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Forex Scarcity: Banks In Multi-million-dollar Racketeering - Business - Nairaland

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Forex Scarcity: Banks In Multi-million-dollar Racketeering by dre11(m): 9:54am On Feb 13, 2016
Commercial banks in the country are raking in millions of dollars from a foreign exchange racketeering which has been fuelled by the acute shortage of hard currency in the economy, investigation by the Saturday PUNCH has revealed.

The Central Bank of Nigeria has been rationing forex to prospective importers in the past 16 months, after the global fall in the prices of crude oil, the nation’s main forex earner.

The situation has exacerbated over time and tens of thousands of applications for forex by intending importers have been kept on hold by the CBN for months.

Sources close to the forex racketeering said the dollar shortage had led to a situation where prospective importers apply to the CBN through their banks for forex for months without getting it.

The continued acute scarcity, it was learnt, had been capitalised upon by the commercial banks who are now selling several millions of dollars obtained from the CBN on their clients’ names at huge premiums above the N199 to $1 official rate approved by the central bank.

According to sources familiar with the situation, thousands of helpless importers who are in desperate need of forex to import products ranging from raw materials to equipment are milked on weekly basis by the greedy banks.

Findings by our correspondent showed that the scheme, which has been on for several months as the forex scarcity worsens by the day, has made many top bank executives multi-millionaires overnight.

Out of about $10m to $25m (depending on the volume of demand by its customers) sold by the CBN to commercial banks in some weeks, illegal profit to the tune of $5m could be made by each of the banks involved in the forex racketeering.

A prospective importer, who was recently approached by a major bank in the country involved in the forex racketeering, told our correspondent that many importers had no choice but to buy the scarce forex from the banks despite the huge and illegal premiums being made by them.

Narrating his ordeal to Saturday PUNCH, the importer, who spoke on the condition of anonymity, for fear of being victimised by the bank, said, “We need $295,000 to import some equipment. We have been on the so-called CBN queue since October. The bank said no forex. Recently, the bank called us that there was forex but not at the official rate. They wanted to sell to us at N275 to $1. Out of about N81m we are to pay, only about N59m goes to the CBN, which is the official rate. The balance goes to the bank officials who get this allocation from the CBN. This is the type of stupid money they make now, God saves Nigeria.”

Explaining further, the visibly angry importer said, “The bank’s officials said they had $5m as of January 29. So calculate how much they made for that week alone.”

The forex racketeering victim said the bank officials had told him that the difference between the CBN rate of N199/$1 and the N275 to the dollar rate they were offering him would be paid through a cheque written on a name to be provided by the officials.
He added, “The bank will debit my account at the CBN rate and then I will give them a cheque for the balance.”

Another importer, who shared a similar experience, told Saturday PUNCH that his own bank offered a deal of N285 per dollar.

Further findings by our correspondent revealed that commercial banks were carrying out the forex racketeering through various means depending on the method through which a prospective importer is planning to make payment to its prospective supplier overseas.

Normally, payments are made for imported goods through open accounts, Letters of Credit, and Bills for Collection.

For items that are not valid for forex (i.e items the CBN has excluded from the list of items it provides forex for), payments are usually made through open accounts.

Letters of Credit (a kind of guarantee for payment) are usually written by Nigerian banks to their correspondent banks overseas on behalf of an importer, while Bills for Collection involve a situation where the supplier releases the goods to the importer and payments are made later. In any of the latter two cases, importers or companies are required to get forex from the CBN which will be transferred into the bank accounts of their suppliers overseas by their commercial banks in Nigeria.

It was learnt that a whole lot of forex racketeering involving opening bank accounts overseas by bank officials and importers alike was now in place.

When contacted, the CBN Director of Corporate Communications, Mr. Ibrahim Mu’azu, said there was the need for aggrieved customers and importers to lodge a formal complaints with the CBN over the matter, adding that this would enable the central bank to commence thorough investigation into the matter.

“The regulatory authority can only know when there are complaints. If there are complaints, the CBN will investigate and rescue the situation,” Mu’azu said.

But economic, financial experts and ex-bankers said the CBN and commercial banks were culpable, noting there was the need for the duo to introduce mechanism to arrest the huge fraud.

An economist and Chief Executive Officer, Cowry Assets Management Limited, Mr. Johnson Chukwu, said the CBN could be held responsible for the sharp practices.

Chukwu, who is a former banker, said, “Human beings are economic agents and they will always be tempted to follow the easy path. But the regulatory authority must not create the loophole for such. The premium between the official exchange rate and the parallel market rate is too much.”

An Economist and Head, Investment and Research, Afrinvest West Africa Limited, an investment bank and research firm, Mr. Ayodeji Ebo, also said there was the need for the CBN to come up with a policy to close the huge gap between the naira-dollar exchange rate on the parallel and official forex markets, adding that the difference would continue to breed round-tripping and all manner of unethical practices.

He added, “Commercial banks also need to strengthen their internal controls both at the head office level and branch levels. Most of these forex racketeering are carried out only in some bank branches without the knowledge of the head office or even top officials at the branch level. So, the banks need to do something quickly about this.”

