By Cosmas Omegoh
Managing Director/CEO of Baywood Continental, Emperor Chris Baywood Ibe, recently raised the alarm on how a bank fleeced his organisation of large sums of money in the form of spurious interest charges, warning that the practice was killing most SMEs. He then tasked the Central Bank of Nigeria (CBN) to mandate the banking sector to get involved in real sector lending, as it is the sure way to stimulate the economy.
Excerpt:
How banks criminally over charge customers
Recently, our account with one of the new generation banks was over charged to the tune of over N700 million. We had a forensic audit of our transactions with the bank; it was the second time we had had such experience. As a matter of fact, we took them to court and the court decided that we should take the matter to the Alternative Dispute Resolution (ADR) and if that failed we should come back to the court. In the course of that, we discovered why Nigerian banks are making very huge profits at the expense of their customers who are writhing in pains.
Signs that our account was being over charged
We had an idea of what was happening. The bank had funded one of our flagship projects, which we did with Total Nigeria. It was the construction of the largest onshore pipeline in Nigeria today. Our organisation was doing the project, prosecuting the project and delivering on the project. We knew that those things were going on. But we didn’t want any distractions. We promised ourselves that at the end of the project, we would have the time to go back and holistically look at our transactions with the bank.
We have had a case like that with the bank in one of our Baywood Continental Ltd accounts. That was the one that we took to the ADR. So it was at that point that we were well convinced that if we take the action we took when our parent company, Baywood Continental Ltd was involved, we could take the same position when our joint venture project account was involved.
For us, it was an eye opener that a bank that claims to be tops on ethics could engage in such back dealings. If that happened to us, you can image what is happening to every other customer of the bank. That is why I strongly advise every customer of the bank involved to go back again and look at their books of accounts.
The bank believes that it has all the muscle, all the network to do what its officials are doing. If you are the average customer, they will not even listen to you unless you take the kind of drastic action we took. I’m glad we were able to press home our point. We made it clear that what they did was very unprofessional and very unethical. We even considered their action as fraudulent because dipping hands into our money without our consent is every inch fraudulent.
How the anomaly was discovered
When we first discovered that our account was being over charged, we promptly reported to them and demanded that the money be returned to our account but they challenged our claim. We learnt that it was characteristic of the bank. They believe they have what it takes to deal with their customers and impoverish them.
When they refused to toe the line of peaceful, alternative resolution, we petitioned the Central Bank of Nigeria (CBN). We asked the apex bank to call them to order. But anytime the bank was found wanting, its officials sent a counter petition to the CBN. They tried to elongate the matter. That was how the case lingered for one year and six months. And anytime we made a move, they countered such move.
They believe they have all the muscles to do anything. But at a point, they were mandated by the CBN to refund our money. But rather than credit our account with the excess deduction they took from our account, this time, they petitioned the CBN governor claiming that they were not treated fairly.
But that was where I saw a lot of positive things happening in Nigeria. The CBN, after carefully reviewing our submission, maintained its position, insisting that the money should be refunded to us.
Then along the line, the bank officials came back to claim that they had discovered that in one of our dollar accounts, they undercharged us. So because of that, they insisted that we should trade off over N200 million. They ended up paying us the balance. I feel that this is a situation where government has to look inwards and come down hard on Nigerian banks. They are not fair at all to their customers.
The bank I’m talking about here knows itself; it is not customer-friendly; its officials are bullish; they don’t care about client services relationship. They will rather deal with their customers one off. And God bless your soul if you don’t have someone to run to, if you don’t know your rights or you don’t have the power to push your rights through. They will simply muzzle you. But I was determined to claim my right and that was what I clearly did.
At some point again, they insisted that they weren’t going to pay the money. So we had to notify the CBN, which promptly came down hard on them with a lot of pressure before they could make the refund. They were simply pressured to pay back the money within 72 hours or so.
Their reaction when the matter was first brought up
They were very hostile – very hostile. They didn’t want to listen to anything. They started telling us that we had no claim; they even denied the email communications we had with them. They claimed that the emails they sent to us were done in error. At some point, they started accusing us of manufacturing the email letters ourselves.
Before then, they had admitted that they owed us. But at the point it became obvious that we were going to ask for refund, they started playing pranks. It was at the point that we decided to engage a consultant to help us get to the end of it.
The consultant was very knowledgeable in the financial world. He is a professor, a practitioner who teaches in the Bankers’ Committee. He is versed in CBN requirements and guidelines. So, we were guided fully and strictly by CBN guidelines; his findings were obvious that those guys excessively overcharged us.
Implication of banks’ action on business and enterprise
A scenario like the one we experienced makes loan repayment quite difficult; it ultimately destroys the spirit of enterprise. When banks overcharge you, they balloon your account balances at every stage. Where your account balance is supposed to be showing N1,000, it will be showing N5,000 deficit. This makes your credit balance very tough. It is a recipe for failure of most loans because today, you own N1, the next day, it shoots up to N5. Before you know it, your bankers will claim that you owe N100.
Do you suspect this dealing to be rampant?
I can tell you yes. This is what is happening everyday; this is how banks are making their money and declaring bogus revenues and profits before and after tax. This is what most of them are doing to the public. But many people are not aware of this. Even people who are confronted by this challenge do not have the strength to follow through when it arises – when they suspect that their account balances have been tampered with. They are intimidated. But we couldn’t be intimidated. That is the situation.
Federal Government should wade in
It was a destabilising situation. I feel the Federal Government should step in here to help Nigerian entrepreneurs. I feel that Nigerian firms are not well treated.
Way forward
I challenge the CBN to come hard on erring Nigerian banks. I was reliably informed – because I followed this matter extensively – that there are mountains of complaints before the CBN. That means that the Nigerian public is writhing in pains while the banks are rejoicing, and declaring huge profits.
So, the CBN should, as a policy, heavily sanction any bank that attempts to short-change its customers. Where possible, let the licence of such bank be withdrawn. Their actions are clear recipes for loans failures. That is why, when you go to banks you hear about bad loans; some customers getting indebted to the banks. The banks make it difficult for their customers to operate and deliver on their projects while they are living large all over the country.
I tell you that many bank customers are dying everyday. After funding your projects, they leave you with nothing; you end up paying them everything and getting liquidated. The banking industry at the moment is not supportive of business. It is not doing real sector banking. Rather, banks are lending to treasury bills other than the real sector because of the interest rate and government bond yield.
On the other hand, government is not helping matters; the government yield is higher than the lending rate. If government bond yield is higher than the lending rate, of course, everyone is in business; the banks will resort to investment in treasury bills and government bonds rather than investing in real sector businesses. This is what is happening today; that is why most banks are not lending. So, how would the economy be stimulated?