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We steal billions from European banks: this is how (1)

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The streets of Amsterdam

The Netherlands is musing on proposals for a special police unit to tackle Nigerian criminal gangs. Investigative reporter EMMANUEL MAYAH travels there and meets a cell leader and other Nigerian career criminals waging an aggressive economic war against Europe.

Some call it economic terrorism. But one crook, beating his chest, calls it a pay back for historical wrongs.

A few streets off bustling Amsterdam Central is a posh bar curiously named Lost in Amsterdam. The neon sign does not say much. But it takes just a few minutes for the ambivalence of this leisure spot, which targets tourists and resident rich Africans, to sink in.

It is the night out for a gregarious group of Nigerians, almost all of whom walk with impunity in their footsteps. Normally, their boisterous nature would annoy an average Dutch audience, but soon it begins to get clear why this bunch of West Africans is always tolerated here.

In a little over two hours the group of six men, including this undercover reporter, burns cash in excess of 4,000 euros. The last bottle of wine is not even finished when the others move to another part of the city to continue the spending spree.

In pursuit of the good life, they chase after women, habitually writing telephone numbers on euro bills before handing them to the women of their desire.

One of the men jokes that it makes no sense carrying a business card. “Cash is my business … besides, using euros as my memo pads is the best first impression.”

Not only have these Nigerians, members of an underworld, conquered different women, they have also conquered different parts of Europe.

They have sojourned in France, Italy, the United Kingdom, Belgium, Greece, Luxembourg, Germany, Denmark, Spain and Sweden – swindling banks, raking in millions of euros, in an offensive described as economic terrorism.

Two of them had been in prison elsewhere before settling in the Netherlands…

Four years ago, while working undercover on a human trafficking and illegal migration story, this reporter had been referred by his “travel agent” to a cybercafe opposite the public library in Isolo, Lagos where prospective emigrees were, for a fee, taught skills in computer crime, basically to prepare them for a life in Europe.

At this shadowy academy, this reporter met 26-year-old Femi (not his real name). Called Femishow by his friends, he was one of the Nigerians drinking alcoholic milkshakes at the pricey “Lost in Amsterdam” in the Nieuwendijk area of the city.

Happy to hook up with a former ‘classmate’, Femishow gave a narrative of his journey to Europe.

When he arrived Schipol Airport in 2010, he was arrested for possessing no travel documents.

Femishow had acquired a Guinean passport in Lagos. With the fake passport, he travelled to Ghana where someone helped him to procure a visa for N700,000. Aboard the flight to Amsterdam, he made his way to the toilet and destroyed his documents.

He arrived the Netherlands without a nationality. Although the Dutch police knew he was a Nigerian, they could not prove it.

Femishow was imprisoned for four months. Upon his release, he was asked the standard question: “Do you wish to return to your country?” He was ready with his answer: No.

He was taken to a detention centre in Schipol for a month. From there he visited the asylum application centre also in Schipol. After several interviews, he was taken to an asylum camp in Dronten. Five months later, his asylum request was turned down, his stay in Holland officially terminated.

Rejected asylum seekers are left stranded on the cold streets. Without legal documents, they can neither get jobs nor easily move on to another country. Not Femishow. He had his friends waiting for him.

While at the camp, he was given free language coaching. With his smattering Dutch, he was prepared for the life ahead. Most of the Nigerian illegals take to crime, often drug peddling, to survive.

In May 2009, while trying to escape the Dutch police, one Azubuike jumped from the 9th floor of his apartment building in Bijlmer, southeast Amsterdam. His death sparked a protest against police high-handedness by the black community in Amsterdam.

Black Amsterdam

In Amsterdam, this reporter’s white friends warned him not to go to Bijlmer, a predominantly black neighbourhood. This place is the Hillbrow of Johannesburg or the Mushin of Lagos. This is where Femishow lives.

Bijlmermeer, ‘Bijlmer’ for short, or ‘the Bimmer’ for those in the know, is synonymous with crime, drugs, unemployment and illegal immigrants. It is home to 100,000 people of 150 different nationalities, mostly from Africa, and the former Dutch colonies of Suriname and Antilles.

Walking around, you see different faces of Nigerians, Surinamese and Somalis. You encounter a street market retailing garri, egusi, plantain, coconut, pepper and other foods from immigrants’ homelands. Reggae, salsa and Nigerian music rule the air.

There is no doubt who runs Bijlmer: Nigerians. They are loud wherever two or three of them gather. Other nationalities defer to Nigerians, who lounge around with beautiful Surinamese girls by their side and act as though they invented the automated teller machine (ATM).

Young men work as ‘look-outs’ and foot soldiers as money quickly changes hands on street corners. Bijlmer has an underbelly, and it shows. A police chief once described this notorious district ruled by Nigerians as a “national disaster area.”

In search of solution to the menace, a call was recently made for the establishment of a special police unit to handle Nigerian-related crimes.

Three parties in the Dutch parliament, the Christian Democrats, the conservative VVD and the populist Freedom Party, jointly proposed to the justice minister to create a permanent police unit to tackle Nigerian criminal gangs.

Outside Nigeria, the Netherlands is said to host the largest community of Nigerian fraudsters, especially internet scammers. Back in Nigeria, at the various backstreet fraud classes, where most youngsters learn the rope, the Netherlands is the destination choice for greenhorn crooks preparing to migrate to Europe.

Figures published in 2006 by Ultrascan, a Dutch private detective company, said there were over 800 suspected Nigerian fraudsters described as “hardcore scammers” working from the Netherlands.

The UK was second with 724 scammers, followed by Spain with over 500.

Aside hardcore scammers, “at least 1,400 Nigerians in Holland alone were involved with this type of scam,” Ultrascan added, to underscore the fact that the Netherlands was the hotbed for Nigerian con artists.

