Wednesday, April 9, 2014

Malabu N155bn fraud: How Keystone Bank helped presidency, ministers broker huge money laundering deal

Published:

Dan Etete

Malabu opened its ‘Etete’ accounts at Keystone, 10 days after Mr. Ikomi assumed duties

Why did Oti Ikomi, former Managing Director at Keystone Bank, and the one with a velvet banking resume and experience, fire what appears to be a disturbing internal memo to staff at about the close of business on Thursday, October 11?

After just 13 months in office, and two months after he painted a rosy vision of the future he would take the bank, Mr. Ikomi dramatically fouled the mood at Keystone when he told staff he was, unceremoniously, stepping down.

The veteran banker came to Keystone with whistles and bells. He earned a masters degree in industrial engineering from the State University of New York, and a well-heeled professional reputation from Citi Bank, and the Standard Bank in Johannesburg where he left a highly regarded career in global transaction management, tendering the bank’s fortunes in 30 African markets.

Although the Keystone bank Mr. Ikomi inherited had been ravaged by high-level corruption and managerial incompetence that necessitated the Asset Management Company of Nigeria [AMCON] to pump in a controversial N283 billion rescue package, financial analysts were convinced salvaging the troubled bank was a mission Mr. Ikomi could accomplish.

Even in August, Mr. Ikomi still spoke of a rosy future for Keystone. In an interview that month, the banker said, “We have put in place a ‘let’s build’ strategic focus to be a top five bank in Nigeria by 2015, focusing on innovation and meeting customers’ needs in the middle market and retail banking. We are making early progress in the statistics released as part of the cashless Lagos drive. Keystone Bank already features as a top-10 bank in Nigeria, measured by Point of Sale terminals (PoS) deployment.”

Thus, with his believe in a great future well stated in newspaper interviews, his seeming steady stewardship, and an apparently satisfied and supportive board of directors , it seemed really odd that the man would suddenly opt out of one of the most coveted jobs in the industry.

So why did Mr. Ikomi leave? And why was it all of a sudden, and in such an untidy process?

Mr. Ikomi’s years in the banking upper deck also seems to have taught him nuances of the best art in corporate-speak; he decided to keep  his resignation letter short and ambiguous.

“Due to urgent personal reasons, I have today resigned my position as MD/CEO of Keystone Bank,” he told the staff.

This “urgent personal reasons” troubled many in the financial community as it did the staff of the bank.

But for operatives at the banking fraud unit of the Economic and Financial Crimes Commission, EFCC, this was a red flag that something was amiss.

Financial detectives at the EFCC fanned out almost immediately trying to make sense of this development, usually reliable sources at the anti-graft agency confided in PREMIUM TIMES. “It boiled down to two curious accounts,” they said.

In the ambience of the whirling post-year interviews and reviews that Mr. Ikomi gave in August, the bank boss had approved the release of details of transactions of two particular accounts in the bank. The accounts would become an albatross for the bank and its boss.

The accounts, according to EFCC operative, were used to launder funds by a convicted felon.

Now the House of Representatives has suddenly developed interest in the details of the accounts too, demanding the management of Keystone Bank to forward the details of these accounts to its investigations committee.

The ‘fraudulent’ accounts, both the EFCC and the House of Representative discovered, belonged to Malabu Oil & Gas and were managed by ex-convict, and Nigeria’s former oil minister, Dan Etete.

Both financial detectives and House Committee investigators also found that all the “suspicious” transactions done with these accounts occurred during the tenure of Mr. Ikomi as Keystone Bank boss.

“The truth is that everyone is so shocked that this fraud started right at the commencement of Mr. Ikomi’s tenure at Keystone,” sources at both EFCC and the House of Representative told PREMIUM TIMES in Lagos and Abuja in the course of the investigation.

PREMIUM TIMES’ two-month long investigation, involving multiple document reviews, and strings of interviews with sources at Keystone Bank, the EFCC, and the House of Representatives, show how Mr. Etete and Malabu, aided by the willingness of officials of Keystone Bank to ignore banking regulations, created a now ‘characteristic’ culture of impunity defined, in the main, by misinformation, forgery, and manipulation in order to carry out one of the most heinous acts of fraud in recent banking history.

