Overdraft Billionaires

Babajide Kolade-Otitoju

When the Forbes 2009 list of the world's richest persons was released in March, two Nigerians, Alhaji Aliko Dangote, President/CEO Dangote Group, and his estranged friend, Femi Otedola, President/CEO of Zenon Petroleum and Gas, as well as Chairman/CEO of African Petroleum were conspicuous on the list.

While Dangote was ranked 261 in the world, Otedola was ranked 601. Dangote was estimated to be worth $2.5billion, while Otedola's estimated worth stood at $1.2 billion. They emerged as two of only four black persons to make the list.

When, however, on 18 August, the Central Bank of Nigeria, CBN, released a list of big time debtors whose failure to service their debts put five Nigerian banks in trouble, Dangote and his friend featured prominently as other Nigerian billionaires like the self-styled whizzkid, Mr. Jimoh Ibrahim, Mr. Joseph Arumemi-Johnson, former Delta Governor, James Ibori, Azeez Arisekola Alao and Peter Ololo among others. Sixty of the debtors were arrested by the Economic and Financial Crimes Commission, EFCC, while some were ordered to report to the commission's office to explain themselves. Jimoh Ibrahim, Chairman of Global Fleet, demanded an audit of his account with Oceanic International Bank. Ibrahim, who was accompanied to the EFCC office by his lawyer, Femi Falana, said: âm a clean businessman; I have nothing to fear. He claimed that while the bank said he was owing N8 billion, the actual balance is N4.8b. The bank, he claimed, had agreed to reconcile his accounts, accusing it of making excess charges on his account. Arumemi-Johnson, Managing Director of Rockson Engineering, one of the companies listed to be owing Intercontinental Bank to the tune of N36.989billion, disclosed that power projects being handled by his company will be further delayed by the CBN’s “haste†in releasing the list without cross-checking with the debtors. He claimed that some of the banks inflated the figures with ulterior motives. Arumemi-Johnson said he was owing N14.4billion and not N36.9billion, as stated by CBN.

Dansa Oil and Gas Limited, with links to Dangote, was listed by the CBN as owing Intercontinental Bank N8.8 billion, while Dangote Industries owes Oceanic Bank N2.5 billion. Two companies owned by Otedola owe a total of N19.05 billion. While Zenon owes Union Bank N6.2 billion, AP owes Afribank N12.8 billion.

Nigerians were generally shocked that prominent billionaires were on the list. For example, Oba Otudeko, who stepped down as President of the Nigerian Stock Exchange, NSE, used his position to secure N1.6 billion from Oceanic Bank for his Honeywell Group.

Similarly, Ndi Okereke-Onyiuke, who is both the Chairman of Transnational Corporation of Nigeria and Director-General of NSE, caused the company to owe Union Bank N30.8 million, which was used in acquiring the troubled Nigerian Telecommunications Limited, NITEL. The company failed to service the loan. However, Okereke-Onyiuke argued that she did not take the loan in her personal capacity and that the company was in the process of divesting its 50 per cent stake in NITEL, with the desire to use part of the proceeds to clear the debt.

Other prominent names on the first list rolled out by the CBN were Mr. Lulu Briggs, Controller of MTS Wireless Communications, who is owing Union Bank N9.8 billion; Annie Okonkwo and Ifeanyi Araraume, both former senators. Okonkwo, through his Reliance Telecommunications, owes Oceanic Bank N801 million, while Araraume is owing FinBank N158 million. Abulazeez Arisekola Alao, the Ibadan-based businessman, owes Intercontinental Bank N4billion. Khalifa Isyaku Rabiu, who runs IRS Airlines, and Alhaji Ahmadu Chanchangi were also on the list, which also has Great Ogboru, who was accused of bankrolling the 1990 coup against the military regime of General Ibrahim Babangida.

