Nigeria: Banks and Money Laundering

The object of this column in the last two weeks has been to debunk any insinuation that Central Bank of Nigeria, the government’s agency for regulating and supervising the banking sector, and the EFCC, Nigeria’s financial crimes fighters did not know of the rot in our nation’s financial markets!

To this end, “Banks and Fraud Incorporated” the first article in this series discussed the revelation by none other than a CBN Deputy Governor, Tunde Lemo in October 2005, that the apex bank was aware of the fraudulent statements of the banks, yet, we do not recall that any serious sanction or indeed criminal proceedings instituted against any bank!

Last week’s article titled “Banks and Money Laundering (1)” was first published in September 2005.  That article explained how the banks are positioned as the best channel for money laundering, particularly for heavy weights in the business of treasury looting.

Today’s article which was first published 31/12/2007 provides further confirmation that the EFCC were not only aware that several of the former Governors were involved in treasury looting, but also recognized the role of banks in the illegal transfer of public funds abroad.  Regrettably, the public excitement and hoopla generated by EFCC’s self-righteous media announcements were certainly misplaced as the zeal of the financial crime fighting outfit soon fizzled out.  The following is the full text of “Banks and Money Laundering (2).  We hope that CBN’s and EFCC’s current revival is not another flash in the pan.  Please read on:

“For the majority of Nigerians who now live on less than $1 a day, banks are those architectural masterpieces which dwarf other less elegant and sometimes conservative and decrepit structures on major highroads all over the country. A visit to a bank is as auspicious, intimidating and unlikely as a stopover for lunch in Aso Rock by any one from the critical mass of impoverished Nigerians.
“Banks are seen as where ‘rich people’ keep their money and the majority of our countrymen would feel uncomfortably out of place, as fish out of water, in the ‘arctic chilled’ ambience with the searching human and electronic eyes of most banking halls.

“However, for a small subsection of Nigerians with an average annual income of about N600,000, bank patronage is a futile psychological desire to aspire to an ‘elite class’ who carry cheques and savings pass books to show that they belong, even if, their accounts show nil balances less than 24 hours after lodgment of their monthly salaries! The reality of course is that most income earners outside, the buoyant sectors of banking, oil and telecom cannot afford the luxury of savings!
“Meanwhile, the underlying prerequisite for investment growth in any economy is the availability of savings; without a surplus for savings from income earners, bank lending to investors will be highly constrained, and employment possibilities will become endangered.

“In the event that the Banking, Telecom and Oil industries employ a very small percentage of our labour force, it is clear that the banks cannot depend on this small catchment for their impressive profitability in recent years! An associate of mine, with over thirty years professional accounting experience insists that the actual target segment for savings is the small but powerful club of public treasury looters! He maintains that only this group of ‘celebrated’ Nigerians have huge surplus funds, consequently ‘mini’ clad damsels with extra curricula skills and qualifications have become favoured bank employees to divert the course of the looted funds from Ghana must go bags into the safe havens of bank vaults! The impact of such a banking strategy on the moral fibre of our women folk has been the subject of national debate and recently, no less a body than the National Assembly has been rightly worried by this trend.

“Apart from the rabid appetite for young female flesh, the critical demand of treasury looters is of course confidentiality and the ability of the recipient banks to repackage the bloated loot to give it the air of a legitimate cash lodgment; the rate of interest paid by the bank on such deposits is generally not a critical factor for the unlikely bank of noveau riche. It also makes no difference that the bank will turn round and offer the same funds to desperate investors at over 5 times the rate paid to these custodians of stolen funds.

“I am not a legal expert, but I know that universally, criminal law recognizes that the receiver of stolen goods (knowingly or unknowingly) is as guilty as the actual thief! Alas! Inspite of the public awareness that banks have remained veritable fences for looted public funds, our Central Bank’s sanctions have never been more than a mere slap on the wrist for a handful of indicted errant banks! In this event, it is unlikely that Nigerian banks would ever be weaned of the appetite for criminal financial collaboration against the rest of us.

“The banking consolidation was feted as the hope bearer for better banking services and the potential engine of growth for the economy, particularly the small and medium industrial sub sector. However, over a year after the completion of the exercise, most of the corresponding positive expectations remain unfulfilled; banking halls continue to witness long unending queues of customers, simple cash withdrawals can still take hours to transact; the consolidation exercise has also reduced the disposable income in the system with serious consequences for consumer industries and general employment.

The consolidation exercise inevitably led to staff rationalization and very many otherwise secure Nigerians suddenly lost their jobs without adequate preparation for alternative gainful employment. Meanwhile, the jumbo salary packages of bank employees created a serious fracture in the national wage structure, such that a driver in a bank would receive a bigger salary than a graduate medical doctor in any of our government hospitals! Banking remains the prime destination for almost every job seeker inspite of the increasing rate of fraud in the system.

“The Guardian Newspapers on page 6 of the edition of Friday 28/12/2007 carried a report titled “EFCC FINGERS 10 BANKS IN LOOTING BY EX GOVERNORS”. The report noted that.. “Not less than 10 banks have been linked with illegal transfer of public funds abroad by some former Governors under investigation or trial by the EFCC”

“The Guardian report added that “most of the huge funds being recovered by the EFCC from the former State Executives were transferred out of the country through some officials of the banks”.
“Incidentally, these nefarious activities of our wonder banks were not brought to the attention of the EFCC by the traditional watchdog of the banking system, i.e. the Central Bank of Nigeria, inspite of its self adulation of excellent banking supervision, audit and control! “Indeed the Guardian report under reference indicated that”the EFCC unearthed the various roles played by the banks in the course of quizzing former Governors”. Nigerians have been led to look elsewhere all along by the CBN as if the miscreant Governors and other treasury looters had carted their loot to Mallams in Martins Street for changing to Dollars before stuffing the Dollar loads into bags and suitcases and physically smuggling their booty through any of our porous borders! Na lie!

“The banks were the main conduits for treasury looters and they continue to play this role as you read this article! As you can imagine, billions of Naira will be readily provided by the cabal to defend this criminality and Nigerians should not be surprised at the legal jargons, technicalities and illogical summersaults in the coming months to throw the EFCC off the tracks of those wild hounds who are resolved to have the rest of us for regular dinner!

 Written By Les Leba