Fraudsters Clone Banks Cheque Books

Umaru Ibrahim, NDIC helmsman

Major Nigerian banks are now silently absorbing jaw breaking punches from elite fraudsters who have devised ingenious ways to clone or reproduce cheque booklets of banks and confidently draw money from well targeted accounts of customers.

 Financial fraud experts estimate that the banks may have lost well over N2 billion to these fraudsters in the last two years.
The exact figure lost by these banks could not be ascertained before going to the press. All efforts to speak with the Nigerian Deposit Insurance Corporation (NDIC) spokesman, Mr. Hadi Birchi was not successful as his mobile phone was switched off. But facts of fraud incidences in banks as documented by the NDIC show that the banks have lost over N15 billion in the last ten years to fraudsters.  
Mohammed Abdullahi, Head, Corporate Affairs, Central Bank of Nigeria (CBN), bluntly said that he would not want to comment on the issue, stating that the Apex Bank is not incharge of banks cheque books. “It is better you contact the affected banks. CBN does not control the issuance of cheque books.”But when reminded that the Nigerian Minting and Printing, which is responsible for printing most banks instruments, is under the management of the CBN, he merely retorted, “go and find out from the affected banks”.
The head of Compliant Department of one of the affected banks, told Business hallmark that cheque cloning is a huge burden that crept into the sub sector a few years ago but has now assumed a frightening dimension. According to him, the major challenge is not just that of the fraudsters but the menace of insiders who pass vital customer information to the fraudsters who now clone these cheques. “It is a big challenge actually, but we are taking care of it,” the bank executive reluctantly muttered on phone.
Findings by Business Hallmark reveal that some criminally minded bank staffs divulge the secrecy oath of their banks and pass vital information on corporate and individual account holders to these fraudsters, “who not only clone their cheques, but are also given signature samples, mandate requirements and any other information that would help them carry out their evil work,” a middle cadre management staff of one of the affected banks said on condition of anonymity. 
Since last week, some of the banks whose cheque books were heavily pirated been calling and sending text messages to some of their valued customers warning them of the menace of the fraud ring and also to regularly monitor movement of cash from their accounts. Reliable sources told Business Hallmark that the compliant department of five of the affected banks have been working round the clock to ensure that losses are minimized or reduced to the barest minimum. 
Although, this development has created panic in some of the banks, as customers have continued to troop in to find out their account position, “some of the account holders are also involved in these, as some have been found to draw from their personal accounts using cronies, and then report that they were not aware”, the bank executive stated. 
The banks have also become nervous as a result of the development. Their worry is that it is difficult to determine and estimate how much money may have been withdrawn from each of the banks with the cloned instruments.  
Analysts believe the banks are not talking in order to hush the information from spreading and creating an image that would cause a run on the financial institutions. It is believed that two thirds of the banks patronize the company.
While the banks are still confused and cannot point a finger to where the cloning came from, Business Hallmark research revealed that Triple Gee & Company Plc has exclusive right to print security materials, including cheque books for some of the banks.
But most experts are of the view that the cloned cheques are so real and difficult to distinguish from the original that only printing companies from the Asian countries could be pointed as the base for the influx of fake cheques.  
 More worrisome however, is the fact that people suspect that insiders (staff of the company) may be involved in the fraud. “It is not possible for the company's staff not to have a role in this fraud” said a security expert.
Though the banks said they are still investigating the matter, efforts made by this reporter to get the management of the organization to speak on this proved abortive as Triple Gee Plc's receptionist related that the company's Managing Director, Chief Gani Gbadebo Giwa, said it does not deal with a third party. 
The banks are also worried that the fraudulent act may have gone on un-dictated for a long time, besides the fact that they do not know how many of those cheques are already in circulation.
Former President of the Chartered Institute of Bankers of Nigeria CIBN), Mazi Okechukwu Unegbu, who reckoned that fraudulent cloning of financial instruments did not start today, stated that the banks usually suffer losses whenever there is such incident. According to him, “whenever there is such development, the banks suffer losses because monies are withdrawn from customers account and paid for by the financial institution involved.” 
 Similarly, a senior staff of one of the big banks said this may cause loss of confidence in the customers and the banks would lose many of them. 
Triple Gee was established in 1980.Ever since, the company has served many financial institutions in Nigeria and beyond with the printing of their cheque books among other security materials. But the recent development may sour the business relations between the company and its clients. Business Hallmarks investigations revealed that already, the company's accounts are in red. For instance, it targets a loss of N60.992million in the Q1 forecast ended march 2010.This is different from its Q3 unaudited result in which it posted a loss of N61million. The development has not impressed investors who are dumping its shares for more viable ones. The company's shares which peaked at N7.77 per share as at March 6, 2009, has plunged 43% to N4.37 in June 21, 2010.

ANALYSIS OF FRUAD INCIDENCES
A careful study of the data reveal a ding dung movement in the number of banks' staff involved in perpetrating frauds. Though the number of staff involved increased but mainly at the middle management level. 
 “Looking at the statistics, a critical issue that one would think of in terms of causation would be that there is an increasing level of desperation on the part of many people to make it by all means and by any means”, Professor Omololu Soyombo, a criminologist in the department of Sociology University of Lagos told Business Hallmark.
He pointed that the increasing trend in financial fraud cases and the amount lost by the banks is traceable to the high level information technology skills which most of the perpetrators have in abundance, blaming poverty, high cost of living, unemployment as remote stimulants to commit fraud. 
Out of the total of N73,589.52bn involved in 8,139 fraud cases from 2000 to 2007 the biggest amounts lost to fraudsters were recorded in 2001, 2002, 2004, 2005 and 2007 with N11,243.94bn, N12,919.55bn, N11,754.00bn, N10,606.18bn, and N10,005.81bn respectively. However, the highest loss was recorded in 2005 as the fraudsters were able to successfully remove N5,602.05 billion from the banks.
The huge loss in 2005, according to Professor Soyombo is attributed to the rush that characterized the recapitalization of the banks in the following year.
“When a system is in transition, there is a lot of opportunity for misbehavior or what the sociologists will call anomy. So, that opportunity is there, because people are relatively busy, control is loose and people are in a hurry, so it provides a lot of opportunity for people to commit crime, and for people who are speculative, it becomes an avenue to perpetrate criminal behaviours”.
Fraud offenders or perpetrators were dominated by the managers and supervisors, who though are well remunerated but have unhindered access to the vaults of their respective banks.
Over 2000 bank employees involved in fraud from the respective banks that made returns to the Nigerian Deposit Insurance Corporation invariably lost their jobs, thereby swelling the unemployment market, and in extension depleting the skilled and experienced manpower in the subsector.
Although, the number of bank staff involved in frauds shrunk to 273 in 2007 from 331 the previous year and rose again to 313 in 2008, but the amount involved in fraud rose exponentially from N10 billion to N12.9 billion in 2008, an indication that more sophisticated IT skills are needed for these fraudsters to succeed, as only a few are so well skilled and armed with the know how on how to access vaults of banks.
 The head of compliant department of one of the old generation banks, who prefers not to have his name in print, told Business Hallmark that the experienced hands that leave the system pose more problems to the financial services industry, as they serve “as godfathers and guide the younger fraudsters, advising and exposing them to the loopholes in the banking system.”
According to him, these “old staff” know everything about the banking system, “so they are more dangerous outside than inside.”