Sources say they are unable to determine, at this point, if the appointment of Mr. Ikomi on August 5, 2011 was a “bundled package” calculated to make him the “trusted architect” of the fraud, a veiled suggestion that if this were to be the case, the investigation will widen in the direction of the Central Bank of Nigeria and the presidency.

The Etete jackpot

On Monday, August 15, 2011, 10 days after Mr. Ikomi came calling at Keystone’s corporate headquarters to assume duties, two ‘officials’ of Malabu Oil and Gas Ltd opened two corporate accounts at the Central Business District, Abuja branch of the bank. One was current account number 1005552035, and the other, a domiciliary account number 1005552028.

There was a sense of hurry in the Malabu pace, and this seemed to be for a purpose. Dan Etete, erstwhile million-dollar man was on his way to becoming a billion dollar richer the next day– courtesy of a largesse by the Jonathan administration, and nothing must stop this move.

Federal investigators told PREMIUM TIMES they believe part of the anxiety in the Malabu camp, and the need for pace had to do with the expected arrival of Ngozi-Okonjo Iweala, to her new job as Nigeria’s finance minister. The former World Bank Managing director was expected to assume duties on August 17 and since there was no trusting if she would “be helpful” in the deal; the Minister of Justice, Mohammed Adoke, devised a scheme that would ensure the transfer of $1.1 billion to Mr. Etete, a day before Mrs. Okonjo-Iweala’s resumption.

While the agreement to transfer the money, gotten from oil giants, Shell and Eni, to Mr. Etete’s Malabu, was reached since April, petitions were stacked high on Mr. Adoke’s table, pointing to Mr. Etete’s criminality in the deal, and to reasons why the transaction should not go ahead. Many of the reasons advanced in the petitions were already matters being investigated by anti-corruption and regulatory agencies on whose board Mr. Adoke sits as chief legal officer of the Nigerian government. Without huddles from Mr. Adoke’s office, Mr. Etete’s aides got a nod on their accounts from Keystone Bank.

The signatories/ forged resolution

The same day that Malabu opened the accounts, it wrote a letter to Keystone Bank. In the one-sentence letter signed by Seidougha Munamuna and Rasky Gbinigie, Malabu said it was appointing Mr. Etete “the sole signatory” to Malabu accounts.

Mr. Munamuna was a front for Mr. Etete, “fraudulently” appointed a board member of Malabu, while Mr. Gbinigie was appointed by Mr. Etete as Malabu’s company secretary.

PREMIUM TIMES had reported how Mr. Gbiginigie submitted forged resolutions to the Corporate Affairs Commission, CAC, at various times in order to change the ownership structure of Malabu to make Mr. Etete’s fronts, including Mr. Munamuna, directors and shareholders. Mr. Etete himself had been involved in fraud and deceit during the 1998 registration of Malabu at the CAC, as indicated in our earlier stories on this matter.

Mr. Munamuna (as Chairman) and Mr. Gbinigie also signed two company resolutions of two board meetings held within three days (no meeting of the real board ever held) and submitted them to the bank. The first ‘meeting’ of August 12 empowered the two men to be the signatories to the accounts.

Realising that the two men could not be completely trusted, Mr. Etete caused another ‘board meeting’ to be held on August 15, the day of the account opening, in which Mr. Etete, a ‘consultant’ described as “our Chief Dauzia Loya Etete” was appointed the sole signatory.

Based on the letter by Mr. Munamuna and Mr. Gbinigie to the bank, and the attached resolutions, signed by both men, Mr. Etete became the sole signatory of the two Malabu Keystone accounts.

Mr. Gbinigie declined interview when PREMIUM TIMES telephoned him Saturday in Lagos.

“At this time, at the stage we are in now, we don’t talk to the press,” he said.

Mr. Etete simply ignored us. He did not return calls or respond to email inquiry.

PREMIUM TIMES investigations found that in Malabu’s transaction with Keystone Bank, the financial house abused its own and Central Bank’s oversight requirements with respect to account management process.

Know Your Customer

One of the fundamental reforms the Central Bank of Nigeria put in place for Nigerian banks in the aftermath of the banking crisis that led to the near collapse and bail-out of five banks was the “Know Your Customer” policy demanding banks to have accurate and adequate knowledge of individuals and corporate entities before opening accounts for them.

