“After purchasing shares with the bank’s funds, the firms are instructed to allocate them to some directors of Finbank, including the defendants.”
The Economic and Financial Crimes Commission, EFCC, on Wednesday accused a former Managing Director of Finbank, Okey Nwosu, and his co-defendants, of creating “paper companies” to manipulate the bank’s shares.
Two of the EFCC witnesses, Messrs Anafi Mohammed and Shittu Bello, made this allegation at the resumption of Nwosu’s trial before a Lagos High Court in Ikeja.
Mr. Nwosu and three former directors; Dayo Famoroti, Danjuma Ocholi and Agnes Ebubedike, were charged to court for allegedly stealing N10.9 billion belonging to Finbank (now First City Monument Bank Plc).
In his testimony, Mohammed, head, Compliance and Enforcement Department, Financial Intelligence Unit of the EFCC, said he investigated the activities of the defendants.
The witness, who was led in evidence by EFCC counsel, Rotimi Jacobs alleged that the defendants created seven companies known as Special Purpose Vehicles, SPVs, to purchase the bank’s shares.
“The internal account of Finbank was debited and the money was transferred to the accounts of two stock brokering firms, Springboard Trust and Investment Ltd., and Integrated Securities Ltd,” Mr. Mohammed, one of the witnesses said.
“Approvals were given to the firms to buy the bank’s shares and these approvals were usually signed by Nwosu or Famoroti.
“The shares were bought in the name of some companies which were fronts for the bank.
“They were paper or share companies used by the bank as SPVs,” he narrated.
He alleged that after purchasing the shares with the bank’s funds, the firms were later instructed to allocate them to some directors of Finbank, including the defendants.
“Infact, about 34 million shares were given to Famoroti by Integrated Securities. Some directors never paid a single kobo for these shares,” the witness alleged.
Mr. Mohammed said it was the practice by banks during that period to trade in their own shares, noting that it did not amount to stealing.
“We actually discovered that some of the money was being returned to the bank’s account, after some of the shares were sold.
“They were only manipulating the bank’s shares to boost their image in the capital market but the bank lost some money in these transactions because of price fluctuation,” he said.
Also giving evidence, Mr. Bello, a Bank Examiner from the Nigerian Deposit Insurance Company, NDIC, alleged that the former bank chief’s violated the provisions regulating banking activities in the country.
Mr. Bello said his team of inter-agency investigators discovered some irregularities in the bank’s transactions.
“The defendants were buying the bank’s shares for themselves, which contravened the rules of the Central Bank of Nigeria, CBN, and the Securities and Exchange Commission, SEC,” the bank examiner said.
“After our investigations, we recommended that the bank should be sanctioned for rendering incorrect reports to the regulatory authorities and operating below the approved liquidity ratio”.
However, Mr. Bello, under cross-examination by the defence team of Lanre Ogunlesi, Ifedayo Adedipe and Yemi Sowemimo,all Senior Advocates of Nigeria exonerated the defendants of the theft charge.
“Our team did not find or established a case of theft against the defendants”, he said.
The matter was adjourned to November 1 for continuation of trial.
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