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Fraudulent conspiracy: How banks protect staff guilty of stealing customers’ money

Fraudulent conspiracy: How banks protect staff guilty of stealing customers’ money

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Given the disturbing rate of fraudulent practices that has made many bank customers across the country to lose their savings, sometimes with the aid of some workers in the bank, TUNDE AJAJA in this report examines the severity of this problem and how most of these banks cover up their staff members involved in such practices

The last two months have been some of the most difficult period in the life of Mrs. Lola Adekanmi, a 52-year-old low-level civil servant based in Abeokuta, Ogun State.

Apart from almost developing high blood pressure as a result of a phoney transaction made on her bank account, she has lost considerable weight in the process of doing all she could to survive and recover the money.

A widow with five mouths to feed, the distressed woman, who hails from Ilesa, Osun State, has had it rough since the death of her husband and best friend of over 25 years in 2015.

And for a lone parent, who has had to toil relentlessly to meet the family’s growing list of basic needs, seeing N71,000, all her savings, vanish suddenly from her bank account on the evening of Friday, February 9, 2018 was like the world coming to an end.

“I couldn’t sleep that night. I read the message over and over again, thinking it was an error that would be reversed, because till date, it’s been from one story to another.”

She recalled that she was at a branch of the bank in Abeokuta earlier in the day to complain that she was no longer receiving message alert on the transactions on her account. “A young man attended to me and he gave me a form to fill,” the 52-year-old, whom our correspondent tracked down after hearing about her ordeal from a friend, said.

“On the form, I was to enter my account number, phone number, email and other information. Of course, I supplied all the information, but then how did N71,000 develop wings and fly out of my bank account that same day. I hadn’t been to the bank for a long time before that day. You know what I think? Somebody in the bank knows about it and they are trying to cover it up.”

The visibly enraged widow told our correspondent, “Some of the officials of the bank tried to persuade me to calm down and they promised that it would be sorted out. I told them I suspected that one of their staff members knew about it. They denied it. But when they asked me the name of the person and I described him, would you believe that they looked at themselves and chuckled.

“For days and weeks, they tossed me up and down a number of times but when I was no longer taking it easy with them and I resorted into shouting and even threatening to go to the press, a lady who had promised to look into it confided in me that the guy who attended to me had been fired because there were similar complaints from other customers that he attended to and they had been able to see that he was complicit in the different cases. But the person assured me that the bank would refund me even though it might take some time.

“Even when I reminded them that they could track the person with the name and account details of the person whom the money was sent to, they simply said I shouldn’t worry, that the bank would sort it out.”

Disturbing as Adekanmi’s ordeal is, it is not peculiar by any means – she is in fact on a growing list of bank customers who have lost huge sums in mysterious ways to bank staff who connive with fraudsters to dupe people of their savings.

In some cases, customers are unable to get any sort of explanation or help from the bank, because most of the banks would rather cover up to protect their image, and in rare cases, they refund the ‘troublesome’ customer who could complicate things for them by running to the press or the social media.

While Adekanmi had been at the mercy of the bank, living in the hope of being refunded someday, Mr. Rufus Odika, a furniture maker in Sapele, Delta State, has already approached a lawyer to help him recover his N200,000 that got missing from his bank account.

He could not hide his pain and displeasure when our correspondent contacted him on the phone. Since the incident happened in 2014, he said all he had heard from the bank was ‘we are working on it,’ which he said he was tired of hearing.

Narrating how it began, Odika said he had issues with his ATM card and he went to a branch of the bank in Benin to complain. Little did he know that the complaint was the beginning of a torturous, frustrating experience with the bank he had been using for over 15 years.

After filling the form he was given, stating his name, account number, complaint and email address, he said the young man who attended to him promised him the issue would be rectified within 24 hours.

“But towards evening, say around 8pm, I received an email, purportedly from the bank, detailing my complaint and stating that the issue was still being looked into,” said an angry Odika. “I saw it as a follow-up from the bank. Thus, I was told to generate a token, which I did.

