EXCLUSIVE: Access Bank, CBN, others culpable in subsidy fraud

By: Idris Akinbajo

Access Bank financed the importation of about 40 per cent of the petrol brought into Nigeria in 2011 and received, into accounts at its branches, a similar percentage of the N2trillion the FG paid as subsidy during the period Access Bank and other Nigerian banks played major roles in the fuel subsidy scandal of 2011 and have several questions to answer, a PREMIUM TIMES investigation has shown. Sources at Access Bank, the Central Bank of Nigeria (CBN), and the oil industry say that although there is no apparent focus on the role of Nigerian banks in the whole scandal, some of them, particularly the major players like Access Bank helped perpetrate the fraud. While N240billion was approved in the 2011 budget as petrol subsidy, Ngozi OkonjoIweala, Nigerias finance minister last week told the Nigerian Senate that the Federal Government actually paid 2.19 trillion as subsidy to petrol importers. Following pressure on the administration by civil society and other Nigerians over the implementation of the recommendations of the House of Representatives committee, which probed the fuel subsidy payment for 2011, the government set up two

committees. A technical committee was first set up by the Finance Ministry, followed by a presidential committee, set up to review the work of the technical committee. Both committees were headed by Access Bank's Group Managing Director, Aigboje AigImoukhuede. Investigating himself

Though Mr. AigImoukhuede headed the two probes, Access Bank, which he heads, financed the biggest chunk of fuel importation for the 2011, which was characterised by large-scale fraud, our investigation has shown. Sources at the CBN and documents have shown that the bank financed close to 40 per cent of the petrol imported to Nigeria, and for which subsidy was paid, in 2011. Access Bank financed about 40 per cent of the deals in 2011," a top Access Bank staff familiar with the deal said. "So, if there was fraud in the 2011 subsidy scheme, then companies finance by access bank, even our bank or senior officials, perpetrated or benefitted from 40 per cent of the fraud. PREMIUM TIMES learnt that about 400 cargoes of petrol was imported into Nigerian in 2011 with almost 160 of them financed by Access. Some of the importers financed by Access bank include Sahara Energy, Eterna Plc, and Spog Petrochemicals Limited. Eterna and Spog are two of the companies indicted by the House of Representatives committee in its report. Eterna was indicted for tax evasion; while Spog, owned by controversial Jide Omokore, a major financier of President Goodluck Jonathans election and beneficiary of various government largesse including juicy oil blocks, acquired in questionable manners, was indicted for getting approval to import petrol even before it was registered by the PPPRA. How that was done is difficult to decipher. But Access is its long-term financier. Mr. Omokore is also married to Angela Jones, a senior official of Access Bank, who is currently in charge of Wealth Management at the bank. Ms. Jones, alongside Aig Aig-

Imoukhuede, younger relative of the Access Bank GMD, also sits on the board of another company, Marina Securities. The younger Aig-Imoukhuede is a co-owner of Ice Energy Petroleum Trading Company Limited which was also indicted by the Lower House. Another company owned by Mr. Omokore, Ceoti International Limited, defaulted in its tax payment, the House committee discovered. Validating Spog Spog Petrochemicals which was alleged in a petition to the Attorney General of the Federation in 2011 to have imported 3000 metric tones of petrol despite receiving subsidy for 13,000 metric tonnes early 2011, came highly recommended by Mr. AigImoukhuedes Access Bank. In a letter addressed to the executive secretary of PPPRA, dated May 31, 2011 and signed by Tope Ogunfusika and Ojeifoh Okosun, Access Bank stated that it had had a great relationship with Spog since 2006. We recommend the company (Spog) as being suitable for normal business engagements with your company (PPPRA), the bank told PPPRA, in order to strengthen the company's application to participate in the subsidy regime. PREMIUM TIMES learnt that that letter helped shore-up the image of Spog which at that time was almost blacklisted by PPPRA over suspicion of underhand dealings. Access Bank made no reports Investigations show that Access Bank, into whose accounts the Federal Government paid about 40 per cent of the N2trillion subsidy, never reported any marketer either to the CBN or the PPPRA for underhand dealings. The bank was just interested in its money. As long as the marketers could get the money, even through subsidy, we (Access Bank) didnt see a reason to report them to the CBN. Though we knew many of them were not selling any products, our source stated. Access wouldn't comment on its role in the subsidy regime. Our reporter tried consistently for a week to get the bank's reactions to the facts at our disposal. Its spokesperson, Segun Fafore, demanded an email enquiry on Thursday last week. By Thursday evening, Mr. Fafore, after receiving our emailed enquiry, called to say that the bank would respond to our enquiry on Friday. After failing to respond on Friday as promised, Mr. Fafore did not answer subsequent calls from our reporter. Covering-up the banks

