Insider Abuse And Stealing In Nigerian Banks

The country’s banking industry is crawling with criminally-minded people who, through a variety of tricks, continue to milk depositors. Now the law is after them

In the last quarter of last year, the Special Fraud Unit, SFU, headquartered in Lagos, declared over 50 bankers wanted for bank fraud. This year, the agency already has a lot on its plate, with over 600 cases of bank fraud perpetrated by bankers and accomplices from outside being investigated.

The Economic and Financial Crimes Commission, EFCC, is also investigating a similarly large number of banking stunts executed from the inside. The strains of the crime include manipulation of customers’ accounts, deliberate clearance of forged cheques and payment of money transfers to fictitious persons.
In many of the cases, the insiders are usually assisted by outsiders. The major targets of insider fraud, this magazine gathered, are accounts of wealthy customers as well as dormant accounts. The insiders, who sometimes are bank relationship officers, make illegal transfers from the customers’ accounts to the accounts of accomplices outside. To give the impression that such transfers are authorised by account owners, customers’ Transfer Instruction Letters as well as mandate signatures are forged.

•Olayinka Sani: Docked for an alleged N1.5billion fraud

Marilyn-Joan Obiora, a senior staff of Diamond Bank, is being prosecuted by the EFCC at the Federal High Court in Umuahia, Abia State. Obiora’s stunts were exposed in a petition by Stephen Inegbu, the bank’s zonal security supervisor in Port Harcourt. His petition was inspired by the bank’s inspection unit, which discovered that Obiora, abetted by four other staff of the bank, made fraudulent withdrawals totalling N125.6 million. In three installments, Obiora and colleagues withdrew N26 million, N91.6 million and N8 million.

Like Obiora, the duo of Ebele Okoh and Charles Amadi, also of Diamond Bank, are facing similar allegations before the Karu Chief Magistrate’s Court, Abuja. Okoh and Amadi of the bank’s Zone 4 branch in Abuja have been accused of withdrawing N250,000 from a customer’s account. Police prosecutor, Garba Mohammed, explained that Okoh and Amadi scanned the signatures of some customers, with the intention to use them for withdrawals. The suspects did not go far in their scheme before they ran out of luck. By then, they had withdrawn N250,000 from the account of one L. A. Mittee through one Amaechi Josiah, who is also being tried for alleged theft in the same court.

In February 2009, Mr. and Mrs. Tochukwu Obazu found themselves before a Federal High Court sitting in Ikoyi, Lagos, for an alleged N97 million fraud. Mrs. Abazu, while a staff of the Ikoyi branch of Fidelity Bank, was brought to answer charges of conspiracy with her husband to forge a customer’s account statement, which had the number 027402010024417.

Mrs. Abazu, who was an Executive Assistant with the bank’s e-Business Unit, Domestic Operations, allegedly made false entries to the account. The entries amounted to about N97 million. Mrs. Abazu and her husband admitted before the court that they made the entries knowing them to be false and acted upon them as genuine through several Fidelity Bank cheques.

Early this year, Olisaemeka Onyeka, a business manager with an Enugu branch of the United Bank for Africa, appeared before the Federal High Court, Awka, Anambra State, on a 17-count charge of criminal conspiracy, fraud and forgery. Onyeka allegedly convinced himself that the best place to obtain a loan was from a customer’s account. Supported by an account officer, Dike Chukwunenye, he forged documents and “obtained” a loan of N16 million from the account. Their luck, however, evaporated when the customer noticed that his account had been fiddled with and reported the matter to the EFCC.

•Ibru: Pleaded guilty to stealing N199 billion from Oceanic Bank

Another business manager, of the University of Ilorin branch of the bank, Sirajudeen Abdullahi, along with two of his colleagues, is being tried at the Kwara State High Court for nicking N60 million from the University of Ilorin Personnel Cost Account. The EFCC, which is prosecuting him and his friends, alleged that the suspects pretended that the university instructed the bank via a letter dated 14 September, 2011 and with a false reference letter to transfer the money from the account to another owned by Bamestic Ventures. While the suspects denied any wrongdoing, there was no evidence to support their claim as the account owners never gave authorisation for the transfer.

Also early this year, the EFCC arraigned the trio of Oyebode Atoyebi, Olayinka Sanni, a former manager with the defunct Intercontinental Bank (now part of Access Bank); and a company, Sidaw Ventures, before a Lagos State High Court on an eight-count charge of conspiracy, stealing and forgery. Sanni, Atoyebi and Sidaw Ventures were accused of stealing about N1.5 billion. Sanni, a chartered accountant and owner of Sidaw Ventures, a bureau de change, was alleged to have illegally moved various sums of money from more than seven customers of the defunct Intercontinental Bank into the account of Sidaw Ventures owned and operated by him, without the customers’ consent. Atoyebi was arrested for allowing the use of his passport-sized photograph and name to open an account in Sidaw Ventures Limited in the name of Akanmu Babatunde. With this fictitious name, Sanni launched a series of shady deals that left many victims sucked of their cash.