In 2006, Dutch authorities arrested 12 Nigerians, confisticating computers, fake travel documents and 25,000 euros in cash.

In a separate arrest, a quartet of Nigerian scammers in the Netherlands who had bilked mostly American citizens of more than $1.2 million (according to the United States Justice Department) were arrested and extradited to the U.S.

In March 2010, another Nigerian, Ugochukwu Enwerem, who collected over $9.5 million from victims, was convicted by a federal jury in North Carolina. He tricked them to wire money to him and his designees in the Netherlands.

Sophos, an anti-fraud coalition, said: “Over the last couple of years, we have seen more 419 solicitations with Dutch phone numbers than those of any other nation, including Nigeria, though the Dutch-based fraudsters are of course Nigerians operating primarily from Amsterdam.”

The term 419, a Nigerian penal code, also called advance fee fraud, is a Nigerian criminal patent and virus spread by virulent migrants across the world.

In terms of organisational structures, criminal enterprise and collateral damages, the Nigerian 419 groups are now comparable to Colombia drug barons and the Russian mafia.

Years back, a few Nigerian scammers brought down a Brazilian bank, Banco Noroeste, after one of its directors, Nelson Sakaguchi, wired a total of $243 million to the Nigerians. The scam, recorded as the third biggest in banking history, led to at least two murders.

 A night out with the gang

Throughout the evening this undercover reporter was with the Nigerian fraudsters in Amsterdam, conversations and telephone discussions were carried out in lingo. They discussed activities of rival criminal cells in Amsterdam, Hilversum, De Hague, Rotterdam and across the border in Brussels.

They debated latest information from their intelligence network and plotted revenge on turncoats found snitching.

As the night wore on, and alcohol began to inflate egos, conversations became boastful and inevitably centred on associates who recently made a killing. One of the “hit men” is a Nigerian called Olu who came to Holland a refugee.

Known by multiple aliases in the cybercrime world, he returned to Nigeria a few years ago and built an eye-catching hotel in the Papa Ajao area of Mushin, Lagos.

Olu owns a country home equipped with a swimming pool and a tennis court in his native Ekiti State.

Early this year, he acquired and re-modelled a massive event centre in Lagos, equipped with 40 units of air conditioners. He added a mini-Disney playground for children. He also owns a clinic and moves about town in a convoy of exotic cars.

It is well known that a good number of Nigerian fraudsters rose from humble refugee status to become instant millionaires in the Netherlands.

Olu is estimated to worth over N2 billion, yet he is not considered one of the richest.

Nigerian fraudsters invented or modified popular fraud ploys like the Advance Fee Fraud, Red Mercury Scam, credit card fraud, lottery scam, solid mineral scam, the rich widow scam and God-knows-what-else.

But some of them made fortunes by attacking financial institutions in the Netherlands.

One of the most talked-about cases in Nigerian underworld discourse involved the Dutch bank, ABN AMRO. A Nigerian involved in the serial heist that climaxed in 2005 disclosed that his own cell defrauded the bank of 5.2 million euros before the game was up.

A Dutch investigative journalist, Anneke Verbraeken, believed that ABN AMRO lost much more than what was made public. She said crimes of such nature are hardly talked about because often times victims choose to remain silent and banks would not cry out either, not to shatter depositors’ confidence.

Investigations conducted in the Netherlands and neighbouring Belgium revealed that the Nigerians took time to weave an intricate web. Recruitment of members of the fraud gang began early at the asylum reception centre in Ter Apel.

At least that was where one of the Nigerians made the acquaintance of a Surinamese who would be offered employment years later by ABN AMRO.

While the technical details remain obscure, the Nigerians basically used the Surinamese insider knowledge and complicity to open dozens of bank accounts using fictitious names and forged documents.

Usually, they met outside the bank. The Surinamese supplied the information on new banking schemes the gang could take advantage of. The Nigerians rarely visited the bank premises. Documents for setting up new accounts, including passports, were supplied to the Surinamese at their meeting place.

Ordinarily, when a client presents a document like a passport to a bank, the bank verifies it, makes copies and returns the original to the client.

Because all the documents the Nigerians supplied, including job guarantees with fat salary contracts, were forged, they supplied only photocopies to the Surinamese who took them to his office and passed them on as papers he had treated.

When his supervisors demanded that certain information be cross-checked with certain employers, to verify if a prospective account owner actually worked with an organisation or earned the salary stated in his contract, the Surinamese reported back that he had done so.

Once an account was opened, the fraudsters applied for loans which they did not intend to repay. Then they just sat back and watched the loans roll in from dozens of accounts.

To obtain fatter loans, the same process was employed to open business accounts with the crooks claiming to be business owners taking out loans to finance the next profitable venture.

No one can really say how long the Nigerian-Surinamese scheme had been running before the crooks were found out.

Reluctantly but quietly the bank went to court. But it was difficult deciding how best to handle a bunch of Nigerians with doubtful identities who, for all intents and purposes, were ghost customers.

The majority of “bank passes” used in opening the accounts were traced to refugees denied asylum in the Netherlands who swapped them with the Nigerian syndicate for a token.

The prosecution applied the screw on the Surinamese hoping to get to the Nigerians through him. Four Nigerians were initially taken in but the prosecution had a tough time in the face of weak evidence.

Lawyers to the Surinamese argued that, like the bank, he was a victim of the hypnotic powers of diabolical Nigerians. He has been fired by his employers, but the judgment against him is currently on appeal.

Refugees enjoy many rights in the asylum camp. Bank accounts are opened for them through which they receive monthly stipends for their welfare from the Dutch government. For the many who are eventually refused stay, the Nigerian frausters solicit and buy their bank documents to clone hundreds of identities.

Femishow disclosed that the Dutch do not trust Nigerians but trust Surinamese, their former colonial servants; therefore, Nigerians find a dozen ways to co-opt and compromise Surinamese, often by first winning the love and confidence of their women.

