Public panic grows as GTCO debunks allegations of irregularities, fraudulent accounts opening

By Oludare Mayowa

One of Nigeria’s top lenders, Guaranty Trust Bank, operating under a holding company of GTCO, is again in the eyes of the storm as a group.

A group, Global Intergrity Crusade Network (GCIN) has accused the bank of operating a fraudulent depositors account and manipulations of its financials.

But the bank has distanced itself from the allegations, saying the series of misinformation and reports were sponsored by the adversaries of the bank.

The group, Global Intergrity Crusade Network (GICN), addressed a press conference; footage of the conference has been circulated across social media, creating panic among depositors at the bank.

One of the key allegations against the bank by the leader of the group was ghost account opening, which was aimed at increasing the lender’s customer base, “thereby giving it a high ranking in terms of size, capacity, and profitability.”

This is a situation where a customer did not approach the bank or show any interest in maintaining an account with the bank, yet the bank goes ahead to source for the customer’s information, such as telephone number, date of birth, bank verification number, and other vital details, to open an account for the customer without his or her consent.

The aim of this practice is to increase the customer base of the bank, thereby giving it high ranking in terms of size, capacity, and profitability.

In 2016, staff of an American bank, Wells Fargo, were found to have been involved in the creation of millions of unauthorised accounts in order to meet aggressive sales targets set by the bank.

However, there is no record of such discovery in Nigeria until the allegations by GICN against GTBank on unauthorized account openings for customers who are not aware of this practice.

Efforts to reach the spokesperson of the regulatory bank, the Central Bank of Nigeria (CBN), to comment on these allegations were futile, as phone and WhatsApp messages sent were not responded to.

However, many insiders said such practices may not be possible in a stringent regulatory environment.

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The group, GICN, noted that unsolicited account opening is tantamount to a breach of data privacy and identity theft and can expose innocent account holders to lots of financial crimes.

The other issues raised by GICN were matters in the public domain, such as that fine imposed on the lender by the United Kingdom Financial Regulator, the Financial Conduct Authority, which fined the UK subsidiary of Nigeria’s Guarantee Trust Bank 7.6 million pounds ($9.3 million) for what it says are further failures in its anti-money laundering systems and controls.

The incident happened in January 2023 and was widely reported in the local and foreign media.

Britain’s financial watchdog had fined the UK subsidiary of Nigeria’s Guaranty Trust Bank 7.6 million pounds ($9.3 million) for what it says are further failures in its anti-money-laundering systems and controls.

“These weaknesses were repeatedly highlighted to GT Bank by internal and external sources, including the FCA, but despite this, GT Bank failed to take appropriate action to fix them,” the Financial Conduct Authority said in a statement in Januray 2023.

The watchdog said GT Bank has not disputed the findings and agreed to settle, making it eligible for a 30 percent discount on the fine, down from the original 10.96 million pounds ($13.3 million).

“GT Bank’s conduct is particularly egregious, as this is not the first time that the bank has faced enforcement action in relation to its AML controls,” the statement said.

The managing director of GT Bank UK, Gbenga Alade said the bank takes its anti-money laundering obligations extremely seriously and noted the FCA’s findings with sincere regret, adding that the FCA found no instances of suspected money laundering.

The FCA acknowledged in its findings that GTBank UK had spent considerable time and resources in order to bring its AML standards up to the required level.

The Managing Director of GTBank UK, Alade further stated that: “As a responsible financial services institution that is committed to best practices, GTBank UK takes its AML obligations extremely seriously.

“We note with sincere regret the FCA’s findings regarding AML control gaps in our operations in the past, and we are very sorry for this.”

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He further stated, “We would like to assure all our stakeholders and the general public that necessary steps have been taken to address and resolve the identified gaps.

“Whilst there was no direct customer impairment arising from the period under review [and the FCA’s findings do not include any instances of suspected money laundering], we have since reinforced our AML control framework and implemented changes in our AML processes in line with best practice to ensure that the highest standards are maintained in our operations.”

