Côte d’Ivoire’s EDC Asset Management (EAM) file has not finished revealing its secrets. Two and a half months after Financial Afrik’s investigation, revealing the sanctions taken by the market regulator, namely the CREPMF, against, on the one hand, Paul-Harry Aithnard, CEO of Ecobank Côte d ‘ Ivoire and also, in this capacity, chairman of the board of directors of EAM Cote d’Ivoire, and, on the other hand, Mike Coffi, former director general of EAM, legal maneuvers are underway and other revelations are coming s ‘add to folder.
We remember that after the dismissal of Mike Coffi on March 26, 2020, the file lost intensity before rebounding in January 2021 with the sanctions of the market policeman. The affair that was brewing within Ecobank’s subsidiaries and the parent company has since taken on another dimension. The two leaders at the forefront of this file, namely Paul-Harry Aithnard, summoned by the regulator to immediately leave his functions as PCA and no longer chair the board of directors of an asset management entity and Mike Coffi, struck by a ten (10) year ban from exercising any activity of a financial nature linked to asset management, “individually” summoned the market policeman before the WAEMU jurisdictions. Two unprecedented “individual” remedies which, we hope, will help to reveal the truth in the service of the development of the regional financial market.
Unauthorized loans
According to the exclusive information of Financial Afrik, the EAM subsidiary had granted loans between $ 20 and $ 30 million US dollars to various entities including $ 18 million to Yerim Sow’s Teylium Group in the form of a series of short-term bridge financings. A loan was also granted to a company in the name of Supply Vessels Company of which Mike Coffi was the PCA at the time of the facts. In addition, SCI Bijoux –Abinan Pascal received a loan without having to sign a credit agreement. Ditto for Royals Palm, a developer of luxury residences in Assinie. Same preferential treatment to Mata Holding of businessman Aboubakar Sidiki Fofana, Seyo Lou etc…. The loans concerned, or “shadow banking”, were granted in violation of internal procedural rules and regulatory limits on asset management activity.
“All the amounts granted have so far been reimbursed”, declares Mike Coffi contacted by Financial Afrik. Information also confirmed by a source of Teylium as far as he is concerned. On the other hand, within Ecobank, the answer is more nuanced: “a significant amount has been collected, leaving a current outstanding amount of approximately 4.6 million USD”, it is declared. These contradictions de facto confirm the violation of regulations related to the activity of the asset management company.
Asked by Financial Afrik, Paul-Harry Aithnard said he followed the internal procedure provided as soon as he learned of the irregularities. “The internal audit report has been brought to the attention of the EAM Board of Directors by the PCA and the appropriate reporting lines within the Ecobank Group. Unauthorized transactions were immediately and firmly stopped, and the previous EAM Management Team was tasked with collecting and removing the loans from EAM’s books. This instruction was reiterated continuously throughout the council sessions and regular updates were provided. Appropriate disciplinary action was taken against the previous management team and the matter was reported to the regulator. ”
Ghana lost $ 95 million five years ago
Five years ago, in 2016, the pan-African bank had provisioned a loss of $ 95 million noted by SWAM in Ghana, in favor of microfinance institutions without having obtained the agreements internally. The ETI group had passed the sponge. Despite this loss, the bank had decided not to close the entity. The boss of SWAM at the time was Paul-Harry Aithnard, who had committed as early as 2013 to improving controls in a structure that did not include an internal audit, operations or risk manager. The similarity between what happened in Ghana and Abidjan is striking, although the group wants to separate the two cases. “There is no connection between the two events which are different and have no relation, having taken place 5 years apart,” the bank said.
Since this affair, a lot of water has flowed under the bridges. Banker Paul-Harry Aithnard was promoted in August 2018 to the head of Ecobank Côte d’Ivoire, in charge of the UEMOA zone. His then number two, Mike Coffi, pinned in 2015 by the Compliance Department for violations, was promoted to boss of SWAM. The same causes producing the same effects, here we are, five years after Accra, before another case, that of Abidjan, which splashes the image of the bank in most of its countries of presence.