Playing Robin Hood

Asked what he did with his share of the AMRO BANK bounty, one of the Nigerians involved in the cyber heist boasted that he returned home to a hero’s welcome. He built a big house, bought stocks and invested in sand-dredging equipment.

He bankrolled the production of a Nollywood movie and even flew some of the cast to Amsterdam to shoot scenes. Through that, he made the acquaintance of his dream girl, a popular Nollywood actress.

Meanwhile, one of his unforgettable moments was the day he played Robin Hood. The incident happened at the Rotterdam train station.

A woman in obvious distress bumped into him. She mumbled her apologies with tearful eyes. The kind crook was so concerned he went after her, wanting to be assured she would be okay.

Touched by his show of concern, the woman spilled it all, including the family and financial problems weighing down on her.

The Nigerian reached inside his jacket and pulled out 3,500 euros, handed it to the stranger and left in the opposite direction. Now, it was her turn to run after him, demanding for his phone number.

Aside ABN AMRO, other banks known to have lost money to Nigerian syndicates include P&T Luxembourg, Piraeus Bank Greece, HSBC, Societe Generale, Bank of Cyprus and Laiki Bank (Cyprus).

The syndicates somehow managed to circumvent banking regulations to plunder savings, pensions, credit cards, loans and insurance.

Road trip to Belgium

Posing as a fledgling fraudster who needed help to pull off a big scam, Femishow had accompanied this reporter on a road trip to Antwep and Brussels to meet a Nigerian godfather who controlled one criminal cell each on both sides of the border with the Netherlands.

The Nigerian, by the name Olu (not his real name), networks with both West African and European underworld gangs. His tentacles reach Italy, Spain; and unlikely places such as Luxembourg.

Olu has expertise in everything, from shipping items to registering an offshore company, money transfer, to money laundering. He boasted that he had people in the right places to transfer money to anywhere on the face of the earth.

He started his money laundering business in the early 1990s, beginning with links with elements in the Nigerian army. This was when Major General, who is now dead, headed the Nigerian Drug Law Enforcement Agency (NDLEA).

Proceeds of crime, including drugs and advance fee fraud, were used to buy trucks, pharmaceuticals, computers, exotic cars and agricultural equipment. Shipped from Belgium to Nigeria, the boys from the army were always at the Lagos port to facilitate smooth and quick delivery.

It was discovered from interactions with several Nigerians that even in the 1990s, Dutch banks were inevitably the first targets for young criminals in need of small but easy money.

Olu recalled that at the time banks offered various incentives to attract customers. One was an instant credit line of 1,000 Dutch guilders on any new account. Every new account was entitled to the overdraft, which was repayable in small percentages from the regular income of the account holder.

Nigerians employed fraudulent means to open as many bank accounts as possible. They harvested 1,000 guilders on each and abandoned the accounts to open yet another set, using fake identities.

With the introduction of the Euro zone, the Nigerians moved on to yet another insidious scheme. When internet banking was not yet sophisticated, they devised a means to steal 3,000 euros at a time from Dutch banks.

First, they opened an account depositing 3,000 euros. Because the ATM could only allow a maximum withdrawal of 1,000 euros a day, they waited for weekends to strike.

They withdrew 1,000 euros late on a Friday, crossed the border to Belgium and withdrew another 1,000 euros on Saturday, then another 1,000 euros on Sunday.

Because these weekend withdrawals took till Monday to reflect, the Nigerians raced back to the Netherlands on Sunday. Very early on Monday morning, they were the first at the bank where they used not the ATM this time but their passbook to pull out their original 3,000 euros.

With fake documents and fake identities the cycle was repeated every weekend.

 Plundering Dutch Pension

Besides Dutch citizens falling prey to credit card fraud or advance fee scam, one group that has proved an easy target for Nigerian criminals in the Netherlands is Dutch pensioners.

The syndicates employed foot soldiers to watch the homes of retirees. Using master keys they raided mailboxes to steal bank statements. Next, they cloned the identity of the pensioner. Posing as the account holder, they applied to the bank for online banking, using the victim’s personal data.

Online banking solves all the problems since a young black African cannot physically impersonate an old white man or woman; not even with the best make-up.

The criminals worked as a team; the foot soldiers stole the documents and those who could read and write Dutch handled the cloning and correspondence. They changed the address of the pensioner as well as any other things necessary to cut the retiree off his account.

Once they ascertained the savings in an account they went on to wreck it, making purchases online.

After about 11,000 pensioners were robbed, the Dutch police two years ago took to delivering mail in sting operations in areas worst hit. Cameras were also set up in strategic locations.

It paid off with a good number of the mail thieves nabbed across the country. There was a lull, with the crooks beating a retreat to Belgium. But some of them are now back, devising day and night new ways to remain one step ahead of the law.

Yet another way Nigerians fleece banks in Europe is through cheque kitting. Using stolen identities, a Nigerian, for example, Dotun, opens cheque accounts at bank A and bank B.

He deposits 500 euros in Bank A and 0 euros in Bank B. He then writes a 100,000 euros cheque on his account in Bank A and deposits it in Bank B. Bank B, unaware that Dotun has insufficient funds in his account in Bank A, gives him immediate credit on his account.

During the three business days it takes Bank B to clear the cheque on his account in Bank A, Dotun writes a 100,000 euros cheque on his account in Bank B and deposits it in Bank A to cover his first 100,000 euros cheque.

Bank A immediately gives him credit on his account, and Bank B clears Dotun’s first 100,000 euros cheque.

He continues writing bad cheques between his accounts for a safe period before he moves on to another bank with another stolen identity.

The Chinese connection

Scams recently pulled off in the Netherlands strongly suggest the collaborations of Nigerian criminals with the Chinese mafia. One is in the area of cheque fraud.

