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Caught in the buzz: The economics of Nigeria’s “Yahoo Yahoo”

Osaz, a former yahoo boy familiar with the operations of internet fraudsters, explained the sequence of activities to Nairametrics.

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FBI's arrest of Invictus' Obinwanne Okeke stirs controversy, Invictus Obi: Court forfeits Obinwanne Okeke’s N280 million to FG 

It was a Friday evening in an upscale restaurant and bar in Lagos, Nigeria. About half a dozen guys hurdled together around a table littered with half-empty bottles of Champagne, Whiskey, Brandy and cans of mixers, as the DJ serenaded them with the latest Nigerian Afrobeat sounds. There was something different about that night for Olu, one of the guys seated at the table. The quality of drinks they were consuming was way beyond their means; yet, they kept ordering even more.  

He wasn’t so sure how they expected to foot these bills as some of them did not even have enough cash to pay even if the drinks were sold at regular retail price. Upscale Lagos bars are accustomed to selling alcoholic liquor in bottles at about 300% of the regular retail price. To the irritation of his companions, Olu fretted frequently despite being told not to worry, that the tabs would be picked up by someone else.  

That “someone” was airborne on his way from back home from abroad. He had told his friends to gather around at the joint and order whatever they wanted until he joined them soon after his plane landed. Davoe, as Olu had been repeatedly told, had just “picked up” serious cash and is worth millions in dollars.  He was coming into town to declare for his boys, starting from that night till his departure. 

Davoe had just pulled off a major heist and was flying in to celebrate with his friends before deploying his newfound wealth into more productive uses. The night out with his friends was the culmination of a process that emanated from months of sleepless nights online in what has become one of the most sophisticated cyber frauds in recent history.  

[READ MORE: Investing & Gambling: Differences and Where They Intersect] 

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FBI Raid: Three weeks ago, the US Federal Bureau of Investigation (FBI) announced that it had caught former Forbes 30 under 30 entrepreneurObinwanne Okeke, popularly called Invictus Obi, suspected of participating in an advancefee fraud operation. The news caught the entire country by surprise, particularly young Nigerians who typically look up to success stories like that of Obi as a source of inspiration. 

A few days later, the FBI published about 80 names of young Nigerians suspected of being involved in a massive fraud operation that they declared unprecedented in the United States. What is perhaps more intriguing is how this vast network of cyber thieves functioned in an operation that spanned continents across the world.

Nairametrics spoke to a few people familiar with the operation of modern-day “Yahoo Yahoo.” Their names have been changedas they all spoke under the condition of anonymity to allow them to speak more freely about what they know.    

Fraudsters. Yahoo Yahoo

Stolen Data: It often starts by subscribing to a premium version of dating apps where upper-class men and women often spend time looking for love interests. To log in to these platforms, users are expected to provide their email addresses and passwords. These standard login methods are designed to ensure that owners of these apps collect as much data as they can from users. Unfortunately, hackers are also interested in this data and often steal them.  

According to reports, in 2019, a collection of 2.7 billion identity records, consisting of 774 million unique email addresses and 21 million unique passwords, were posted on the web for sale. Bidders for the data included internet fraud perpetrators, including those caught by the FBI two weeks ago, who rely on them for a slew of illegal activities.   

How it works: Osaz, a former “yahoo boy” familiar with the operations of internet fraudsters, explained the sequence of activities to Nairametrics. According to him, fraudsters, relying on the email addresses of their victims, hack into the servers of unsuspecting corporations. Once logged in, they read email exchanges between top executives with mandates to sign away payments.   

Of interest to them are email exchanges between suppliers of services and customers that occur as frequently as twice a week. The frequency of supply orders and payments provides the suspects with a high level of vulnerability that they can exploit.   

After a protracted period of studying transaction flows and processes, they pounce, taking over the servers of their victims bypassing cybersecurity firewalls.  He explains in a few summarized steps.  

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  • An email is sent from a supplier to a company, requesting payment.   
  • Taking over the server, the email is hacked, and the fraudsters manipulate details on the emails (attached invoice).  
  • They slightly alter the names of suppliers such that the persons authorizing payment will not notice.  
  • They insert their account numbers in the email as well as their bank details.  
  • Once payment is made, the money laundering process begins, connecting several co-perpetrators across the globe.   
  • The money passes through several connected accounts, even going through accounts of innocent companies or individuals thinking that they are purchasing dollars in the regular course of a genuine transaction.  

[READ ALSO: If this doesn’t encourage you to start investing today, nothing ever will!]