“Few minutes after clicking the link, I received a debit alert on my phone that I had been debited N200,000. It said I had transferred N200,000 to one person in another bank. I stood up suddenly; confused.

“I couldn’t sleep that night. I was just pacing up and down in my room. I kept checking my phone to see if another text message would come in because I felt it must have been an error. I felt like rushing to the bank that night, maybe some of them would still be around, balancing their books, but my wife told me to wait. I was very angry. ”

Still furious over the issue, Odika said he got to the bank 7:30am the following morning and when the bank opened, he met another customer care officer who checked the account’s history and said the debit wasn’t from them.

“I told the lady my ATM was still bad and I didn’t have any mobile transfer app or platform activated on my phone or on any device whatsoever. That was when the person became short of words. I advised them to use the personal information on that account to track the person but they kept dragging their feet.

“I reported to the police but nothing was done. One day, N10,000 was transferred to me from one account in another bank and my bank said it was part of the money as they were trying to settle it. I reported to the police and at some point, their demand became overwhelming. I later learnt that the guy who attended to me that day was the brains behind it and that he had been dismissed but the police had not been able to track him. That was what someone told me. I’ve engaged a lawyer to take them to court.”

Across a number of the commercial banks in the country, these complaints of fraudulent withdrawals and transfers have become almost an every day event, and still growing by the day.

In-house fraud in banks, a fast-rising dilemma

Perhaps, not many would know how severe internal abuse and fraudulent practices by some members of staff of commercial banks have become until the Nigeria Deposit Insurance Corporation said in March 2018 that the number of fraud cases that resulted from internal collaboration by banks staff increased from 231 in 2016 to 320 in 2017.

“A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016. That represented an increase of 38.53 per cent in the total number of fraud cases reported in 2017.

The corporation’s Head of Communications and Public Affairs, Mr. Mohammed Ibrahim, in a statement on March 11, said the report of the off-site supervision of Deposit Money Banks showed that there cases of fraud and forgery being perpetrated by bank staff were rising. He said the report relied on the 286 responses received from 26 banks.

He pointed out that the amount involved in the fraudulent activities documented increased from N8.68bn in 2016 to N12.01bn in 2017, representing a 38 per cent increase.

The statement partly read, “The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30 per cent higher compared to 16,751 cases reported in 2016. Similarly, the amount involved in the fraudulent activities documented increased by N3.33bn from the N8.68bn reported in 2016 to N12.01bn in 2017.

“Also, the expected/actual loss slightly decreased from N2.39bn in 2016 to N2.37bn in 2017.”

According to him, apart from internet/online banking and ATM card related fraud types, which constituted about 92.68 per cent of all the reported (26,182) cases, other reported crimes perpetrated by these fraudulent bank staff were fraudulent transfers/withdrawals, cash suppression, unauthorised credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges and presentation of forged or stolen cheques.

In the release, the corporation also chided the banks for not rendering a proper account of the fraud, forgery and similar cases involving members of their staff who were dismissed or whose appointments were terminated on account of fraud. It said specifically that banks were hiding the fraud cases involving their staff.

The statement added, “The 22 licensed commercial Banks and four merchant banks rendered 286 Returns on Dismissed/Terminated staff as a result of fraud and forgeries during the year under review. Out of the 26,182 fraud cases reported by the 26 licensed banks, 320 cases were attributable to internal collaboration by bank staff.

“A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016. That represented an increase of 38.53 per cent in the total number of fraud cases reported in 2017. However, the losses arising from the reported cases decreased from N760 million in 2016 to N682 million or about 11.43 per cent in 2017.

To show that fraudulent practices by bank staff didn’t start today, the Managing Director of NDIC, Umaru Ibrahim, said in 2016 that banks exposed themselves to fraud and forgery when they assigned sensitive roles to casual workers, who, according to him, are about 25 per cent of the banking workforce.

Apart from casual workers, he identified other factors breeding corruption in the banks to include poor corporate governance and lack of effective sanction of offenders, among others.

