Guaranty Trust Bank Plc (GTBank), the bank of choice for Nigeria’s yuppie middleclass and upwardly mobile connoiseurs is embroiled in another mind-boggling scandal. The bank which has a reputation for innovation and constructing stylish edifices recently attempted an illegal sale of a customer’s shares fraudulently tendered as a loan security by Transglobe Investments and Finance Limited, a firm currently under investigation by the Securities and Exchange Commission, SEC.
Transglobe had conspired with some top managers of the bank to obtain a loan using the stock portfolio of one of their clients. The client, a cooperative outfit, was totally unaware of the fraud and had been led to believe by the firm that their shares were safely warehoused with the Central Securities Clearing System, CSCS.
When Transglobe ultimately defaulted on the loan facility, the loan recovery unit of GTBank wrote a letter to the cooperative on August 2, 2008 asking the directors of the firm to repay the loan and regularize their accounts. A copy of the letter reads: “We note with displeasure that despite our demands, you have failed, refused and neglected to regularize your account as requested. The outstanding debit balance in your account as at today is N344, 120,241.05 (three hundred and thirty–four million, one hundred and twenty thousand, two hundred and forty-one Naira, five Kobo only) and interest continues to accrue at the ruling market rate”.
GTBank warned the cooperative that it had only seven days to comply with the demands of the letter after which GTBank would report the matter to the Credit Risk Management System Bureau of the Central Bank of Nigeria (CBN). The bank also averred that it would we explore all legal avenues to recover the debt, including but not limited to instituting winding up proceedings against the firm.
The directors of the co-operative were shocked when they received the letter. None of them had any knowledge of the transaction in question and they had not authorized Transglobe Investments to place a lien on their shares as a security any loan. They had even been granted a facility of 700 million naira by GTBank which they had not drawn upon.
The cooperative’s directors immediately dispatched a letter to Mr. Tayo Aderinokun, the MD of GTBank and told him that they had no knowledge of the transaction that was referred to in the letter. Part of the letter read: “We believe that the letter must have been wrongly addressed or an error/fraud committed in/with your bank and hope that you will urgently look into the matter and ensure that our good name and relationship is restored”.
According to the cooperative, they knew nothing about the transaction until they received the letter and had believed that their shares were safe with the CSCS. They wondered why GTBank did not contact to validate the transaction even though they already had a banking relationship.
The question on the lips of most analysts is how GT bank could grant a facility to ‘persons’ that are not authorized signatories of a firms account. They also wondered how GTBank could process a loan facility without completing the KYC (Know Your Customer) Process.
It was later discovered that the documents filed by GTBank as evidence of transaction contained faked mandates and seals which suggests that high level GTBank staffers were involved in the fraud. After discovering that the 334 million naira fraud, GTBank still attempted to fraudulently dispose of the cooperative’s shares However, a manager at the CSCS stopped the transaction because of some irregularities.
When the firm was alerted by the CSCS on the attempted sale of their shares they confronted the bank and threatened to go to the press and also take legal action against GTBank. An unnamed source within the bank claims that the order to sell the shares was given by an executive director of the bank who is rumoured to have been the mastermind of the original fraud. The same source added that the bank has settled the cooperative’s directors with a huge sum of money to stop them from publicizing the matter.
File: Gtbank fraud
September 8, 2008