Traditionally, Nigerians operate by hiding their real identity and location, using fake names and fake postal addresses, as well as communicating via anonymous free email accounts and mobile phones.

Victims have received unsolicited emails from companies, often claiming to be in China, looking for representatives to establish a business presence in the Netherlands or in other parts of Europe and for payments transfer.

Recipients of such emails are typically promised 10 per cent of those transfers from customers.

In reality, this is a cheque fraud that can work on a massive scale, causing damages of thousands to hundreds of thousands of euros. In some cases, names of legitimate companies are used for the scam. In other cases, the companies are non-existent.

The scammers are really not Chinese; they are not even Asians but Nigerians. They mail their “representative” fake cheques from phantom customers to deposit in the representative’s personal or business accounts. Often these are written on blank cheque forms stolen from legitimate businesses.

Provided the business whose cheque is stolen has sufficient funds in its account, the cheque will initially clear. It usually takes about a month for the cheque to bounce; this happens when the company whose cheque was stolen receives the deposited cheque it never wrote.

Before this the cheque clears the unsuspecting representative wires the amount to a bank account in another country; often Japan, Taiwan, China or the UK. By the time the fake cheque bounces the money is already out of the Netherlands or Europe, leaving the victim wondering what has hit him.

Nigerian fraudsters also target unlikely businesses such as art galleries.

Someone is interested in your artwork and wants it shipped overseas. Unknown to the gallery, the client has just paid with a fake credit card or fake certified U.S. bank cheque. But that is not even the problem.

The real problem is that for some reasons the rich client has paid the gallery in excess of the tag on the artwork. Being a decent person, the gallery owner does not refuse the customer’s request that the difference be wired back to him through Western Union. The cheque will turn out to be dude; by which time the gallery has lost a decent amount.

In 2007, a popular Nigerian movie actor, Nkem Owoh, was arrested in Amsterdam while performing at a concert. He was known for performing the song, I go chop your dollar. The song was featured in a controversial movie The Master in which Owoh plays a fraudster.

Over 200 Nigerians were reportedly arrested by the Dutch police who stormed the concert venue in a helicopter.

Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC), and the Nigerian Broadcasting Commission (NCC) had banned the song prior to the Amsterdam concert.

I go chop your dollar is a tribute to Nigerian advance fee fraudsters who have a robust scam industry and harvest millions of dollars yearly from victims in Europe, America, Australia and Asia.

Some of the victims include a former U.S. Congressman Ed Mezvinsky who, having bought into a dodgy business proposition, was made to travel to Nigeria several times to meet his ‘business partners’ and ultimately lost over $3 million.

The Washington politician did not only bag a seven-year jail sentence in his country, his son, Marc Mezvinsky, lost the chance to marry his heartthrob, Chelsea Clinton, daughter of former American President, Bill Clinton.

Not a few scam victims have committed suicide.

• In 2006, an American living in South Africa hanged himself after falling victim to 419.

• Kjetil Moe, a Norwegian businessman, was reported missing and eventually found dead in South Africa after an encounter with Nigerian scammers in Johannesburg.

The four Nigerians arrested in the Netherlands and extradited to face justice in the U.S. were

• Nnamdi Chizuba Anisiobi (of multiple aliases: Yellowman, Abdul Rahman, Michael Anderson, Edmund Walter, Helmut Schkinger, Nancy White, Jiggaman, and Namo);

• Anthony Friday Ehis (also known as John J. Smith, Toni N. Amokwu and Mr. T).

• Kesandu Egwuonwu (aka KeKe, Joey Martin Maxwell, David Mark).

• John Doe 1 (aka Eric Williams, Lee, Chucks and Nago).

To fleece their victims, they posed as throat-cancer patients living in the Southeast Asian nation of Brunei. Each said he was too ill to distribute his wealth of $55 million to charity and needed help.

They promised their victims a share of a large inheritance but requested payment of a variety of advance fees for legal representation, taxes and documentation.

After the victims had wire-transferred funds to pay the required fees, correspondence ceased. The victims lost more than $1.2 million.

Just as the Nigerian underworld abroad collaborates with Chinese, corrupt officials at home team up with unscrupulous Dutch businessmen to defraud the Nigerian government.

Shortly before the call for bid for the sale of Nigerian Telecommunications Limited (NITEL), a Dutch company, Pentascope, was hurriedly put together.

It was registered on a public holiday, January 1, 2002. From the Netherlands in 2003 suddenly came Pentascope, emerging the preferred bidder for NITEL.

By April 2004, when Pentascope was stripped of the contract within one year, it had itself stripped NITEL of about N100 billion.

When a team of NITEL directors travelled to the Netherlands to verify the claims put forward by Nigeria’s Bureau of Public Enterprise (BPE) and PricewaterhouseCoopers, the firm of auditors that was supposed to have done the due diligence on the Dutch firm, they were stunned by their discoveries.

Pentascope had only seven staff, a janitor, and operated from an abandoned old church building.

Olu pointed at Pentascope and Shell to support his argument that beautiful cities like Amsterdam were developed with wealth stolen from Africa. “We are here to take some of it back. For them to stop us, they must first stop their own people. Fair is fair. I call it tit-for-tat good neighbourliness,” he said.

When this reporter visited the Nigerian embassy at The Hague, the Ambassador, Nimota Akanbi, maintained that there are many decent Nigerians doing well in different professions in the Netherlands.

She, however, regretted the activities of a few bent on sullying the country’s image. She reiterated the embassy’s preparedness to assist Nigerian illegals with travel documents to return home.

The frustration and helplessness with Nigerian fraudsters is written all over the Dutch community. A popular T-shirt laments: “My money went to Nigeria and all I got is this lousy T-shirt.”

