Beige Bank collapse: Witness accuses former CEO of fraud

THE first prosecution witness in the trial of the former Chief Executive Officer (CEO) of the defunct Beige Bank has told the Accra High Court that the accused, Mike Nyinaku, supervised the issuance of misleading investment certificates to unsuspecting customers.

According to witness, Julius Ayivor, a chartered accountant with auditing and advisory firm, KPMG, the customers were made to believe that they were investing with the bank.

He said unknown to the customers, Nyinaku instructed that moneys deposited by customers with the Beige Bank be siphoned out to a sister company, the Beige Capital Asset Management (BCAM), a firm owned by Nyinaku.

Cross-examination

Counsel for the accused, Thaddeus Sory, who was subjecting the evidence given by Mr Ayivor to scrutiny, argued that funds that had been placed with the bank by its customers formed part of the bank’s property.

According to him, the funds were not the property of shareholders or customers who deposited those funds with the bank.

However, the witness explained that even though the funds placed by customers with the defunct Beige Bank became the property of the bank, those funds equally stood to the credit of those customers to whom the bank had an obligation to pay back the funds whenever they requested.

Mr Ayivor further stated that siphoning those funds from the accounts of customers into the account of the BCAM,also held with the Beige

Bank on the instructions of Nyinaku, without the instructions or knowledge of the affected customers, meant that the affected customers only had access to the balance that remained on their accounts with the bank after the funds had been siphoned.

The witness added that once the funds got into the account of the BCAM, they stood to the credit of the BCAM and not the customers any longer.

This, he said, explained why the BCAM, together with Nyinaku, had access to those funds totalling GH¢448 million, most of which were appropriated, leaving a balance of GH¢539,515 on the BCAM’s account as of August 1, 2018, when the bank’s licence was revoked by the Bank of Ghana.

Investment certificates

While using about 12 of the investment certificates tendered through the state issued to one Emmanuel Richard Ofori in connection with a GH¢4 million investment, Mr Ayivor had previously alleged that those “BEIGE” certificates were intentionally issued to the affected customers to “mislead” them into thinking that the funds remained with the Beige Bank in fixed deposits although the funds had actually been moved from the customers’ accounts with the Beige Bank to the BCAM’s account.

Mr Sory claimed that the Bidvest Microfinance Limited, one of the over 10,000 customers whose funds had allegedly been siphoned to the BCAM without the knowledge and instructions of the management of the company, had fully been repaid their deposit of GH¢3 million, which Mr Ayivor alleged had been siphoned out of their account before the Beige Bank’s licence was withdrawn.

In his response, Mr Ayivor said, “My lady, it is true that Bidvest received a credit of GH¢3.1 million on April 25, 2018, which is shown on Exhibit H15, but that credit was paid out of the fictitious account opened in the name of the First Africa Savings and Loans, which is exhibit K”.

Mr Ayivor further explained that the GH¢3.1 million paid to Bidvest was made out of the over GH¢320 million customer funds that had been siphoned on the instructions of Mike Nyinaku into a fictitious current account opened in the name of the First Africa Savings and Loans FASL without the knowledge of the board and management of the FASL.

Mr Ayivor described the “scheme” under which Bidvest was paid as “robbing Peter to pay Paul”.

Mr Sory argued that because the Receiver made demands on Nyinaku for the repayment of the amounts allegedly siphoned out for the benefit of Nyinaku and his companies, the amounts demanded qualified as debts and nothing else.

Referring to a letter dated January 11, 2019, Mr Sory asked, “in the letter, the Receiver informs Mike Nyinaku that he was formally demanding repayment of all those funds that you mentioned in paragraph 25 of your witness statement”.

Mr Ayivor responded, “that is so and that is because the Receiver’s mandate as prescribed under Act 930 includes recovering debts owed to the bank and that could be made up of those legitimately advanced by the bank and those illegitimately siphoned out of the bank, so this paragraph is just in fulfillment of that mandate”. 

Background

Nyinaku has been charged at the court, presided over by Justice Afia Serwah Asare-Botwe, for allegedly stealing about GH$1.3 billion of depositors' funds from the bank.

He has pleaded not guilty to all 43 charges of stealing, fraudulent breach of trust and money laundering, and is currently on bail.