The Nigeria Deposit Insurance Corporation (NDIC) has instituted two separate actions at the Federal High Court in Lagos against Wema Bank over some assets in Banana Island and N401 million disputed payments.
The NDIC, acting as liquidator of the defunct Gulf Bank Plc,
filed both suits against Wema Bank under the Failed Banks (Recovery of Debts
and Financial Malpractices in Banks) Act.
The move was part of efforts to recover and liquidate
outstanding assets of the defunct Gulf Bank Plc after 20 years of its collapse.
In January 2006, the Central Bank of Nigeria (CBN) revoked
the licence of Gulf Bank Plc due to insolvency and failure to meet
capitalisation requirements.
Subsequently, NDIC emerged as liquidator in a bid to recover
the outstanding assets, following a court order.
THE FIRST SUIT
At the centre of the first suit instituted by NDIC are six
properties in Banana Island purchased in the name of Euston Wenberg Engineering
Company Limited, described as a shell company used by Gulf Bank Plc.
These plots, situated in Zones J, K, L and P, have a
combined area of approximately 13,794.145 square metres.
At the current market rate of N4,500,000.00 per square
metre, NDIC values these properties at N62,073,652,500.00.
NDIC alleges that Gulf Bank acquired six Banana Island plots
between 1998 and 2003 using Euston Wenberg Engineering Company Limited as a
vehicle.
NDIC argued that the assets remain beneficially owned by
Gulf Bank plc despite the internal records of the defunct bank reportedly
treating the acquisition as a loan account.
NDIC alleged that Wema Bank took custody of these properties
purportedly to secure an interbank deposit of N771.79 million.
The agency said a joint CBN/NDIC special examination
conducted in September 2005 found no record in Gulf Bank’s books confirming
that any such deposit existed.
The agency said the report found the defunct bank’s
explanations unsatisfactory with no supporting documentation produced.
NDIC said Wema Bank later presented two managers’ cheques
from Access Bank and Intercontinental Bank, both dated September 2005,
totalling N250 million in favour of Euston Wenberg Engineering Limited.
The agency said the cheques are instruments for a purchase
rather than recovery of a deposit.
NDIC argued that the purported sale at N250 million was
commercially implausible, given that a single property in Banana Island at the
time was worth in excess of N500 million.
THE SECOND SUIT
The second suit was premised on a separate set of six
properties in Banana Island acquired through Bacad Finance and Investment
Limited (later renamed Supra Commercials Limited) — another entity in which the
defunct bank held over 80 percent shareholding.
NDIC alleged that Gulf Bank injected N20 million into Bacad
Finance and Investment Limited in 2001 to increase its share capital, and later
invested N60 million in the company in 2003.
The defunct bank held over 80 percent of Bacad Finance’s
shares and used the entity to acquire the second set of six Banana Island
plots.
The defunct bank was said to have planned to develop the
properties as a luxury residential estate of 72 flats, to be called Bacad
Estate, in partnership with Shelter Afrique.
NDIC accused Wema Bank of claiming to have sold the assets
for N524 million by way of managers’ cheques dated 2006 and 2007, without any
valid mortgage, court order, or proprietary interest.
NDIC rejected the claimed sale price as grossly implausible
given that each property was worth over N4 billion at the time.
In addition, NDIC said in June 2009, it wrote to Wema Bank
approving payment of N1,635,616 as the full outstanding deposit due to the bank
as of January 16, 2006 — the date Gulf Bank went into liquidation.
NDIC alleged that despite the approval, Wema Bank collected
N401 million from UBA, NDIC’s agent bank, without lawful justification, and
that the agency has no record showing Wema Bank was owed any sum beyond the
approved N1.6 million.
NDIC is seeking court declarations that any purported sale
of the properties was illegal, null, and void and that Wema Bank had no valid
interest in any of the properties.
The agency is also seeking a court order to compel Wema Bank
to return the land title documents or pay the current value of the disputed
properties.
THE OBJECTIONS
Wema Bank, through its counsel, Oladapo Olanipekun, Kehinde
Ogunwunmiju, Tunde Afe-Babalola, have filed a preliminary objection challenging
the jurisdiction of the court.
The bank argued that NDIC’s claims do not arise from any
loan, credit facility, guarantee or banking transaction between the parties as
required under the Failed Banks Act.
The lender added that it was never a customer of the defunct
Gulf Bank Plc in respect of any credit facility.
The bank further argued that the suits disclose no
debtor-creditor relationship and that NDIC lacks locus standi because the
disputed properties were allegedly owned by Bacad Finance and Investment
Limited (now Supra Commercials Limited), a separate legal entity.
The bank said the issue is property ownership rather than
banking debt recovery, adding it is outside the federal high court’s
jurisdiction.
The bank argued that any course of action, if it existed at
all, arose between 2006 and 2007 and is now statute-barred under the Limitation
Law of Lagos state.
Wema Bank accused NDIC of abusing court process by
attempting to circumvent limitation laws with a stale claim.
Wema Bank asked the court to strike out both suits.
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