Investigations

Exclusive: 44 companies import 500 containers using cloned Form M  

-over N9 billion diverted in tariff fraud

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A photo of Apapa Port in Lagos, Nigeria used to illustrate the story

In what is probably the most brazen display of impunity by powerful syndicates at the Lagos seaport, a total of 44 companies are discovered to have imported about 500 containers into the country using same Form M. Of the 44 companies (see list below) 30 brought in various consignments using Form M with number MF20170010026/ BA No. 21420170005250 which was cloned and recycled 29 times over a period of two years between 2017 and 2018 in a massive and sophisticated serial tariff fraud.

Five of the 44 companies namely Max Holding & Sons Ltd, Auto Creation E-Hub Ltd, Joneble Holding & Sons Ltd, Bossman Holding Ltd and Vintage Nigeria Ltd used another cloned Form M with number MF20170019026/ BA No. 21420170005260 for their shipping transactions while the Form M used by three companies, Garba Murtala Tafida, Ogwuni Rolland Edwin and Pedrona Ltd are so tampered with vital information scrubbed out that this newspaper is unable to read them.

Two companies with business names The Seacorp Nig. Ltd and Flex Nig. Ltd utilised for their transactions one Form M MF2017013894/BA No. 21450034.

The last four companies each quoted Form M numbers in their documents thus: Sonai Shipping Ltd MF20180052740; Cosmos &Sons Ltd MF20170010111; Duncan Maritime Ventures Nig. Ltd MF20170094928 and Emoko Real Properties Nig. Ltd MF20130010026. Curiously, all the four Form Ms have no batch numbers thus making it impossible to determine the name of the bank that issued the Form Ms in the first place and also making it difficult to track the source of funds used by the business owners in the transactions.

Two months ago, in September, SATELLITE TIMES blew the lid on a powerful “Port Cabal” that specialised in using clone Form M documents to perpetrate large scale fraud at the Lagos seaports. The report exposed how the Cabal imported millions of dollars’ worth of luxury vehicles, many of them armoured, into the country using just one Form M. The offensive Form M with number: MF 20170010026 was used in importing a total of 554 luxury vehicles that included one Rolls Royce, 84 Toyota Landcruiser, 41 Toyota Fortuner, 123 Toyota Prado, 46 Lexus 570/460, 140 Toyota Hilux, 32 Toyota Camry, 21 Toyota Coaster, 43 Toyota Hiace, 21 Mitsbushi Pajero and 2 Range Rover, most of them armoured and targeted at high-end market.

Cargo manifest

Cargo manifest

While the September report about 17 companies colluding to use one Form M had left ordinary Nigerians and anti-corruption crusaders in utter disbelief, the story pales into insignificance with the latest discovery of 44 companies pulling off an even bigger fraud without the Colonel Hameed Ali-led leadership of the Nigerian Customs Service being any wiser. Intriguingly, it was the same Form M MF 20170010026 used by the 17 companies to bring in 554 exotic cars that was also utilized by a new group of 27 companies to import more cargoes, bringing the number to 44 consignees.

Form M explained

Form M is the most important item in the documentation process put in place by the Federal Government of Nigeria through the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS), to monitor goods imported into the country as well as to enable collection of import duties where applicable.

Any person intending to import physical goods into Nigeria must initiate the importation by processing a Form M through an authorised dealer (licensed bank). Alongside the Form M, a host of other documentation will be presented to the bank. Where approved, the Form M serves as authority to the bank to open letters of credit for foreign exchange transactions on behalf of the importer.

This form has a unique number which must be quoted/written on all the shipping documents; although there are exemptions such as Diplomatic cargos (of reasonable quantity), personal effects, goods shipped in by government agencies or goods shipped into Free Trade Zones in Nigeria such as the Calabar Free Trade Zone (CFTZ).

Form M is the first official document needed to initiate shipment to NigeriaThe life span of a Form M is 6 months (for general merchandise) and one year (for plant and machinery), after which an extension of 6 months (for general merchandise) and one year (for plant and machinery).

 

Cargo manifest

Cargo manifest

A Form M is usually issued for a particular supply contract (between the oversea manufacturer and the Nigerian importer) and allows for part shipments within the validity period. For large project such as stadium construction, a Bulk Form M can be issued, which allows continuous part shipments throughout the validity of the Form M.

Form M is a form of licence. Approval of a Form M depends, among other things, on the forex okayed for the importer by the CBN for a particular import. To obtain Form M, the importer must present his Tax Identification Number (TIN). In fact, the TIN is now key-username to log into the electronic platform to process this all-important document. Form M is not transferable from one importer to another. And a Form M approved for the import of a particular item cannot be used even by the same importer to bring in a different item.

An industry stakeholder (names withheld) gave “a rough estimate” of the values of the 500 containers imported by the 44 companies as “over N100 billion”. It will take the expertise of forensic financial investigators to arrive at the true value of the imports. However, SATELLITE TIMES was told that “because all the imports were luxury goods, they attract 20% duty of the true value, 50% levy and 5% VAT. Indeed, the cloning and manipulations of Form M and allied shipping documents are aimed at escaping payment of accurate levies and tariffs. The industry stakeholder added that the Federal government must have “lost nothing less than N9 billion to this batch alone of cloned Form M imports”.

Official reactions were sought by this newspaper at the headquarters of the Nigerian Customs Service in Abuja. Clearly-worded text messages sent to the mobile number of the Service PRO, Mr. Joe Attah, was not responded to at press time.

List of the 44 companies

1. Five Stax Group Ltd

2. Emy Cargo & Shipping Services

3. Volta MP Equipment Nig. Ltd

4. Vintage Nig. Ltd.

5. Suplus Nig. Ltd

6. Brasslet Nig. Ltd.

7. Sonnex Nig. Ltd.

8. Zako Bag Allied Nig. Ltd.

9. Kaslak Nig. Ltd.

10.Zeb Holding Ltd.

11.Cosmos & Sons Nig. Ltd.

