In Ex Parte, Court Orders Seven Banks to Remit $793.2m to TSA, Banks Deny

Davidson Iriekpen and Obinna Chima

Ten months after the Central Bank of Nigeria (CBN) suspended nine commercial banks from trading in the interbank foreign exchange (IFEX) market for failing to remit a total of $2.33 billion belonging to the Nigerian National Petroleum Corporation/Nigerian Liquefied Natural Gas Company to the federal government’s Treasury Single Account (TSA), a Federal High Court in Lagos yesterday ordered seven of the banks to temporarily remit a total of $793.2 million allegedly still domiciled with them in contravention of the TSA policy.

Justice Chuka Obiozor ordered the seven banks – Diamond Bank, United Bank for Africa (UBA), FirstBank, Skye Bank, Fidelity Bank, Sterling Bank and the defunct Keystone Bank (acquired by Heritage Bank) – to remit the various amounts allegedly kept “illegally in their custody” to the designated federal government asset recovery dollar account domiciled with the CBN.

According to the court papers filed by counsel for the Attorney General of the Federation (AGF), Prof. Yemi Akinseye-George (SAN), a total of $367.4 million was illegally hidden by three government agencies in UBA, while the sum of $41 million was illegally kept in a National Petroleum Investment Management Services (NAPIMs) fixed deposit account with Skye Bank.

The court papers further stated that $277.9 million was hidden in Diamond Bank; $18.9 million in FirstBank; $24.5 million in Fidelity Bank; $17 million in Keystone Bank; and $46.5 million in Sterling Bank.

A lawyer from Akinseye-George’s law firm, Vincent Adodo, who deposed to a 15-paragraph affidavit in support of an ex parte application filed by the AGF, stated that seven banks colluded with the federal government officials to hide the funds in breach of the government’s TSA policy.

The funds, he said, were revenues, donations, transfers, refunds, grants, taxes, fees, dues, tariffs, etc., accruable to the federal government from different ministries, departments, parastatals and agencies.

Adodo said the banks had failed to remit the funds to the TSA domiciled in the CBN, in violation of the guidelines issued by the Accountant General of the Federation which fixed September 15, 2015 as the deadline for such funds to be moved.

He said: “The 1st to 7th respondents (banks), in collaboration with and/or collusion with unknown officials of the federal government, conspired to disobey the relevant constitutional provisions, thereby depriving the Government of the Federal Republic of Nigeria of funds belonging to it, which are needed urgently to fund pressing national projects under the 2017 budget.”

Among the allegedly culpable government agencies include the Nigerian Petroleum Development Company (NPDC), the exploration and production subsidiary of NNPC.

Moving the ex parte application thursday, Akinseye-George said it would best serve the interest of justice for Justice Obiozor to order the banks to remit the funds to the federal government to prevent the funds from being moved or dissipated.

“The withheld funds are urgently required for the implementation of the 2017 budget. The budget has a lifespan of 12 months and we are already in the middle of the year.

“By hiding these funds, the federal government is being forced to borrow money from these commercial banks at high-interest rates,” Akinseye-George added.

After listening to the counsel, Justice Obiozor granted the interim order.

He directed that the order should be published in a national daily newspaper.

He also adjourned till August 8, 2017 for anyone interested in the funds to appear before him to show cause why the interim order should not be made permanent.

Reacting to the order, Fidelity Bank said thursday that since the commencement of the TSA, it had complied with the policy and did not have the sum of $24.5 million belonging to a government agency domiciled with it.

In a statement by its spokesman, Mr. Charles Aigbe, the bank said: “Our attention has been drawn to media reports stating that Fidelity Bank illegally concealed $24.5 million in contravention of the Federal Government’s Treasury Single Account (TSA) policy, citing court papers filed by the Office of the Attorney General of the Federation at the Federal High Court in Lagos thursday.

“Please note that at the commencement of the TSA policy, all TSA related accounts held by the bank were fully disclosed to the authorities. We do not have any TSA related account with a balance of $24.5m in Fidelity Bank which has not been remitted to the authorities.

“This matter is coming to us as a surprise. We are therefore reaching out to the Office of the Attorney General of the Federation to ascertain which account or parastatal they are referring to with a view to carrying out a detailed reconciliation.”

Also, Sterling Bank, in a statement by its Chief Marketing Officer, Henry Bassey, said: Our attention has been drawn to an order by the Federal High Court sitting in Lagos on Thursday 20th July 2017, mandating Sterling Bank Plc to remit the sum of US$46.5 million to a designated Federal Government Asset Recovery Account with the Central Bank of Nigeria.

“The sum in question supposedly represents undisclosed qualifying funds under the Federal Government’s Treasury Single Account (TSA) policy illegally kept by the National Petroleum Investment Management Services (NAPIMS) and Nigerian Petroleum Development Company (NPDC).

“We wish to state unequivocally that Sterling Bank does not hold any sum in any currency as a deposit from either of these entities.

“We have therefore written formally to the Office of the Accountant General of the Federation (AGF) demanding a clarification of this claim and a correction in the interest of the general public.”

A senior executive of UBA who preferred not to be named, also said the bank did not have hidden federal government funds and had complied with the TSA policy.

He said: “If you recall, last August, we were the first bank to refund NNPC/NLNG funds domiciled with us. We do not understand where this is coming from, but we will contact the federal government to get to the bottom of this case.”

Last August, the CBN had suspended UBA ($530 million), FirstBank ($469 million), Diamond Bank ($287 million), Sterling Bank ($269 million), Skye Bank ($221 million), Fidelity Bank ($209 million), Keystone Bank ($139 million), FCMB ($125 million) and Heritage Bank ($85.5 million) from the FX market for not remitting a total of $2.33 billion belonging to NNPC/NLNG to the TSA, stating that they would only be readmitted after they had remitted the funds.

However, UBA was readmitted to the market the next day after the suspension was announced, having complied with the directive.

Though the remaining eight banks had started to remit some of the funds domiciled with them, the CBN about a week later readmitted all of them into the FX market, in order to avert a crisis in the financial system.
It also gave the banks till March this year to remit all the NNPC/NLNG funds in their custody.

A CBN source informed THISDAY yesterday that some of the banks failed to meet the March deadline and were still remitting the dollar deposits gradually to the TSA.
He, however, declined to disclose the names of the banks that had not finished remitting the dollar deposits still domiciled with them.

It was uncertain if the outstanding dollar deposits not yet remitted by the banks formed part of the $793.2 million mentioned in the court processes thursday.