Intercontinental’s Divided House

Lai Alabi, Intercontinental Bank MD: Presiding over a divided house?

The arrest of four top executives of Intercontinental Bank in connection with the illegal transfer of N12 billion to the bank’s former Managing Director, Erastus Akingbola, exposes the tenchant battle for the ‘soul’ of the troubled bank
By Bayo Amodu
The Nigerian banking sector is yet to fully recover from the recent special audit carried out by the apex regulatory body the Central Bank of Nigeria, CBN. Shortly after he was appointed the CBN Governor, Lamido Sanusi, a former Managing Director, First Bank of Nigeria, (FBN) initiated the audit which was later to be known as ‘Hurricane Sanusi.’ Indeed, the result of the audit opened a huge can of worms. Many depositors, investors, stakeholders and even admirers of the once enviable and profit- driven banking sector were shocked at what the outcome was.
The results of CBN’s examination of the first 10 banks, released on August 14, 2009, led to the sack of the Chief Executive Officers, (CEOs) and management of Oceanic Bank, Union Bank, Afribank, FinBank and Intercontinental Bank. By October 2, when the apex bank concluded the audit and announced the results for the remaining 14 banks, three more CEOs of Equitorial Trust Bank, Bank PHB and Spring Bank were also sacked. Sanusi accused the sacked CEOs of poor corporate governance that put their banks in jeopardy through weak risk management framework, as manifested in indiscriminate lending to operators in the capital market. Consequently, the CBN revelations showed that the indicted bankers were involved in massive fraudulent practices. And new management teams were appointed for the troubled banks, with a mandate to turn them around for profitability.
However, it appears as though trouble is not over yet for the affected banks, despite the fact that new managers are now at the helm of affairs. Recently, the Economic and Financial Crimes Commission (EFCC) arrested four top executives of Intercontinental Bank Plc over illegal withdrawals totalling N12 billion from the bank, allegedly, in favour of the bank’s former Chief Executive, Erastus Akingbola, who is currently on self-exile.
Akingbola was one of the bank executives invited for questioning by the EFCC for alleged involvement in deals running into several billions of naira. While other executives honoured the invitation and were arrested and detained by EFCC, and later charged to court, Akingbola filed a law suit against the action of the apex bank, challenging his removal as CEO of the bank and fled the country to London. Lai Alabi was appointed Managing Director of the bank, by the CBN.
The arrested executives are Akin Fabunmi, Financial Controller, Ayoola Ayinde, Head of International Operations, Toyin Odeshina, Head of Domestic Operations, and Toyin Oyelade, Head of Treasury. According to a top EFCC official, the four Intercontinental top- shots were said to have conspired to withdraw the N12 billion in favour of their former boss, Akingbola. The Source gathered that, at first they withdrew two billion naira from the bank’s general ledger account and transferred it to a subsidiary account of the bank.
The money was later said to have been moved to a Bureau de Change, where it was converted to hard currency and sent to Akingbola’s personal domiciliary account, where he withdrew it abroad. No sooner was the two billion naira withdrawn, The Source learnt, than the same set of people moved another N10billion into Akingbola’s private company, from where they moved the money to another bank.
“We thought by now, bank top executives would have learnt their lessons and depart from the evil of fraud, but to our greatest surprise, they still continue with their nefarious activities. We will not relent in our efforts at ridding this country of such unscrupulous elements," the EFCC source said.
However, soon after that, an imminent change took place in the bank. On Thursday, December 3, The Source learnt that 26 officials of the bank were sacked following a house-cleaning exercise. Many of the affected officials, including some general managers, The Source gathered, were loyalists of the former CEO, Akingbola who are perceived as working against the efforts of the present management to put things in the right shape.
The Source's findings indicate that the arrested officials and some others still working in the bank had moved their families out of the country, indicating that they had prepared to escape at the slightest hint of trouble. The Head, Media and Publicity, EFCC, Femi Babafemi, said that the passports of the four suspects had been seen seized, to prevent their escape.
According to a reliable source within the bank: “Because Akingbola had been at the helm of affairs for 20 years, many of those working in the organisation are still very loyal to him, even though there are clear cases of fraud and mismanagement. The reason is simple. He recruited many of them and gave them the means with which they would continue to survive, even after the crisis in the sector."
The source further said that, “those that were arrested had been acting against the efforts of the present management to put things in the right shape. They have been working with a former staff of the organisation, who is now floating an opposition group. And the documents gathered so far, have linked the arrested staff to the N12 billion fraud.”
Checks also revealed that one of the suspects had confessed that he was authorised on the phone to approve the movement of N10 billion into Akingbola’s company in another bank to settle private loans obtained.
However, a statement by the bank last week said that the 26 staffers resigned as part of the ongoing restructuring exercise in the bank. The statement signed by the Corporate Communication Department described the exit as a “sacrifice,” adding that: “As part of the ongoing restructuring exercise in Intercontinental Bank Plc, the management of the bank today accepted the voluntary exit of 26 senior management officers of the bank.”
The shocking revelation of illegal withdrawals at Intercontinental may not be too strange as regulators recently said that incidence of fraud in the sector remain on the rise. According to the CBN Banking Supervision Annual Report for 2008, a total of 538 bank workers were fired for fraud-related cases and forgery in the sector last year alone. It further stated that the fraud and forgeries were detected in 1,972 cases, out of which the fraudulent staffers succeeded in their dastardly plot in 746 of the cases as at December 31, 2008.
“Arising there from, 316 staff of deposit money banks were dismissed and 220 others had their appointments terminated,” the statement read.
The Nigerian Deposit Insurance Corporation (NDIC) had last month reported a huge loss of N17 billion by banks to fraud and forgeries involving their workers in various cadres. The NDIC, in its 2008 Annual Report, stated that about 313 bank staff attempted to steal over N53billion. The Corporation put the total number of reported cases of attempted fraud and forgeries last year at 2,007, indicating an increase of 29.2 per cent over the 1,553 reported cases in 2007.
The CBN’s Banking Supervision Department in its latest report further expressed concern over the high rate of fraud within the financial sector. The Report stated that the CBN and the NDIC continued their collaboration on the on-site examination of banks and discount houses in 2008. The CBN, according to the Report, examined the books of 14 banks and five discount houses while the NDIC was reported to have examined 10 banks in 2008.
Highlighting some of the findings of the examiners, the CBN said as at the month of December, 2008, two banks failed to meet the minimum prescribed capital adequacy ratio of 10 per cent. Despite these challenges, keen stakeholders told The Source that they are hoping to see a new vibrant banking sector emerge from the ongoing reforms.