RE: Intercontinental Bank replies Akingbola


We have so far refused to respond to all the frivolous allegations in the press against the Bank. This is based on our belief that unnecessary press war is not in the interest of the Bank. But the recent heavily advertised campaign of calumny against the Bank calls for response to set the records straight.


Response to Akingbola’s claim that the Bank was in good shape before the CBN intervention in August 2009.


I cannot hold brief for the CBN, but let us critically examine the situation. First of all, why was Intercontinental Bank Plc (ICB) included among the initial five banks that were taken over by the CBN? Why not Zenith, GTB or IBTC which were contemporary banks to Intercontinental? It is because these banks were professionally well-managed and prudently too.


For Intercontinental, it was a case of gross mismanagement and abuse of office. To the public, the Bank posed a shining camouflage, managed largely on the pages of newspapers. ICB became a philanthropic foundation portraying an artificial wellness. Within, it was dying gradually through gross mismanagement. Banking is based on trust. When that trust is lost you have problems. And that was what happened to the Bank.


Let us illustrate


i)   Loan Portfolio


In August 2009, the Bank had a loan portfolio of N685billion. Of these, Share or I-Margin loans and Oil & Gas loans represented N362billion or 53%. 75% of these were non-performing.


However, at that time, the books of the Bank were heavily manipulated. Upon proper audit of the books in December 2009, we had the following:


Total Loans were N692billion out of which only 20% was performing. The balance of 80% was non-performing. Of the N365billion Share and Oil & Gas loans, 91% were non-performing.


Now, how did the Bank get to this hopeless situation? Against all tenets of prudent and conservative banking and contrary to the credit policy of the Bank, the former CEO pursued aggressively, lending to the Capital Market. The Bank was hawking share loans all over the place, encouraging people especially politicians to come and take loans to buy shares. During this mad rush to lend to the capital market, grave mistakes were made – poor documentation, inadequate security, account mismanagement, fraud, etc. It was a real messy situation.


Out of the N208billion lent to the capital market, the value of the securities had declined to about N36billion i.e., only 17% of the exposure by December 2009. In the case of the balance of N157billion to Oil & Gas, there was virtually no security. The products had been sold and in many cases, the proceeds had been diverted. So, almost the entire non-performing loans to the capital market and oil & gas sector virtually had no security to back them up.


The Bank became highly illiquid. Of course, people got to know which contributed to the supposed ‘de-marketing’. Such was the grave situation of the Bank which led to the CBN intervention and the source of serious problems the present management met on ground.


ii)   Purchase of Bank’s Own Shares


You see, when people talk of being witch-hunted without telling people what they actually did, the public becomes misinformed and show undeserved sympathy. Such is the situation in this case.


Do you know that the former CEO purchased N167billion of the Bank’s own shares using depositors’ funds and interbank borrowings? The volume of share purchased with the amount represented 27% of the Bank’s issued share capital as at December 2009. And this man says he did nothing wrong?. He did this without the Board approval and against all rules of Corporate Governance. Please note that the law bans a bank from acquiring its own shares. This man went to acquire 27% of the Bank’s own shares using depositors’ and interbank funds. And yet he did nothing wrong.


To even make matters worse, he used as one of the stockbrokers, his own Company, Tropics Finance owned mainly by himself and his wife to purchase these shares. This action forced the price of the Bank’s shares up to N40 at a point, one can imagine the amount of brokerage and commission that accrued to him and his family from these illegal acts.


Of course, with actions like this, the market was bound to crash. And crash it did. As at end of December 2009, the value of these shares purchased at N167billion had crashed to N8.2billion. As at 30th September 2010, they were worth only N6.4billion. Now, if over


80% of a bank’s loans are not performing and collection most difficult and


N167billion of the Bank’s deposits had been committed to acquire the Bank’s own


Shares whose value is now N6.4billion and with interbank borrowings at about


N280billion, can such a bank be said to be healthy at the time the CBN took it over in August 2009? Honestly, we need to be frank to ourselves. The CBN took action to save depositors. I did not contribute to the problem. I was brought here to salvage the Bank. And my Management team has put everything to make sure this Bank survives. We do not deserve condemnation.


Central Banks all over the world have the primary responsibility of protecting depositors. That is what the CBN did. It had other options. It could have liquidated the banks. After all, Abacha liquidated 26 banks in one day in January 1998 with dire consequences to depositors some of which have not recovered from the episode till today. Instead, the CBN chose to protect depositors and avoid a collapse of the sector. I think the CBN should be commended.




Manipulation of the Bank’s books by Akingbola


The last Audited Accounts signed and sent to the Central Bank of Nigeria for approval by Mr Akingbola was for the year ended 28th February 2009. It had a profit before tax of N14.7 billion. The deliberate and unbelievable huge falsification of the Bank’s books was so perfectly concealed that when the same firm of External Auditors had to revise the audited accounts for 28th February 2009 (after most of the fraudulent activities and heavy manipulation of the records and book keeping of the Bank were uncovered), the profit before tax of N14.7billion reported and signed by Mr Akingbola was actually an operating loss of N335.8 billion.