Also, on March 5, 2024, the Bank of Ghana suspended the foreign exchange trading licenses of Guaranty Trust Bank Ghana Limited for one month.

The suspension comes in response to various breaches of foreign exchange market regulations, which include incidents of fraudulent documentation within their foreign exchange operations.

“Bank of Ghana has suspended the Foreign Exchange Trading Licences of Guarantee Trust Bank Ghana Limited (GTB) and FBNBank Ghana Limited (FBN), effective 18th March 2024, for a period of one month, in accordance with Section 11(2) of the Foreign Exchange Act 2006 (Act 723).

“This is as a result of various breaches of the foreign exchange market regulations, including fraudulent documentation in their foreign exchange operations, which have come to the attention of the Bank of Ghana.

“The license will be restored at the end of the one-month suspension period once the Bank of Ghana is satisfied that they have put in place effective controls to ensure strict adherence to regulations to the foreign exchange market,” the statement read in part.

However, in response to Global Financial Digest enquiries on the weighty allegation against the bank, the spokesperson for GTCO, Oyinade Adegite, sent a statement from the bank that disproved the various reports and allegations against the bank, published in social media and other platforms.

The statement, which was not signed but carried the logo of the lender, was titled Rebuttal of false news reports against GTCO’s business activities, results, and executive management.

The statement, which was also posted on the X handle of the lender, noted that the series of reports against the bank was meant to create a false narrative about the GTCO brand and its management.

It said the false news articles, which are being sponsored using the media, centre around baseless allegations against the group’s business activities and its executive management.

“Based on the incessant release of false news reports on GTCO’s business activities, results, and management team, it has become necessary to set the records straight and dispel attempts by certain groups to create a false narrative about the GTCO brand and its management.

“The false news articles, which are being sponsored using the media, centre around baseless allegations against the group’s business activities and its executive management.

“Being a responsible corporate citizen and a first-class institution, GTCO PIc has taken swift and decisive legal actions against the various sources of these false reports and will continue to use the full extent of the rule of law available to safeguard its reputation,’ the lender wrote in the statement.

It therefore urged its customers, shareholders, and stakeholders to disregard all the allegations being peddled through various media platforms and handles.

GTCO stated that all of its executive management team continue to operate in their full capacities as appointed and are not under any financial or regulatory scrutiny as alleged.

However, the GTCO statement does not address directly some of the allegations by GICN and leaves a yawning gap in its defence against transparency, accountability, and alleged corruption in the bank.

A search in the High Court cause list could not provide any evidence that the bank has sued the Group, GICN behind the allegations flying around social media and traditional media.

Global Financial Digest also reached out to GICN through email and social media handle for further clarification, which is yet to be responded to.

But in a veiled response to panic elicited by the weighty allegation against one of the nation’s top lenders, the Central Bank of Nigeria (CBN) last week reiterated its unwavering commitment to ensuring the stability and reliability of the Nigerian financial system.

In a statement released by the regulatory bank’s acting director of corporate communications, Hakama Sidi-Ali, on Tuesday, it was noted that CBN recognises the crucial role of public confidence in banking operations and affirms that all deposits in Nigerian banks are secure.

To maintain the integrity of the financial system, the CBN actively ensures that banks adhere to established regulations and best practices while stress testing is conducted to identify potential vulnerabilities and ensure the resilience of financial institutions.

Sidi-Ali said in the statement that the CBN’s risk-based supervision approach focuses regulatory efforts on institutions with the highest financial system risks, ensuring efficient oversight and promoting the overall health of the banking sector.

However, despite the disclaimer by the lender and the statement by the regulatory bank, many customers of the banks are worried over the allegation, particularly without clarification from the regulatory authorities.

Comments from some bank customers suggested that the CBN was vague, citing a similar statement issued by the regulatory bank earlier in the year, and shortly thereafter, it wielded the big stick on Heritage Bank.