Fraud In BOI, As Assets, Monies Diverted

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Nigeria’s path to industrialization is now being threatened as the directors of the Bank of Industry (BOI), set up to ensure
industrial growth, have diverted monies that were set aside to grow businesses and also stolen assets of the bank.

The Fraud in the bank which was detected at the twilight of 2013 involves money which runs into billions of Naira as well as the assets that have been converted by its former managing director Evelyn Oputu through a firm, Tango Towers who is a related partner.
BOI, formerly Nigeria Industrial Development Bank, (NIDB), as a result of this development and others, is having problem getting its account for 2010, 2011 and that of 2012 approved by the Financial Reporting Council of Nigeria (FRC)

This development is an indictment on the supervisory roles of the Trade and investment ministry whose sources said its minister,
Olusegun Aganga has been blinded by the gift of black Range Rovers jeep collected from BOI.

It also indicted BOI owners- the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance Incorporation (MOFI).
This point to three things. It is either they cannot read figures or care less about the finances of the country or they are accomplices.
The fraud was detected by the FRC while trying to ensure the level of compliance with the new accounting regime, the
International Financial Reporting Standards (IFRS).

FRC, an improvement of the Nigerian Accounting Standard Board (NASB), is the body that supervises and ensures the compliance of private and public firms to the (IFRS).

several infractions in the BOI’s accounts and sources said the development has prompted another round of investigation into the tenure of Evelyn Oputu, who assumed office in 2005 and ended December 12 2013.

Oputu is awaiting one year tenure extension even after serving two tenure of four years each.
Jim Obazee, CEO of the Financial Reporting Council of Nigeria (FRC) told journalists from some select media houses in Lagding the BoI, the Nigerian Aviation Handling Company plc, and Nigeria Police Force Microfinance Bank plc, submitted their documents to the FRC, when it carried out its last readiness test.

Though Obazee declined comment on the findings in BOI, the FRC report which has been sent to Olusegun Aganga, minister of
trade and investment described Oputu’s tenure as unsatisfactory.

The report which also copied Oputu frowned at the management whose books for 2010 and 2011 have no records of about 12 properties and that of several funds being managed on behalf of some state governments.

Investigation also revealed that BOI has produced another restated accounts though unsigned by its directors for the two
years (2010 and 2011) and which its owners, Central Bank of Nigeria and Ministry of Finance Incorporated (MOFI) did not know of.
The FRC report noted that some BOI’s assets are missing from the books since 2008 while some have been converted for personal use by some of its directors.

Some of the assets missing in its 2010 and 2011 accounts are the two properties on plot 23A and the one on plot 25 on high
brow Bourdillon road, Ikoyi Lagos.

They had to be compelled before the properties were included in the restated accounts for the two years and also for the 2012 though their book value understated.

The latter which is directly opposite the house of former Lagos state governor, Bola Ahmed Tinubu, has pressured the former governor to leave the house alleging that it constitutes security risks.

When the accounts were restated, the accounts put the valuation of the multiple storey building twin-tower property on 25 Bourdillon road at N1.2 million, while the value of another massive building on 23A Bourdillon road was put at N946,000.
In the accounts of BoI, the twin-tower multiple storey building generates N3 million in rents annually, while the one
on 23A Bourdillon road generates lower.

Sources in BOI however revealed that $7.2 million had been earned on the twin-tower building on plot 25 Bourdillon though
not stated in the bank’s books. The money, it was learnt, could only be accounted for by the managing director and the staff in the finance department.
Other highlights of the report included the placement in fixed account in Access Bank, of several intervention funds to
assist some state indigenes and some strategic sectors.

For instance, BOI accounts stated that the CBN N535 billion intervention fund for Power and Aviation sectors was fixed at three percent, while it was allegedly put at about 12 percent in Access Bank’s books.

The same revelation was also made of other managed intervention funds which is being kept in fixed deposit accounts in several banks but which the BOI management is reporting paltry three percent interest rates.

-How MD, Directors Defrauded BOI.

Fresh revelation have shown how the management of the Bank of Industries embarked on financial recklessness thst frittered away, billions of money meant to develop the industrial sector.

The details of the fraud which had been sent by the FRC was received on October 4, 2013 by the bank’s managing director
Evelyn Oputu, Olusegun Aganga, the minister, trade and investment, Akintola Williams Deloitte (BOI Auditors) and
other federal government offices.

In the FRC letter of September 20, 2013 and signed by its executive secretary, Jim Obazee, four areas were flawed in
the 2010 and 2011 accounts of the bank.

This explains why the council directed BOI to withdraw the accounts from the public, for correction and re-issue them
within 60 days before finalizing the 2012 accounts.

The areas border on the bank’s accounting policies, issues relating to the bank’s income, issues relating to the bank’s fixed assets while the fourth are issues relating to the
bank’s liabilities and shareholders’ funds.

Under the bank’s accounting policies, the FRC flawed BOI accounting policies, policy on dividend income, accounting
policy on lions and advances, accounting policy on investments and accounting policy on employees retirement benefits. FRC described these as misrepresentation,
misleading and unacceptable.

