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The Ibru, Akingbola Legal Challenge

The case between Dr. Erastus Akingbola, the embattled former chief executive officer of Intercontinental Bank and the Central Bank of Nigeria, CBN, came up for hearing Thursday but the presiding judge, Justice Abdullahi Mustapha, of the Federal High Court would not entertain it as a result of his impending retirement.

Cecelia
Cecelia

Consequently, he assigned it to Justice Auta and adjourned the matter to September 14, this year. “In view of my impending retirement from the bench of the Federal High Court, this matter is hereby assigned to Justice Auta and this matter stands adjourned till September 14, 2009 for mention,” he ruled.

But this was not without the initial objection of the counsel to the CBN to the jurisdiction of the court to hear the matter. The lawyer specifically challenged the jurisdiction of the Federal High Court, Lagos, to hear the suit. The presiding judge however noted that since he was retiring from the bench soon, it would be better for all the arguments to be canvassed before the judge that will hear and conclude the matter.

The counsel to Akingbola had asked the court to take argument on whether to take all the applications together, so that when the matter is transferred to another judge, the issue of taking the applications together would have been determined.

Justice Mustapha however insisted that the matter should wait for the new judge because whatever he agreed on could be overturned if the new judge disagrees with his opinion. He however frowned at attempt by counsels to delay a case that seems straightforward.

“I thought that this is a simple case, but as typical of lawyers, they have filed so many papers, when we know what the issue in this case is, which is about the single letter written by the CBN,” he noted.

The former managing director of Oceanic Bank International Plc, Cecilia Ibru, last week also dragged the Central Bank of Nigeria and its governor, Sanusi Lamido Sanusi before a Federal High Court in Abuja over her compulsory removal from office, demanding the sum of N50 billion for “exemplary, punitive and aggravated and general damages.”

In an originating summons, Ibru wants the court to declare her removal from office invalid, null and void because she was not afforded any fair hearing as contained in Section 36 of the 1999 Constitution.

In the suit filed by three Senior Advocates of Nigeria – Akin Olujinmi, Niyi Akintola and Wale Akoni – Ibru wants the court to determine whether on a proper construction of Sections 33 and 35 of the Banks and Other Financial Institution Act, 2004, Companies and Allied Matters Act 2004 and the Memorandum and Articles of Association of Oceanic Bank International Plc, the CBN and its governor acted within jurisdiction in the manner she was removed from office.

The two suits – Akingbola and Ibru – are similar in content. They intend to anchor their cases on but not limited to the following:
·That they were not afforded fair hearing as contained in Section 36 of the 1999 Constitution
·That the action of the CBN was premeditated and

·That no special examination of the banks was conducted either by the CBN or NDIC.Specifically, Akingbola claims that he noted that CBN and NDIC (Nigerian Deposit Insurance Corporation) visited the bank several times between the months of February and July this year. But when no official report on any of these examinations was made available to the bank, he wrote the Director of Banking Supervision on August 5, 2009 to demand a copy.

He also noted in the said letter that the figures and details of non-performing accounts to be provided for change with each different list given to the bank which was “different from the various exit interviews held with our management”.

He therefore requested for the full examination report with “details of accounts deemed non-performing for our review and response in keeping with your (CBN) normal practice”. To this letter, Akingbola claim, he got no reply.

Ibru on the other hand claims that as required by the CBN every year, the bank filed audited accounts and that its 2008 account which she filed early this year was approved and communicated to her in letter dated 14th July, 2009.

She stated that the audited accounts were still pending with the CBN for approval when the apex bank sent a team of CBN/NDIC to carry out an ad-hoc assignment in the bank, adding that the team carried out its ad-hoc assignment and left without raising any queries or questions concerning the books and affairs of the bank.

She further claimed that after the ad-hoc team finished its assignments and left a letter conveying the approval of the 2008 audited accounts of the bank was issued to the plaintiff. She averred that even though she asked from the CBN for a copy of the report of the ad-hoc team on its assignment in the bank, none was given to her, stating that she was therefore not able to know the content of the report and was not given the opportunity to comment on anything in the said report which may have been prejudicial to her.