The External Auditors had no choice but to qualify the accounts for the year ended 28th February 2009 to the effect that proper books of Accounts were not kept by Mr Akingbola.


Significant percentage of the profits declared by the Bank in the previous financial years were from spurious debit entries into customers accounts particularly depositors and borrowing customers. Staff were encouraged during month ends/year ends to find all possible ways of booking profits. This unbelievably included passing debit entries into depositors’ accounts and crediting income accounts. This has currently led to huge claims on the Bank particularly by large ticket depositors as well as credit customers whose accounts had been heavily manipulated. Over N40billion claims by various customers arising from spurious entries have been verified and confirmed by the Inspection Department of the Bank. A lot of these customer’s claims are still pending against the Bank.


This situation was quite serious than can be imagined. When staffs, under serious threat of sanction are forced to show profit by all means from heavily deteriorated balance sheet, then of course they are forced to cook the books. Each month end or quarter end, they are forced to debit depositors accounts and credit profit, then they credit non-performing accounts to make them performing and debit other customers and they defer or conceal expenses. All these to show profit and avoid sanction. Simultaneously, such crook actions were rewarded with heavy bonuses nicknamed ‘JETTA’. With time, such regular practice became common practice. The whole system became infested. The ‘Man of God’, the Pastor had created a satanic bank. Some of the concealed expenses included branch expansion cost, invoices from service providers, commitments on needless promotions including CNN and various foreign media, etc running into several billions of naira which the current management had to pay up. Sometimes we wept at the extent of the pervasiveness of such practices across the Bank.


If we decide to catalogue the full extent of the atrocities and rot we met, some members of the public who had been deceived to trusting this man will weep. While the shepherd was accumulating huge personal wealth, the sheep had to suffer serious loses for following him.


The situation led to the wholesale unreliability of most of the books of account and general ledger balances during Akingbola’s period in the Bank. The current Management apart from re-orientating the generality of the staff on the necessity for professional ethics has also cleaned up the books to ensure reliability and integrity.


Allegation of stealing against Akingbola


Honestly, I did not believe what we saw. The first warning came from Deutsche Bank in London which asked us to confirm certain transfers in favour of Mr. Akingbola’s lawyer in the UK. It took us long to find out the truth because all the staff who were supposed to provide us with information were misleading us. It was after the disengagement of some of these staff that the truth started coming out.


We found out that Mr. Akingbola had transferred using the Bank’s funds, a total of about £13million in favour of his lawyer in the United Kingdom.


Secondly, we found out transfers totaling N10billion into his private companies using the Bank’s funds through the Bank’s Managers’ Cheques. We found out that these funds which were transferred from the Bank to his private companies were used to repay his loans from other banks including associates of the Bank. There were other transfers.


The Bank was bleeding as a result of the serious illiquidity he had caused. Yet he was milking the Bank severely. Perhaps he had seen the end coming and was trying to ensure his own survival instead of the Bank’s. Of course, we had to take actions to recover these funds which belong to depositors and shareholders of the Bank.


Since he was in United Kingdom, we had to pursue recoveries through UK courts. Meanwhile the Government is pursuing him in local courts towards recoveries. We hope to prove all these allegations in court.


The issue of generous waivers we have been accused of granting.


This is an area where the public had been totally misinformed. In the process, the former CEO is creating undeserved public sympathy for himself while maligning innocent management team.


I should start by giving you the global picture of Intercontinental Bank especially on the share loans from where all the wrong accusations of favourable waivers came from.


First, over 95% of Share Loan borrowers of ICB dispute their balances. That is the truth. During the audit process for December 2009, our External Auditors circulated over 500 letters to our loan customers to confirm their balances. Only 16 responded. Out of these, 11 claimed the Bank owed them rather than the other way round. The External Auditors had to devise other ways to arrive at these balances. Such is the level of anger, dispute, complaints and helplessness surrounding these share loans.


Secondly, no other bank exhibited the level of recklessness that ICB did in lending for share purchase. The Bank went deliberately and aggressively to market and persuade people to take share loans. It offered such shares to many people especially politicians without proper and adequate documentation and collaterals. Many, we cannot locate or identify. Many have totally rejected or disclaimed such loans. Many have gone to court. About N17billion of margin loans supposedly for some politically exposed persons cannot now be linked directly to them because of the weak documentation relating to the booking of such loans. Value of margin loans in court is presently N63billion. And this man still has the audacity after presiding over the mother of all such recklessness to accuse somebody of granting generous waivers.


