By Nick Fielding

JOHN FASHANU, the former England football star, claims he has solved a £3.7 billion debt trading fraud perpetrated by members of Nigeria's former ruling elite.

Fashanu, 37, a millionaire businessman and Nigeria's official sports ambassador, has extensive business interests in the west African country and says he has been investigating the fraud for the past three years.

The oil-rich state was systematically looted by the previous regime, the family of the late dictator General Sani Abacha and the previous president, General Ibrahim Babangida.

International financiers and bankers knew that billions of pounds disappeared from the Nigerian central bank in the late 1980s and early 1990s. It was suspected that senior figures had hidden the cash in overseas accounts.

The precise mechanics of how the money was funnelled overseas remained murky. If Fashanu's claims are correct, however, the incident was one of the largest banking frauds in history - exceeded only by the 1991 collapse of the Bank of Credit and Commerce.

"I and one other person have personally financed this investigation," claimed the sportsman. "I consider it a duty. Nigeria's reputation reflects badly on all of us and it is time it was cleaned up. As a Nigerian [holding dual citizenship], I want this to be sorted out."

Fashanu may be influenced by more than national pride. He has made no secret of his political ambitions and has been mooted as a future sports minister in Nigeria, where he spends six months a year. His African business interests range from a duty-free centre to acting as an agent for Nigerian football players, including Arsenal's Kanu.

The Football Association initially opposed Fashanu's application for a Fifa agent's licence because of his involvement in the 1998 match-fixing trial, in which he was acquitted.

Fashanu says he met the Nigerian high commissioner in London, Prince Bola Ajibola, last week and gave him a dossier which has already led to the freezing of five bank accounts holding £125m in Switzerland and Austria.

"There are a lot of prominent names among the beneficiaries," Fashanu said yesterday.

The fraud centred on a Nigerian debt buy-back scheme run by the Central Bank of Nigeria between 1988 and 1993, he said. Hundreds of millions of pounds were diverted into foreign accounts.

Fashanu said he first came across the fraud three years ago when he was doing background checks on some Nigerian potential business partners. "A lot of information began to come out," he said. "I was even called anonymously and offered £500,000 if I stopped making my inquiries."

He decided to press on, hiring investigators who gradually pieced together the story. "It got bigger and bigger," said Fashanu, "until we were looking at a fraud of at least $6 billion [£3.75 billion], involving 200 separate bank accounts. I have all the data and information on the people who have stolen this money."

A Nigerian central bank report has already established that up to £7.75 billion of government payments made between 1988 and 1993 are not accounted for. The sum was part of the windfall from higher oil prices after the Gulf war.

Some of this had been earmarked for currency stabilisation and debt buy-back, but these schemes cost only £1.5 billion and there are no records of other payments during the period.

Nigeria's decision to buy back its debt in 1988 was kept secret because it was technically illegal. With official government backing, two Americans with close links to Babangida were brought in to set up front companies and offshore companies.

Jeffrey Schmidt and Robert Minton used a London-based company, Growth Management, to buy back the debt with funds from Nigeria channelled through a leading Austrian bank, Osterreichische Landesbank.

Further companies set up in America helped to disguise the origin of the funds. Money was later routed through banks in New York and Basle to buy back the debts.

Big lenders to Nigeria, including Barclays Bank, had thought they had little chance of seeing their debts repaid and were glad to take advantage of the scheme. Barclays sold almost £190m of debts to the Austrian bank in 1991.

However, much of the money made available for the buy-back scheme ended up being diverted by others into Swiss and Austrian bank accounts.

Minton told the newsletter Africa Confidential this week that he had made money - but not the sums that were now being mentioned. "We made tens of millions of dollars, not hundreds of millions and certainly not billions," he said.

Minton added: "If any money was stolen, it must have been from transactions which were outside our control."

Stefan Pinter of Growth Management said: "It was one of the most effective buy-backs I've seen and of great benefit to Nigeria."

Fashanu says he has been warned off the investigation several times and received two anonymous threatening phone calls last week. President Olusegu Obasanjo's democratically elected government, which replaced the military dictatorship last year, has pledged to crack down on the fraud and corruption which has given Nigerian business an appalling reputation throughout the world. Obasanjo himself is a former chairman of the advisory committee of Transparency International, an independent monitoring organisation based in Berlin.