To show that the purported sack was premeditated, Akingbola said as was the practice with the CBN, once the liquidity ratio of any bank falls below the required minimum of 10 percent, it would notify the bank to do something to shore it up. But in this case, he said, “Intercontinental Bank Plc was never informed that its liquidity ratio had fallen below the required minimum.

“The details of the 48 per cent non-performing loans allegedly granted by Intercontinental Bank were not disclosed despite demand in this regard. The basis of the computation that the liquidity ratio of the bank is 21 per cent was not disclosed”.

The CBN, he further said, did not disclose “how they arrived at the conclusion that the Capital Adequacy Ratio (CAR) of the bank was 7.41 percent and not up to, or above the prescribed 10 percent”.

Perhaps, if given the opportunity, he stated further, the bank would have been able to show that the “CAR was above 10 percent as prescribed by the CBN and not 7.41 percent as alleged”.

To prove this point, Akingbola says the balance sheet of the bank as reported in the monthly returns to the CBN, has never shown the shareholders’ funds as negative. At all relevant times, the CAR of the bank, he said, was above the limit of 10 percent as required by the CBN. “Based on the monthly returns to the CBN and the audited accounts of Intercontinental Bank as at February 2009, the CAR was consistently above 20 per cent.

“Following the examination conducted by CBN on the balances of the bank as at May 2009, Intercontinental Bank was advised that the expected provision in the  books as at February 2009 should be N100 million.

“Although there was no detailed breakdown from the CBN for the computation of the CAR for the month of February 2009, the bank’s CAR when it was instructed by CBN to make provision for the said N100 billion was above the prescribed 10 percent.

“Furthermore, when the expected provision in the books of the bank was subsequently increased to N142 billion in May 2009 as recommended by CBN, the bank’s CAR was still above 10 percent”.

Akingbola also made attempts to correct the CBN claim that it had insufficient assets to fund its liabilities. According to him, there was no justifiable basis for such conclusion. He said the use of the Expanded Discount Window (EDW) of the CBN in not a sign that if is a failing bank, in any trouble or in a grave situation. “Intercontinental Bank did not use the EDW of the CBN persistently and all the arranged time plans of the repayment were diligently followed,” he pointed out.

Apart from that, he claimed, the use of the EDW by the bank “was not unreasonable when compared to the use of same facility by other banks. The other banks deemed “strong” or “healthy” by the CBN made recourse to the use of the EDW more than Intercontinental Bank”.

Ibru and Akingbola are also claiming that no Special Examination was ever conducted by the CBN on the affairs of their banks. The only documentary evidence in Abuja is that between February and July 2009 the CBN and NDIC conducted and Ad-Hoc Assignment and not a Special Examination as stipulated by Section 35 of the Banks and Other Financial Institutions Act (BOFIA).

On June 18, 2009, a letter of introduction was written to the embattled former bank chiefs. Titled: “Joint CBN/NDIC Ad-Hoc Assignment”, the letter was authored by one E. O. Owajulu, a deputy director, on behalf of the director of Banking Supervision.
The letter sent to Intercontinental Bank read thus: “A team of CBN/NDIC bank examiners led by Mr. R. A. Adams has been scheduled to carry out an Ad-Hoc Assignment in your bank.

“Please provide them with the necessary information that will enable them to promptly complete the assignment”.
The argument of the two former bank chiefs is whether in the absence of the special examination properly ordered by the CBN governor into the books and affairs of the banks and carried out pursuant to Section 33 of the BOFIA, Sanusi could validly exercise the power conferred on him by section 35 of BOFIA to remove them from office.

Ibru noted specifically that CBN did not at any time order a special examination into the books and affairs of Oceanic Bank and that the bank was still functioning normally and was meeting its obligations to its depositors and creditors as at the time Sanusi ordered her sack.
Consequently, both of them are asking the court for, among others, a declaration that their appointments as officers and Managing Director/Chief Executive Officers and as a Director of their respective banks subsist.


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