When Malabu was opening its accounts, two individuals filled its customer information form. Mr. Etete filled and signed as ‘consultant’ to the company, while Mr. Munamuna signed without indicating his position in the company.

A curious official of Keystone bank, in a document certified by Johnson Okanlawon, a bank compliance officer, questioned Mr. Munamuna’s customer information form saying “not properly filled” and that some information “required by CBN” were missing.

The bank needed the money and so, it ignored the warning.

Also, neither of the men were directors or board members, even by a search later conducted on behalf of Keystone by Lawsmythbond and Co., a law firm. The company’s directors and shareholders, according to the search, were Mohammed Sani, Kweku Amafagha (Mr. Etete’s fictional character), and Hassan Hindu Wabi.

A senior official of the bank who spoke to PREMIUM TIMES on condition of anonymity said that was the genesis of the bank’s current problem with Malabu.

“Everybody knows that if a company is to open an account, the directors, particularly the largest shareholder must officially approve. They allowed the account without knowing or hearing from any of the official shareholders or directors. That was the problem,” the official said.

Also, Malabu claimed its official address is 30 Catholic Mission Street, Lagos. That address is the official law firm of Mr. Gbinigie, the lawyer. Another Abuja company address that a bank official claimed he visited on No. 2, Buza close, off Amazon Street, Maitama Abuja, is believed to be one of Mr. Etete’s many houses within Abuja metropolis.

This negligence of the Know Your Customer policy is what dragged Keystone Bank into the Malabu scandal, according to investigators.

A day after the account was opened, the billions started to pour in.

The transfers

A day after Malabu opened the two ‘Etete’ accounts, Mr. Adoke, alongside the Minister of State for Finance, Yerima Ngama, authorized the transfer of $400 million (N60 billion) into the Malabu domiciliary account. This is separate from another $401 million transferred to another Malabu account with First Bank.

JP Morgan, holding the Nigerian account, executed the transfer on August 23. The money got into Malabu Keystone Bank account on August 24, 2011.

Then, the Malabu transfer began.

On August 26, Malabu transferred $60 million (N9 billion) into its current account and subsequently into another Keystone account of a Bureau de Change Operator, AS SUNNAH BDC LTD. This transaction, PREMIUM TIMES can confirm, was reported to the EFCC, and the Nigeria Financial Intelligence Unit, by the bank.

The operators of the bureau the change are already telling the EFCC what they did to earn (N9 billion) from Mr. Etete.

Investigators believe the company is one of several used by Mr. Etete and his cronies for money laundering. The House of Representatives has also summoned the money changers.

However, a larger chunk of the money, $336 million (N51 billion) went to a man continuously described as “Mr. Corruption” by EFCC investigators.

On September 6, Mr. Etete transferred N51 billion into the account of Rocky Top Resources, a company owned by Abubakar Aliyu, a business crony of Mr. Etete and other top members of the Peoples Democratic Party, PDP, including Dieprieye Alamieyeisegha, an ex-convict and former Bayelsa State Governor, who appointed President Jonathan as his deputy in 1999.

PREMIUM TIMES had reported how top government and party officials are putting pressure on the lawmakers to shelve a planned public hearing on Malabu mainly to prevent Mr. Aliyu from a public testimony that could expose his dealings with top government officials, including the presidency.

The EFCC investigations

The EFCC said it is still investigating the Malabu scandal, started before 2007. The commission’s chairman, Ibrahim Lamorde, said “our investigation into the case is not yet concluded.”

However, some of its officials involved in the investigations say the pressure on Mr. Lamorde and his team over the scandal has slowed investigations.

An official revealed that Mr. Aliyu was one of those yet to appear before the commission, same for Mr. Etete, and Mr. Munamuna.

Mr. Gbinigie, the lawyer, reportedly told investigators that he acted, at all times, on the instruction of Mr. Etete.

Despite the EFCC’s non-conclusion of its investigation and non-prosecution of the people who could have scammed Nigeria of N155 billion, Malabu may have had its first victim in Mr. Ikomi, the bank boss.

Though Keystone may have played a major role in one of the greatest individual heist of public funds in Nigeria, Mr. Ikomi believes his bank did well during his time in office.

“We have made progress, our business is stable and we are focused to get market share and be a Top 5 Bank by 2015,” he told staff of the bank.

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