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Some Nigerian Debtors Got Loans Fraudulently-police

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http://www.guardian.co.uk/business/feedarticle/8674414

* Debtors could be liable for prosecution along with bankers

* Anti-corruption police says some debtors laundered money

* Defaulters challenge central bank audit

(Adds anti-corruption police on debtors)

By Nick Tattersall

LAGOS, Aug 25 (Reuters) - Some of the debtors to five Nigerian banks rescued in a $2.6 billion bailout obtained loans under false pretences and may have been laundering money, the country's anti-corruption police said on Tuesday.

The Economic and Financial Crimes Commission (EFCC) had given defaulting debtors listed by the central bank, including some of Nigeria's most powerful figures, until the end of Tuesday to pay up or face possible arrest and asset seizures.

"Some loans were given without collateral ... some loans were given under fictitious conditions. Money laundering comes in ... economic crime comes in," EFCC chairman Farida Waziri told a news conference in Lagos.

"Don't let anyone tell you this is civil (crime) ... we can arrest them for conspiracy together with the bank executives."

The central bank injected $2.6 billion into Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank on Aug. 14 and sacked their senior management, saying lax governance had left them so weakly capitalised that they posed a systemic risk.

Last week it published a list of what it said were their defaulting debtors, more than 200 companies, individual and state bodies which it said owed 747 billion naira ($5 billion).

"So far from our investigations some of these loans were disbursed without the approval of the boards of the banks and apart from that, some of the debtors in some instances diverted these loans to ventures different to the purpose from which they were sought," EFCC spokesman Femi Babafemi said.

"With the collaboration of both the debtors and the bankers they have been using fictitious companies and names to apply for loans and get at this money. That also raises the question of money laundering," Babafemi said.

Some debtors had repaid loans ahead of the EFCC deadline and Waziri was meeting with the five banks' new management to ascertain which debts were still outstanding.

Asked if arrests would be made on Wednesday, Babafemi said, "We are asking for their documents to reconcile some of these figures, those that have paid, those that have not paid, so we do not go for the wrong people ... We don't want to go and arrest somebody that has paid somewhere."

It appears bankers are the same the world over.

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