In the last 20 years, Nigerian banks have not only become irredeemable money laundering organizations, they have also institutionalized the immoral exploitation of their female employees. It’s time somebody or some people did something about it. In this two-part article which I originally wrote three years ago, I lay out the enormity of these twin problems.
There is a kind of person called a “pimp.” Not the “PIMP” described by my late father Dr. Nnanna Ukegbu as “Post-Independence Mercenary Politicians,” but the American definition of the term. According to online LegalDictionary.net, “Generally speaking, pimping refers to the receipt of a prostitute’s earnings, whether directly or indirectly. Pandering, on the other hand, refers to the procurement, or recruitment, of an individual to be used for prostitution.” It is a crime in America to work as a pimp.
Nigerian bank CEOs and their senior managers have by and large gladly soiled their hands in the vast corruption sludge in Nigeria. Aside from providing the infrastructure for politicians and civil servants to loot government funds, they have also done their part to independently rob hapless Nigerians. In the heyday of the Nigerian stock market bubble (2004-2009) they were neck-deep in fraudulent practices. For instance, they tipped off their friends and business partners on pending rights offerings, helping these cronies to buy shares beforehand, enabling them to gain abnormal profits once the rights offerings came to the market. This fraud, known as “insider trading,” is a crime that would have landed all the participants in prison in the U.S. or Britain. It was a rigged system, deliberately designed to rob ordinary Nigerian investors. These thieves used the Nigerian Stock Exchange to fleece Nigerians billions of naira of their life savings, and got away with it. That bourse was under the leadership of Mrs. Ndi Okereke-Onyiuke, and the whole perfidy came to an end when Ms. Arunma Oteh took over Nigeria’s Securities and Exchange Commission in 2010 and fired Mrs. Okereke-Onyiuke.
The OCC does not joke around. Separately at the time the OCC did close down Riggs National Bank, a small commercial bank headquartered in Washington, DC., with offices in Miami.
The U.S. Government has in the past attempted to punish criminal activities in Nigerian banks. In April 2008, after repeated warnings to the New York branch of the UBA plc about the money laundering going on there, the U.S. Department of Justice in conjunction with the bank regulator the Office of the Comptroller of the Currency (OCC) fined UBA New York a whopping $15 million for its infractions of the law called the Bank Secrecy Act, and threatened to shut it down. The OCC does not joke around. Separately at the time the OCC did close down Riggs National Bank, a small commercial bank headquartered in Washington, DC., with offices in Miami. The bank had become a money laundering facilitator for foreign bigwigs, notably the president of Equatorial Guinea and his family, aside from other bigwigs from Latin America.
The 2008 sanctions against UBA came after the OCC and the Justice Dept. in June 2007 confiscated $5 million of what they called “fraud proceeds” at the UBA’s New York branch.
The OCC and the Financial Crimes Enforcement Network (FinCEN), both units of the U.S. Treasury Department, said the $15 million civil penalty arose from about $197 million involving 140 suspicious transactions the bank failed to identify and report. U.S. Government investigators also thereafter flagged transfers of about $300 million of suspicious deposits by an account owned by the entity called African Finance Corp. at the Nigerian Central Bank. The AFC was a company formed by the CBN under Mr. Charles C. Soludo, purportedly for infrastructure development in Africa. At the time he announced the formation of that bank, I had questioned the motivation and the purpose, because the stated functions were almost all duplications of those of the then Tunis-based African Development Bank.
I had argued in an article published in the Lagos-based Guardian newspaper that if the Nigerian government desired more power at the AfDB, the better thing to do was to increase its equity in the AfDB.
I had argued in an article published in the Lagos-based Guardian newspaper that if the Nigerian government desired more power at the AfDB, the better thing to do was to increase its equity in the AfDB. So, it was not surprising when soon after Mr. Soludo and the directors of the AFC, some of them managing directors of local commercial banks, including Mr. Tony Elumelu of UBA and Mr. Jim Ovia of Zenith Bank, diverted some $300 million of the new AFC’s founding capital into the UBA New York branch and used the funds for purposes far removed from African development. The succeeding CBN Governor Mr. Sanusi L. Sanusi (formerly Head of Risk, and subsequently MD of First Bank) was well aware of the shenanigans in the Nigerian financial system and removed these and other bank CEOs using various reasons, but these two quickly returned to their banks once the now Emir of Kano [recently dethroned] was removed from the CBN by President Goodluck Jonathan.
Assessing the $15 million civil penalty against UBA New York branch, the U.S. FinCEN, issued the following statement: (Excerpts:)
“The Branch serves as the presence in the United States on behalf of the United Bank for Africa, a foreign banking organization with its headquarters in Nigeria. Nigeria has been recognized in varying degrees as a center for criminal financial activity, including money laundering and illicit schemes such as advance fee fraud. The Branch provides the customer base of the Bank with access to the United States financial system….
“The failure by the Branch to establish and implement an effective anti-money laundering program resulted in extensive violations of the requirement to report suspicious transactions. The Branch failed to detect and timely report approximately $197 million in suspicious transactions….
“The Branch failed to implement effective procedures for conducting due diligence on customers of the Branch. The Branch failed to implement effective procedures to gather and review critical information to establish risk profiles, including information on business activities, source of funds, financial capacity, and normal ranges of transaction activity. Branch procedures for identifying politically exposed persons and managing the risks associated with such account relationships did not exist as of June 2006, despite the fact that the Branch maintained accounts and processed transactions for high-level politically exposed persons, including senior … political figures in Nigeria….Furthermore, the absence of effective due diligence procedures prevented the Branch from incorporating adequate risk profiles into its system for monitoring transactions for potential money laundering and other suspicious activity.
