of the IMF/World Bank meetings.According to TheCable, Yemi Cardoso announced that the CBN has set a remittance inflow target of $1bn a month.

A few things are worthy of consideration regarding the announcement and disclosure. The volume of remittances has been on the rise since Yemi Cardoso took over at the CBN and implemented a few initiatives. One of which was the granting of approval in principle (AIP) to 14 new and eligible international money transfer operators (IMTOs) to trade on the official foreign exchange (FX) window through the implementation of a willing buyer-willing seller model. This enabled timely access to naira liquidity for IMTOs thereby enhancing liquidity in Nigeria’s FX market.

diaspora remittance inflowIt has had a positive effect because in July the CBN reported that the country had recorded an all-time high of $553m. During the IMF/World Bank meetings the CBN governor announced that remittance inflows surged past $600m.

According to Cardoso, “When I was in Washington for the spring meetings, I called the different IMTOs and…we engaged with them extensively and understood what the problems were. I would say that when we started, the volumes that were going through the remittances were in the region of maybe about $200 million and as at the end of last month, we were almost $600 million.”

It is on the strength of this growth that Yemi Cardoso has set the seemingly high $1bn monthly diaspora remittance target. How realistic is that target and what will it mean for the Nigerian economy?

It is realistic because diaspora remittances have averaged $20bn annually over the past decade and as I noted in an earlier intervention, when the CBN is in the spotlight, discussions almost always resolve to the foreign exchange rate.

The managed float of the naira coupled with other measures introduced by the CBN are having some positive impact seen in the comparative stability of the naira relative to the green back, the checkmating of round tripping, removal of speculative trading and arbitrage and positive contraction in the gulf between the official and parallel market rates.

The CBN governor believes that with the naira competitive Nigerians in the diaspora are now eager and should be encouraged to invest. “Our currency has now become extremely competitive and cheap. So they see the opportunity of taking positions in assets and businesses back home.”

What the CBN governor is alluding to here is that since the dollar can now get more naira for those abroad, the time may be right to set up that water-making factory or agro-product processing plant because aside from oil and remittances and bonds, the country needs return of productive capacity to help buoy the value of the naira.

This case is being made with gusto by the CBN governor and his lieutenants as well as bankers and financial sector stakeholders who have joined the train.

The CBN governor was guest at an event on October 22 on the sidelines of the IMF and World Bank annual meetings in Washington DC. Titled ““Strengthening Ties with Nigerians Abroad” A Conversation with Yemi Cardoso, Governor, Central Bank of Nigeria” it afforded him an opportunity to share ongoing reforms at the apex bank and contextualize the need to change the perspective on remittances from a focus on consumption to investment.

That same message resonated at a forum which held a day earlier in Houston, Texas under the theme “Optimizing Remittances to Nigeria: A Vision for the Future”. The event “brought together members of the Nigerian diaspora, business leaders, investors, and top executives from Nigerian banks to explore strategic pathways for enhancing remittance flows, a vital component of Nigeria’s economic stability and growth.”

To boost remittance flows, enhance diaspora BVN enrolment and facilitate banking transactions in Nigeria for those in the diaspora, the Nigeria Inter-Bank Settlement System (NIBSS) took advantage of the forum to introduce the Non-Resident Bank Verification Number (NRBVN), a new digital platform which simplifies Know Your Customer (KYC) verification for Nigerians in the diaspora and foreign investors.

The message was simple; remittances can be a strategic tool for promoting diaspora-led investments if we pay close attention to the pivotal role the Nigerian diaspora already plays in national development and direct a shift in focus. As Philip Ikeazor, Deputy Governor, Financial System Stability, CBN told his audience “We are looking at remittances going beyond remittances for consumption, but remittances for investment.”

But will $1bn monthly diaspora inflows make much of an impact? The answer is easy. Increased remittance inflows will provide more foreign exchange liquidity which will have a positive impact not just on the dollar supply side but on the overall economy. So, the key is to move from $1bn monthly to more.

19.1%, of their GDP down from 21.57%And to explain this I will return to my Jamaican friend and his country. Jamaica’s foreign exchange earnings come primarily from Tourism, Trade and Remittances. In 2023, remittances accounted for recorded in 2022

5.65% of GDP indicating an increase from 4.26%Nigeria on the other hand earns its foreign exchange mostly from oil. Then we have receipts from the non-oil sector from trade in goods and services, agro products and solid minerals. Oil earnings have dwindled in recent times thanks to a cocktail of issues that do not need elaboration. In 2023, diaspora remittance inflows accounted for recorded in the preceding year.

My focus on Jamaica which has a population of about 3m people may look like the proverbial apples to oranges comparison so let us look at diaspora remittances from the perspective of bigger low- and middle-income countries (LMICs).

World Bank According to 2023 statistics from the “remittances to low-and middle-income countries (LMICs) grew an estimated 3.8% in 2023,” albeit lower than the previous year’s with a total value of “$669 billion.”

The same World Bank report also lists the top 5 remittance recipient countries in 2023 as India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion). Nigeria came in at $20.52bn for 2023.

The fact that the announcement was made in America in Houston which boasts the largest Nigerian population in the US is significant because America remains the largest source of diaspora remittances and to put it in perspective; in 2022, of the 4.8 million Indian Americans in America, 3.1 million were immigrants meaning they had ties at home conversely Nigeria had a population of about 712,000 with about 392,811 of those born in Nigeria and with ties to home.

