Wonder bank: Scheme fuelled by greed, ignorance?




With a whopping N106.9 billion trapped in wonder banks, victims are currently licking their wounds. In this report, ENITAR UGWU examines the factors that led to their fate.In human nature, greed is a dangerous thing.  Add ignorance to that, and you are saddled with a human going ready to go all the way without thinking or questions. When the wonder bank syndrome hit the shores of the country, it benefits seemed too good to be true.


As against the paltry returns on the investment by commercial banks, these wonder banks were churning out millionaires in matters of weeks.That was at the beginning.  As their customer base increased, the debt factor crept in till the entire scheme collapsed leaving in its wake bewildered but angry customers.


A total of 560,882 claims amounting to N106.9 billion had been submitted by members of the public against 440 illegal companies/’wonder banks,’ the Central Bank of Nigeria (CBN) said last week.This came hours after the banking watchdog restricted the stakes a bank can take in bonds issued by state governments.


Out of the N106.9 billion claims made by the public, which still has to be verified by the Inter-Agency Committee On illegal Fund Managers, the apex bank in a statement signed by its Head of Corporate Affairs, Muhammed Abdulahi, said 36 illegal fund managers accounted for N104 billion, or 97.3 per cent of the total collated claims.It said Nospetco Oil and Gas Ltd, one of the illegal fund managers, accounted for 48 per cent of these claims.


The Inter-Agency Committee, which was set up to stem the menace of ‘wonder banks’, comprises CBN, Nigeria Deposit Insurance Corporation (NDIC), Security and Exchange Commission (SEC), Economic and Financial Crimes Commission (EFCC), Corporate Affairs Commission  (CAC) and the Police.


The committee according to the statement met recently and deliberated on issues relating to the activities of illegal fund managers and wonder banks with a view to addressing the scourge.The Committee also deliberated on measures to confront the challenge posed by the stripping of assets by the promoters of the ‘wonder banks,’ many of who have gone underground.


The CBN said “in the case of Sefteg Company Nigeria Ltd, where a liquidator had been appointed by a court, the liquidator was able to realise a sizeable sum of money from the assets of the company and has commenced payment to verified depositors of the company. This approach of using court appointed liquidators would be replicated in all cases to ensure early resolution.”


The committee according to the statement has also mapped out strategies to address the menace in a comprehensive and sustainable manner through enhanced public communication, the use of court appointed liquidators and intensive surveillance by the law enforcement agencies to resolve the problem.


The CBN therefore advised members of the public to refrain from dealing with unlicenced or illegal operators, who offer astronomical or extraordinary returns on investments to extort money and lure undiscerning people into dubious pyramid schemes.“Members of the public, who choose to deal with these unscrupulous individuals and companies, despite these warnings, do so at their own risk. Where in doubt, enquiries should be made at the CBN, SEC and other member-institutions of the Inter-Agency Committee,” the apex bank stressed.


It would be recalled that in 2008, following the upsurge in the number of companies operating as illegal fund managers in the country, the CBN launched investigations into the activities of some identified companies. The investigations revealed that a number of the companies were involved in the illegal business. As a preliminary measure, the balances in their bank accounts were determined, the accounts frozen and the cases transferred to the EFCC for necessary action.


To enlighten the members of the public on the dangers of continued patronage of illegal fund managers, a list of the finance companies licensed by the CBN was published repeatedly in newspapers nationwide, and members of the public advised to transact business with licensed financial institutions only.


In order to adopt a holistic approach to deal with the menace, which had become an issue of national concern, an Inter-agency Committee on Illegal Fund Managers/’Wonder Banks’ comprising the CBN, NDIC, SEC, CAC, EFCC and the Nigeria Police was established at the instance of the CBN, in February 2008, to enhance collaboration among the relevant agencies of government. The broad objectives of the Committee were to:


• Put in place an appropriate mechanism for inter-agency collaboration to stop the activities of wonder banks and prevent resurgence in the future;

•  Map out modalities for pursuing cases against offending companies at the Investments and Securities Tribunal and

• Establish procedures for returning the trapped funds to the depositors/investors of the illegal fund managers.


An implementation sub-committee was set up by the main committee to ascertain the liabilities of each of the companies and propose procedures for repaying the trapped funds.Following a newspaper publication, members of the public who had invested/deposited funds with the illegal fund managers/’wonder banks’ submitted claims against 417 companies.


The resolution of the claims remained a huge challenge to the Committee as a result of the large number of companies involved, the quantum of claims, the complex verification procedures and the determination of the tangible assets of the illegal fund managers.Also, the illegal fund managers and/or investors/depositors against the CBN, some banks and other regulatory bodies had instituted series of litigations. Some of these litigations had led to the payment of claims on the order of the courts, thereby frustrating the efforts of the Committee.


However, measures had been put in place to surmount these challenges with a view to resolving the claims.  Also, plans are underway to embark upon a massive nationwide media campaign in 2009, to discourage members of the public from patronising illegal finance companies.The CBN would continue to intensify efforts to curb the activities of illegal fund managers/’wonder banks’ in the country.


Wonder banks had flourished over a period of three years up till about November 2007 when the tempting offer of making more than 500 per cent returns of deposits to participants in what investment experts describe as pyramid schemes clothed in exotic investment propositions like Forex Trading, Fixed Odd Betting and hedge fund investment.


Most participants in the schemes were persuaded of the legitimacy of the schemes because the operators presented the scheme as a joint venture between them (wonder banks) and commercial. Mostly, a participant was required to pay directly into a designated bank account in the name of the wonder bank domiciled with a reputable commercial bank, usually with a customised teller.


The Securities and Exchange Commission had, in response to public outcry when the wonder banks started failing in their payment dues, usually qualified as profit on deposit in an operational week, clamped down on their operations and instituted a suit against them in November 2007, accusing them of soliciting, advertising and inviting the public to deposit funds with them.


The 28 wonder banks on trial before the IST are, Art Master & Co. Ltd., Cyber International Ltd, Fortune Access Interlinks Network, Gold Power Unique Services Ltd, Gorutrans Nigeria Co. Ltd, Interglobal Investment Ltd, Money Field Ltd., New Freedom Diversified Investment Ltd., Open Gate Multipurpose Investors Ltd., Orion Express Global Services Ltd, Pennywise Investment Ltd, Positive Move International Nigeria Ltd, Precious Golden Profile; Real and Cool Wealth International Ltd, Shola Olanrewaju Ayinke (Sefteg Nigeria Company), Silvertrust Global Investment.


Others are Successpoint International Investment Ltd, Torid Investment Ltd, Treasured Fund Assets Ltd, Vikel Petroleum Ltd, Wealth Concepts Global Ltd, Wealthgage Multibiz Int. Ltd, Wealth Interlink Agency Ltd, Wealth Solution Ltd, Wealth Transfer and Logistic Ltd, Wilson O. Wilson (Doing business in the name and style of Wilamas Ventures), Wisdom Investments Nigeria Ltd and Nospetco Oil and Gas Ltd.





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