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How First Bank Goofed in N.5B Debt Recovery

How First Bank goofed in N.5B debt recovery as Appeal Court uphold the decision of the Federal High Court

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The Lagos Division of Court of Appeal has dismissed an appeal filed by First Bank of Nigeria Plc aimed at recovering the sum of N556, 493,034.16 million, owed by the defunct Lead Merchant Bank Plc.

First bank of Nigeria Plc had approached Appeal court seeking to upturn the judgment of a Lagos Federal High Court, delivered by Justice Ibrahim Buba in suit numbered FHC/L/CS/1662/2016 instituted by the bank against the Nigeria Deposit Insurance Corporation (NDIC) the Liquidator of Lead Merchant Bank Plc.

In a unanimous decision the appellate court held that the provision of Section 54 of the Banks and Other Financial Institutions Act (BOFIA) made it clear beyond peradventure that deposit liabilities rank in priority over and above every other liability of the bank where the Bank suspends payment or is unable to meet its obligations.

Justice Gabriel Kolawole in his lead judgement, held that statutory provision has conferred priority on deposit liabilities over all other liabilities of the bank.

Other members of the Panel are Justice Joseph Shagbaor Ikyegh (presiding) and Justice Ugochukwu Anthony Ogakwu respectively.

The facts of the suit are that prior to the revocation of the banking licence of Lead Merchant Limited, the bank became indebted to the Appellant (First bank of Nigeria) under a clearing and settlement banking transaction and the outstanding indebtedness stood at N556,493,034.16 million.

The transaction was secured by an unregistered legal mortgage over Lead Merchant Bank’s property situate t No. 1, Oladele Olashore Street, Victoria Island, Lagos.

The Deed of Assignment covering the property was deposited with the First Bank Plc and in addition, a negative pledge was provided by the defunct bank in favour of the First Bank Plc, whereby the bank irrevocably undertook not to sell mortgage or otherwise charge its title, interest or ownership in the property so long as the sum due to the Appellant remains outstanding.

However, upon the withdrawal of the banking licence of the defunct Lead Merchant bank by the Central Bank of Nigeria (CBN) sometime in 2006, NDIC in accordance with its statutory duty under the NDIC Act became the bank’s liquidator.

Consequently, First bank notified NDIC of Lead Merchant Bank’s indebtedness, but the NDIC classified the Appellant’s claim as creditor’s claim, which would only be considered after the claims of public depositors have been fully pad or settled.

Dissatisfied with the NDIC’s response and action, First Bank commenced the suit, wherein it claimed several reliefs.

In decided the suit on May 24, 2017, Justice Buba in his judgement dismissed in its entirety all the claims presented by First bank.

Not satisfied with Justice Buna’s decision, First Bank in its Notice of Appeal dated July 31, 2017 urged the court to set aside the judgement.

The Appellant’s Brief of Argument is dated and filed by its lawyer; Moyosore Onigbanjo SAN (now the Attorney General of Lagos State) and two issues were raised namely: “Whether the lower court correctly held that the provisions of section 54 of the Banks and Other Financial Institutions Act Cap B83 LFN 2004, (“BOFIA”) prevented it from granting the reliefs sought by the Appellant in its Originating Summons?

“Whether the lower court was right to hold that the settlement of the depositors of the defunct Lead Merchant Bank by the Respondent was a condition precedent to the settlement of secured and unsecured creditors of the defunct Lead Merchant Bank?”

However, respondent’s brief of argument filed by Osaro Eghobmein (SAN) formulated only one issue namely: “Is the Respondent liable to settle its indebtedness to the Appellant without first settling all outstanding depositors’ liabilities as required by the compulsory provision of Section 54 of the BOFIA?”

Resolving the issue, the appellate court held that the mortgaged property cannot by any stretch of imagination or legal theory be said to belong to the First bank (Appellant) adding that it still belongs to the defunct Lead Merchant Bank.

Justice Kolawole held that ‘’as at the time the Respondent took over the affairs of the Respondent upon which it became bound and statutorily obligated to comply with the provision of Section 54 of BOFIA, the legal interest in the assets still rests with the defunct Lead Merchant bank and not the Appellant, though a secured creditor, who unfortunately failed to perfect its security’’.

‘’As a matter of fact, the story may not have been the same if the Appellant, who has always been aware and conscious of the nature of its interest in the mortgaged asset, had commenced an action to enforce its rights of sale before the Respondent stepped in as a liquidator of the defunct bank’’.

‘’My Lords, in this case, perhaps for all intents and purposes, the moment the Respondent became seised of the affairs and assets of the defunct Lead Merchant bank as a statutory liquidator, it cannot otherwise act other than in accordance with its enabling Act, BOFIA and/or other enabling statutes relevant to the actualization of its statutory duty.