•Atuche: Forged resolutions of two companies to siphon over N10.9 billion

And in one audacious move, Hillary Amakor, an intern with Finbank plc, now swallowed up by First City Monument Bank,  in harness with Osondu Chimaokwu, a full-time employee of the bank, masterminded a N600 million heist through a fictitious company, Osdech Nigeria Limited. The two men were recently arraigned before a Lagos High Court on a six-count charge bordering on falsification of account.

Just last week, two Access Bank staff, Olusegun Afolabi, 25, and Rebecca Enahoro, 24, appeared before a Magistrates’ Court in Lagos for an alleged N3.3 million fraud. “The duo conspired to fraudulently re-activate a dormant account No. 0021035478 belonging to Mohammed Lokogoma,” the prosecutor said. After the reactivation, the accused used the account to transfer N2. 3 million to another bank and another N1 million to a different account in Ecobank. If convicted, the suspects face up to 15 years imprisonment.

Aside from the cases being tried by the anti-fraud agencies, some aggrieved customers are also in court with staff of banks for allegedly fiddling with their accounts. Odafe Atogun, a Skye Bank customer, is one of them. In 2008, Atogun, an editorial consultant, struck a deal with an Ireland-based company, Hudson Killeen, for the establishment of a printing press in Nigeria. To start up, a sales representative of Hudson Killeen, Kelvin Fuller, sent the sum of €6,000 to Atogun through Western Union Money Transfer. In his payment instruction to Western Union, Fuller specified that the money be paid to Atogun through any of its affiliate banks in Abuja. When the money was sent, Atogun decided to wait till the next day to pick it up since it was already past banking hours.

The next day, he went to Skye Bank on Ademola Adetokunbo Crescent, Wuse II, Abuja, to collect the money, only to be told that the money transfer control number may not exist or may have been used. After about two months of continuous enquiry, the Western Union Money Transfer office in Ireland discovered that the said money was paid out at 6.22pm Nigerian time on 3 November 2008, by a Skye Bank branch office at 1, Forestry Road, Benin City–to someone else. Desirous of knowing how the money could have been paid during non-banking hours, Atogun approached the bank for explanation. He got none. That aroused a suspicion that the payment could only have been made possible by an insider.

•Sanusi: CBN has put in place measures to check internal and external bank fraud

He filed a N100 million suit against the bank. Five years after, Atogun’s quest to hold Skye Bank liable for the fraudulent withdrawal of the money sent to him is still before a Lagos High Court. Three weeks ago, the court rejected the bank’s application to stop the trial on the grounds that the court lacks jurisdiction to hear the matter.

In another incident involving the bank, over N52 million was allegedly fraudulently deducted from an account belonging to the Lagos State Ministry of Establishments and Training at the bank’s branch in Alausa, Lagos.
Two cloned cheques were allegedly used in withdrawing the money from the ministry’s account in two instalments without confirmation from the account signatories. Police investigation into the matter revealed that the ministry, indeed, issued two cheques with the same numbers as the cloned ones, but to other individuals and amounts way below the ones cashed with the cloned cheques. While the original cheques bore the sums of N400,000 and N4,249,429.40 respectively, the cloned cheques bore N23,830,192 and N26,750,400. Unlike in the case of Atogun, the management of the bank, perhaps because of the entity affected, experienced a bout of contrition and made a refund of the money to the ministry.

Even the top echelon of the industry appears not to have immunity against the temptation to engage in fraud.
The trial of Francis Atuche, former managing director of the defunct BankPHB, alongside two others, shows the vulnerability of the industry’s top cats to the seduction of money. Atuche, who is standing trial along with his wife, Elizabeth, is alleged to have forged board resolutions of Future View Securities Limited and Trajek Nigeria Limited. The resolutions by the two companies, which were mere proxies, were used to siphon over N10.9 billion from the bank. Witnesses in the case have offered startling revelations of the couple’s predilection for fraudulent transfers and conversion. Mr. Erastus Akingbola, former managing director of the defunct Intercontinental Bank, is in the same boat with Atuche. Still hanging on the former Intercontinental Bank boss’ neck are hefty charges relating to a N47.1 billion fraud.

Aside from the cases in court, this magazine learnt that many others involving bank staff are never reported to security agencies because of their potential for reputational damage. An industry source told this medium that many fraud cases in which bank staff assist Internet hackers to access customers’ accounts are often not reported to security agencies. The source explained that banks prefer handling such internally to stave off public suspicion that their internal security measures are defective. “No bank wants to give the public the impression that it is unsafe to bank with it. So, when cases of internally assisted Internet fraud are detected, they just handle the matter internally,” said the source, who added that the EFCC is currently not handling cases on Internet hacking, a claim confirmed by a senior EFCC official.

