The N179bn fraud trial of ex-Managing Director of the now-defunct Intercontinental Bank Plc, Dr Erastus Akingbola, continued on Monday with an official of the Nigeria Deposit Insurance Corporation, Mr Paul Akali, claiming “the bank’s assets significantly deteriorated” under the defendant.
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Akali told Justice Ayokunle Faji that he was one of the external examiners who looked into the bank’s books in May 2009.
The Economic and Financial Crimes Commission is prosecuting Akingbola on amended 22 counts, wherein he was accused of using N179bn belonging to the defunct Intercontinental Bank for “fictitious transactions.”
The EFCC also claimed that Akingbola granted loans to a number of companies without adequate securities.
But the ex-bank chief pleaded not guilty.
Led in evidence on Monday by the prosecuting counsel for the EFCC, Mr Rotimi Jacobs (SAN), Akali said his team found out that contrary to the regulation of the Central Bank of Nigeria, Intercontinental Bank gave out over 80 per cent of its deposit as credit facilities.
Akali said with this, “assuming bank customers who have money in the bank want to withdraw, the bank will not be able to meet up.”
The witness said, “There is a regulation that says a bank should not give out more than 80 per cent of its deposit as loans and advances.
“When we go on the field, we check for these things. Our check revealed that the bank (Intercontinental Bank) contravened this regulation. The loan to deposit ratio was 107.85 per cent. It exceeded the maximum that should be given.
“The bank experienced volatility in its deposit during the period under review.
“The ratio of non-performing credit to total credit of the bank as of May 31, 2009 was 48 per cent compared to the previous examination. The bank’s assets significantly deteriorated.
“We observed that insider-related facility totalled N86.78bn; that was 4 per cent of the total credit of N690bn as of May 31, 2009.”
Akali told the court that to conceal its liability from external examiners, the bank’s management classified their loans as “commercial papers.”
He said, “But when we reviewed the items, we had to reclassify them as loans because they did not, in any way, qualify as commercial papers. So, we had to bring them back on the balance sheet to form part of the assets and liability of the bank.
“After we finished, we calculated the bank’s capital adequacy ratio; it was 77.41 per cent. That was above the minimum capital adequacy ratio of 10 per cent stipulated by regulation.”
In the charges, the EFCC, among other allegations, accused Akingbola of reckless granting of credit facilities to five firms, which did not furnish the bank with adequate security for the loans.
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