Business Sense

Some years ago, the Central Bank of Nigeria seized deposits and licences of wonder banks for illegal operations. Depositors, whose funds were trapped in these illegal financial institutions, had expected their money to be refunded after the CBN’s verification of their claims. But we are still expecting to get our funds after about four years.

“The CBN should come out and tell Nigerians what has happened to the seized funds and any accrued interest. The depositors also need their funds as quickly as possible.

“We urge the Federal Government to intervene in this matter, otherwise some fraudulent persons might divert the funds to their personal accounts. Government should do its best to protect the citizens from being duped.”

The above represents the lamentation of a Nigerian, Mr. Niyi Adesuyi, whose N1.5million is still trapped in the vault of Nospedo Oil and Gas, since 2007.

Adesuyi, who resides in Ibadan, Oyo State, in a chat with Banking, explained that he had gone to deposit the sum of money at the company on knowing that it was giving an interest far above what the regular banks were giving to the customers then.

“Though many would blame us for this, but I think it’s poverty that drove majority of us into it,” he stated.

According to him, the company was not defaulting until he put his money there and the big hammer of the apex bank fell on it. After this, the office was sealed, while funds found in its coffers were carted away by the apex bank.

He argued that since 2007, when the apex bank wielded the big stick, himself and others in his shoes had not heard from the apex bank, concerning the deposits with the firm.

Another Nigerian, who would not want his name in print, stated that he had been keeping money with another wonder bank for some time before the bubble finally burst towards the third quarter of 2007, leading to a loss of close to N1million.

“Actually, I was getting my interests as at when due before the apex bank struck. My first lodgement with the firm was a sum of N250,000 and it yielded quite an appreciable interest for me. Besides, others were also getting theirs, so, there was no reason to suspect that things might go awry,” he stated.

He still believes if the apex bank had not ‘disrupted’ the process,  he would have been getting his ‘returns on investment’ as at when due.

The issue of wonder banks was again brought to the fore not too long when a whopping sum of over N100billion was said to have been trapped in the vaults of some of the defunct illegal banks, with depositors having no hope of having access to these funds in a long time to come.

For instance, Adesuyi had argued that since the apex bank decided to put a stop to the activities of these illegal finance outfits, carting away some of the funds found in their vaults, the money should, by now, have been released to their owners.

“They are not illegal funds; they are not stolen, or got illegally. So, since the necessary verification had been done, I see no reason why the funds should still be kept,” he argued.

However, in his reaction to the above claims, a  finance expert and  banker, Mr. Adebiyi Adesuyi, would not blame the apex bank or any regulatory body in the industry for the fate that presently befell the depositors of those ill-fated wonder banks.

“I would only blame the apex bank and the Security and Exchange Commission for not wielding the big stick on time. You could see that those that fell victims were driven by greed.

“While the conventional banks were giving about 12 per cent then, as interests on deposits, these outfits were promising close to 100 per cent. But we all knew it was a fraud, a pyramid scheme that would only benefit the early callers.

“I remember that the activities of these illegal outfits were even giving the conventional banks some sleepless nights. For instance, the management of the bank where I worked as of then was getting worried  because the bank was losing customers to these wonder banks,” he added.

He said that it would be difficult for depositors, whose funds are trapped in those illegal banks to look up to the CBN or SEC for a  refund, since the outfits were not licensed by the regulatory bodies to carry out such financial role.

“Take for instance, Nospedo Oil and Gas that was obviously into oil business, being patronised as a financial institution. For any discerning mind, it was obvious that the aim of the company was to mop up funds from other available sources, apart from borrowing, to be able to do its oil business.

“So, it would be wrong for anybody to think that the apex bank is still keeping some funds recovered from those illegal outfits. Even if any fund was recovered at all, would they be enough to go round?” he asked rhetorically.

It is obvious from Biyi Adesuyi’s argument that the answers to those wonder banks’ depositors’ query in respect of the whereabouts of their funds kept with those illegal financial institutions may be long in coming. And unfortunately, they belong to that class of victims, whose plights may not really elicit any sympathy from Nigerians and other stakeholders.