Thirdly, the offer for the margin loans contained some clauses which seem to place certain obligations on the Bank. The customer is normally made to make his or her own equity contribution sometimes up to 30%. But the Bank imposed a condition that if the value of the shares fell to a certain level, the Bank should sell and repay the loans without recourse to customer. This has become a very contentious obligation.


Needless to say, the only way we could collect anything from these margin loans was to encourage the borrowers through generous concessions and waivers.


And we were able to achieve huge success through this means. We have collected about N140billion from non-performing loans and pay-backs between August 2009 and September 2010. These recoveries have contributed in no small measure to the improved liquidity and stability achieved by the Bank. Let us illustrate.


The former CEO claimed the Bank’s interbank takings as at the time of CBN intervention was N73billion. As usual with him, this is half truth. That figure represented only the secured interbank takings. The total interbank borrowings as at that time, both secured and unsecured was N280billion. When the true position of the Bank became known to the public following the publication of its September 2009 accounts, the loss in public confidence led to increase in inter bank borrowings to about N300billion in December 2009. Through our consistent efforts at recoveries and other actions including improved deposit mobilization, we were able to bring down our interbank takings to N200billion in June 2010 and less than N170billion in August 2010. It is our target to bring it below N100billion before the end of the year. In addition, we inherited foreign borrowings of over $152million when we assumed office in August 2009. Today, we have settled all these outstanding borrowings. In addition, there were so many other obligations on contractual agreements which the Bank had defaulted on. Huge expenses including huge bonuses already paid by Mr. Akingbola were held in suspense accounts. We had to settle all these and bring them into the books.


Waivers to Dr Saraki’s related companies.


The case of waivers to Dr Saraki’s associated companies has been seriously distorted. First of all, neither I nor any of the present management team had anything to do with the granting of the loans.


Secondly, the considerations for waivers were already in motion before the present management assumed office in August 2009.


The former CEO had visited the Governor in Ilorin to discuss the issue and the Governor had insisted on certain minimum waiver. Thirdly, the accounts had been subject of several disputes – wrong entries, disputed mandates, disputed debits, requests to sell and not selling, excess charges, dispute on penal charges, etc. The loans had much political undertones, the Bank being the major bank to the State at that time. Facilities were given without due procedure and care. That was what we met on the ground and every decision on these accounts since we came were made by the Credit Committee and not by any single individual. The Committee made decisions based on available facts and reality of the situation on hand.


We gave concessions on the margin loans and we insisted that full payment for the other loans plus accrued interest be paid and these were collected in full. This was the condition approved by the former management in writing for the securities for the non-margin loans to be released. In effect, the effective concession on these loans came to 57%. This is not uncommon to similar concessions given by the former management in the past. As to the loans being performing, this is far from the true position. Which disputed margin loan could be said to be performing at that time? But I am not surprised by this wicked accusation. In Intercontinental Bank of those days under the same former CEO, every loan no matter how bad can be made performing by crediting it with fictitious entries and debiting other innocent customers. The term used for such manipulated accounts in those days was “Purdah Accounts” that is, only selected staff could view them so such customers do not see such frivolous credits and draw on them.



Accusation of fraudulent take-over of Intercontinental Bank Plc by Saraki and others.


For God’s sake, I thought this man claims to be a Pastor. Why should a supposedly Man of God rubbish others in order to save himself. I really don’t understand. He claimed Sarakiwanted to take over his Bank because he refused to merge with Saraki’s Bank. It is the most outlandish accusation I have come across in banking. First of all, this happened during the period of banking consolidation when weak banks were looking for whom to merge with.


So I am sure Saraki would have made similar gesture to other banks. Does this mean he planned to take over those banks who also refused him. Secondly, Central Bank of Nigeria had restored SGBN license before the CBN intervention of August 2009. So why would Saraki be planning to take somebody’s bank when he might be trying to revive his own bank? Thirdly, the romance between Saraki and Akingbola or put another way between Kwara State and Intercontinental Bank blossomed post consolidation when Intercontinental Bank virtually became the dominant bank to the Kwara State Government. So if his refusal to merge with SGBN was so sour to Saraki, how come the man transferred most of the State accounts to Akingbola’s Bank after the refusal?


How come Mr. Akingbola allowed him all those margin loans? The accusation obviously sounds ridiculous.


In any case, the process of acquiring another bank or any of the 8 intervened banks are clearly laid out. It is on record that none of the foreign or local banks who have so far shown interest in Intercontinental Bank Plc had any relationship to Saraki. More over, as clearly spelt out, the decision of who the preferred bidders will be rests on the Board and Shareholders of the respective banks. I leave the ‘Man of God’ to the public to judge.


The claim that Saraki influenced my appointment and that I am an employee of Saraki.


With all humility, I take serious exception to these allegations and Mr. Akingbola himself knows he is telling lies and deceiving the public which is truly unfair.