12. Joneble Holding & Sons Nig. Ltd.

13. Amaju & Sons Nig. Ltd.

14. Zinktex Nig. Ltd.

15. Dabik Holding & Sons Nig. Ltd.

!6. Landhoast Ltd.

17. Ogwuni Rolland Edwin

18. Ruffo Nig. Ltd.

19. Marko Nig. Ltd.

20. Sengenmenge Nig. Ltd.

21. Offor and Sons Nig. Ltd.

22. Lext Vin Nig. Ltd.

23. Modul Oil and Gas Ltd

24. Ducan Maritime Ventures Nig. Ltd.

25. Carmen Ltd.

26. Garba Murtala Tafida

27. Auto Creation E-Hub Ltd.

28.  Emoko Real Properties Nig. Ltd.

29.  Osland Ltd.

30.  Brimax Still Nig. Ltd.

31. Akuabia Prince Afamefuna

32. Max Holding & Sons Ltd,

33.Auto Creation E-Hub Ltd,

34.Joneble Holding & Sons Ltd,

35.Bossman Holding Ltd

36. Vintage Nigeria Ltd

37. Garba Murtala Tafida,

38. Ogwuni Rolland Edwin and

39. Pedrona Ltd

40. The Seacorp Nig. Ltd

41. Flex Nig. Ltd

42. Sonai Shipping Ltd

43. Cosmos &Sons Ltd

44. Duncan Maritime Ventures Nig. Ltd

 

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Investigations

Exclusive: After $2 Billion tax evasion, another MTN’s multi-billion offshore transfer discovered

-shifts billions to companies in Dubai and Mauritius

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MTN building showing its logo

Weeks after the Nigerian authorities discovered that telecom giant MTN had skipped paying $2 billion in tax relating to import duties, VAT and withholding taxes on foreign imports/payments, new tranches of transfer are yet discovered to have been made by MTN to companies in Dubai and Mauritius using sophisticated tax avoidance schemes.

MTN has consistently prided itself as the foremost telephone company that gets Nigerians talking the most. Now the South African company is about to set tongues wagging across networks with revelations that it has routinely been shipping billions of naira overseas to avoid paying its fair share of tax in Nigeria.

An 11-month- investigation by this reporter in collaboration with UK-based Finance Uncovered reveals that MTN has been running circles around Nigerian revenue authorities using a complex but noxious tax avoidance scheme called Transfer Pricing. For any economy, it is a slow death.

The red flag was raised the moment our investigations showed that MTN Nigeria has been making payments to two overseas companies – MTN Dubai and MTN International in Mauritius – both located in tax havens.

It was discovered that in 2013 for example, MTN set aside N11.398 billion from MTN Nigeria to pay to MTN Dubai. A similar transfer of N11.789 billion was made by MTN Ghana to the same MTN Dubai, making it a total of N23.187 billion that was shipped to the Dubai offshore account.

In a rare disclosure in 2013, MTN admitted it made unauthorized payments of N37.6 billion to MTN Dubai between 2010 and 2013. The transfers were then “on-paid” to Mauritius, a shell company with zero number of staff and which physical presence in the capital Port Louis is nothing more than a post office letter box.

The disclosure amounted to a confession given that MTN made the dodgy transfers without seeking approval from the National Office for Technology Acquisition and Promotion (NOTAP), the body mandated to oversight such transfers.

N90.2 billion transferred out of Nigeria

On the basis of an earlier management fees agreement that was technically quashed by NOTAP and on the basis of MTN’s reported revenues, it is estimated that N90.2 billion could have been transferred out of Nigeria in management fees alone since the company was founded in 2002.

READ ALSO: INVESTIGATION: Secret memos and documents from MTN’s $14 Billion offshore transfers

A menace called Transfer Pricing

For corporate organizations determined to escape the taxman but still cleverly staying on the right side of the law, Transfer Pricing is the new cellar door constructed by the most ingenious of accountants. It is a new global disease to which Third World economies are the most vulnerable.

Multinationals employ Transfer Pricing to move their profits offshore, leaving behind a shrinking tax base in their host countries and inexorable cuts to public services.

In Africa, tax avoidance has been named as one of the factors holding the continent back by starving governments of the revenues it needs for development.

A report jointly commissioned by the United Nations and the African Union and drafted by a high-level panel led by former South African president Thabo Mbeki considered tax avoidance by multinationals to be an “illicit financial flow” and a significant drain on government resources across the continent.

In total, illicit financial flows -which included corruption and the proceeds of crime – were determined to be costing the continent $50billion a year.

Just last year, South Africa’s deputy president Cyril Ramaphosa had harsh words for tax dodgers. He said: “Tax evasion is not only a crime against the state; it’s also a crime against the people of our country, ordinary people.”

Curiously, the same Cyril Rhamaposa was non-executive chairman of the board of MTN between 2001 and 2013 before he became South Africa’s No.2 man. In effect, the same tax practices which the deputy president strongly condemned in his country as financial crime is vigorously being promoted in Nigeria.

READ ALSO: INVESTIGATION: AGF Malami may file “criminal charges” against Standard Chartered, Stanbic IBTC and Citi Bank over MTN’s $14 billion transfers

MTN is the largest cell phone company in Africa with 227.5 million subscribers. The company, which operates in more than 20 countries across Africa and the Middle East, has Nigeria as its biggest operation.

Until now, tax justice investigations had focused on computer giants, corporations in the extractive industry, food and beverages; in fact, everywhere but the mobile phone sector despite the cell phone industry in Africa being one of the largest and most important industries for the continent.

Mobile phone has been a cheap and quick way of rolling out the vital communications infrastructure that has underpinned Africa’s growth story over the last decade. As a result, the industry has seen explosive growth. With 685million mobile phone users in Africa, the success story means that cell phone companies are now the largest contributor to government revenues in many African countries. That is if they pay their fair share of taxes.

