How bankers defraud depositors, endanger investments

  • Their fraudulent activities almost ruined our lives Victims
  • We’re after errant banks – EFCC

Indications have emerged that a good number of top banks in Nigeria are battling several internal fraud cases due to poor internal control, occasioned by negligence on the part of senior officials of the financial institutions.
About 70 per cent of such cases were revealed after depositors had reported their experiences at different branches or headquarters of the banks.
According to top sources across the banking sector, many bankers engage in different types of fraudulent activities, as a result of laxity on the part of some officials in the internal control departments at various levels.
A good number of the frauds in question, our findings show, are also carried out by third parties with the connivance of insiders.
But investigations by The Point reveal that, while some of the fraudsters had been caught and forced to make refunds after depositors lodged complaints, several other unrepentant officials still live large in the institutions.
“We treat scores of fraud cases every year and most of them are done in connivance with senior officials of the bank at the branch level. Recently, a fraudster went to our Ikeja branch to clear a cheque worth N5 million from a customer’s account, who was abroad. The cashier observed an irregular signature and alerted a superior officer, who signed at the edge of the cheque as an approval for the cheque to be honoured.
“A few months later, the customer came to the branch threatening to sue the bank. When the cheque was presented to confirm who authorised payment, the edge of the instrument, where the senior banker signed had been torn. While the bank paid the customer, the cashier and her guarantor were made to refund the bank,” a top executive in one of the banks with its headquarters close to Marina roundabout, Lagos, told The Point The assertion by the top bank executive that some frauds are carried out by third parties with the connivance of insiders, was also confirmed by several depositors. One of the depositors, Mrs. Adeola Akinwunmi, told The Point that the sum of N160, 000 was transferred from her account in a bank owned by a business mogul in Ogun State (FCMB) to another bank in January 2016.
According to her, she didn’t issue a cheque to anybody for the said amount and she was shocked when she got an alert from her bank. “I rushed to my branch at Alagbado, Lagos, the next day, to enquire and was perturbed as the branch manager, one Mr. Olalekan, could not explain what happened to my money after waiting for hours. All he said was, madam, we will sort it out, please come back,” she narrated.
She alleged that the fraud was carried out by an insider in the branch, who must have observed that she had not touched the money in the account for months. After five months, the manager told her that the fund was transferred by an unknown person to one Mr. Innocent Abuchukwu’s Zenith bank account in Port-Harcourt, Rivers State.
Though, the money was refunded by the bank seven months later, after the account holder and her husband had reported the case at Meiran Police station, Lagos, the manager failed to disclose how the money got transferred to the teenager’s account.
Another way bankers allegedly fleece some depositors is by altering the account opening application forms earlier submitted by the depositor. In most cases, this type of fraud is usually carried out by the account officer of the depositor.
For instance, the Managing Director, Just Clothes, Mrs. Abimbola Okafor, who was a victim of such fraud, disclosed that she had instructed her bank (UBA), through her account officer, not to give her an ATM card when she opened the account shortly before her trip to Turkey in April 2016. Having informed the banker that she would be out of town for about two months and her GSM lines would not be reachable, the banker forged her signature and requested for an ATM card on behalf of the customer.
“I couldn’t believe my eyes when I got debit alerts that a sum of N350,000 was deducted from my account within three days. I called the banker and she told me the card must have been processed and sent from the bank’s head office in Marina and assured me it would be sorted out in two days, which was never done till I returned two weeks later. I am sure her intention was to borrow the money and refund before I returned because she had asked me to borrow her money before I travelled,” she recalled.
After she reported the fraudulent transaction to the branch manager, her money was refunded while the lady was dismissed.
Findings also reveal that some bankers carry out other fraudulent acts on some dormant accounts. While most banks have introduced several security checks to ensure such accounts are not tampered with, the bankers always find ways to beat the checks. One of the checks is that a dormancy status must be placed on accounts that had been inactive for six months.
But some staff of the financial institutions always circumvent the checks. What most of them do is to remove the inactive status on an account they presume the owner is late, withdraw money from it and return the status almost immediately. This is usually done by two or more parties, especially with another staff in the Internal Control department. The work of the IC staff is to ensure the alert sent to the department when the status is lifted is deleted immediately in order to avoid detection.