“Having found, and rightly so that the assets in question still belong to the defunct bank, even though subject to encumbrance, I am unable, as the Appellant will want this court to, wish away or overlook the clear provision of Section 54 of BOFIA, particularly considering the peculiar facts of this case.

The Legislature thought it right and proper and for good reasons to make the settlement of deposit liabilities a priority and condition precedent which rank higher vis-a-vis other outstanding liabilities of the bank in liquidation’’.

‘’In the light of the above analysis and reasoning, the relevant and primary issue in this appeal is resolved in favour of the Respondent.

Therefore, the appeal is in my view, devoid of merit and is hereby dismissed.

The judgment of the Federal High Court, Lagos Judicial Division, delivered on May 24, 2017 is hereby affirmed.”

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Top Court News is a product of a dedicated Journalist, owner of I-Wahab Media The Publisher started his Journalism career with Murhi International TV, MiTV in 2003 before working with Radio Nigeria, Lagos Operation, as a Judicial Correspondent. He is presently the Vice Chairman of the National Association of Judicial Correspondent, NAJUC, Ikeja Branch and occupied same office with Nigeria Union of Journalist, NUJ, Radio Nigeria Chapel. topcourtnewsng.com is out to serve you with informative and educative News in the Judiciary sector. To put an end to the under reported activities of the sector among the three arms of government

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BUSINESS

EFCC Narrates How Customer Lose N1.8bn in Sterling Bank Plc Care

Economic and Financial Crimes Commission, EFCC, commence trial against a Sterling Bank Plc official over N1.8bn alleged fraud

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The eagle eye of the Economic and Financial Crimes Commission, EFCC, has caught up with a banker working for Sterling Bank Plc over N1.8bn alleged fraud.

An official of the bank, Ifeanyichukwu Shallom Isituah and a businessman, Ighodaro Austin Osaretin was alleged to steal the sum of N1,790,558,000 belonging to a customer of the bank, Wells Procurement Limited with account number – 0016798848.

The matter has since been dragged to court after thorough investigation by the anti graft agency.

An EFCC Investigator, Adamu Mohammed, told Lagos State High Court sitting in Ikeja, that the agency received a petition with reference No: SB/IAG/12/EFCC/011 duly signed by the Head IT and Head Intelligence and Investigation on behalf of Sterling Bank.

Mohammed, who works with the Team C Cybercrime department of the EFCC, while testifying on oath, said that the petitioner alleged that a customer’s bank account was profiled via internet banking and the said sum was diverted to various individuals and companies.

While led in evidence by the prosecutor, N. M. Anana, the witness testified that preliminary investigation by the bank revealed that the second defendant’s profile, Isituah, a female, was used to initiate the account on internet banking and more than 24 accounts got the same amount of money.

Also Read: Alleged N111.5billion Revenue Fraud Reports Indicts Zenith Bank

“Investigation letters were sent to FCMB, Zenith, First Bank, Fidelity Bank and Access Bank. Responses were received from the banks and the statement of accounts were analysed and the analysis revealed that most of the company’s accounts the money was transferred to were BDC (Bureau de Change) operators.

“Some of them reside in Abuja, Kaduna and there was one address that we suspected to live in Lagos, Ndifreke Roberts. But all efforts to trace the address of Kaduna, Lagos and Abuja suspects did not yield any information to help the commission get them.

“On March 10, 2020, the DSS handed over the two defendants to the commission under the instruction of the AGF (attorney-general of the Federation) for further investigation. The two defendants’ statements were voluntarily taken under caution.

“The first defendant revealed that he has a company called Universal Agriculture Empowerment Initiative as an NGO which received the sum of sixty million naira as part of the transfer from that Sterling Bank customer’s account. He further stated that the money was received from one Osaretin (second defendant) and transferred to his account as a donation.

“That he introduced one of his friends who is the owner of Villavon International School who also received one hundred million naira from the said fraud.

“He further stated that he called a BDC in the name of Damo who owns Damoo Ten Ventures. Damo was invited to the commission and he volunteered a statement that the first defendant contacted him and he transferred sixty million naira to various accounts and further instructed the owner of the International School to transfer ninety-five million naira.

You May Also Like: SFU Opens Trial Of Syndicate who Theft N.9Billion From FCMB

“The dollar equivalent was received in cash by the first defendant. The first defendant further stated that the money was used at IDP camps around the country. I cannot remember the specific location but he mentioned a place in Borno and Adamawa, the witness said.

However, during cross examination by the defence lawyer, A. Okenile, the EFCC operative said that Sterling Bank gave the commission the information that the second defendant profiled the account for the alleged fraud.

When asked what links the second defendant to the alleged fraud, Mohammed said, “the offence was committed at Sterling Bank and it was reported. The offence took place during a public holiday and the bank realized it on December 28. The accounts of the customer we are talking about has never been profiled for internet banking. So we had to understand how it was transferred, which was through internet banking.