Artificial operating costs

To pay little or no tax, companies determined to cheat begin by seeking ways to create artificial operating costs in the country where they operate. For example, a company is in Nigeria but has a parent or subsidiary company in another country. It makes huge profit but decides to declare a much lower profit-before-tax. To achieve this, it pays the parent and/ or subsidiary company for services not rendered and ships cash to them. Where services are rendered, the costs are inflated. Such services may include royalty for the use of brand name, procurement services, technical services and management services.

Typically, the recipient company is located in an offshore territory under a different financial jurisdiction. MTN has a substantial network of subsidiaries in offshore tax havens, including the British Virgin Islands, Dubai and Mauritius.

Because of the growing concerns that multinationals are using intra-company trading to shift profits around the world by overcharging for services delivered or in more extreme cases by creating artificial transactions where no services were rendered at all, respective countries have a maximum percentage of profits it can allow companies to pay out as management fees.

For example, in Senegal, accounts from the company Sonatel show that the company has a ‘cooperation agreement’ with parent company France Telecom that is capped at 1.43% of revenue.

Until 2010 MTN Nigeria had an agreement with MTN Dubai to pay 1.75% of revenues to the company for management, and royalties for the use of the MTN trademark. Nigeria requires that management fees paid by multinationals are approved by the National Office for Technology Acquisition and Promotion (NOTAP). The fee payments had been reversed following a failure to come to a new agreement on management fees with Nigerian regulators.

READ ALSO: CBN yields to Satellite Times’ report; orders MTN to refund $8 billion

MTN’s previous agreement with NOTAP expired in 2010.

Notwithstanding, MTN has continued to make payments overseas. When these journalists sent questions to MTN over these unauthorized payments, the company told us that this was because they expected NOTAP to approve a new deal and backdate it to the date of the expiry of the previous deal.

MTN’s financial activities are now being questioned by more than one tax authorizes in Africa.

In Ghana the MTN subsidiary, Scancom, has been paying vast management fees to companies located offshore. Our investigations reveal that Scancom paid 758m GHS in management and technical fees to MTN Dubai between 2008 and 2013. This was 9.64% of the company’s revenue. Normally the maximum fee level allowed in Ghana is 6%.

We can reveal that the high levels of fees attracted the attention of Ghana’s intelligence services, which launched an investigation into “economic fraud” between 2012 and 2013.

MTN’s management fees need approval from the Ghana Investment Promotion Centre (GIPC). The Ghanaian “National Security Taskforce” has called for a “review of all technology transfer and management service agreements currently held by GIPC to remove sections which are inapplicable and wrongly provided for” and upgrading and training of state systems and staff.

In response to this, MTN in Ghana told us: “The technical and management services agreements between Scancom and Investcom were duly approved by the GIPC.”

The current head of the GIPC is Mrs. Mawuena Trebarh, who between 2007 and 2012 was responsible for government relations at MTN Ghana. This reporting team asked Mrs Trebarh to comment on whether her previous role could be perceived a conflict of interest. She did not respond to our requests.

In response to our enquiries MTN confirmed that the company paid 12 billion West African Francs in 2012 and 14 billion West African Francs in 2013 in management fees to MTN International. The figure for 2013 is equivalent to 5% of the revenue made by MTN in Cote d’Ivoire.

Dubai paradox

Dubai is one of the places MTN ships huge profits to. Meanwhile, MTN does not operate any mobile phones in Dubai, yet it has significant operations in the small city state.

MTN told us that it employs around 115 people in Dubai who provides services to the MTN group such as group procurement, group finance, legal services, human resources and other corporate functions.

One tool that campaigners have said will be helpful is to look at company reporting on a country by country basis. If a company is making huge revenues in a country where it has few employees but there is a low tax rate, which would suggest that there may be some profit shifting taking place.

In Uganda, a dispute between the Uganda Revenue Authority and MTN has revealed that the company is paying 3% of its turnover in management fees to MTN International.

The fees have been challenged by the Uganda Revenue Authority (URA) who issued MTN with a “notice of assessment” in 2011. This was for a number of tax issues between 2003 and 2009, but a large portion was to do with a dispute over management fees, most of which had been paid to Mauritius.

READ ALSO: EXCLUSIVE: South African President, UK and UAE lobbyists fought hard to stop MTN’s $8 billion sanction

Correspondence between the URA and MTN seen by us show that the URA questioned the legitimacy of these fees, and pointed out that MTNI, the company providing “management services” to MTN Uganda had not spent any money in the years they had looked into. The URA said this could only mean two things: that management services provided to MTN Uganda had either already been paid for by MTN Uganda (and so MTN was in effect charging twice for the same thing) or they were never provided at all.

The Ugandan authority told the company: “We have repeatedly asked for evidence of specific work performed by MTN Group for MTN Uganda for each of the tax years 2003 to 2009. We have only been provided with very little information relating to 2009 and the latter years. This information is very far from justifying a payment of 3 per cent of MTN Uganda’s turnover as management fees.”

NOTAP keeps mum

Asked to confirm the amount of fees paid out to MTN Dubai and Mauritius based on the company’s reported revenue between 2002 and today, MTN said: “There is no disclosure obligation for this information in South Africa or Nigeria.”

Asked to explain the possible justification for MTN Nigeria to pay fees for management and technical services to a company with no employees, MTN said: “It is the contracting party’s prerogative as to how it elects to discharge its contractual obligations.”

Meaning is that MTN Mauritius can perform its task without a single staff member.

This reporter made sustained efforts to get NOTAP and the Federal Inland Revenue Service (FIRS) to comment on the MTN practices in Nigeria.

The Director in charge of Technology Transfer and Agreement, Ephraim Okejiri, initially pleaded that he was in a meeting, and that the reporter should wait. But after over four hours of waiting, he sent a secretary to say he would not be able to give any information on MTN.

