BY PETER EGWUATU

The controversial nationalized banks have taken a twist with the court restraining the Central Bank of Nigeria (CBN), Nigerian Deposit Insurance Corporation(NDIC) and  Asset Management Company of Nigeria (AMCON) from dealing on the assets of the affected banks.

This means that the court will have to decide whether the action by the CBN to nationalise a publicly quoted banks was right or wrong.

The shareholders of the former Afribank Nigeria Plc, Bank PHB and Spring Bank Plc had dragged the Central Bank of Nigeria (CBN) and 11 others to court to challenge their power to nationalize their invezstment.

It is the first time in the history of the Nigerian capital market for publicly quoted banks to be nationalized by an agency of the government. Also, history will be made if the court in its ruling returns the banks to their former owners.

In the suit, the shareholders argued that the revocation of the licenses of the banks by the CBN Governor, Sanusi Lamido Sanusi, was prejudicial to their rights to invest in public quoted companies in accordance with the Nigeria Investment Promotion Commission (NIPC) Act and the Investment and Securities Act (ISA).

Part of the reliefs sought by the shareholders include a declaration that the action of the CBN, NDIC and the AMCON in the purported transfer of the assets, businesses and operations of the nationalised banks to the new banks are a breach of their fundamental human rights to freedom from compulsory acquisition of property as guaranteed by the constitution.

They are also seeking for an order of the court for the defendents to jointly and severally pay them punitive damages to be determined by the court through their lawyer for the diminution in the value of their shares in the nationalised banks as a result of the unlawful take over of the banks by the CBN.

The shareholders are equally seeking an order of perpetual injunction restraining the three new banks, the NDIC and the AMCON from offering for sale or advertising or representing to any person, any intention or offer for sale or transferring or purporting to transfer to any person any interest in the assets, businesses and operations of the three nationalised banks.

It will be recalled that former Afribank, Bank PHB, and Spring Bank were nationalized by the CBN for being under capitalized.

The CBN, acting in consonance with the  NDIC as the liquidator, engineered the revocation of operating licences,  liquidated and subsequently acquired former Afribank Plc, BankPHB Plc and Spring Bank Plc, and consequently changed their names as nationalised and are being managed by AMCON without considering the investments of the shareholders in the affected financial institutions.

The aggrieved shareholders have also warned prospective investors that are proposing to have stakes in the recently nationalized banks to stay off pending the determination of the suit filed before a federal high court sitting in Lagos challenging the unlawful takeover of the banks by the CBN.

The warning came after CBN, NDIC and the nationalized banks denied receiving the court order restraining them from dealing in the assets of the nationalised banks.

The concerned shareholders also appealed to the CBN and the 11 other defendants in the suit filed by Mr. Boniface Okezie and three others to obey the caveat emptor placed by Federal High Court, Ikoyi on October 21, 2011 restraining them from dealing on the assets of the nationalized banks.

The counsel for the shareholders, Chuk Nwachukwu at a press briefing in Lagos last weekend, stated that the aim of the briefing was to inform the public of the implications of the defendants misrepresenting the ruling of Justice Charles E. Archibong  and for the defendants to maintain status quo with regards to the nationalized banks.

According to him, “ The Judge of the Federal High Court, C.E Archibong did not give an order to close the  nationalized banks, nor did he say depositors funds are not safe but only restrained the nationalized banks, CBN, Nigerian Deposit Insurance Corporation (NDIC), and Asset Management Company of Nigeria (AMCON) from further dealing in the assets, businesses and their subsidiaries which are purported to have been transferred to the Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited or carrying on or in any manner offering for sale to any persons any part of such assets businesses and operations  pending the determination of the motion on notice.”

According to him, “The court order restraining the CBN, NDIC and AMCON from tampering with the assets and businesses of these banks remain effective for two weeks until November 28, 2011 when the case would be heard by the court. The Judge has the right to reverse the restraint depending on how the parties to the suit comport themselves.

“What the judge has done at the moment was to show the defendants that the case is before it and should be respected. The defendants should stop telling the public that they have taken possession of people’s assets without shareholders, the original owners approving that.”

On Monday, 14th November, 2011, Justice Archibong of the Federal High Court Lagos granted the order as prayed after a thorough scrutiny of the application including the supporting affidavit and written arguments.

Commenting on the Motion Exparte, Boniface Okezie, Chairman, Progressive Shareholders Association (PSAN), said, “Shareholders are praying the court to declare the action of the CBN in nationalizing the banks without compensation as illegal and return back the banks to us. The CBN did not allow the time frame given the banks to recapitalize to elapse before taken its action.

So the court is the last hope of shareholders who had invested their little income in these banks.”

Continuing, he said, “We will abide with what the court will say on this issue because it is our last hope and we hope that the CBN and others concerned will abide by the rule of law. “We hail the courage and astuteness of this rare judge. The undue restraint of the courts in the many actions filed by aggrieved shareholders has only bred contempt of the courts in the mind of Sanusi and his ilk.

“It had hitherto strengthened his hand of tyranny, hence he freely taunted shareholders and other aggrieved Nigerians with the words “go to court”. A brave and wise judge has put a slap on his face and put a stop to his contemptuous jeer of the Nigerian courts” he enthused.

Meanwhile, it will be recalled that the NDIC had stated that the decision to take over AfriBank, Bank PHB and Spring Bank was a pre-emptive step to save them from collapse, since there was no sign that they would sign Transaction Implementation Agreements (TIA) with any core investors before the September 30 deadline.