In the bank’s income, FRC discovered that BOI did not provide enough disclosures on management fees of third party funds
while the nature of ownership of the bank’s land and buildings could not be established in the bank’s fixed assets column.
FRC frowned at the removal of some fixed assets from the bank’s books while it also queried renovations of its Abuja corporate
office, Akure office and Bauchi office.

“It is not clear why the same amount was expended on the renovations of two different buildings in different locations
of the country. BOI could not explain the arbitrary nature of these amounts.

The representative of BOI claimed that a contract for renovation was awraded to a contractor for N226 million with an advance of N200 million to the contractor”.
FRC in the letter noted that “When he was informed that this was not in accordance with the procurement guidelines, he
said he was not sure that the explanation he gave can be substantiated.

This makes the matter altogether suspicious”. Another instance of the corruption in the bank is the renovation of the BOI’s office on Marina, Lagos which billions were spent, its market value is still below the cost of renovation.

“Also in 2010, the bank expended N3.4 billion to renovate the Lagos Marina office. At the date, the book value for all and buildings of the entire bank including the Lagos Marina office was N658,889,111 (N.06 billion).

It is therefore alarming that the value of the building, based on a 2010 valuation report done by a supposed expert, and carried out shortly after the renovation and on the basis of open market valuation between 4th and 8th August 2010 was less than the amount incurred for the renovation. The renovation surplus was N2.142 billion.

A copy of the valuer’s report compounded the matter as the figures were at huge variance from the financial statements” said the FRC in the letter to Oputu and
Aganga.

“This is unacceptable and indicative of fraud” noted FRC who had asked BOI to send in the names/FRC registration numbers of all professionals (internal and external) that worked with the bank.

BOI’s balance sheet did not also indicate that it has short term investments while its disposal proceeds were seen on the cash flow statement for 2011 when it recorded N2.6 billion and N1.18 billion in
2010.

In the Long term investment, the FRC noted that “the statement of the cash flow reveals that the bank spent some billions to purchase investments (N1.7 billion in 2011 and N2 billion in 2010).

However, corroborative evidence of these additional investments could not be found anywhere in the financial statements and neither was BOI able to provide valid explanation”.

Another discovery is the non-classification of deposit for shares as part of shareholders fund despite its being in the bank’s balance sheet since 2007, growing from N12.3 billion to N38 billion in 2011.

When FRC asked why the shares were not allotted, the reasons by BOI were incredible says the council.

-FRC Queries BOI Over Missing Properties.

Worried by the misleading financial statement prepared by the Bank of Industry and the unsatisfactory responses
from its management, the Financial Reporting Council FRC has queried the bank, noting that its reports are capable of misleading the public.
It therefore requested that all documents relating to all its transactions and operations be provided for its
verifications.

In the letter titled ‘ Re: Non Compliance with statement of Accounting Standards (SAS) dated February 6, 2014 to the BOI
managing director, Evelyn Oputu, the council referred the bank to the several meetings with it and Olusegun Aganga, minister, trade and investments as
unsatisfactory.

The letter was signed by Jim Obazee, FRC executive secretary and was copied Olusegun Aganga, the minister, trade and
investment and the Partner, Akintola Williams Deloitte, the bank’s auditor.

“Our council has reviewed your submissions and we regret to inform you that we are unsatisfied because the report is still
capable of misleading a relevant stakeholder.

You are hereby required to furnish our council, not later than seven days from the date of this letter, with the under-listed documents/reports as they may provide a pathway for an amicable resolution that will give our council comfort on this matter”, the
council noted.

The documents being requested for by the council include sources of the reclassifications of its investment properties which were not in BOI’s 2010 and 2011 accounts but in the restated accounts for
the two years.

Others are management discussion and analysis for classifying the investment properties into previous categories in
the first place and, the valuation report, from a FRC registered valuer, on all the investment properties that are now recognized in the retstated financial statements and also accounted for in the 2012 accounts.

Also requested by the FRC are applicable values of the individual investment properties, auditor’s physical verification
attestation letter on all the investment properties and also, a schedule of rental income earned on each of the properties over the last three years (2010,
2011, and 2012).

Others are the evidence that the rental income was recognized in the BOI’s income statement, the rental income receivable and the identity of the debtors, the scheduled of occupants of the investment properties analysed into related parties, third parties, corporate, individuals etc and the evidence of BOI’s ownership of all the restated

investment properties including, but not limited to, certified title documents.In addition, the bank is also asked to
submit to the FRC, the three years audited financial of the managed funds covering 2010, 2011 and 2012 for each of the funds.

The bank is also requested to submit, the memorandum of understanding between the BOI and the National Automotive council, (NAC) on the management expenses on the NAC managed intervention funds as well as the attestation of the external auditors of the NAC funds.

BOI had created an exceptional item of N1.255 billion for NAC from the intervention fund that is principally foronward lending to qualified beneficiaries in the automotive industry.

FRC, it was learnt is interested in the conditions for this.

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