These two cases are experiencing other developments within the parent company, Ecobank Transnational Incorporated (ETI), where a banker, in this case, Moyo Kamgaing, 59, was sacked on October 1, 2020 for demanding transparency and denounced in his time the scandal of the Ghana branch. Put into “early retirement” according to the formula used by the group’s communications department, the Cameroonian executive, CEO of EDC (a subsidiary of ETI housing Investment Banking or IB and Securities and Wealth Management or SWAM) and group boss of IB, had suffered the wrath of his hierarchical superior, Amin Manekia, boss of Corporate and Investment Banking (CIB), before being sacked following abrupt discussions with Ade Ayeyemi, CEO of ETI.
The argument raised by the CEO would be the upcoming closure of Branch IB for economic reasons, with a cost rationalization plan at the holding level which has since resulted in the departure of more than 35 people. “All those affected, including Moyo Kamgaing, have been compensated in accordance with legal requirements and the laws of the Republic of Togo. All payments were made to the Bank to ensure fairness “according to the Bank’s Communication Department, which vigorously rejects the words of the former employee.
In his complaint filed on December 11, 2020 and as reported by our Nigerian colleague “This Day Live”, Mr. Kamgaing states that he was dismissed for refusing to endorse “inappropriate and possibly criminal transactions”. And the banker defended by the firm Oditah to mention by name the activities of SWAM, and in particular the case for which EAM was pinned in Côte d’Ivoire by the CREPMF, in 2020. The hearing of the preliminary objection of ETI and the report on the service of court documents have been set for June 23, 2021. Note that EDC has not filed a defense but rather a preliminary objection in which it challenges the territoriality of the service given to it on Lagos. ETI also argues that the complaint should have gone to Togolese courts, despite Kamgaing having worked for his last four years in Nigeria, employed by EDC Nigeria.
In the meantime, there are many questions. Will the bank sacrifice its branch IB, a great deal credited, year in and year out, with 10 million dollars in profits, which is more, with an operating ratio of 40% (against 67% for the group) between employees based in EDC units in Abidjan, Accra, Lagos and Douala?
For sure, this Moyo Kamgaing trial, which recalls another, beyond the interests of each other, questions ETI on the structural weakness of its governance rules (exceeded by 20 years of rapid geographic growth), the rigor of its internal audit procedures, the quality of its board of directors and the integrity of its management.
In Lomé, a long-awaited Kroll report
This Abidjan affair begins, as written above, in October 2019 when an audit revealed that unapproved loans for nearly $ 30 million or more had been granted off the books by SWAM in Côte d’Ivoire since 2015 using the free deposits of certain customers. Mike Coffi, who managed SWAM, admits responsibility but says the activity was known within SWAM. In Lomé, the case is being followed closely. Amin Manekia, former boss of CIB and supervisor of Mike Coffi, had shown himself willing, at the time, to accept his remedial plan. The implicit option chosen was to hush up the case. Moyo Kamgaing will break the omission with an April 17, 2020 email to Amin Manekia explaining that the incident was foreseeable and citing his oversight responsibility.
Embarrassment in high places
On April 23, 2020, Ayeyemi, CEO of ETI, will notify Kamgaing that he will shut down the IB without further legal action and that he will be fired. Information vigorously denied by ETI, explaining that early retirement is part of a general plan to reduce the workforce for economic reasons. At an EDC board meeting in May 2020, Kamgaing insisted that a culture of impunity had been allowed to develop within SWAM for many years. It wasn’t until January 2021, when the WAEMU financial market regulator (CREPMF) notified its sanctions, that the lines would start to move. In the meantime, new customer complaints have also arisen. This prompted the ETI Board of Directors (Board of Directors) to launch an investigation by London-based firm Kroll Associates, the results of which are expected shortly. Will ETI’s Board of Directors prolong the law of silence or will it finally open its eyes to the weaknesses of its internal supervision and control structures?
