Fresh indications have emerged that Nigerians who lost over N150bn to illegal fund managers may never get it back, SUNDAY PUNCH investigations have revealed.

The amount was allegedly channelled through about 450 fund managers, who promised their clients high returns on investment during the nation‘s banking consolidation exercise, which ended in October 2007. The Central Bank of Nigeria, under the superintendence of its former governor, Prof. Chukwuma Soludo, kick-started the consolidation in 2004.

Indeed, no fewer than 600,000 people fell for the alleged untidy transactions.

Unfortunately, it would be difficult for the complainants to get their money back as most of the fund managers have got court injunctions to lift the freezing orders placed on their bank accounts by the Investment and Securites Tribunal.

A member of the inter-agency sub-committee of the Financial Services Regulatory Committee that investigated the complaints against the fund managers said that the committee‘s hands were tied because of the court orders.

The source, who pleaded anonymity, said that it would have been possible for the victims to get their money back if the accounts of the fund managers were still frozen.

He said, ”Immediately they got these court orders, they removed all the money they had in their bank accounts. If this money was still intact, it would have been possible to pay back the complainants.”

The source said that investigations by the committee showed that some of the court injunctions were not genuine.

”It is even sadder that these fund managers exploited the judiciary to deny people their hard earned money. We later discovered that some of the court injunctions they submitted to the banks were not genuine,” he said.

SUNDAY PUNCH learnt that the inter-agency committee set up in 2008 to investigate the companies, had representatives from the Central Bank of Nigeria, Securities and Exchange Commission, Nigeria Deposit Insurance Corporation, Economic and Financial Crimes Commission, Corporate Affairs Commission and the Nigeria police.

The committee, which submitted its interim report recently, noted that though many of the 450 fund managers were registered by the CAC, a good number of them were not licensed to operate as fund managers.

The SEC had laid the ground work for the committee‘s work when it placed an advertorial on Feb. 18, 2008 in major Nigerian newspapers, including The PUNCH, calling on investors who were yet to receive their share certificates and surplus money to report to its office.

Parts of the advert read, ”To all investors in the Nigerian capital market who have not received their share certificates and surplus monies in respect of all public offers that closed on or before Oct. 31, 2007 are hereby advised to forward their complaints in writing to the Director-General of SEC.

”Please note that any public company found to have violated the commission‘s rules and regulations relating to the despatch of share certificates and return/surplus monies will have its listed securities suspended indefinitely from trading on the floor of the Nigerian Stock Exchange.”

Soon after the advert was published, no fewer than 600,000 Nigerians thronged the office of the SEC and the committee with their claims totalling N150bn.

Those who patronised the illegal fund managers did not, however, know that the advert was not meant for them. But it became an eye-opener, as it provided an avenue for them to realise that they had been swindled.

Among the companies linked to the alleged scam were Nospetco Oil and Gas Limited, Art Mater &Co. Limited, Cyber International Limited and Fortune Access Interlinks Network.

The source said, ”Then, it was a merry period and there was a lot of excitement in the stock market. If the fund managers had stuck to a few customers, they might have been able to manage the situation but they took on more than they could chew.

”Most of them did not have the human resources and financial capability to manage the situation. They were just collecting money from people until they became overwhelmed and unfortunately, the stock market crashed.”

However, a financial analyst, Abimbola Adeseyoju, said, ”All that money did not disappear and it is still within the system. It is a case of some fraudulent people collecting money from unsuspecting Nigerians and investing it in their personal business. Even when these fund managers paid interests, it was from the money of other investors.

”It is called the ‘Ponzi scheme‘ – a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.”

Adeseyoju, who is the Chief Executive Officer of DataPro Ltd., noted that the action contributed to the recession in the economy.

He noted, ”Apart from the fact that this fraud affected the integrity of financial institutions negatively, it also crippled businesses.

”Some people sold their properties to invest in the offers that promised interests that even the CBN could not pay.”

When contacted on the telephone, the chairman of the inter-agency committee, Mr. M.A. Adegbite, was not willing to comment on his committee‘s findings.

”We have submitted our final report to the CBN and I know that a press statement has been issued to that effect. I cannot make any further comments,” he said.

The spokesman of the NDIC, Mala Hadi Birchi, also declined to make comments. He said that the NDIC could not make individual comments because it was a collective investigation. The report of the committee, he added, was representative of each of the agencies involved.

However, the head, media and publicity of the EFCC, Mr. Femi Babafemi, confirmed that the commission was part of the investigations. He said, ”Apart from the inter-agency committee report, we are presently prosecuting 50 of such cases and I can tell you that each of them has an average of N500m claims against it. Those 50 companies are also on the list of the committee‘s report. We are prosecuting them based on the complaints we received from the public. We have not received a request to prosecute companies on committee‘s list.”

The head, Media Relations at SEC, Mr. Lanre Oloyi, also confirmed that SEC was a part of the inter-agency committee that came up with the report. He said, ”SEC is a member of the inter-agency committee and I‘m aware of the report.

”As a commission, we always advise people to be careful of the fund managers they patronise.

”People should always check who they are investing their money with. If you are not sure, just come to the SEC before giving your money to anybody.”

The Head, Corporate Affairs of the CBN, Mr. Muhammed Abdullahi, in an earlier statement said that the inter-agency committee had 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 law enforcement agencies.


http://www.punchng.com/Articl.aspx?theartic=Art201008294222821

very old news!

God help us