Beige Bank case: Witness accuses former CEO of siphoning customers' funds

A Chartered Accountant with KPMG, Julius Ayivor – who is currently on secondment to the Office of the Receiver of the defunct Beige Bank Limited, has testified that reviews conducted into affairs of the defunct bank identified a number of transactions which were suspicious and unusual in nature.

Mr. Ayivor – who is acting as principal witness in the trial of the defunct bank’s former Chief Executive Officer (CEO) Mike Nyinaku – said the suspicious and unusual transactions involved the siphoning of funds that had been deposited by customers of the defunct bank by the former CEO to himself and companies related to him.

These, he said, caused the government of Ghana to settle the affected customers with taxpayers’ money following the bank’s collapse.

He made the allegation when testifying in court as part of the trial.

In providing examples to establish a basis for the allegations made, the Principal Prosecution witness noted in his witness statement that deposits of over 10,000 customers of the defunct Beige Bank totalling GH¢449million were siphoned out of the accounts of said customers to the account of Beige Capital Asset Management Limited (BCAM) – a company that is wholly-owned by Mike Nyinaku.

Out of the GH¢449million siphoned out of the affected customers’ accounts, GH¢320million was moved into a fictitious bank account opened in the name of one of the defunct bank’s customers – First Africa Savings and Loans Limited (FASL) – without the knowledge of FASL’s management.

The witness stated that the fictitious bank account was opened in the name of FASL in March 2018 on the instructions of Mike Nyinaku, and a total of GH¢21million was transferred out of the FASL account to the accounts of two individuals and 10 companies held with the defunct bank on the instructions of Mike Nyinaku.

Nine out of the 10 companies that benefitted from the GH¢21million transfer are owned by Mike Nyinaku. The companies are Alberry Limited, DYI Limited, Legacy Pensions Trust Limited, Adelia Limited, Beige Academy, Beige Assur Limited, Beventure Limited, Beige Care Limited and Beige Capital Limited – all of which received amounts totalling GH¢18million.

Mr. Ayivor also stated that other deposits amounting to GH¢141million placed with the defunct bank by 23 customers was siphoned out of their accounts between 2016 and 2018, to the account of The Beige Group Limited – a company wholly-owned by Mike Nyinaku on his instructions.

The witness also spoke about how the defunct bank’s funds amounting to GH¢282million were siphoned out of the bank on the instruction of Mike Nyinaku for his own benefit. He stated that the amounts so siphoned were recorded in four other assets ledger accounts in the defunct bank’s records – the Director’s account, Shareholder’s account, Beige Group Account and Prepayments Project Works account.

In paragraphs 26(b), 26(c) and 26(d) of Mr. Ayivor’s witness statement, he cited three examples of the many transactions which amounted to the siphoned GH¢282million. In one of those examples, noted in paragraph 26(c) of the witness statement, the witness reported that approval was given by Mike Nyinaku for an amount of US$200,000 to be “released” from the Cash Management Unit of the defunct bank to Mike Nyinaku’s office in July 2017 for no work done.

The witness also noted in paragraph 26(d) of his witness’ statement that investments made by the defunct bank with some eight financial institutions, totalling GH¢62million were transferred to one of Mike Nyinaku’s companies – The Beige Group Limited, on the instructions of Mike Nyinaku on 17 August 2017.

During cross-examination of the witness by Thaddeus Sory, the lawyer for Mike Nyinaku, the witness told the Court that there was evidence to support the claim that the government of Ghana, through its bailout package, paid all 10,000+ customers whose fixed deposits were siphoned by Mike Nyinaku for his benefit and companies related to him.

The witness also stated that payment of the affected customers was done by Consolidated Bank of Ghana (CBG) in collaboration with the office of the Receiver, after a validation exercise to ascertain and confirm the total amount involved.

Asked if evidence was available to the court to prove that, indeed, the alleged customers had been paid out of the government of Ghana bailout package, Mr. Ayivor answered in the affirmative and stated he would make available to the court evidence supporting the fact that the 10,000+ depositors had been paid. Justice Afia Serwah Asare-Botwe consequently ordered the witness to submit, at the next adjourned date, evidence to prove that the 10,000+ affected customers had been paid.

When counsel for Mike Nyinaku asked the witness to confirm whether some of the amounts he alleges were siphoned out of the bank’s account into BCAM’s account with the bank were in the sums of GH¢5million, GH¢2million or less, the witness in his response stated, “Yes, there are various amounts. There were even instances when GH¢1,000 was siphoned out of customer accounts”.

When also asked by Counsel for Mike Nyinaku why the balance held in BCAM’s bank account of GH¢59million as of 16 April 2018 was not migrated to CBG after the defunct bank’s licence was revoked, the witness answered: “My lady, this is because BCAM was confirmed as a related company.

“In fact, BCAM is 100 percent owned by The Beige Group, which is also 100 percent owned by Mike Nyinaku. Migrating those balances to CBG to be paid out of government’s bailout package would have meant giving BCAM access to funds they did not own. Those funds belonged to various customers and had been siphoned from their accounts on the instruction of Mike Nyinaku.”

The witness stated that the amounts siphoned out of the accounts of affected customers for the benefit of Mike Nyinaku and companies owned by him have to date not been repaid to the defunct bank or the Receiver.

The facts of the case as narrated by Alfred Tuah-Yeboah, Deputy Attorney General, were as follows: Mike Nyinaku was the former Chief Executive Officer of The Beige Bank Limited, and on 1 August 2018 the Bank of Ghana revoked the banking licence of Beige Bank and placed it in receivership.

A review of the bank’s financial and other records conducted by the Receiver and his team revealed several suspicious and unusual transactions, which were subsequently reported to the law enforcement agencies for investigation.

The Deputy AG said the investigations conducted revealed that between 2015 and 2018 the accused person, as CEO of the bank, had allegedly used various means to transfer huge sums of monies to companies related to him and for his personal benefit.

Mike Nyinaku is standing trial on 43 counts of stealing, fraudulent breach of trust and money laundering, involving the siphoning of a total GH¢1.3billion from the defunct Beige Bank between 2015 and 2018 in a case presided over by Justice Afia Serwah Asare-Botwe, a Justice of the Court of Appeal sitting with additional responsibilities as a High Court Judge.

He has pleaded not guilty to all charges.