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Confusion in Ecobank As Customer Drags Bank to Court Over N2Billion Loss
A Federal high court sitting in Lagos south west Nigeria has adjourned
till 10th of December, 2018 for report of settlement or trial if
amicable settlement fails, the suit instituted by a Lagos business man Rev. Chukwuemeka Ngubo and his company Elim Motors Nigeria limited against Ecobank Nigeria limited for
allegedly buying United States Dollar on their behalf at the rate of
N475 to one United States Dollar whilst the Central Bank approved rate
was at N300 to one United States Dollar as at the time of purchase.
till 10th of December, 2018 for report of settlement or trial if
amicable settlement fails, the suit instituted by a Lagos business man Rev. Chukwuemeka Ngubo and his company Elim Motors Nigeria limited against Ecobank Nigeria limited for
allegedly buying United States Dollar on their behalf at the rate of
N475 to one United States Dollar whilst the Central Bank approved rate
was at N300 to one United States Dollar as at the time of purchase.
By wrongfully sourcing foreign exchange from the parallel market,the
Plaintiffs alleged that Ecobank exposed them to the sum of over
N2Billion loss.
By the provision of the Foreign
Exchange (monitoring and miscellaneous Provisions )Act, Cap F34,laws of
the Federation of Nigeria 2004,Ecobank ought not to have sourced foreign
exchange from the parallel market.
Plaintiffs alleged that Ecobank exposed them to the sum of over
N2Billion loss.
By the provision of the Foreign
Exchange (monitoring and miscellaneous Provisions )Act, Cap F34,laws of
the Federation of Nigeria 2004,Ecobank ought not to have sourced foreign
exchange from the parallel market.
The plaintiffs further averred that, the action of the bank is in
flagrant breach of the Central Bank of Nigeria’s extant rules regulating
the conduct of foreign exchange transactions in Nigeria which has
adversely affected the credit rating and financial credibility of the
company to the benefit of the bank.
flagrant breach of the Central Bank of Nigeria’s extant rules regulating
the conduct of foreign exchange transactions in Nigeria which has
adversely affected the credit rating and financial credibility of the
company to the benefit of the bank.
According to statement of claim filed before the court ,The
Plaintiffs aver that pursuant to the banker-customer relationship
between Ecobank Nigeria limited and Elim Motor limited,the bank had,
in the past granted Elim Motor limited several credit facilities which
the company always repaid as at when due.
The company averred that,it applied for and the bank issued a bank
guarantee in the sum of $12million in favour of Credit Trading Company
,through Deutche Bank AG London in the sum of $8,750,000, By the
foregoing the plaintiffs aver that, a balance of $3,250,000 was left
unutilised.
guarantee in the sum of $12million in favour of Credit Trading Company
,through Deutche Bank AG London in the sum of $8,750,000, By the
foregoing the plaintiffs aver that, a balance of $3,250,000 was left
unutilised.
The loan was secured with the following.
1.lien on cash Collateral of N200 million being held at the bank’s Treasury Department.
2.legal mortgage on blocks of lecture Halls Complex student centre Okota, Isolo Lagos State valued at N383Million.
3.Legal Mortgage on Block of Lecture hall complex at Elim Mordern Student Centre Okota.
4.Stock Hypothecation of one Billion Naira.
5.Persobal guarantee of the Managing Director with a notarised statement of net worth.
6.Promisory
note of Elim Motors Limited for the payment of all present and future
principal and outstanding balances in the account.
note of Elim Motors Limited for the payment of all present and future
principal and outstanding balances in the account.
Upon the expiration of the tenor of the bank guarantee ,and in
honouring the bank guarantee, Ecobank Nigeria limited unilaterally and
wrongly sourced the sum of $8,750,000. It
paid to Cedric Trading Company LLC from parallel market rather than
from Central Bank of Nigeria by purchasing the foreign exchange at the
rate of N475 to one US Dollar, whilst the Central Bank of Nigeria’s
approved rate was at N300 to one US Dollar as at that time.
honouring the bank guarantee, Ecobank Nigeria limited unilaterally and
wrongly sourced the sum of $8,750,000. It
paid to Cedric Trading Company LLC from parallel market rather than
from Central Bank of Nigeria by purchasing the foreign exchange at the
rate of N475 to one US Dollar, whilst the Central Bank of Nigeria’s
approved rate was at N300 to one US Dollar as at that time.
By wrongly sourcing foreign exchange from the parallel market, the
bank exposed the Plaintiff Company to the sum over N2billion as loss.
bank exposed the Plaintiff Company to the sum over N2billion as loss.
By the provision of the foreign Exchange (motoring and Miscellaneous
provision) Act, Cap F34,Laws of the Federation of Nigeria 2004,Ecobank
ought not to have sourced foreign exchange from the parallel market.
Due to the wrongful actions of the bank,the bank is still demanding
for the sum of N4,410,017,358.51 from the plaintiffs as their
outstanding indebtedness.
However, the Plaintiffs averred that they are not in any way indebted
to Ecobank,consequently urged the court to declare that the unilateral
purchase of foreign exchange by Ecobank at the parallel market rate
rather than at the Central Bank of Nigeria ‘s inter-bank rate is in
breach of the Ecobank’s fiduciariary duties owed the Plaintiffs by
Ecobank Nigeria limited.
to Ecobank,consequently urged the court to declare that the unilateral
purchase of foreign exchange by Ecobank at the parallel market rate
rather than at the Central Bank of Nigeria ‘s inter-bank rate is in
breach of the Ecobank’s fiduciariary duties owed the Plaintiffs by
Ecobank Nigeria limited.
An order directing Central bank of Nigeria to conduct a detail enquiry into the purchase of foreign exchange
by the bank at the parallel market, and if the bank is found to have
breached ethical standards in the banking industry, penalized the bank
in line with its extant Guidelines and Monetary Policies.
by the bank at the parallel market, and if the bank is found to have
breached ethical standards in the banking industry, penalized the bank
in line with its extant Guidelines and Monetary Policies.
The
bank in its statement of defence denied almost all the claims of the
plaintiffs instead the bank is contending that the plaintiffs are owing
the bank the sum of N4,693,438,781.10 as at 28th of February, 2016.
bank in its statement of defence denied almost all the claims of the
plaintiffs instead the bank is contending that the plaintiffs are owing
the bank the sum of N4,693,438,781.10 as at 28th of February, 2016.
The bank therefore urged the court to dismiss the claim of the plaintiffs as being frivolous and baseless.