“A transaction is ‘suspicious’ if the transaction: (1) involves funds derived from illegal activities; (2) is designed to evade reporting or record keeping requirements under the Bank Secrecy Act; or (3) has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and the financial institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction….Financial institutions must report suspicious transactions by filing suspicious activity reports and must generally do so no later than thirty (30) calendar days after detecting facts that may constitute a basis for filing such reports.” For more, go to the link >>>
Aware of the illegal activities of Nigerian banks (something the Central Bank of Nigeria, from the Obasanjo era down to the present, turned a blind eye to), it is no surprise that the OCC has denied every application by Nigerian banks to obtain licenses to open up branches in the U.S., similar to UBA’s New York branch. Apparently after the headache of the UBA branch in New York City, the OCC decided that one Nigerian bank in America was one too many.
But this piece is not just about the money laundering offences of Nigerian banks only, it is also about their criminal gains from the immoral earnings of women.
The practice of coercing young female bankers into prostitution has been going on since the 1990s, most egregiously since the civilians came to power in 1999. It all started with a business directory publishing company in Lagos, which was headed by my younger brother, sending its advertisement and directory sales staff to the scores of “new generation” banks. The banks thereafter began hiring these female sales executives, turning them into “marketers” who entice men to open accounts in return for sex. And it has never been of concern to the banks and their “marketers” where the money they receive in deposits are sourced from: stolen, proceeds of fraud, bribery, etc. In law this makes the “marketers” and their bank-manager pimps equally guilty of those frauds, and the bribery and embezzlement that are so often the sources of the deposits. In effect they become accessories after the fact. But amazingly Nigeria’s law enforcement agencies focus only on the corrupt government officials and let the money-laundering banks off the hook.
For all its touted reform agenda, the government of Mr. Olusegun Obasanjo and his CBN governor Mr. Soludo lifted not a finger to stop these abuses in the banks as they were themselves involved in some of the financial shenanigans of these banks. Responding to the admonitory letter to the National Assembly by Mr. Obasanjo over the members’ alleged profligacy, outspoken Nigerian senator Dino Melaye (APC, Kogi) pointed out that during the campaign in 2005/2006 to change the Constitution to extend Mr. Obasanjo’s tenure to a third term, supportive National Assembly senators and representatives each reportedly received multi-million naira bribes (N70 million and N50 million, respectively) from the Presidency. At the time a senator alleged that the bribery payments were handed out at a Zenith Bank branch in Abuja. Mr. Melaye also reminded Nigerians how [prior to the tenure-elongation fiasco] during the quest to oust House Speaker Ghali Umar Na’abba, the Obasanjo Aso Rock tried to bribe Assembly members allegedly with bags of naira which those in opposition displayed on the floor of the House to embarrass the president. Only a couple of years ago the news was rife with reports about how billions of dollars meant for fighting the Boko Haram insurgency were illegally diverted to other purposes, of course using the banks as vehicles.
On a lower level, many Nigerians read in the newspapers the charges that the EFCC leveled on a previous governor of Edo State, Mr. Lucky Igbinedion, providing a long laundry list of daily and weekly deposits of huge sums of money made into a company’s account at a Benin City branch of the now defunct Broad Bank. Only a moron wouldn’t have questioned those deposits, because obviously there was no known company in the town doing the kind of business reflected by the reported billions that found their way into the account. It was clear the bank must have known it was being used to launder stolen funds. And they could all get away with it.
When Mr. Soludo left office as the CBN Governor in 2009, his successor Mr. Sanusi blew like a tsunami through the Nigerian banking system, which subsequent investigations showed was a cesspool of malfeasance. It was notable and good that banks such as the UBA, First Bank, Zenith Bank, Guaranty Trust Bank, Fidelity Bank, Skye Bank and Diamond Bank were found to be prudently managed, and so escaped censure. On the other hand, some others, notably Intercontinental Bank and BankPHB (Platinum Habib Bank), were nationalized and their managing directors arrested and accused of mind-boggling fraud and self-enrichment.
More astounding revelations of graft and unbridled theft of government funds came after General Muhammadu Buhari’s EFCC finally resumed its important work after being suppressed for years by the government of President Jonathan.
For instance, the reinvigorated EFCC under the inimitable financial crimes fighter Ibrahim Magu uncovered the alleged diversion of funds from the state-run oil company, NNPC, to fund the PDP campaign in the 2015 election. One trace of the funds, which amounted to $115 million, allegedly showed they came from the former oil minister Mrs. Diezani Allison-Madueke, were privately stored for her in a bank, and were then doled out to beneficiaries, who were PDP political operatives. Some of the indicted PDP political operatives issued a defense which was that they had received the campaign funds in good faith and were unaware of the original source of the funds.
A former naval chief was found to be taking for himself a huge cut of the nation’s defense budget meant for the Navy. More former state governors and high-ranking government officials as well as judges were being investigated, their properties seized, bank accounts frozen, millions of dollars in foreign and local currencies forfeited to the government. But as is always the case in Nigeria, corruption fights back, and the favorite paths for escape used by several of these indicted former governors and government officials were to tie up their cases in court for years, using all manner of technicalities, or jumping parties to the ruling All Progressives Congress, and having the Buhari government go easy on them.
All this being said, this writer does not for a minute absolve the current APC government in Nigeria of corruption, seeing that it has exhibited instances of following the same path as the discredited government of former president Mr. Jonathan. There have been reported cases of officials of the current government diverting public funds, and not facing or suffering any meaningful consequences, as usually the EFCC is kept under leash when it comes to some sacred cows. But there’s one recurring decimal, Nigerian banks, which gladly provide the infrastructure for these grand thefts.
Stopping corruption and prostitution in Nigerian banks (Part 2) >>>
♦ Hector-Roosevelt Ukegbu, an Economist, Financial Consultant and Business Analyst, is based in the United States.
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