Ibrahim had also said at a forum in August 2017 that in 2015 alone, banks’ staff in connivance with fraudsters defrauded the system to the tune of N18.02bn, out of which banks alone lost N3.17bn while other victims could include bank customers.

However, in 2016, the fraud and forgery which involved bank staff was N8.68bn, out of which the loss to the banking industry was N2.4bn.

Independent of these humongous figures, the attempted cases of fraud and forgery dropped from N2.7bn in March 2017 to N2.4bn in June 2017.

The NDIC had expressed worry over the rising trend of fraudulent practices by bank staff, especially in the online banking and ATM card related channels, saying it remained a serious cause for concern.

It is therefore worthy of note that this disturbing trend, which is wrecking the joy and happiness of many customers, is on a steady increase. This is because the reported cases of fraud and forgeries were 12,279 in 2015, but in 2016, it had risen to 16, 751, while in 2017, it had reached 26,182.

Findings also revealed that of the over 10,719 fraud and forgery cases recorded between year 2000 and 2009, over 2,500 bank staff were involved in the fraudulent practices.

It is also worthy of note that most of the banks with these fraudulent cases are the top banks with huge customer base and presence.

But, in spite of their strength, their customers have continued to be at the receiving end of in-house fraudulent practices, including excessive and hidden charges.

In fact, the Central Bank of Nigeria in October 2017 recovered over N50bn from banks, being excess charges imposed on customers.

Meanwhile, the Cyber Security Experts Association of Nigeria and a Russian online cyber security firm, Kaspersky, had severally in 2017 warned that Nigerian banks might soon be hit by cyber attackers, given their level of vulnerability.

The extent to which this warning has been heeded could best be imagined, given the rising cases of online frauds in banks.

Meanwhile, the Nigeria Inter-Bank Settlement System, which was set up to handle inter-bank payments, facilitate the electronic clearing of cheques and other paper-based instruments, electronic funds transfer, Automated Direct Credits and Automated Direct Debits in order to remove potential bottlenecks associated with inter-bank funds transfer and settlement, has revealed the percentages of frauds perpetrated by each of the platforms banks and their customers use to carry out transactions.

On its website, as of Thursdays, the NIBSS revealed that 29.6 per cent of the frauds are perpetrated through ATM, 19.7 per cent through internet banking, 23 per cent through mobile devices, 17 per cent through the web, while the remaining 10.7 per cent are done across counter, e-commerce, POS and others.

Why banks cover up for their staff

According to findings by our correspondent, most banks don’t reveal the identity of their staff involved in such fraudulent practices; neither do they openly accept that their staff was complicit, even in obvious cases. Rather, they quietly discipline (sometimes dismiss) the staff members while they absolve themselves of any blame. And in certain instances when they see that the customer is making too much noise about it, they tend to refund the customer.

Meanwhile, on why banks don’t admit when their staff members are involved in fraudulent practices, some sources in some commercial banks told our correspondent that such issues were usually covered up to avoid bad publicity.

“You know it’s a competitive market and no bank wants to be seen as having bad employees,” said a management staff in a foremost commercial bank. “By the time there are reports from time to time on catching fraudsters in your bank, it’s not good for you. Some customers tend to feel their money is no longer safe with you, and before you know it, they close their accounts. That is why we make it an internal issue.”

Also, the Managing Director and Chief Executive Officer, Highcap Securities Limited, Mr. David Adonri, said banks sweep such fraud cases under the carpet to avoid negative publicity.

“They do that because of the negative publicity that any action against such fraudulent staff would generate. That is what they are running away from and that is why they try to handle it secretly.

“But I tell you that it is not a good strategy; those fraudsters are supposed to be named and shamed and severely dealt with. In the capital market, no fraudster is covered up. Any fraud that is perpetrated in the capital market is reported and publicised; they name and shame them, so as to serve as deterrent to others. But the banks don’t do that. They sweep everything under the carpet, which is not good.

“And the banks should be sanctioned for that cover-up. That would make them to be more transparent because there is need for transparency in doing business, but unfortunately, they are not very transparent.”

