The Nigerian Deposit Insurance Corporation (NDIC) has submitted its initial report on the insider abuses and related fraud that took place in the defunct Gulf Bank Plc after the harmonization of the several complaints on the case. In the report, the Corporation narrated how the executive management of the Bank in collaboration with others including Obong Victor Attah, former governor of Akwa Ibom State to misappropriate over N7 billion belonging to the bank among other fraudulent activities.
In a 43 page report a copy of which was obtained by this medium, the Corporation gave a detailed report of how companies belonging to Akwa Ibom State government such as Ibom Power Company Limited, Akwa Ibom Refinery/Petrochemical Limited, Akwa Ibom Investment and Promotion Council were used in concert with other private establishments to defraud the bank of huge sums of money.
According to the NDIC, the bank’s former Director and major shareholder Prince Adekunle Adegboyega Johnson in concert with his foreign allies used their companies Sublime Lyk Engineering Company and Eagle Energy Limited to defraud the defunct bank to the tune of $40 million. Most of the businesses they claimed to have engaged in on behalf of the bank revolved around Akwa Ibom state government and companies belonging to the state such as the Ibom Power Company (IPC), Akwa Ibom Refinery and Petrochemicals Limited (AIRPCO)and Akwa Ibom Investment Promotion Council.
In the report, the NDIC detailed how the former governor Arc, Obong Victor Atta indemnified the bank against exposure in a deal over the importation of gas turbine for the Ibom Power Company, which was not at the time registered at the Corporate Affairs Commission. Moreover, it was discovered that there was no legal mortgage for the transaction and the asset debenture was defective, yet the sum of $25 million was expended in that venture. Also, there was the case where $7 million was claimed to have been used in the importation of power generating turbines from Nanjing China for the development of Akwa Ibom Refinery and Petrochemicals Limited. In perpetrating the fraud, $1 million was being transferred weekly to Nanjing China by the company.
On a related development, the sum of $3 million was taken from the bank and captioned Bridging Facility for the designs and consultancy from the development of Akwa Ibom Refinery and Petrochemicals Limited. In January 2001, Akwa Ibom Refinery and Petrochemicals Company Limited submitted certificate of incorporation with RC No.399518, Memorandum and Article of Association, and Board resolutions of non existing company to the defunct Gulf Bank through which the sum of $9 million was transferred abroad for payment of salaries of staff of Centrum Overseas Limited and Lyk Engineering Company two of the companies frequently used in perpetrating fraudulent activities in the bank.
To throw more light on this case, the NDIC said it has has extended invitation to all officials of the Akwa Ibom State government who were in the know about all the dealings between the said companies and defunct Gulf Bank for further investigations. Equally invited is the former governor Obong Victor Atta who allegedly guaranteed N1, 454,375,000.00 facilities for the purchase of gas turbines for Ibom Power Company. Sources at the NDIC say he is yet to honour the invitation. Equally invited for questioning are the Executive Chairman, Akwa Ibom Investment and Promotion Council, Dr. Okon Ansa and other members of the Council. According to Gareth Wilcox, Managing Director Lyk Engineering Limited, the company received various facilities from the defunct bank for varied project including development of Akwa Ibom Petrochemical Refinery and Ibom Power Company. He added that some of the facilities have been repaid and that Akwa Ibom Petrochemical Refinery was duly registered by operatives of Akwa Ibom Investment and Industries Promotional Council, a claim which is found to be at variance with an emphatic report from Corporate Affairs Commission reference RGO/9/VOL.XXXVI/0314 of September 24, 2013 which stressed that Akwa Ibom Refinery and Petrochemical Company has no evidence of registration.
Highlighting on the intricacies surrounding the case, Mr Okolonji Joseph, lawyer to the NDIC said that the defunct Gulf Bank senior officers approval memoranda variously signed by the Managing Director of the defunct Gulf Bank, Mr Babajide Rogers, the bank’s Executive Director Operations, Mr. Fashina, Head Energy Department, Mr Eustace Odunze, Relationship Manager Ada Okpeji and the Account Officer, Fisayo Opadoye. That most of these approvals were given without proper documentation, while others were given even before processing. Little wonder why most of the facilities were not repaid. The claim by Gareth Wilcox that some of the facilities does not exist or have been repaid cannot be substantiated.