•Adelowo Tunji: Also in the soup

Many factors have been attributed to the growing involvement of bank staff in fraud. One of such is casualisation of staff, explained Comrade Sunday Salako, National President, Union of Banks and Financial Institutions Employees, NUBIFIE. In a recent interview with this magazine, Salako said casual staff in banks have back-breaking work schedules for which they get measly wages. In the report in which Salako’s interview was run, some casual bank staff told TheNEWS that banks give them big marketing targets which, even when met, do not deliver commensurate commissions. Those who handle large volumes of cash, like tellers in some banks, are paid as low as N30,000. And when some of them are affected in staff rationalisation exercises, the best they get is a month’s salary. These, argued many in the industry, have greatly increased the temptation to engage in varieties of fraud.

•Ogunsakin: SFU trains bankers on early fraud detection techniques

In a recent interview, the SFU spokesperson, Mrs. Ngozi Isintume, said the successes recorded in bank frauds are attributable to banks’failure to carefully screen applicants. She also identified inadequate documentation of employees and the inability of the affected institutions to cross-check information provided by their employees before absorbing them. The SFU spokesperson said it has not been easy tracking the bank officials wanted for fraud because the banks usually fail to cross-check the addresses provided by those they hire. She advised employers, especially banks, to be more diligent in their recruitment efforts.

Another factor identified by industry observers is the wish to sustain the lush lifestyle that bankers were known for before the banking crisis of 2009. Many bank directors and managers currently standing trial for stealing depositors’ funds provide examples of this. While Akingbola was reported to have bought a private jet with depositors’ funds, Atuche and Cecilia Ibru, managing director of the defunct Oceanic Bank, stole billions and donated millions of depositors’ funds to churches. An aggregate of N500 billion of depositors’ funds is believed to have been stolen in those heady days. Ibru was jailed for only six months after pleading guilty to stealing N199 billion from Oceanic Bank.

The penalty she got was widely viewed as a slap on the wrist, a development that is likely to serve as an encouragement to aspiring rogues. The recent presidential pardon granted to Muhammed Bulama, CEO of the defunct Bank of the North, who was jailed for stealing depositors fund and abusing his office, attracted similar criticisms from the public.

Listed mostly as white-collar crime, insider abuse by bank directors and misuse of depositors’s funds attract harsh jail terms and fines under the United States Bank Fraud Statute that makes bank fraud a federal offence. In China, fraudulent bankers have been executed, while long jail terms and state-sanctioned pauperisation await bank directors who fall foul of the law in Russia.

Worrisome as these developments appear, some banks are putting measures to checkmate the trend. For instance, Guaranty Trust Bank recently deployed a security software on its Internet Banking platform called Trusteer Rapport. The software blocks malicious attempts on customers’ accounts from both internal and external fraudsters by securing online communications with the bank’s website and internet banking portal. The software can be used as an additional layer of security to any anti-virus or security software already used by its customers.

•Lamorde: EFCC is prosecuting insider abuse offenders

A few years ago, the bank also installed a whistle blower platform to help mitigate instances of fraud whilst resolving customer service-related issues. The channel enables customers, staff and other stakeholders of the bank to report unethical or unprofessional conduct by its employees without revealing the complainant’s identity. The GTBank Whistle Blower is a very secure platform that is hosted on the bank’s website for easy access.

Authorities at the bank have stated that it remains ardently committed to proper practices and preventive mechanisms that safeguard the properties of its stakeholders. The bank intends to continue strengthening its security processes at all touch points, whilst promoting its value system, which, it says, is hinged on international best practice, professionalism, ethics, integrity and superior customer service.

GTB’s leading role in the provision of secured technological platforms to its customers recently received international plaudits when it received the Payment Card Industry Data Security Standard certification, PCIDSS.

On its part, Zenith Bank adopts multiple layers of approval for cheques. This is to ensure that no particular staff of the bank, no matter how highly placed, can approve any withdrawal from a customer’s account. The bank also has an internal security protocol that immediately detects any suspicious transaction. The protocol flags any withdrawal from a customer’s account that does not follow due security process.

CBN has also recently put other measures in place to check both internal and external bank fraud. Besides pushing for a stiffer penalty for bank fraudsters in the proposed amendment to the Banks and Other Financial Institutions Amendment Bill before the National Assembly, the CBN has also mooted plans to introduce biometric teller machines and the use of finger print and eye retina to make accounts more secured.

To further curtail the situation, Special Fraud Unit of the Nigeria Police, in collaboration with the City of London Police, recently organised a workshop for stakeholders in the banking sector. Over 300 bankers were trained at the seminar on early fraud detection techniques for both internal and external bank fraud.

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