When the technical committee, headed by Mr. Aig-Imoukhuede, submitted its report, it identified 17 methods allegedly used by oil marketers to defraud the Federal Government. Although the report is yet to be made public, sources knowledgeable about its content say the first method identified is the lack of evidence of sale proceeds of imported fuel with the financing banks. In other words, though the banks paid for the imported petroleum products, the marketers probably sold the products behind the banks, diverted them, or did not even do any importation. The total sum for the unaccounted products according to the committee is N158billion. This finding was however faulted by senior bank sources including top officials of the central bank of Nigeria (CBN), Nigerias banking regulator. "Who did the banks complain to that there was no evidence of sale? Since the subsidy money was paid into the marketers accounts with the banks, why didnt the banks complain to the CBN or even PPPRA that they had no evidence that any product was sold, a top CBN source said. The truth is we know they were all involved in the scheme, they are just trying to exonerate themselves. Another bank source made reference to the membership of both the technical committee and the Presidential committee as reasons the committee would never indict or reveal the roles of the bank. Apart from Mr. Aig-Imoukhuede, who heads both committees, there are two other top bankers on the two committees: Sola David-Borha, the MD of Stanbic IBTC; and Onyinye Ahuchogu, a Deputy Director at the CBN, are members of the two committees. How can you want to investigate a sector where banks played a crucial role, and you appoint heads of the same banks to lead the probe. Can they ever probe themselves, a top CBN source queried. Ignoring the banks Nigerian banks, described by a top industry source, as very complicit if thorough checks are done, have been overlooked by previous probes of the subsidy scam, including the technical committee. It is not only Mr. Aig-Imoukhuedes committees that avoided the complicity of the banks in the scandal, the House of Representatives committee, which did a live telecast of its probe, and whose report has been widely acknowledged as thorough, also overlooked the banks.

We focused more on the marketers and regulators," a member of the House committee told PREMIUM TIMES. "But while investigating, we knew there was no way they could exclude themselves from the scam. I just dont know how they escaped our view. But I can assure you, they are complicit. Analysts believe that without the banks, there wouldnt have been a basis for subsidy payment for most of the oil marketers in the first place. They provided the finances and now, sources say, the banks, which industry sources say are as complicit as the marketers and the regulators are going to exclude themselves from the probe again. How the banks get involved After securing petroleum import licence from the Petroleum Products Pricing and Regulatory Agency (PPPRA), an oil marketer approaches a bank to finance the deal. The bank bids for forex (foreign exchange) for you from the central bank on the basis that you obtained a license, a top official, of a major Nigerian bank, involved in the energy sector said, while explaining the process to our reporter. The bank also opens a letter of credit (LC) with the offshore oil supplier or its bank, from whom the Nigerian company is buying the petroleum product. The bank then provides evidence of financing to the PPPRA. The evidence will contain the volume of product paid for, volume imported, and so on. In order to ensure the marketer does not default in payment, and does not divert the products, the bank ensures that both the subsidy sum to be paid by the PPPRA, and the fee to be paid by local purchasers of the imported fuel are paid into the oil marketers account domiciled with the bank. The truth is the banks cannot claim not to know that there is fraud going on. Sometimes, we (the banks) even partake in it, a senior banker said. There is no way a marketer will divert a product we have paid for without us knowing. Sometimes, we even appoint people to help us monitor the imported product at the tank farms, he said. Sources in the oil industry also confirmed what the bank officials said. Do you think a bank will use its own money to pay for a product and let one marketer do what he likes with it? They learnt from their earlier mistakes during the banking crisis. Most of what goes on is with their knowledge, a top oil industry source, who did not want her name mentioned for fear of victimization, stated. However, it is not only the Access Bank and other commercial banks which should be investigated on the subsidy scam; even the CBN was culpable.

See no evil

The CBN, Nigerias apex bank and financial regulator, looked away while marketers were colluding with bank officials to dupe the nation, investigations reveal. In at least one occasion, the PPPRA wrote to the CBN when it suspected that some oil marketers were playing pranks, submitting suspiciously fake bank documents, in probable collusion with the affected banks, in order to claim subsidy payments. In a letter dated February 1, 2011, received by the CBN on the same day and directed to the director in charge of trade and exchange, the PPPRA told the CBN that it received documents from the indicated marketers as part of the requirements for subsidy claim. In line with the policy of transparency, the Agency deemed it necessary to request the verification of authenticity of the attached documents from the CBN, the letter stated; the word, authenticity, was in bold fonts. The documents suspected to be fake and sent to the CBN included Form M, Letters of Credit, and Evidence of Bank Finance. Investigations at both the CBN and the PPPRA revealed that the CBN never responded to the request. That was a trying period, particularly for the banks involved. We (the CBN) didnt want anything that would further erode public confidence in the banks. That is why we didnt respond to that request. Nobody knew all these (the fuel subsidy scandal) would happen, a top CBN official said. Following our email enquiry last Thursday, Ugochukwu Okoroafor, CBN's director of corporate communications, said (in an email) on Friday that the apex bank would respond to our enquiry this week. Mr. Okoroafor is however yet to respond to our questions on the various roles of the CBN in the 2011 subsidy regime.

Despite the apparent complicity of the banks however, the fate of the mismanaged trillions of naira and the expectations of Nigerians is still being managed by Mr. AigImoukhuede and his other bank colleagues in the Presidential probe panel. Anyone expecting any justice from Aigs panel is deceiving himself. He will never indict himself or his colleagues. With that committee, President Jonathan has dashed the hopes of Nigerians on the fuel subsidy scandal, a top CBN source stated.