He noted said that denials by Prince Adekunle Adeyeba of complicity in the massive fraud are just mere denials. To buttress this point he pointed to a report of the investigation panel appointed by the Board of the defunct bank to look in the activities of Mr Babajide Rogers as Vice Chairman/CEO of Gulf Bank dated April 13, 2005-May 13, 2009.He also said that the special purpose vehicle through which most of the fund was siphoned is Lyk Engineering Company Limited. He alleged former Governor of Akwa Ibom State, Arc Obong Victor Attah of involvement in the fraud by indemnifying funds on behalf Akwa Ibom State Government. Also, Dr Okon Ansa and Mr. Andy Inyang of Akwa Ibom Investment and Procurement Council, Bassey B. Aninwanene of the Governor’s Office who collected part of the fund under the guise of constructing and developing Akwa Ibom Refinery and Petro chemicals Limited-a non-existing company with the Corporate Affairs Commission records. Also fake documents of incorporation were submitted to the bank to facilitate the fraud. Mr Okolonji Joseph said that he made complaints on this matter to the Police through various petitions stressing that Prince Adekunle Adeyeba used stooges in an attempt to strip the defunct bank of the two properties in Banana Island, Ikoyi.
In his own submission, the company secretary and legal adviser to Ibom Power Company, Ime Asibong, said that Ibom Power Company was set up as a special purpose vehicle to develop a generation power project in Akwa Ibom. The Investment arm off Akwa Ibom State Government held 15%, stake and Lyk Engineering was to hold 85%. Akwa Ibom Investment and Industries Promotional Council (AKIIPOC) paid a counterpart fund representing the 15% shareholding while Lyk Engineering obtained a loan for purchase of a turbine-This was to be their contribution.
But in 2005, a dispute occurred over the ownership of the project, the Federal High Court, Uyo held that Lyk was not a shareholder of IPC as the transaction for share ownership was not formalized and the shares allotted never paid for. It was clear that Lyk obtained a loan from Gulf Bank with which the turbine was purchased. The parties in severing their agreement conducted an evaluation to determine the respective contributions of the parties. It was agreed by the report that Lyk contributed $8 million dollars and the parties entered into a severance agreement whereby Lyk is to be paid in four separate installments to enable them settle all the creditors who had worked on the project including Gulf Bank. The case went to EFCC and it was agreed that the payment be kept in an interest yielding escrow account and the creditors be paid as the installments come in. IPC had paid in two installments but none of the creditors had received any payments.
He stated further, that NDIC went to court to obtain judgment against Lyk in order to garnishee IPC account. IPC resisted and reminded them that the monies belong to all creditors of Lyk and not only Gulf Bank. Also ex-partriate workers of Lyk have approached the National Industrial Court to be compensated for the salaries they worked for Lyk. He stressed that a loan from Gulf Bank to Lyk is not a loan to IPC, that Lyk only bought a turbine which is working currently in Ibom Power Company.
He expressed the willingness of IPC to pay up the remaining two installments as agreed at EFCC provided the creditors are settled. This will however depend on availability of fund.
On the issue of the $20 million bridging loan from Afeximbank, he stated that Akwa Ibom State Government has taken over the repayment by setting up an irrevocable standing payment order (ISPO) to repay the sum instalmentally, though he cannot tell whether the ISPO payment has commenced.
On the offer letter dated 25th April, 2001 to Lyk Engineering for the sum of N1,454,375,000.00, he stressed that condition precedent to withdrawal must have been concluded before draw down and that the Relationship Manager, Corporate Banking & Energy Department are to ensure compliance.
On the issue of All Assets Debenture of 30th April, 2004, he sought to see the supporting documents to enable his comment. He denied knowledge of grant of N300 million credit facility in 2001 to Akwa Ibom Refinery and Petro Chemical Ltd stressing that his department was never asked to conduct a search on the company. He is not aware of the existence of such a company; and the credit did not pass through the banks credit approval process. He also claimed ignorance of remittance of $9 million abroad based on the N300 million on Ibom Power Company exposures, he admitted knowledge stating that by his effort, a letter of commitment was obtained from the Akwa Ibom State Government.
Mr Wilcox noted that in 2001, funds were loaned to Lyk by Gulf Bank to procure equipment for the power plant project. The repayment source for these loans was to be a $80 million syndication for which Gulf Bank was mandated to arrange. The syndication funding failed to materialize and IPC defaulted in its repayment. Other smaller facilities were advanced by Gulf Bank and he believes Lyk managed to repay.
He added that in 2004, Akwa Ibom State Government agreed to fund completion of Phase 1 of the power project. The plant was first fixed in December 2009 and continued operations until February, 2013 when it was shot briefly for maintenance and now restarted. During the period of his tenure of Lyk and IPC, Prince Adeyeyba acted as a promoter which is the same role he had with Daewoo. At inception, IPC was planned to supply light to the refinery but was gradually expanded to supply light to the whole state of Akwa Ibom and beyond.
