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Failed banks: Does long wait await depositors?

But today, the same sad episode has repeated itself in the nation’s banking sector with over N118 billion depositors’ money currently trapped in 13 failed…

But today, the same sad episode has repeated itself in the nation’s banking sector with over N118 billion depositors’ money currently trapped in 13 failed banks of which N53.3 billion is owed by 40 Nigerians. Just like what happened in 1995, insider loans and other unhealthy activities by few Nigerians contributed greatly to the inability of the failed banks to meet the Central Bank of Nigeria (CBN)’s N25 billion minimum capital base in 2004.

According to the chairman Senate Committee on Banking, Mrs Nkechi Nwaogu, in her report to the Senate, the N188 billion included insiders credit abuse by chairmen, directors and managing directors of the affected banks. He added that it was unfortunate that some of the perpetrators of insider abuse currently hold high positions while some of the depositors of the money are dying in penury.

In 1995, the likes of Chief Femi Adekanye and Ralph Osayemeh of the defunct Commerce Bank, former chairman of Financial Merchant Bank, Otunba Femi Ajayi and Alhaji S.A Abubakar, former managing director of defunct Gamji bank, were the ‘king’ of the industry before the bubble burst

In its report, the senate committee on banking listed many Nigerian politicians, businessmen and bankers as debtors. The list included the former directors of 13 failed banks who were allegedly involved in inside credit abuse that contributed to the banks’ collapse.

The former directors collectively owes the failed banks N53.3 billion out of which NIDC has so far recovered N4.8 billion.

The highest debt of N15.7 billion, according to the report read on the floor of the Senate, was allegedly owed by a former Minister of Science and Technology, Chief Ebitimi Banigo. The money was allegedly borrowed from the defunct AllStates Trust Bank.

Other alleged debtors include Prince Samuel Adedoyin, who owes City Express Bank N2. 06 billion; Sir Emeka Offor, African Express Bank, N3.85 billion; and Chief (Mrs.) Remi Adiukwu, Metropolitan Bank N1.09 billion, former Governor of Kwara State, Alhaji Shaaba Lafiaji; a former Minister of State for Foreign Affairs, Chief Dubem Onyia; industrialists Aliko Dangote, Chief Samuel Adedoyin and Chief Cletus M. Ibeto. Others on the list are, Dr. Sam Eke, Chief Victor Odili, Sanusi Ado Bayero, Dr. T. C. Osanakpo, Malam Saleh Jambo, Great Ogboru, Ambrose Ejiogu, Alhaji B. I Bunu and Chief F. E. Adiele.

Others are, beautiful socialite, Mrs. Angela Onyeador, Babajide Rogers, a former chief executive of Gulf Bank, Dapo Sarumi, a former Minister of Information and Senator Mike Ajaegbo,

Chief Stephen Olukunle Bakare, owner of Oluwalogbon Motors, his wife, Oluremi, were also listed. The failed banks include African Express Bank, All States Trust Bank, Assurance Bank, Eagle Bank, Fortune Bank, Societe Generale Bank, Trade Bank, Hallmark Bank, Gulf Bank, Metropolitan Bank, Lead Bank, Liberty Bank, Fortune International Bank and Triumph Bank.

Alh. Sule Jambo told Weekly Trust that Lead Bank did not fail. “We only failed to capitalise before the deadline given by CBN. As at October 2004, I deposited 3.5million dollars in my bank. If I knew it was going to fail, I wouldn’t have put in my money. We had even finalised agreement to merge with Wema Bank before they pulled out and by then, it was too late,” he explained.

Surprisingly however, shortly after the release of the names of the debtors, many of them have started making payments. For instance, one of the debtors, Senator Chris Adighije, who reportedly owed the distressed Metropolitan Bank N1.9 million, said that he was never aware that his company, Cinab Eng. & Geological Services Ltd, owed that amount.

He presented a copy of the cheque with which he has however settled the debt to the NDIC and forwarded same to the committee.

Adighije also gave the committee a copy of the letter he has sent to the NDIC on the matter.

Another debtor, Sir Emeka Offor, in a letter to Nwaogu, said he has resolved to liquidate his N1.2 billion debt to the African Express Bank in 12 months from June 1, 2009.

While noting in the letter dated May 14, 2009, that he has already deposited collaterals of shares valued at $300 million with the bank, he said, “in view of the foregoing representations, we humbly request that Chrome Group makes a good faith payment of N1.2 billion in 12 equal installments effective June 1, 2009 in full and final settlement of its indebtedness as against the outstanding balance of N934,952,129 needed to pay the outstanding deposit liabilities of the defunct African Express Bank Plc.”

On his part, Prince Adedoyin refused to agree with the Senate committee report and denied any indebtedness totalling N5.584 billion to the defunct City Express Bank.

Reacting through his solicitors, Sanusi, Akinrimisi & Co, Adedoyin stated that he is not indebted to the defunct City Express Bank in the sum stated.

Text of the solicitors’ statement reads: “Sequel to the takeover of the defunct City Express Bank by the Central Bank of Nigeria (CBN) in December 2005, an Interim Management Committee appointed by the Central Bank of Nigeria alleged that our client and his companies were indebted to the defunct City Express Bank in contradictory sums ranging from N585,000,000 (Five Hundred and Eighty-Five Million Naira) to N1.2 bn (One Billion, Two Hundred Thousand Naira). These contradictory figures our client has vehemently denied owing.

“Nigeria Deposit Insurance Corporation (NDIC) also forwarded a petition to the Economic and Financial Crimes Commission (EFCC) but was unable to substantiate the sum allegedly owed by our client and his companies. Series of suits have been filed and are pending at the Federal High Court, Lagos, in relation to the sum allegedly owed by our client and his companies.

“However, the sum of N5.584bn (Five Billion, Five Hundred and Eighty-Five Million Naira) forwarded to the Senate Committee on Banking, Insurance and Other Financial Institutions by the NDIC as the amount allegedly owed by our client was never at anytime owed by our client and his companies.

“Our client denies owing the defunct City Express Bank the sum of N5.584bn (Five Billion, Five Hundred and Eighty-Four Million Naira) and stated that the figures forwarded to the Senate Committee on Banking, Insurance and Other Financial Institutions by NDIC are fictitious and untrue.

“Our client shall forward a detailed and comprehensive petition to the Senate Committee on Banking, Insurance and Other Financial Institutions to refute the libellous and mendacious publication as presented to the Senate Committee on Banking, Insurance and Other Financial Institutions by the NDIC,” the solicitors stated.

Many Nigerians who spoke to Weekly Trust commended the efforts of the Senate committee on banking and insisted that the debtors must be made to face the law.

The immediate past National President, Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe, said those involved in the debt saga and the auditors should be made to face the law, adding that the case is that of economic sabotage.

He noted that such development will further discourage the informal sector from doing business with the banks.

“This is a sad development. The Senate must be commended for this disclosure. It must not stop at this until the culprits are brought to book. Nigerians will also like to know the various auditing firms of the failed banks with a view to bring them to book. This is the only way to guard against future occurrence,” he stated.

The President of the Manufacturers Association of Nigeria (MAN), Mr. Bashir Borodo, said that not all the debtors should be blamed for the payment defaults, as some factors, not disclosed by the Senate, could have been responsible for the situation.

Analysts however warned that the debtors should not go unpunished even if they have started repayment. The fact is that they have jointly caused a lot of havoc to the nation’s banking sector and they are not worth being trusted with public funds. Unfortunately, many of the debtors are figures who are either currently holding public positions or aspiring to do so.