“The bank said the account doesn’t have internet banking access and it was a staff that did it and the second defendant’s profile was used to connect the account to internet banking. Without that profiling money cannot be transferred from that account.

“Even when the bank tried to contact her, she ran away. She was nowhere to be found. Not until the Department of State Services (DSS) traced, arrested her and handed her over to the commission”.

The matter was further adjourned till October 19 for continuation of trial.

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Suru Homes Boss, Edward Akinlade in Alleged Messy N1.7Billion Deal

Suru Homes Boss, Edward Akinlade in alleged nessy N1.7Billion fraud over selling property he had used as collateral for a Fidelity bank loan.

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The Chief Executive Officer, CEO of Suru Homes Ltd, Edward Akinlade has been arraigned at an Ikeja Special Offences Court for allegedly selling property he had used as collateral for a Fidelity bank loan.

Akinlade and his company were arraigned on a 10-count charge of stealing and issuance of dud cheques proffered against them by the Economic and Financial Crimes Commission (EFCC).

The defendants plead not guilty to the charges.

According to the EFCC prosecutor, Mr Temitope Banjo, Akinlade committed the offences sometime in 2017 in Lagos.

“The defendant with an intent to defraud, converted the property situated at No. 11A Lawson Adeyemi St., Ikoyi, Lagos by selling it without the knowledge of the bank and diverting the proceeds of the sale.

“The property was part of a legal mortgage he had used as an part of a collateral to secure a loan of N1.7 Billion loan he had obtained from Fidelity Bank Plc,”the EFCC prosecutor said.

Banjo noted that on Sept. 8, 2017, the CEO issued nine separate dud Guarantee Trust Bank, GTB checks of N10million each to Fidelity Bank Plc.

You May Also Like: Alleged Bank Fraud: Court Adjourns For Final Written Addresses

“When the cheques were presented for payment, they were dishonoured on the grounds that no sufficient funds were standing in the credit of the account,” he said.

The offences violate Sections 1(1)(a)(b) and 2 of the Dishonoured Cheques Offences Act 2004 and Section 284 of the Criminal Law of Lagos State 2011.

After the arraignment, the defence counsel, Mr Lawal Pedro (SAN) told the court that he only became aware of the charges the EFCC had filed against Akinlade the previous day.

The SAN noted that in response, he had filed a bail application and had just served a copy of the application to the EFCC.

Responding, the EFCC prosecutor acknowledged receipt of the bail application and told the court that needed some time to respond to it.

“My lord, the charges have been filed since 2020 and it was impossible and very difficult to arrest the defendant until yesterday.

“The Bank Fraud Section of the EFCC on several occasions put calls across to the defendant to no avail.

Read Also: SFU Opens Trial Of Syndicate who Theft N.9Billion From FCMB

“He jumped administrative bail and he is being investigated by four sections of the EFCC,” Banjo said.

Justice Oluwatoyin Taiwo in a ruling granted Akinlade bail in the sum of N30million with two sureties in like sum.

“One surety shall be a legal practitioner and the second surety shall be a close relative of the defendant.

“The sureties shall swear to an affidavit of means and their home and office addresses shall be verified by the court,” she said.

The case was adjourned until Oct. 11 for trial.

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BDC Operator Yakub in Court Over Alleged N197m Fraud

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A Bureau De Change, BDC Operator, Yusuf Yakub has been dragged to court over allegations of misappropriation of funds and N197m Fraud

Yakub was arraigned by the Economic and Financial Crimes Commission, EFCC, before a Kano State High Court on a count charge.

The defendant was said to have allegedly obtained the sum of $870,000 only from the complainant under the pretext of changing same to Naira but returned only the sum of N220, 300,000 and diverted the balance of N197, 600,000.

Yakub however pleaded not guilty when the charge was read to him.

Upon his not guilty plea, the EFCC counsel, Musa Isah however asked the court for a trial date.

Also Read: N7m Fraud: Ponzi Scheme Operator, Umoren Edet Gets Conviction

In a counter reaction, Counsel to the defendant, Abdul Adamu informed the court that he had filed a motion challenging the jurisdiction of the court.

Subsequently, the presiding judge, Justice Sanusi Ma’aji, granted the defendant bail in the sum of Fifty Million Naira with two sureties in like sum.

According to the judge, one of the sureties must be a relative of the defendant and both must also be residents of Kano. Their business addresses must also be verified.

The matter was thereafter adjourned till August 18 for argument on the motion.

The Charge reads; “that Yakubu Yusuf on or about 14 of January 2021 within the jurisdiction of this Honorable Court, with intent to defraud, dishonestly and misappropriated the said sum belonging to Oliver Ogokumaka and Obumnemi Okoli and thereby committed an offense contrary to section 308 and punishable under section 309 of the Penal Code.”

 

 

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