Former Bankers Sentenced for N7.8 Million Palliative Fraud: A Deeper Look at Internal Control Failures

The Kaduna State High Court has sentenced two former employees of Access Bank Plc, Obadofin Bamise and Hadiza Yakubu, to seven years’ imprisonment each for theft. The convictions stem from their guilty pleas to charges of diverting customer funds linked to a federal government palliative scheme. This case, prosecuted by the Economic and Financial Crimes Commission (EFCC), highlights systemic vulnerabilities in financial institutions and the ongoing battle against internal fraud.

Case Details and Judicial Outcome

According to an EFCC statement released on Thursday, the trial judge, Justice A. A. Bello, delivered the verdict after both defendants pleaded guilty to a single-count charge filed under Section 274 of the Kaduna State Penal Code Law, 2017. The court, however, granted each convict the option of paying a fine of N50,000 in lieu of imprisonment—a provision that has sparked debate about the deterrent effect of such sentences.

In the charge read in open court, Bamise was accused of stealing N433,000 belonging to the bank, while Yakubu was alleged to have diverted N806,000 between 5 November 2024 and 23 January 2025. Prosecutors told the court that the offences were committed while both were still in active service and had direct, unsupervised access to customer accounts.

How the theft happened

Broader Investigation Reveals Larger Fraud

EFCC investigators revealed that the case extended far beyond the amounts specified in the charge sheet. A wider probe uncovered that the two ex-bankers had carried out unauthorised withdrawals on the accounts of 305 customers who were beneficiaries of the federal government’s palliative scheme. In total, N7,842,700 was allegedly moved without authorisation and diverted through transactions linked to accounts associated with coordinators of the scheme.

This pattern of exploitation is particularly troubling because palliative funds are intended to support vulnerable populations during economic hardship. The diversion of such funds not only constitutes theft but also undermines public trust in government intervention programmes.

305 customers affected

Systemic Implications: Why Bank Staff Fraud Persists

This case adds to a steady stream of convictions involving bank staff who abuse their access to customer accounts. In recent years, the EFCC has secured several convictions of bank employees across Nigeria for theft, ATM fraud, and unauthorised electronic transfers—often involving similar claims of internal access being exploited over time.

Observers say such cases continue to expose gaps in internal controls within financial institutions, especially where staff have direct access to sensitive customer data and government-linked intervention funds. Key vulnerabilities include:

• Inadequate segregation of duties: Employees with access to both customer data and transaction systems can move funds without detection.
• Weak audit trails: Many banks lack real-time monitoring systems that flag unusual patterns, such as multiple small withdrawals from palliative accounts.
• Delayed reporting: Victims often discover fraud only after funds are gone, making recovery difficult.
• Lenient penalties: The option of a N50,000 fine for a seven-year sentence raises questions about whether such punishments serve as a sufficient deterrent.

A recurring pattern in bank insider fraud cases

Practical Lessons for Banks and Regulators

To prevent similar incidents, financial institutions and regulators should consider the following measures:

• Implement multi-factor authentication for any transaction involving government intervention funds.
• Conduct periodic, unannounced audits of employee access logs, especially for staff handling sensitive accounts.
• Establish whistleblower programmes that protect employees who report suspicious activity.
• Strengthen collaboration with the EFCC to ensure swift prosecution and public disclosure of convictions, serving as a deterrent.

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Conclusion: A Call for Systemic Reform

While the conviction of Bamise and Yakubu represents a step toward accountability, the case underscores the need for deeper reforms. The diversion of N7.8 million from 305 palliative beneficiaries is not merely a crime of opportunity—it is a symptom of systemic weaknesses that allow trusted employees to exploit their positions. Without stronger internal controls, harsher penalties, and more robust oversight, such fraud will continue to erode public confidence in both the banking sector and government welfare programmes.

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