Michael Nyinaku, Founder and Chief Executive Officer (CEO) of the defunct Beige Bank Group, has explained the rationale behind the transfer of depositors’ funds to the account of a subsidiary company, Beige Capital and Asset Management (BCAM).
According to him, there was an agreement between BCAM and Beige Bank to the effect that depositors’ funds with the bank would be transferred to the former, if the investment interest exceeded the banking borrowing rate, adding that this was explained in his response to the Receiver’s query.
He made the statement through his Counsel, Thaddeus Sory, while crossing examining the prosecution first witness (PW1), Julius Ayivor, who also is a lead team member of the Receiver on Monday this week.
The case is being held by the Economic and Financial Division of the Accra High Court, presided over by Justice Afia Serwaa Asare-Botwe.
Mr. Ayivor, in response, said the statement was not entirely correct, because the answer provided by Mr. Nyimaku indicates that, yes, they (Beige Bank) had an agreement with BCAM, where they would transfer to BCAM deposits that came with a cost that was above the bank’s borrowing rate.
He continued: “He (Mr. Nyinaku) did not say they had an agreement with BCAM, where they will transfer customers’ deposits to BCAM.”
This answer was followed by a question from the Counsel: “From your understanding of what the accused (Mr. Nyimaku) said, could these deposits come from any other place apart from the bank?”
Nevertheless, the witness indicated that the funds were customers’ deposits held with the bank, and those funds were not the bank’s deposits.
The Counsel maintained that the accused had explained to the Receiver how customers’ deposits with the bank were transferred to BCAM, but PW1 answered that it was true, and he had even explained the circumstances leading to the transfers of deposits placed by customers of Beige Bank to BCAM, with the knowledge and instructions of the customers.
Question: Is that Exhibit AB4?
Answer:Â He did not state that, but that is the fact.
Question: Please, look at Exhibit AB4 and tell the court which part of the statement you are referring to.
Answer: What the bank would tell the customer is ‘we are sorry, we can place this investment at that investment rate.’ If the bank so wish, it will refer the customer to another entity. The bank wouldn’t take deposits and transfer to another entity owned and controlled by the CEO of the same bank. If that happens, it would be siphoning money from the account of that custom to another entity to the benefit of the CEO.
With all the examples provided when the accounts of the customers were debited, the amount of BCAM was credited giving BCAM access to those credit. All those credits were appropriated by BCAM and the balance has only over GH¢500,000 and some pesewas from August 9 when the licence was revoked.
Background
Mr. Nyinaku has been charged with stealing, fraudulent breach of trust, and money laundering, which he denied in court.
His Beige Bank license was revoked by the Bank of Ghana (BoG) on August 1, 2018, and placed it in receivership.
A review of the financial and other records of the bank, conducted by the Receiver and his team, identified several suspicious and unusual transactions, which were subsequently reported to the law enforcement agencies for investigation.
The facts before the trial court indicated that between 2015 and 2018, the accused person, as CEO of the Bank, used various means to transfer huge sums of monies to companies related to him and for his personal benefits.
The funds transferred to BCAM were depositors’ funds lodged with the Beige Bank.
Thus, between 2017 and 2018, Nyinaku caused the transfer of GH¢10,071.00 fixed deposit account held with Beige Bank, in which various customers placed a total of GH¢448,636,210.21, to Beige Capital Asset Management Limited (BCAM) without the knowledge and consent of these customers.
BCAM is a limited liability company wholly owned by the Beige Group Limited (Beige Group), an entity which, in turn, is wholly owned by the accused person.
Investigations also revealed that the accused person, between 2017 and 2018, caused the transfer of 35 fixed deposit investments of 23 customers of Beige Bank, valued at GH¢141,042,348.92, to the Beige Group, a company wholly owned by the accused person and its majority shareholders of Beige Bank.
Further investigations revealed that in March 2018, the accused person caused a fictitious second account to be opened in the name of First African Savings and Loans (FASL), an existing account holder with Beige Bank, without the knowledge of the Board and Management of FASL.
According to the facts, the accused person then caused the transfer of the sum of GH¢320 million from the accounts of various Beige Bank customers into the bank accounts of BCAM held with Beige Bank.
The GH¢320 million was subsequently transferred from the BCAM account held with the Beige Bank into the fictitious FASL account that had been opened in Beige Bank’s books on the instructions of the accused person.
Therefore, between March 2018 and August 2018, GH¢21,123,270.96, out of the GH¢320 million, was transferred from the fictitious FASL bank account to some two individuals and ten companies, nine of which are related to Nyinaku, on his instructions.
Again, between 2015 and 2017, the accused person, through the use of payment vouchers, caused the sum of GH¢1,465,000.00 of depositors’ funds lodged with Beige Bank, to be paid to himself and other persons, the court heard.
These transactions were recorded in a general ledger account of the bank, described as Directors’ Account, adding that it came out that the accused person, through the use of payment vouchers, e-mails and memos, caused a total of GH¢20,599,052.58 of depositors’ funds lodged with Beige Bank to be transferred to a number of a general ledger account of the bank, described as shareholders’ account.
Additionally, that between 2016 and 2017, the accused, through the use of payment vouchers, caused a total amount of GH¢141,742,087.70 of depositors’ funds lodged with Beige Bank to be transferred to a number of companies and individuals for his benefits, he said.
Furthermore, these transactions were recorded in the general ledger account of the Bank, described as Prepayment: Project Work Account, since between 2017 and 2018, the accused person, through the use of payment vouchers, e-mails, memos, further caused the sum of GH¢118,076,813.09 of depositors’ funds lodged with Beige Bank to be transferred to a number of companies and individuals, for his benefit.
These transactions were also recorded in a general ledger account of the bank, described as Beige Group Account.
The court heard that investigations had established that the money the accused allegedly dishonestly appropriated from the Beige Bank remained unpaid as at August 1, 2018, when the Bank’s license was revoked by the BoG.