A roll-call of some of the oil companies indebted to the banks include Ascot Offshore Nigeria Limited owned by Henry Imasekha. It owes Intercontinental Bank N44.87 billion. Mid-Western Oil and Gas Company promoted by Onnojite Okoloko and Adams Okonen, owe Oceanic Bank N23.86 billion. Fredrick Akinruntan's Obat Oil and Petroleum Company also owes Oceanic Bank N4.47 billion. Other major debtors to the bank are Circular Global International, owned by Namashetu Abdullahi, N12.8 billion; Imad Oil and Gas by Bashir Adamu and Abba Dasuki, N10.10 billion; and Rahamahiya Oil and Gas controlled by Abdulrahman Bashir, which owes Intercontinental and Oceanic Bank N41.4 billion. Oando plc, headed by Mohammed Magoro, a retired Major-General, owes N7.1 billion.

With the EFCC threatening the affected debtors with prosecution, many of them have been rushing to pay their debts, so much so that the commission recovered N25.5 billion in less than a week. This is, however, a far cry from the N747 billion they jointly owe.

One of the most scandalous revelations that emerged was how former Delta State governor James Ibori used Delta State's N820 million units of shares in Oceanic Bank to secure N44.6 billion loan for Ascot, a private enterprise, from Intercontinental Bank.

Also Ibori, and Mike Orugbo, his associate, borrowed about $200 million from Oceanic Bank to finance their take-over of the National Fertilizer Company of Nigeria. He borrowed another $200 million to finance the purchase of Wilbross Nigeria Limited, an oil servicing firm. He did it through Ascot Offshore.

Just last week the EFCC released a fresh list of debtors, which revealed that customers owe the latest five banks audited about N400 billion.

Bank PHB topped the list of the debt-ridden banks with N170 billion non-performing loans. Its subsidiary, Spring Bank, had N95.5 billion in non-performing loans. Equitorial Trust Bank, ETB, has a N46 billion bad loans portfolio, while Unity Bank and Wema Bank are owed N36.5 billion and N36 billion respectively.

Three of the five bank chief executive officers were sacked before the latest list was released. They are Ike Oraekwuotu of ETB, Francis Atuche of Bank PHB and Mr. Charles Ojo of Spring Bank. They were replaced by CBN-appointed management.

Other notable Nigerians whose names or companies were listed are Alhaji Muhammed Buba Marwa, Nigeria’s Ambassador to South Africa; Jimoh Ibrahim and Professor Pat Utomi. Marwa’s defunct Albarka Airlines owes over N1 billion; Jimoh Ibrahim, N3.3 billion; Transcorp, N16.6 billion; Conoil, N19.86 billion; Dangote Industries plc, N1.96 billion; Premium Seafoods Limited, N3.32 billon; Globe Motors, N3.03 billion; Baywood Limited, owned by Chief Chris Ibe and Professor Pat Utomi, N2.74 billion.

Among the dignitaries that owe Spring Bank substantial amounts are Otunba Oyewole Fasawe, a director of the bank who owes a total of N9, 284,331,037.52 in three accounts. Fasawe, through Netlink Digital Television with Account No 1601001010341 owes N4, 821,168,438.27; Mofas Shipping Nig-A/C2, 1601001010688 owes N3, 053,633,054.57 and through Transvari Services limited with A/C No 1601001010387, N1,409,529,544.68.

The Chairman of the bank, Chief Kola Daisi, also owes a total of N4,121,200,911.36 through two accounts. He owes the bank through National Sports Lottery with A/C Nos 0721001006025 and 1441801000046. Chief Tony Anenih and Osahon Asemota through Mettle Energy and Gas Limited, owe N2,065,661,421.09 with A/C No 0161601000897.

Chris Baywood Ibe and Prof Pat Utomi are owing N2,743,349,386.22 through Baywood Continental Limited with A/C No 0011001024030. Also Segun Osinuga, director of the bank owes N2, 556,930,297.06 through WATYEM-DKS Enterprises with A/C No 1511001000102.

In the case of ETB, the bad loans credited to 45 customers amounted to a whopping N46,154, 945,774.89 as at 30 June 2009. Majority of the customers, all corporate bodies, gave legal mortgage, stock hypothecation, and assets debenture as collateral. Conoil plc is the highest debtor to the bank with a total loan of N19.866 billion, which is not supported by any collateral. Next to Conoil is a certain BYSJ Project Account with a debt of N5.972 billion. Premium Sea Foods Limited and Globe Motors Limited are the third and fourth biggest debtors of the bank with N3.321 billion and N3.031 billion respectively. Dangote Industries Limited, Hotel Excel Limited, Formosa Bottling Company Limited, Michelle Nigeria Limited and Igbinedion University are also huge debtors to the bank.