The Head, Investment Advisory, Sterling Capital, an investment bank, Mr. Sewa Wusu, believes the CBN is making efforts to stabilise the forex market, noting that issues coming in recent times would be addressed soon.

Meanwhile, the CBN has asked banks to start publishing their returns on the utilisation of the forex in the newspapers.
This, it was learnt, was part of the measures by the CBN to check sharp practices in the forex market.

For the first two weeks of February, Stanbic IBTC Limited with a total of $23,615,680.90 reportedly emerged the highest amount of forex purchased from the CBN on behalf of its customers.

From the publications, Stanbic IBTC was followed by First Bank of Nigeria Limited and Guaranty Trust Bank Plc, with $19,774,888.26 and $19,709,354.41, respectively.

Also, Zenith Bank Plc with total returns of $18,707,309.97 came fourth, while Diamond Bank reported returns of $17,515,474.

Access Bank reported returns of $16,982,208.04 to occupy the sixth place, while the United Bank for Africa Plc reported returns of $12,045,150.76.

By Thursday, only seven banks had published their returns on utilisation of funds purchased from the CBN, with others expected to do so today.


www.punchng.com/forex-scarcity-banks-in-multi-million-dollar-racketeering/

3 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by INTROVERT(f): 9:55am On Feb 13, 2016
Everything said here is very true.. Especially those bank boys that work with forex and FT department and their ogas. I can't say more coz Il just implicate people close to me.

23 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by AngryNigerian(m): 10:00am On Feb 13, 2016
Who resold my land to this person naaa
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by sholatech(m): 11:16am On Feb 13, 2016
This is why Emir Sanusi told Buhari he is encouraging corruption by refusing to Devalue the Naira!

10 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by ijustdey: 11:29am On Feb 13, 2016
The continued acute scarcity, it was learnt, had
been capitalised upon by the commercial banks
who are now selling several millions of dollars
obtained from the CBN on their clients’ names at
huge premiums above the N199 to $1 official rate
approved by the central bank.

According to sources familiar with the situation,
thousands of helpless importers who are in
desperate need of forex to import products
ranging from raw materials to equipment are
milked on weekly basis by the greedy banks.


these banks are so corrupt

if the don't do forex fraud/racketeering......
they will be aiding ghost workers Fraudster...
or they would actively participate in money laundering
even they will engage in some illegal deduction



why are this people trying to find loopholes in any government programs to defraud the citizens and businesses

8 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by ijustdey: 11:38am On Feb 13, 2016
sholatech:
This is why Emir Sanusi told Buhari he is encouraging corruption by refusing to Devalue the Naira!

has devaluation ever helped our economy


I listen to the cable debate about devaluation and I was impressed when all panel of discussant says devaluation at this point in time will not help the economy but the CBN should play its roles in monitoring and giving templates for guidance on how forex is getting to the end user who are the manufacturing companies......


but, the banks and bankers are just frustrating any gains this policies do have

9 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Adesiji77: 2:06pm On Feb 13, 2016
There is actually more to this.

Some importers are actually "over-desperate...brb

Cc: lalasticlala, dominique, Mynd44, Seun

4 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by kennyman2000(m): 2:17pm On Feb 13, 2016
Hmmmmm... Its well.


Check my signature for ur customised wristband
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Youngzedd(m): 2:25pm On Feb 13, 2016
Blame the banks.
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by hyperflex(m): 3:33pm On Feb 13, 2016
We need to start shooting some policy makers in this country. Once again suffering the masses n giving the elite power. Abi who else r these banks getting money from

1 Like

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by atesunate(m): 3:34pm On Feb 13, 2016
Sincerely this is awful. Alot of institutions especially financial are also looking for ways to get thier share of national cake at the expense of the masses. Its only God that can deliver us.
Check my signature for one of the ways to source for more income especially in this trying times. You will never regret

2 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by coldsummer: 3:34pm On Feb 13, 2016
They provided a safe haven for them

1 Like

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Pavore9: 3:34pm On Feb 13, 2016
Sighs....
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by eleojo23: 3:34pm On Feb 13, 2016
People will always look for ways to make money out of every situation.
Smh.

3 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by hustla(m): 3:36pm On Feb 13, 2016
Nigeria won't change till there are consequences, serious ones for corruption and things like this
We need the death penalty badly before Nigeria can be good again

25 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by lonelydora: 3:36pm On Feb 13, 2016
Na wa
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by RedCapChief(m): 3:37pm On Feb 13, 2016
All banks in Nigeria do this and their Head Offices are aware. However, profit-making is the name of the game.
The banks buy @ 199 naira. . .
and sells @ >280 naira.

Still cheaper than the mallams who sell @ >315naira.

Everybody wins, except the small business owner

5 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by laurel03(m): 3:38pm On Feb 13, 2016
Eedris should go and remix that song "Nigeria Jagajaga, everything scatter scatter"

6 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by ladyF(f): 3:39pm On Feb 13, 2016
There are so many ways to make money sha
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by olopan(m): 3:42pm On Feb 13, 2016
Time to go work for my friends bureau de change ... Need this money
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by APCcrimes: 3:42pm On Feb 13, 2016
I thought the coming of bubu would curb these menaces...Rather, corruption is increasing daily..