Yahoo Yahoo

In the widely publicized case of Invictus Obi, the process was very similar except that it started with a phishing email. The Chief Financial Officer of Unatrac Holding Limited, the export sales office for Caterpillar‘s heavy industrial equipment, received a phishing email containing a web link in April 2018, purportedly to the login page of the CFO’s online email account hosted by Microsoft Office365. Upon opening the link, he was directed to a phishing website crafted to imitate the legitimate Office365 login page.   

Believing the page to be real, the CFO provided his login details which were captured by fraudsters who took over his login profile, giving them access into the company’s email servers. According to the report, between April 6 and April 20, 2018, they had accessed the CFO’s account at least 464 times, mostly from Internet Protocol (IP) addresses in Nigeria, stealing over $11 million.   


Money Washing: Internet fraudsters have also perfected the art of laundering their loot. Like Obi, some smart ones establish legitimate businesses, using their stolen wealth as seed capital. 

Mike, the owner of an upscale boutique that is often patronized by suspected “Yahoo Yahoo boys,” explained to Nairametrics that, Some of them use the money to buy real estate properties in Lekki”. Lekki is Nigeria’s haven for real estate developments. According to him, the smart ones quickly invest the money in assets they can easily sell during dry spells when no money is made. Some invest the money in other income-generating businesses such as night clubs, restaurants, and hotels. Others like Obi, channel the money into enviable ventures such as tech Startups. 

Some never go back to crime and continue the legit path they established using stolen funds, Mike explained. “This Yahoo Yahoo business has a lot to do with luck, which is why some of them also rely on jazz (Nigerian slang for voodoo). When some make it, they don’t go back, but use the money they made to set up businesses for themselves and their spouses or family members.”   

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Back in February, the European Union added Nigeria and 22 other countries to a blacklist of nations seen as posing a threat because of lax controls on terrorist financing and money laundering. Despite this, some Nigerians believe that corruption has often had a positive effect on the economy, depending on how looted funds are laundered in the local economy.

In 2018, Nigeria attracted about $25 billion in foreign remittances, mostly from hardworking Nigerians with legitimate jobs living and working abroad. It is however plausible that some of the remittances may also include money illegally obtained via fraudulent means as the FBI investigation reveals.  

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Funds from Cyber Crimes create jobs and sustain thousands of businesses across the country. On Instagram, sole traders leveraging on e-commerce craze rake in millions selling all sorts of fashion items. They often rely on the flash of opulence displayed by social media celebrities suspected of engaging in cybercrimes to hawk their products. Most young social media addicts are inevitably attracted to such lifestyles and so want to also look the part.


Rags to riches to rags: Not every internet fraudster can boast of a happy ending. For most, after the first “hammer” (a slang for securing a major heist) the loot is splurged on flashy cars, women and other forms of luxury. The urge to splurge is often blamed on inferiority complex or simply extravagance, both culminating in an infectious display of opulence designed to intimidate and impress their admirers. Depending on the size of the loot, the money can last up to a year before the fraudster zeroes back to square one.   

In one of several examples shared by Mike, one of the fraudsters who hammered complained about how he had mismanaged his loot on girls, expensive fashion and booze. He was begging a mutual friend to hire him as a driver. He had gone months without another hammer and was losing reputation among his friends, while all the girls he splurged on when he was on top had left him for more alluring colleagues. For now, he needs to at least get some money to feed himself and pay for his internet bills, as he looks out for another hammer.  

Davoe wasn’t going to allow experiences like these deter him. As he arrived at the international airport in Nigeria, a brand new BMW car was waiting to pick him up. As promised, he drove straight down to meet up with his friends, who by then had racked up 6 figures in booze. By the time he arrived, he was accompanied by an entourage of ladies enough for himself and his friends. The night was just beginning.  

[READ FURTHER: A list of things you should never borrow money to do]

 

 

 

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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Company Profile

Jaiz Bank: First shared-profit bank in Nigeria approaches 10 years

Nigeria’s first non-interest bank has moved from being a regional bank to a national bank.

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Jaiz Bank Plc, First shared profit bank in Nigeria approaches 10 years

When the idea of a Non-interest banking was first broached in Nigeria in the late 90s, it was greeted with suspicion. This was probably because its more popular name ‘Islamic banking’ had non-muslim Nigerians thinking it was a ploy to eventually Islamize the country.

Two decades and several sensitization campaigns later, Nigeria’s first non-interest bank has moved from being a regional bank to a national bank, with several branches and customers.

Nairametrics company profile this week looks at this trail-blazing bank; how it has survived its first decade, while operating a system that is completely different from that of other banks in the country, yet still holds its own in the industry.

READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision? 

History

The JAIZ movement in Nigeria dates far back to 2001, when Justice Imam Muhammad Taqi Usmani and Sanusi Lamido Sanusi, both guest speakers at a seminar hosted in Sheraton Hotel Abuja, advised the different groups clamoring for a non-interest bank in Nigeria to come together under one group, if their aim was to be achieved.

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In response to this advice, the Halal group and the JAIZ group united, combining influence and resources to drive for the establishment of a Nigerian non-interest bank.

Jaiz International was set up in 2003, and after almost 8 years of trying to meet the guidelines, and capital requirements of the Apex bank (amid the Soludo-led recapitalization exercise which shook the industry) and other factors, the bank received a regional license from CBN on a historic date.

JAIZ International Plc was established on 11th of November 2011, and began the long walk to the actualization of their dreams.

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(READ MORE: Jaiz Bank reports 45.3% profit increase in H1 2020, involved in 21 litigations)

On 6 January 2012, operations commenced at the branches in Abuja, Kaduna and Kano. Hassan Usman, is now Managing Director of the bank, while Alhaji Dr Umaru Abdul Mutallab, heads the Board of Directors, with Alhaji Dr Umaru Kwairanga, and Alhaji Dr Muhammadu Indimi as members.

Other members include Abdulfattah O. Amoo; Alh. (Dr.) Aminu Alhassan Dantata; Alh. (Dr.) Musbahu Bashir; Alh. Mukhtar Danladi Hanga; Alhaji Mamun Maude; H.R.H. Engr. Bello Muhammad Sanni; Mahe Abubakar Mahmud; Mall. Falalu Bello; Mall. Hassan Usman; Mr. Seedy Njie; Nafiu Baba-Ahmed; and Prof. Tajudeen Adepemi Adebiyi.

In 2013, when the bank started expanding to other urban centers, it was permitted to increase shareholding capital to $92.3 million (NGN14.3 billion), and subsequently applied for a national banking license which it received in 2016. At the end of FY 2019, it had 38 branches with over a thousand employees.

Stockholding was and is still shared among Nigerian and foreign individuals, and institutional investors, while the number of issued shares as at December 2019 was 29.46 billion.

(READ MORE: Jaiz Bank Plc announces final dividend of 3 kobo for FY 2019)

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Banking with a human face

Non-interest banking is touted to be a more ethical form of banking, with less emphasis on profit, and more on societal and individual development.

Like other banks, Jaiz Bank Plc provides banking products and services like savings, current, salary, and kids savings accounts, but with slightly different terms. The bank also provides online banking, leasing, cards, bonds and guarantees, and several other investment products tailored to its principles. Customers’ deposits are used for business operations, with the understanding that the profit will be shared between the bank and customers. While sharing profit with customers, in the event of a loss, the bank tries to weather it out, since the customers’ deposits are already insured with the NDIC.

In offering its credit facilities, the bank tends to adopt a religious perspective, looking beyond an individual’s ability to repay the loan. The impact of such a business or project on the society is a priority consideration, and could be the sole reason for refusing a loan. In this regard, business ideas which go against morality or societal growth, are not given loans.

READ: Dangote Sugar Refinery: Revenue soars amid rising cost of sales

The bank also offers its loans in a manner that creates a partnership between the bank and the borrower, towards improving the society. A profit for the company is a profit for the bank, while a loss for the company is also a loss for the bank, even though steps are taken to recover the capital.

How many people will be employed by the business? How will it impact the environment and the economy? These are some of the questions considered before a loan is either granted or refused. This is why bankers in the space like to refer to it as “banking with a face” or ethical banking.

(READ MORE: Jaiz Bank Plc appoints new directors)

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No matter how profitable a venture is, if any part of its operations is considered detrimental to societal welfare, it will be declined. If, for any reason, a customer is to be penalized for default, the proceeds cannot be listed as part of profits for the bank, but is ploughed into the society as charity.

Financials

Audited financials from the company shows that the company is fast growing to make up for the early years of little or no profit.

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The FY 2019 audited reports show that the company declared dividends of 3 kobo per share, an improvement on previous years’ performances, where no dividend was declared. Total assets grew 54% YOY, from N108.4 billion in 2019 to N167 billion in 2019, while deposits rose 50% to N127 billion, from the N85 billion recorded in 2018.

READ: Why Ripple might be the future of digital payments

Gross earnings grew from N8.7 billion to N14.7 billion, and Cost to Income ratio improved from 87.28% in 2018 to 80.21% in 2019, with return on assets and equity rising to 1.26% and 13.57% respectively.