Dangote Industries is indebted to the tune of N1.968 billion, Hotel Excel N1.244billion, Formosa Bottling Company N1.027 billion, Michelle Nigeria Limited N1.021 billion and Igbinedion University N841.987million. The total non-performing loan owed to Wema Bank amounted to a whopping N36.07 billion. TRANSCORP has the highest non-performing loan of N16,627,468,744.02, followed by Mrs. Josephine Oluwadamilola Kuteyi, with a non-performing loan amounting to N8,457,489,072.87. Others are Jimoh Ibrahim through his Global Fleet, which owes N3billion; Odua Investment Limited with a total non-performing loan of over N3.7 billion.

To some Nigerians, the fact that the second list of debtors released by the CBN also features some of those mentioned in the first list shows that beyond their denials they are indeed big time debtors responsible for the debt overhang that is pulling down Nigerian banks and impacting negatively on the economy. Yet, some of them are known for the lavish lifestyle they live and the penchant for squandering money, sometimes needlessly. For example, Femi Otedola donated N1 billion to the ruling Peoples Democratic Party for the building of its proposed national secretariat. He also had to be forced, through litigation and threat of a wind up of his company, to pay Access Bank billions of naira his company, African Petroleum owed it, just some months back.

Could it be that many of Nigerian billionaires are simply unwilling to pay their debts? This may be true to some extent, but the truth is many of them invested in stocks and such investments went bad suddenly. Some of them could have diverted the funds secured from banks into other uses, thereby finding it difficult to pay back.

They sometimes connived with bank staff, who took a sizeable percentage of such loans and hoped that the loans would be written off.

In a recent newspaper interview, Lagos lawyer, Bamidele Aturu expressed that some of the debtors could be just unwilling to service their debts. He recalled the case of a millionaire based in Akure, the Ondo state capital, who despite entreaties by a bank he was owing bluntly refused to pay, until the bank mobilised commercial motorcycle riders to picket his house.

His relations, apparently terrified came out pleading with the motorcyclists, also known as Okada to spare them, as they never knew their breadwinner was indebted to any bank. The man, according to Aturu, was eventually forced to part with over N100 million that day. It is thought that many of the debtors borrow money, set up companies with the goal of taking bank loans without a desire to pay back. Even the CBN governor corroborated this during a recent interview with TheNEWS, asking for an amendment to the relevant laws to make things difficult for such negatively inclined debtors.

Meanwhile, experts estimate that the toxic debt by Nigerian banks stands at $10 billion. Meanwhile, Globacom chairman, Mike Adenuga says he has injected N150b into his bank, taking it out of the well reported capital inadequacy.

But the Nigerian banks continue to limp as a result of bad debts. In its last quarter result, Zenith Bank, one of those cleared after the apex banks last round of audit, reported it had written off N26.1billion in bad debt, while UBA had similarly written off N41billion. TheNEWS learnt that other banks will be forced to write off huge debts in the coming days.

Speaking on the development to AFP last week, CBN Governor, Sanusi Lamido Sanusi, said he would not sit back and watch Nigerian banks fail. We have reached a point where enough is enough, Sanusi said, arguing that the whole crisis was caused by a combination of shareholders greed and reckless management.

For a country like Nigeria, stability, including financial, is very important. If we maintain stability, we can attract foreign investments said Sanusi.

On the famous special goal to take Nigeria into the top 20 of world economies in 2020, Sanusi Lamido said: In terms of could it happen? the answer is yes. In terms of Has the government so far shown the capacity to execute? the answer is no.

My personal view is that there is a need to recognise that government should outsource the implementation of this subjective and should insist more on PPP (public-private partnership), he said.

If you are credit worthy, you can owe. But if you don't service your credit or you don't pay your debts, it shows that you are not credit worthy, said an analyst. How really credit worthy are Nigeria's rich and powerful?

So many of them, as far as evidence can go, are merely overdraft billionaires highly dependent on government for patronage and banks for the money they spend.