Uba Group

“In 2010, about N15 million had been raked from such accounts by some bankers in our Oba Akran branch and nobody suspected till the account holders resurfaced after two years but unfortunately the fraudsters had resigned their appointments from the bank. One of them is presently in London living large,” a retired banker, who worked in one of Nigeria’s three biggest banks, told The Point.
Transferring money from the Miscellaneous Accounts, otherwise known as GM Account is another way some bankers enrich themselves at the expense of depositors. The Miscellaneous or GM Account is an account where money meant to be deposited into another account by a customer is kept. Such funds are kept in the account because the depositors, who must have filled wrong details of the beneficiary in the teller, failed to correct the mistake after 48 hours.
Part of such fund can be moved by smart bankers into another account and later withdrawn using an ATM card.
Also, fraud can be perpetuated while transferring money into the accounts of some customers, especially pensioners. This is usually done by someone who has been monitoring such accounts for some months and realised the owner of the account has not been withdrawing money from it. A senior manager in one of the banks suspected to be currently troubled said, “What they do is to retain the names of four out of about 400 account holders, while their account numbers are changed to that of an ally.
”Corroborating this, an ex-military officer and a depositor of an old indigenous bank, Mr. Bayo Williams, said.
“I have had such experience before when I realised I didn’t receive credit alerts for three months from my pension account. I didn’t complain early because I thought it was because I was abroad for medical treatments. When I returned, I found that some other colleagues had similar complaints.
“We inquired from our base in Abuja and were told the money had been deposited in our accounts.

We visited the Suleja branch in our camouflage uniforms and later found that one of the bankers had been transferring the money to her teenage son’s account, to which she is a signatory. The bank made a refund and she was sent to Kuje prison.”

Meanwhile, forensic accountants across the country have picked holes in the operations of some banks. They attribute the prevalent fraudulent practice to poor infrastructure and negligence on the part of the management of the banks.
According to them, some of the banks may also lose several depositors and may be forced to merge, particularly as a result of several fraud cases leveled against them by their customers.
The Managing Partner, Finance View Consulting, Mrs. Dupe Abe, said most of the banks still used obsolete security systems that made it difficult for fraud to be detected almost immediately, adding that this was capable of creating misconception on the true state of the banking sector among local and foreign investors.
She explained that it was only about 30 per cent of depositors that allowed the bank to refund the stolen fund without filing law suits against the financial institutions.
To her, others insist on refund and file for damages, which they fight to the end.
“I have several fraud cases against almost all the banks in the country worth about N2 trillion at the Federal High Court in Lagos, Ogun and Rivers States,” she disclosed.
Also, Managing Consultant, Forensic Consulting, Mr. Ori Adeyemo, disclosed that in 2016 alone, he had presented about 100 cases of fraud before the Lagos High Court, involving Skye Bank, Zenith Bank and First Bank of Nigeria, among others.
According to him, the cases and over 400 others with other commercial banks worth N1 trillion have been at the Federal High Court, Lagos, since January 2012.
“We have won several cases in the court but the banks usually have their ways. When the case is won at the High Court, they file an appeal and that may take 10 years or more. In the process, the customer may die or lose interest in pursuing the case,” he said. Untitled1However, the Director, Corporate Communications, Central Bank of Nigeria, Mr. Isaac Okoroafor, told The Point that fraud cases were out of the purview of the apex bank and that such cases were meant to be reported to the Nigeria Police Force and Economic and Financial Crimes Commission for the law to take its course.
“If adequate compensation is not done after the law has taken its course, we can move in to perform our regulatory functions,” he explained.
Meanwhile, the Mr. Ibrahim Maguled Economic and Financial Crimes Commission said the commission had prosecuted about 1,000 people in the last three years for bank fraud related cases.
The Head of Media, EFCC, Mr. Wilson Uwujaren, disclosed that in 2016 alone, the anti-graft agency had prosecuted scores of bankers that had either swindled depositors or the banks in cases worth about N10 billion.
He added that there were yet more cases pending in Federal High Courts in Port Harcourt, Rivers, Yenagoa, Bayelsa, Edo and Lagos States, among others.
One of such cases is that of a former customer service manager, Ecobank plc, Hotel Presidential branch, Port Harcourt, Rivers, Ms Irene Okeoha, who was arraigned at the State High Court last month on one-count charge of stealing N8 million from depositors’ accounts in the bank.
“What happens is that when a staff of the bank is involved in such activities, the bank takes the person out of the system through dismissal. But now, we are going after the banks and the personnel used to perpetrate fraud. It takes two to tango. We don’t care what happens because the right thing has to be done. These people have given a lot of room for money laundering activities to thrive and that has to stop,” he said.