Profit before tax shot up 135% from 898 million in 2018 to N2.1 billion in 2019, and earning per share grew to 8.29 kobo from 2.83 kobo in 2018.

The recently reported Q2 2020 unaudited reports show that in spite of the COVID-19 challenges in the country, the bank had a fair outing in the second quarter of the year, with a clear improvement across all indicators in comparison to Q2 2019.

(READ MORE: CBN allows banks to pay winnings, salaries for 7 banned betting & gaming companies)

Conclusion

JAIZ Bank Plc is fast-growing, achieving much in good time, although Nigerians are yet to fully understand this system of banking. There is also the supervision of the Advisory Committee of Experts (ACE), which ensures that banking operations are done in line with the dictates of Sharia law.

The bank includes non-Islamic employees in its workforce, a point to back the claims that it is not religiously inclined, though more needs to be done in its board composition to fully corroborate this, and show the public that it is a bank that accommodates all religions.

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Tech News

President Trump to decide fate of TikTok in 24-36 hours

US President, Donald Trump is to decide the fate of TikTok in the country in the next 24-36 hours.

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Vaccine, America's Trump finally bans TikTok, WeChat, US imposes visa ban on Nigerians for election-related activities

All eyes are now on President Donald Trump as he is expected to decide the fate of TikTok in the U.S. in the next 24-36 hours.

In a report credited to CNBC News, ByteDance, owners of TikTok, is planning to go for an IPO for global TikTok on an American Stock Exchange.

Under the proposed plan, waiting for President Trump’s approval include, Oracle owning a minority stake that will be lower than 20% of the new global TikTok.Walmart the world’s biggest retailer by revenue will also take a stake, though its amount remains unknown.

While the Chinese authorities have asserted it’s right to obstruct the sale of vital technologies, it is likely to approve the deal as long as it doesn’t involve the transfer of the artificial intelligence algorithms that drive TikTok’s service. Even if ByteDance were to cede its major ownership over TikTok.

U.S President recently disclosed he was against any idea that ByteDance( parent company) would retain a majority stake in TikTok.

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“From the standpoint of ByteDance we don’t like that,” Trump spoke on the Chinese company retaining a majority stake in the business. “I mean, just conceptually I can tell you I don’t like that.”

An IPO on TikTok would most likely be the biggest technology IPO in recent times. Private valuations of the fast-growing startup have been estimated to be worth about $50 billion.

Back Story; Recall Nairametrics about a month ago reported on how President Trump issued directives banning any U.S. transactions with Chinese tech firms that include Tencent and ByteDance.

According to Trump, “WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

He went on to say that the application also captures personal information of Chinese nationals visiting the U.S.

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Business News

Nigeria working to attract more foreign direct investments to prepare for AfCFTA – Trade Minister

The Minister noted that the ministry is actively working to attract more FDIs into key industries.

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FG meets group to access AfCFTA's $650 billion market, UNIDO’s $60m investment programme to boost Nigeria’s industrialisation - FG, FG to strengthen economic ties with Turkey, FG moves to facilitate tax incentives for SMEs, Made-in-Nigeria vehicles gulp N364 billion from FG

Nigeria’s Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, has said that Nigeria is actively working to attract more foreign direct investments into key industries to meet the demands of the African Continental Free Trade Area (AfCFTA).

This was disclosed by the Minister on Thursday at the virtual Nigerian-British Chamber of Commerce (NBCC) Global Investment Conference, themed “The future of Trade and Investment in Africa.”

READ: Coronavirus second wave won’t stop African Free Trade Agreement

The event covered 3 key areas that will boost trade between Nigeria and the UK. They are: The African Continental Free Trade Area, Foreign Direct Investment and Economic Risk and Accessing finance for increased trade and investment.

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READ: Nigeria received capital inflows worth of $33.27 billion in 17 months

“As we gear up to meet the demands of the enlarged continental market which will be fostered by AfCFTA, we are actively working to attract more foreign direct investments into key industries,” the Minister said.

The Minister added that Nigeria’s investment priorities are:

  1. Promoting digital economy, “considering its potential for growth, job creation and mitigating the impact of Covid-19.”
  2. Domesticating production through various sectoral backward integration plans.
  3. Exploring opportunities to boost renewable energy financing across the country.

Explore the Nairametrics Research Website for Economic and Financial Data

He urged that Nigeria should remain committed to implementing the initiatives to enable the country become a suitable environment for investment and strategic trade relationships.

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