Banks Sanitisation: We Won't Bow to Blackmail- EFCC

The Economic and Financial Crimes Commission, EFCC has described an allegation that it is taking ten (10) percent of funds being recovered for banks as a blatant lie and a cheap blackmail that cannot stop the anti-graft agency from its present involvement in the sanitisation of the nation's financial sector. The Commission in a statement on Sunday also described the accusation as not only ridiculous but a well scripted falsehood designed to create a distraction from the on-going prosecution and investigation of those that have abused their positions and betrayed depositors.

'Information available to the Commission shows that some persons that have felt uncomfortable with the involvement of the EFCC in the bank sanitisation efforts, especially those that have criminally lived big on depositors savings and those that have lost their debt recovery briefs from their collaborators in the banks, have been sponsoring this falsehood hoping it will stick and stop the Commission from forging ahead in their prosecution.

'For the avoidance of doubt and the benefit of the public, the Commission has not at any time demanded or collected any cut in whatever form from any bank over funds so far recovered for the bailed out banks or any other. As such, attempts to blackmail the EFCC through sponsored reports cannot achieve the expected result of the sponsors, rather they will serve as an elixir in our determination to dig deeper into the rot the sponsors of the blackmail have created for their benefit and that of their collaborators.

It should be noted that the Commission is propelled to go this far in the bank sanitisation effort not as a result of any monetary gain, which is really non-existing, but because of the need to safeguard our nation's economic stability along with other stakeholders.

We wish to state the following for the benefit of the Nigerian public that are at the risk of being swayed by self-serving arguments being canvassed in some quarters.

We understand that section 7 (2) of the legislation establishing the Commission states that the EFCC “shall be the coordinating agency for the enforcement of the provisions” of the following key legislations: 1. The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994. 2. The Banks and other Financial Institutions Act (BOFIA) 1991

These two laws alone should suffice to justify the involvement of an organization like the EFCC in the bank cleansing exercise and the recovery of loans by the Central Bank of Nigeria. However it may be necessary to go beyond that. The general issues arising from the exercise in Nigeria have shown that margin loans, other forms of loan facilities and Infraction by lenders, are the critical areas that rogues within the system utilized.

A simple loan facility does not at face value invite the EFCC. However where the loan process from application, through processing, to approval, disbursement, utilization and finally repayment has a criminal flavour, then the EFCC will be involved because a criminal law has been flouted. The scenarios that have justified our involvement are as follows: (i) Loan Application Stage: Customer represents that it wants a loan for working capital purposes but utilizes the loan for private use. That is obtaining by false pretences and the EFCC established several such cases. (ii) Loan Processing Stage: Officers of the bank are compromised and recommend a loan which the fundamentals and cash flow would ordinarily not have supported. (iii) Loan Approval Stage: The Chief Executive of a bank approving loans that have been turned down by the Credit Committee of the Board of Directors. (iv)Loan Disbursement Stage: What if part of the disbursement went into private pockets and not the purport customer? This is a classic case of money laundering that the EFCC established in respect of several accounts. (v)Loan Utilization Stage: Utilizing the loan to mop up the bank's shares (Contravenes BOFIA which criminalizes it) which we have discovered in many instances. (vi) Repayment Stage: Where the terms of the loan states that the cash flow from the business financed is supposed to be paid to the bank but borrower diverts same. It is criminal diversion of funds. (vii) Collateralization Stage: Contrary to the banks' own credit policies, undeserving companies were given unsecured loans. In a single case, an unsecured loan of about $100 million was availed to a company whose balance sheet size and cash flow would not support even a secured loan for that amount.

The investigations also established the existence of fictitious collateral and customers criminally tampering with the collateral given or even a bank accepting collateral unknown to law or not legally viable.

In view of this explanation, the Commission wishes to emphasise that it will in no way succumb to any blackmail sponsored by self-serving individuals over on-going investigation and prosecution of bank executives and defaulters. We see their campaign of calumny as a challenge to dig deeper into their criminal records.