The point of these figures is to show the potential while underlining the fact that diaspora remittances can impact the economy positively when the right environment is created for those who have japa’d to cast their financial gaze home.

The second point is that while Cardoso has set a $1bn remittance inflow target per month there is the feeling that it is a modest target and that the figure would be exceeded if ongoing engagements continue and the measures put in place are sustained.

Migration and Development Brief 39To conclude let us look to a quote by DulipRatha, author of the report to help us understand why the renewed focus on remittances is a big deal.

“Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade. They must be leveraged for private capital mobilization to support development finance, especially via diaspora bonds. Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing.”

***Toni Kan is a PR expert and financial analyst.

 

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FG Terminates Julius Berger’s N740billion Road Contract, Cites Delays, Non-Compliance

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The President Bola Tinubu government has officially terminated the N740billion contract awarded to Julius Berger Nigeria Plc for the rehabilitation of the Abuja-Kaduna section of the Abuja-Kaduna-Zaria-Kano dual carriageway, citing delays and non-compliance with revised terms and scope.

The termination notice was issued by the Federal Ministry of Works in Abuja on November 4, 2024.

 

In a statement released by Mohammed Ahmed, Director of Press and Public Relations for the ministry, the government clarified that the decision stemmed from Julius Berger’s “stoppage of work and refusal to remobilize to site” despite directives to resume operations.

“The Federal Ministry of Works has issued a 14-day Notice of Termination to Messrs Julius Berger (Nig.) Plc for the rehabilitation of Abuja-Kaduna-Zaria-Kano dual carriageway in FCT, Kaduna, and Kano states, contract No.6350, Section I (Abuja-Kaduna),” the statement read.

Ahmed further explained that months of negotiations failed to produce results, leading to the ministry’s decision to end the contract.

 

This follows a series of management meetings within the ministry to address concerns over delays, cost reviews, and incomplete work on the critical northern highway.

The statement read, “The ministry has in the last 13 months been in constant talks with the company, in order to reach an amiable position on the said alignment but to no avail.

“Nigerians may wish to know that the Contract for the Rehabilitation of the Abuja-Kaduna-Zaria-Kano Dual carriageway, which was divided into three (3) Section was awarded to the company on 20th December, 2017and flagged off by the then Minister of Power, Works and Housing, Babatunde Fashola, at an initial sum of N155.748,178,425.50 billion on 18th June, 2018.

Ahmed said, “Sections II (Kaduna – Zaria) and III (Zaria – Kano) were partially completed and handed over during the twilight of the administration of former President Muhammadu Buhari.

“Since then it has been one variation and augmentation or the other and finally, the present minister of works directed the redesigning and re-scoping of the Section I of the contract.

“The alignment was divided into two with one phase redesigned to be on continuously reinforced concrete pavement, CRCP, while the remaining with asphaltic pavement.

“ Approval for Section I, Phase 1 for a length of 38 (thirty-eight) kilometres on the concrete pavement was given to Messrs Dangote Industries (Nig.) Ltd, while the remaining 127 (one hundred and twenty-seven) kilometres remained with the substantive contractor.

He said the Phase 1 was flagged off on October 17, 2024, with a 14-month completion period.

“Due to the stalemate of the contract and, most importantly, the desire of His Excellency, President Bola Ahmed Tinubu, as encapsulated in the Renewed Hope Agenda infrastructure initiative, to see to the completion of this laudable project, also to alleviate the sufferings of Nigerians plying the road, the ministry re-scoped it and got the approval of the Federal Executive Council, FEC.

 

Ahmed explained that the award for the re-scoping and downward review of the contract for the rehabilitation of Abuja-Kaduna-Zaria-Kano Dual Carriageway in FCT, Kaduna and Kano States, Contract No.6350, Section I (Abuja-Kaduna) in favour of Messrs Julius Berger (Nig.) Plc from the sum of N797,263,523,738.87 (seven hundred and ninety-seven billion, two hundred and sixty-three million, five hundred and twenty-three thousand, seven hundred and thirty-eight naira eighty-seven kobo) to N740,797,204,173.25 was granted by FEC on September 23, 2024, and conveyed to the company on October 3, 2024.

 

“As due to the socio-economic importance of the road as a vital artery connecting Abuja, the FCT to the north, the ministry conveyed the approval for a final offer on the Abuja-Kaduna dual carriageway to the company on October 23, 2024, stating that it should agree, in writing, to accept the reviewed contract sum of N740,797,204,173.25 within seven days or risk the termination of the said contract.

“It is a sad commentary on the company that rather than accepting the offer, they tinkered with the bills of quantities, as well as that of engineering measurements and evaluation via a letter to the ministry dated October 29, 2024. The company was summoned for a meeting with the Management of the Ministry, today (yesterday), November 4, 2024, but refused to show up, hence the termination of the contract based on effluxion of time and non- performance,” he added.

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Tinubu Orders Release Of Arrested #EndBadGovernance Minors

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President Bola Ahmed Tinubu has ordered the immediate release of all minors involved in #Endbadgovernance protest who were arrested and arraigned in court by Nigerian police.

Society Repoters reports that he also directed Ministry of Humanitarian Affairs and Poverty Reduction to ensure reunion of the minors with their families.

 

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