He explained further that in 2001 January, a facility was obtained from Gulf Bank for design, consultancy works for the power plant and refinery. Works executed included feasibility study, conceptual design, environmental studies and soil investigation. He stressed that these funds were not repaid to the bank.
Also a facility of N1.4 billion was provided by Gulf Bank to procure the gas turbine generator from Larsenh & Toubro under L/C No. GBN/2001/VOL.1015. He denied the claim that $1 million was transferred weekly to China by the defunct Bank insisting that Akwa Ibom Refinery and Petrochemical Company was incorporated in Nigeria by AKIIPOC.
He further stated that in June 2005, the Federal High Court in Uyo ruled that Lyk had been unable to establish its membership of IPC. IPC and the Lyk Group then entered into a disengagement Agreement under which IPC was to pay Lyk $8.866 million in four installments. The first two payments were issued accordingly. Before issuance of the third cheque, it was determined that the amount claimed by the creditors of Lyk was more than what was due to Lyk, IPC informed Lyk and advised her to settle with the creditors before any further payments.
He re-emphasized that Lyk Engineering Company was formed in late 2000 as a company to develop Akwa Ibom Refinery and Ibom Power Plant. Lyk raised funds from Gulf Bank to actualize these projects. He stated that he cannot recall $17 million equity contribution by Gulf Bank to IPC on behalf of Lyk. He admitted that salaries of staff of Lyk and IPC were paid by Gulf Bank during the early days. Furthermore, that about 2001 and 2002, many payments which were IPC payments were made by Lyk and provided by Gulf Bank.
He stated also that in 2001, IPC borrowed USD$20 million from Gulf Bank/UBA, this loan was guaranteed by African Export-Import Bank (AfroExim). The facility expired in December 2002, UBA called AfroExim guarantee and AfroExim repaid UBA. IPC’s exposure to AfroExim has since 2003 reduced to USD$8.3 million.
He added that Gulf Bank purchased the first gas turbine for the project about $10 million. When Gulf Bank could not provide more finance, Dr. Okon Ansa approached UBA and a grant of about $20 million was gotten based on understanding between Gulf Bank and AfroExim Bank in Cairo. The Government of Akwa Ibom guaranteed the project under Arc Obong Atta.
In conclusion of its report,the NDIC notes that Lyk Engineering Company Limited obtained a N300 million facility from Gulf Bank to develop a Refinery for Akwa Ibom Refinery and Petrochemical Limited. Little wonder a facility of N300 million was reportedly granted for the development of a non-existing company-Akwa Ibom Refinery and Petrochemical Limited. The report of search from Corporate Affairs Commission clearly stated its non-existence, and still fake documents of incorporation received by the bank and acted upon without verification.
The Energy Department of the bank headed by Eustace Udenze (the Assistant General Manager/Relationship Manager to Lyk Engineering Company) was equally indicted. Mr Udenze initiated, processed and recommended the credits granted to Lyk Engineering Limited and Ibom Power Company, and did not report back to the bank’s appropriate department the non-performance of these credits to enable stoppage of draw down. Note that majority of these dubious credits were originally overdrafts that were reviewed and regularly enhanced and drawn without pay back.These acts of disservice could not have been allowed by this caliber of experienced bankers/suspects without cause, the Corporation said.
It is also clear from the investigation that Lyk Engineering Limited and Ibom Power Company headed by Gareth Wilcox obtained so much credit from the defunct bank for construction of Ibom Power Plant-an electricity generating plant without pay back. The then Executive Governor of Akwa Ibom State, Arc Obong Victor Attah guaranteed the credit Gulf Bank granted for the importation of Gas Turbines for Ibom Power Company. This credit has not been repaid.
What took place at the defunct Gulf Bank, according to the NDIC is characterized by manipulation of records, suppression of information, criminal concealments/
misrepresentations and forgeries of public documents all leading to colossal loss of funds to the defunct bank and unprecedented enrichment of the perpetrators. The NDIC in its report noted that the articulation of documents to establish the frauds is challenged by the craft with which the suspects manipulated the records. The dimension of the frauds it says is extensive, implicating top officials of a state government and equally tasking the integrity of certain operatives of the Economic and Financial Crimes Commission (EFCC). The NDIC hopes the former governor of the state will honour the invitation to explain how the state got involved in such a case and his role of the chief executive of the state during the period in question.