I am a first class graduate of Economics of University of Lagos. I was Head of Finance and Planning in First Bank as Deputy General Manager and was honoured by confirmation to General Manager when I left. This was a singular honour at that time. I was the pioneer Managing Director and Chief Executive of Kakawa Discount House Limited. I was Executive Director of Union Bank of Nigeria Plc between 1999 and 2006 during which time I headed the key functions of commercial, corporate and international banking at various times.


Long before Mallam Sanusi became Governor of Central Bank, the Central Bank of Nigeria had appointed me Interim Chairman of Finbank Plc and later Managing Director of Wema Bank Plc. With these credentials do I look like somebody to lobby for my current appointment? It is on record that when I was deciding on whether to accept this appointment, it was the same Mr. Akingbola who encouraged me to accept it. So how can he now say that? And as to being an employee of Saraki, I do not know the basis for that. I was appointed a Non-Executive Chairman of Shonga Farms on merit. Shonga Farms is owned by the Kwara State Government and five other commercial banks. It was service to my State which I performed diligently and meritoriously.


It was done gratis. I never took any kobo from the company during my tenure in any form – either as fees, allowance or reimbursement of expenses. I financed all my trips to Ilorin for the purpose of the company from my own resources. I have met Dr. Saraki only once in the last one year and as at today, might have spoken to him only once in the past six months. So on what basis can someone claim I am his employee or that he controls the Bank? Really unfortunate.


Accusation of heavy recruitment from Societe Generale Bank


First of all, we have only done one recruitment at management level since we assumed duties. And the Management staff recruited has never worked in SGBN. So the question of filing this place with staff of Societe General Bank does not arise. But the allegation creates an impression of massive recruitment from Societe Generale Bank.


I have four Executive Directors as follows:

Mr. Suleiman Yusuf was the Chief Financial Officer of Citibank Nigeria Limited. Mr. Abubakar Danlami Sule was the Managing Director of Sterling Capital Markets Limited. Mr. Segun Adetokunbo Osilowo was Chief Financial Officer of Monarch Communications Limited. The last, Mr. Gbenga Alade who has been accused of being a Saraki nominee was actually recruited from Bank of Montreal, Toronto, Canada after much head hunt. He was introduced to me by the Managing Director of H. Pierson Associates Limited, Risk Management Consultants to the Bank engaged by the former Management under Mr Akingbola. Until I interviewed Mr. Alade, I had never met him in my life. His last place of work in Nigeria was as Head of Risk Management in Guaranty Trust Bank Plc. He worked as Credit Risk Manager in Societe Generale Bank Limited between March 1997 and May 2001. Perhaps that makes him a Saraki’s surrogate in Intercontinental Bank Plc. We leave the public to judge.


Accusation of bloated benefits and expenses.


The fact is, in spite of the enormous challenges we had to face in saving a virtually collapsed bank with the attendant stress and pressure on our health, we made huge financial sacrifices.


On compensation, we adopted the package of the former Chief Executive and the Executive Directors, but as a sacrifice, we discounted it by ten per cent each.


On cars, we purchased two cars each for the CEO and the Executive Directors. Bullet proof jeeps? We do not even know what they look like let alone, purchasing three units each.


On taking mortgage loans of =N=100 million each, we do not know what is informing this unfounded allegation. We run our normal housing allowance quarterly like any other staff in the Bank and no Director, either Executive or Non-Executive has taken any loan whether housing or otherwise since the present Management took over.


Our advice to Akingbola.


Even for the ordinary person, the first act to seeking God’s mercy and forgiveness is to whole-heartedly confess one’s sins, accept one’s mistakes and ask for forgiveness. For a person who claims to be a ‘Man of God’, this becomes even more imperative.


As humans, we are all fallible. But if one continues to claim perfection concluding that everybody is wrong and he is the only sane person, then that person has a problem.


I will advise Akingbola to free himself from the fallacy of most Nigerian bank directors that they own their banks. What is the value of shareholding in relation to the Balance Sheet of a typical bank? A bank reflects its deposits. The true owners of a bank are the depositors. That is why central banks all over the world regard the protection of depositors as their cardinal mandate.


Akingbola made a serious tactical error by fleeing to the UK. That has cost him a lot compared to his colleagues who stayed behind. I will advise him not to make a second tactical error by trying to bring down people through the use of the press. In the process, he might bring himself down and bring down the very institution he claims to own.


Akingbola needs a rethink. He was one of those who encouraged me to accept this job. I was abroad then. I did not know the magnitude of the problems then. I thought I would come, stabilize the Bank in six months and hand it over. I did not know the gravity of the situation. The Bank was heavily mismanaged. We have so far been able to stabilize it through hard work, huge sacrifices to the detriment of our health, the support of the CBN and the grace of God.


Mr. Akingbola should not destroy our efforts through malicious press campaign.





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