Court Orders Forfeiture of Monies in Bank Accounts Not Linked to BVN

• Account holders risk losing monies after 14 days

Tobi Soniyi in Lagos and Chineme Okafor in Abuja

A Federal High Court in Abuja has ordered the forfeiture of all monies in bank accounts owned by corporate organisations, government agencies or individuals that are without bank verification number (BVN).

The forfeiture order, which was issued by Justice Dimgba Igwe, while ruling on an exparte application filed by the Federal Government through the Office of the Attorney General of the Federation, is not final yet.

The owners of the accounts will have 14 days to claim ownership of same and show cause why the proceeds in the accounts should not be permanently forfeited to the Federal Government.

The Federal Government had sought an interim order directing all the money deposit banks (commercial banks) to disclose/declare all individual and corporate accounts in their custody not covered by BVN and for an interim order of forfeiture of the monies therein being accounts with insufficient know your customer guidelines contrary to the directive of the CBN and Section 3 of the Money Laundering (Prohibition) Act, 2011 (as amended.

The application was filed on September 28th, 2017.

The judge ordered the banks to file an affidavit of disclosure before it, showing the names of the affected accounts, the account numbers, outstanding balances, domiciliary accounts and the branch, where the accounts are domiciled.

In specific terms, here are the orders made by the judges: “1. That the 1st-19th defendant banks shall filed an affidavit of disclosure before this court deposed to by the Chief Compliance Officer of all accounts of: (a) Individuals; (b) corporate bodies and (c) government agencies in their custody without BVN and serve same on the Central Bank of Nigeria.

“2.That the 1st-19th defendant banks shall disclose: (a) the names of the accounts as opened; (b) Account Numbers; (c) outstanding balances (d) Domiciliary Accounts and (e) the branch/location where the accounts are domiciled of all accounts without BVN.

“3. That the 1st-19th defendant banks to disclose any investments made with funds from these accounts without BVN in any products including fixed/term deposits and their liquidation and interest incurred, Bank Acceptances, Commercial Papers and any other relevant information related to the transaction made on the accounts.

“4. That an order is hereby made freezing the said accounts freezing the said accounts by stopping all outward payments, operations or transactions (including any bill of exchange) in respect of the accounts pending the hearing and determination of the substantive application

“5. That an order is hereby made directing the 1st-19th defendant banks to disclose any investments made with funds from these accounts without BVN in any products including fixed/term deposits and their liquidation and interest incurred, Bank Acceptances, Commercial Papers and any other relevant information related to the transaction made on the accounts.

“6. That an interim order is hereby made directing the CBN and the Nigeria Interbank Settlement Systems (NIBSS) to validate the information contained in the affidavit of compliance/disclosure filed by the respective

19 banks within 7 days from the date of service on the CBN and NIBSS.

“7.That an interim order is hereby made appointing a bank examiner from the books or any bank that fails to comply with the order of the court to file affidavit of disclosure.

“8. That an interim order is hereby made granting leave to the applicants or any officer authorised by them to advertise the accounts without BVN disclosed by the banks in a widely circulated national newspapers as notice to any person or body corporate or financial institution who may have any interest in any of the said accounts to claim ownership within 14 days of the publication of the order and show cause why the proceeds in the account should not be permanently forfeited to the Federal Government.”

In another development, the Central Bank of Nigeria has given the Nigerian Bulk Electricity Trading Plc (NBET) up till December 31, 2028 to fully liquidate the N701 billion loan borrowed from it to guarantee full monthly payments of electricity generated and supplied to the national grid by power generation companies (Gencos), THISDAY has learnt. The N701 billion loan had been approved by the Federal Executive Council in March this year.

As part of the agreement on the loan, THISDAY also gathered, the CBN granted NBET two-year moratorium on the principal repayment, implying that it would only begin to pay back the loan from January 2019, while repayment of the interest would start from January 2018.

Details obtained from the final term sheet for the loan, showed NBET was now in a firm position to meet its payment obligations to the Gencos, and has even paid the Gencos’ full bills for energy supplied to the grid up to June 2017.

According to the term sheet, which both the Ministry of Finance, Debt Management Office (DMO) and Ministry of Power have equally approved, NBET would also pay back the loan with a single-digit interest of five per cent per annum as against the 10 per cent CBN had earlier proposed.

Following the approval granted NBET by FEC in March to negotiate the loan with the CBN to support its monthly payment to Gencos because of the revenue shortfalls in the electricity market, the two parties engaged in a drawn-out negotiation on the loan terms with the CBN reportedly placing before NBET terms of condition, which it reviewed and subsequently rejected. THISDAY learnt that one of the issues that contributed to the lengthy negotiation was its annual interest, which CBN allegedly raised to 10 per cent.

But in the final term sheet, the NBET will, however, provide a letter of commitment to back up its repayment obligation through its annual budget. The ministry of finance, budget and national planning are also expected to guarantee that repayments would be done as scheduled should there be any case of non-release of funds from budgetary allocation.

In this regards, repayments from the ministry of finance would have to be debited directly to the Consolidated Revenue Fund, subject to appropriation as required in line with Section 80 of the federal constitution. But this condition was found by THISDAY to have been flagged down by the DMO in its comments on the loan which it sent to the CBN in August shortly before the final outcome was agreed in September.

THISDAY also gathered from sources that were privy to the negotiations that a proposal by the CBN to set up a vehicle – the NESI Stabilisation Strategy Limited (NESI SS Ltd) to issue bonds or debentures on behalf of the NBET to finance the Gencos payments was not accepted by NBET.

To ensure transparent disbursements of the funds in the loan, the term sheet stated that: “Drawdowns will be made on a monthly basis based on invoices over a period which shall not exceed 24 months from the effective date.

“The applications for disbursement will contain comprehensive breakdowns of the elements of the payment showing the amounts due to each participating generator and its approved third parties. CBN will review NBET’s submission and credit the beneficiaries that meet full disbursement criteria.”

It equally noted that such applications for disbursement would have to be confirmed by the permanent secretary in the ministry of power, works and housing.