Similarly, at Nigeria’s tax agency, the Federal Inland Revenue Service, the Director of Public Communications, Emmanuel Obeta, who had earlier promised on three occasion to make information available on the matter suddenly had a change of mind. He claimed relevant officials who should provide him with the information sought were all not available.

Emmanuel Mayah first published this investigation in October 2015

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Investigations

Shipping fraud: 17 companies import Rolls Royce, 553 bullet-proof vehicles into Nigeria using only one Form M

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A Rolls Royce used to illustrate the story
A Rolls Royce used to illustrate the story

Large scale fraud in the Nigeria Customs Service has taken a turn for the worse as a total of 17 companies are discovered to have imported millions of dollars’ worth of luxury vehicles, many of them armoured, into the country using just one Form M.

SATELLITE TIMES has been following the paper trail of high flier importers since last year when the Senate’s Joint Committee on Customs, Excise and Tariff raised the alarm on the activities of people it described as “Port Cabal” which it said had “swindled Nigeria of over 30 trillion naira in recent years”.

Documents gathered by SATELLITE TIMES show that between 2017 and May 2018, a total of 554 luxury vehicles were imported by the 17 companies using the same Form M No: MF 20170010026. The luxury cars included one Rolls Royce, 84 Toyota Landcruiser, 41 Toyota Fortuner, 123 Toyota Prado, 46 Lexus 570/460, 140 Toyota Hilux, 32 Toyota Camry, 21 Toyota Coaster, 43 Toyota Hiace, 21 Mitsbushi Pajero and 2 Range Rover. The vehicles, targeted at high-end market, are 2017 and 2018 models; most of them armoured.

 

In looking into the activities of the Customs, financial leakages and malpractices in the nation’s ports and revenue system, the Senate Joint Committee had in 2017 said: “a group of unpatriotic persons brazenly constitute themselves into a cabal to inflict infractions at the nation’s sea ports.”

Cargo manifest

Cargo manifest

The Committee had added that the infractions had become daily occurrence just as it accused commercial banks, shipping companies, terminal owners and operators of colluding with officials of Nigeria Customs Service and Nigerian Ports Authority (NPA) to defraud the country in trillions of naira and inversely constitute a clear and present security threat to our nation.”

Investigations revealed that infractions at the seaports and airport cargo terminals come in various forms including Form M racketeering, the abuse and violation of foreign exchange issued by the Central Bank of Nigeria (CBN), incorrect classification and under valuation of consignments coming into the country.

What is Form M?

Form M is the most important item in the documentation process put in place by the Federal Government of Nigeria through the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS), to monitor goods imported into the country as well as to enable collection of import duties where applicable.

Any person intending to import physical goods into Nigeria must initiate the importation by processing a Form M through an authorised dealer (licensed bank). Alongside the Form M, a host of other documentation will be presented to the bank. Where approved, the Form M serves as authority to the bank to open letters of credit for foreign exchange transactions on behalf of the importer.

This form has a unique number which must be quoted/written on all the shipping documents; although there are exemptions such as Diplomatic cargos (of reasonable quantity), personal effects, goods shipped in by government agencies or goods shipped into Free Trade Zones in Nigeria such as the Calabar Free Trade Zone (CFTZ).

Form M is the first official document needed to initiate shipment to Nigeria. The life span of a Form M is 6 months (for general merchandise) and one year (for plant and machinery), after which an extension of 6 months (for general merchandise) and one year (for plant and machinery).

A Form M is usually issued for a particular supply contract (between the oversea manufacturer and the Nigerian importer) and allows for part shipments within the validity period. For large project such as stadium construction, a Bulk Form M can be issued, which allows continuous part shipments throughout the validity of the Form M.

Form M is a form of licence. Approval of a Form M depends, among other things, on the forex okayed for the importer by the CBN for a particular import. To obtain Form M, the importer must present his Tax Identification Number (TIN). In fact, the TIN is nowkey-username to log into the electronic platform to process this all-important document. Form M is not transferable from one importer to another. And a Form M approved for the import of a particular item cannot be used even by the same importer to bring in a different item.

The 17 companies

The 17 companies that managed to beat the system, cloning and utilizing Form M No: MF 20170010026  to bring in their different consignments, instead of obtaining 17 different Form M with 17 different tax identification numbers are:

1.Sengenmenge Nig. Ltd

2. Marko Nig. Ltd

3. Brasslet Nig. Ltd

4. Offor & Son Nig. Ltd

5. Lext Vin Nig. Ltd

6. Modul Oil & Gas Limited.

7. Supulus Nig. Limited

8. Zeb Holdings Limited

9. Amaju & Son Limited

10. Vintage Nig. Limited

11. Joneble Holding & Sons Limited

12. Kaslak Nig. Limited

13. Handhoast Limited

14. Ruffo Nig. Limited

15. Auto Creation E-Hub Limited

16. Sonnex Nig. Limited

17. Emy Cargo and Shipping Services.

Speaking on the issue of the Form M, Mr. Ojerinde Solomon, an importer at PTML container terminal said he had serious doubt if a Form M is transferable to another importer or consignments “because each consigned goods has its own Form M.”

Cargo manifest

Cargo manifest

Anti-corruption campaigner, Olalekan Akande, expressed his shock to SATELLITE TIMES that the systems of the Nigeria Customs Service did not detect the cloned Form M.

“There are many things involved here. Is it that the 16 companies do not have tax identification numbers to process their own Form M or is it that they were unable to get forex allocations locally to import and then resorted to using their funds in overseas to bring in goods but do not know how to explain their sources of the forex to CBN to get approval for Form M? We might be dealing with a case of money laundering here,” Akande intoned.

Under the Forex Restriction Guidelines, any importer that intends to finance imports using funds from overseas is required to submit a written confirmation from the authorised dealer on the source of funds, and evidence of the source of funds, before a Form M can be issued. This is to check money laundering and terrorism financing.

(to be continued)

 

 

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