Speaking further, Adonri traced the cause of the rising incidence of fraudulent practices by bank staff. He said, “Just like in several other areas of the economy, fraudsters have infiltrated everywhere. A friend was discussing with me yesterday on what some fraudsters normally do concerning banks. They influence the hiring of their surrogates into the banks and those surrogates then pass on vital information to these kingpins through which they perpetrate these massive frauds.

“These kingpins are big people who are able to influence the employment of their surrogates and they have penetrated everywhere. The only thing is for the banks to be very vigilant and reconsider their methods of recruitment to make sure that they don’t recruit surrogates who are informants to the kingpins.”

He said the surveillance departments also need to be very alert, noting that as banks come up with measures to counter their activities, the fraudsters also develop measures to break the control measures.

“But the law enforcement agencies are also not helping matters,” he said. “When these fraudsters are arrested, they are usually not caught by the long arms of the law. They are able to go scot-free. And that emboldens others to continue to perpetrate these acts. The implication is that the law enforcement agencies, including the police, EFCC, judiciary, are also implicated in this assault on the banking sector. So, it has to be tackled from all angles.”

Banks’ conspiracy of silence

One other worrying side of these bank staff-assisted frauds is that even when customers lodge their complaints and there are traces of where the money is fraudulently transferred to, banks where the transactions originated from are usually unwilling to take it up the case.

The case of 33-year-old Kazeem Oluyode is quite instructive and very painful too. He said N55,000 was transferred from his account and when he complained, the bank initially declined to help, claiming it wasn’t their fault. But due to the intervention of a senior staff, the matter was now receiving attention.

He said, “Usually, when I use my ATM card to transact, I would receive text message and email. But that Sunday, I bought N15,000 fuel and I paid with my card. When I saw my balance after I was debited, I felt the money wasn’t up to what it should be but I didn’t give it much thought.

“On Monday, when I checked my email, I saw that I had been debited N25,000 and then another N52.50, which meant it was a transfer to another bank. I knew I didn’t spend the money and I didn’t transfer the money. So, I went to the bank to complain. They checked my account and saw that somebody transferred the N12,000 to an account in another banks.

“The name, account number and the phone number of the person was there. So, I saw that the phone number happened to be a clone of my own number, except for the last digit. I complained and it was like they were doing me a favour and the discussion dragged back and forth. I told them, ‘how can you say there is nothing you could do when they used your platform to steal your customer’s money and now you are washing your hands.’ They said there was nothing they could do, until a senior official that I knew intervened.”

He said due to the intervention, he was later refunded, even though there was no credit alert as there should have been. “That tells me they did it quietly,” he added.

On further enquiries, Oluyode said he was told that they didn’t want to take issues with the other bank because their primary concern was to take care of their customer, which they did quietly.”

“They had drawn the other bank into the issue and the bank had blocked the account but the person had withdrawn the money and there was nothing they could do and I marvelled at the irresponsibility of both banks. The person left enough footprint and they could have reported the person to the police, given the availability of his contact details, passport photograph on their system and other information. But they simply looked away, which means the person would do it to another person and my account would remain vulnerable. I knew that the person who did it was an insider and the person had access to customers’ account but they weren’t interested in that.”

Meanwhile, these are few of the many instances, where customers have lost savings without knowing how to retreive them.

Being a financial crime, the spokesperson for the Economic and Financial Crimes Commission, Mr. Wilson Uwujaren, confirmed to Saturday PUNCH that the commission was aware of such fraudulent practices that had the input of bank staff “I can confirm that the commission has investigated many cases involving staff of banks conniving with fraudsters to defraud depositors,” he said.

Also, Mohammed, who is the spokesperson for the NDIC, told our correspondent on Friday that bank customers should make use of all the platforms made available by the corporation to file their complaints.

He added, “We have a help desk, equipped with toll-free numbers and there are multiple platforms through which they can contact the NDIC to register their complaints.

“They can also write directly to us. We organise forums from one state to another where we interface with customers. People who have complaints can take advantage of any of these platforms to register their complaints and they would be given timely attention.”

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