Bubu is corruption personified!

"Abacha is a saint"...Dullhari 2015

Zombies, over to you..

13 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Nobody: 3:43pm On Feb 13, 2016
Everyone is corrupt, from private to public sector.

Whenever you are recieving payments from outside the country, these criminal banks are happy to pay you naira at official rate but when you want to make payments they start all kind of stories.

The Cbn should stop selling dollar to any, let market forces dictate the price.

what is tha useless wailer hastag again? #iamnigeriannotacriminal

1 Like 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by erico2k2(m): 3:43pm On Feb 13, 2016
dre11:








www.punchng.com/forex-scarcity-banks-in-multi-million-dollar-racketeering/

Was this not the reason the re I troduced form M and A.we warned Nigerians they tagged us wailers oyah nah ova to una
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Iroh88(m): 3:44pm On Feb 13, 2016
“The bank will debit my account at
the CBN rate and then I will give them a cheque for the balance.
Just to cover the electronic trail of the fraud... Can Baba really defeat this cancerous monster??

Obiagelli, are you seeing this??

I weep for my country.

Someone tell me, why can't the Nigerian secret police go under cover to pose as businessmen and bust those behind this crime?? The victims are businessmen and would rather pay the "bribe", get their forex and move on to do their business than report to the authorities.

What has the DSS been doing sef??

7 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by omolola15(m): 3:45pm On Feb 13, 2016
I bought a software online that cost 9.9 USD. Hours later first Bank gave me alert of 3,385.08 naira. That means I was charged around 341 naira per USD. The thing vex me but nothing I fit do. I just keep praying we get out of this mess as soon as possible.

4 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by datigbogirl: 3:51pm On Feb 13, 2016
omolola15:
I bought a software online that cost 9.9 USD. Hours later first Bank gave me alert of 3,385.08 naira. That means I was charged around 341 naira per USD. The thing vex me but nothing I fit do. I just keep praying we get out of this mess as soon as possible.

How do they ship it for you?
Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Reference(m): 3:52pm On Feb 13, 2016
Same thing Buhari caused in 1984, import duty racketeering and essential commodity cartels through failed policies. By the time he left the Customs became largely what it is today. I can't understand why this currency regime is maintained. We say we want to industrialize, we say we want to develop yet we continue to subsidize, to prop up importers and damn the few exporters and forex providers with stupid, unrealistic rates. We steal from Peter to pay reprobate Paul.

10 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by youngalex(m): 3:53pm On Feb 13, 2016
I blame CBN for creating the loopholes capitalized on by commercial banks,Henceforth Banks should on a monthly basis forward the list of Companies that applied for letters of Credit,with their mail addresses...If the commercial banks are issued dollars CBN will personally notify those on crucial import list,when they are notified that their letters of credit,forex transfers etc has been approved by CBN they can proceed to assess forex,Giving the Banks Money without a proper follow-up on the way it is utilized is inefficiency on their part and a catalyst to unwholesome practices....CBN is the cause of this financial crisis

14 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by tunde4top(m): 3:55pm On Feb 13, 2016
Devaluation is the natural solution to our problem now. I expect the CBN to devalue the naira, place import ban on many frivolous goods we should manage to produce here, and tell the FG to urgently fix electricity. By doing the above things, we will naturally become an export dependent country in no time. Lack of devaluation is an advantage to the FG and banks in revenues, and a big disadvantage to the masses (common man) in revenues. The fg knows these things, and that is why they are refusing to do the right thing. Disadvantages of devaluation
1. The landing price of petro etc will rise and that will affect the 5naira gain the FG makes in per litre of fuel. If the landing price increases, the masses with political opponents will even force the FG to subsidize, and the FG dont want that because they just want to make money.
2. Banks will loose money.
advantage of devaluation to common man
.. The masses that do legitimate import business will now get dollar at a fixed price like 260-265 at parallel market instead of the current 330.

2 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by haykay2005: 3:57pm On Feb 13, 2016
We don't have banks in Nigeria. What we have is money making institutions. Our banks have lost it!

2 Likes

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by cirmuell(m): 3:59pm On Feb 13, 2016
I won't be surprised if UBA is one of those banks. A very useless bank to say the least. angry


Please name those banks, let know the enemies of Nigeria.

5 Likes 1 Share

Re: Forex Scarcity: Banks In Multi-million-dollar Racketeering by Blessed2252: 4:01pm On Feb 13, 2016
CBN and the Government is to be blamed for all these corruption. How do you experiment with sensitive economic policies without designing appropriate checks. You want to tell me the government is not aware that such practices have been occurring and has only been made worse by their continued deceit and longing for more money? I look at Nigeria and I laugh hard because we have come to the point were we now accept wrong as right because the government believes the masses don't know any better. Buhari's government can't solve Nigeria's problem, rather it's been a charade of economic, financial and social downturn since it's inception. Mark my words, this government will soon give up and there will be economic and public anarchy. Nigerians stop following politicians blindly. Criticize them now no matter their party and let's hold them accountable for all the mess in this country before it's too late.

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