CBN Undecided Months After Takeover of Union, Polaris, Keystone Banks

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Two and half months after the takeover of Union and two other banks, the Central Bank of Nigeria (CBN) is still undecided on what to do with the three lenders which have continued to operate in the industry with inadequate board members.

The CBN dissolved the board of directors of Union Bank, Polaris Bank and Keystone Bank in one fell swoop in early January and also appointed a managing director and an executive director for each of them.

The apex bank according to its Acting Director of Corporate Communications, Hakama Sidi-Ali, wielded the big stick having been found guilty of various infractions considered inimical to financial system stability.  The action, Sidi-Ali, in a statement said became necessary, following failure on the part of the affected banks and their respective boards to abide by the stipulated rules.

She cited the non-compliance by these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of the Banks and Other Financial Institutions Act, BOFIA 2020, stating that,

“The banks’ infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others”.

Since the dissolution in January that swept off 26 bank directors from the industry, the apex bank has kept mum on the three banks, and efforts to know the next stage of CBN’s action on the three have been futile as officials of the apex bank kept sealed lips to phone calls and messages.

Media enquiries to Sidi-Ali, the CBN’s spokesperson by InsideBusinessNG to know the position(s) of the federal government on the three banks were rebuffed. Also, Auwalu Alhaji of the Corporate Communications department did not respond to media enquiries to ascertain what the intention(s) of the apex bank was regarding the banks at the time of filling this report.

The Founder and Chief Executive Officer of the Centre for Promotion of Private Enterprise, Muda Yusuf, in his defence of the apex bank said the CBN could be taking its time to ensure professionals are appointed to manage Union, Polaris, and Keystone Banks and normalise their situation before deciding the next steps regarding their ownership.  He described the process as a work in progress.

Yusuf, the former director-general of the Lagos Chamber of Commerce and Industry in a chat with InsideBusinessNG said the CBN “has no business holding on to the banks as their owner”.

He further noted that, although the CBN appointed new management for these banks, it would normally allow some time because these banks have issues that led to their takeover by the banking regulator.

“So, they have to give this new management time to normalise the situation in those banks, and as soon as they do that, the Central Bank of Nigeria will take a decision.

It would be recalled that President Bola Tinubu’s Special Investigator, Jim Obazee in his report that was made public at the twilight of 2023 noted that the federal government secured documents and that investigation reports led to the forfeiture of Titan Trust Bank and Union Bank. Based on the report of the investigations into the acquisition of Union Bank and Keystone Bank, he accused former Central Bank Governor, Godwin Emefiele of using proxies to acquire Union Bank for Titan Trust Bank Limited, as well as Keystone Bank without any evidence of payment.

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“We have completed our investigation on this acquisition and have also held meetings with the relevant parties except for Mr. Cornelis Vink, who is currently hospitalised in Switzerland’, said Obazee’s report.

“Otherwise, we are on the verge of recovering these two banks for the federal government,” Obazee reportedly said in December 2023.

In January 2024 however, the banks were recovered for the federal government following the inability of the previous owners to present proof of ownership of the funds with which the banks were acquired.

For instance, the chairman of Titan Bank, and also, former Deputy Governor of CBN, Tunde Lemo, and other investors in both Titan and Union Bank, Cornelius Vink and Rahul Savara refused to attend the December 28 meeting called by Obazee where they were expected to provide proof of ownership of the funds with which Titan Bank was set up and the proof of the funds for its acquisition of the Union Bank.

The Deputy Commissioner of Police (DCP) Eloho Okpoziakpo, the Head of Operations, Office of the Special Investigator had in a December 24 invitation referenced CR:3000/TSI/ABJ/Vol.1/69 entitled, “Re: CBN Investigation Activities, Invitation For A Follow Up Meeting With The Special Investigator” to Lemo, the chairman of TGI, Savara, and Vinks to further ensure that the federal government gave a fair hearing to the three on the TTB and Union Bank transactions, requested them to provide some documents including the company registration, and the details of ownership, shareholding structure, profile, and particulars of directors of Luxis DMCC located at Unit 1141, DMCC Business Centre, Level No.1, Jewellery & Gemplex 3, Dubai, UAE.

They were also asked to bring along with them, documents including the company registration, and the details of ownership, shareholding structure, profile, and particulars of directors of Magna International DMCC located at Unit 1024, DMCC Business Centre, Level No.1, Jewellery & Gemplex 3, Dubai, UAE.

Okpoziakpo warned against their failure to honour the invitation and provide/defend the documents requested, which he said, would be construed as their decision to forfeit their purported shareholding in Titan Trust and Union Bank.

“Kindly note that if Messrs. Cornelius Vink and Rahul Savara refuse to attend this meeting and provide/defend the requested documents/information, it will be construed that they have decided to forfeit their purported shareholders in TTB and Union Bank of Nigeria irrespective of which vehicle that they are using to own the purported shares”.

The documentation sought from Lemo and others are those that led to the licensing of Titan Trust Bank and the acquisition of controlling shareholding of Union Bank of Nigeria by Luxis and Magna, proof of funds, international verifiable bank statements (From the incorporation of the entities to date) and the shareholders that gave interest-free loans to the two entities separately (name, nationality, source, of the fund, proof of such funds, bank statements) as well as the relationship of the entities with Andrew Chukwudi Ojei, Jerome Olagunju Shogbon, Rahul Savara, Winston Odeh, Adaeze Udensi, Ekene Samuel Loius, Godwin Emefiele, Macombe Omoile, Tunde Lemo, Mudasir Amry, Faruk Gumel, Oluremi Oni, Vink Corporation Middle Est FCZ (together with the details of the shareholder that also gave Vink Corporation interest-free loan.

They are also to provide details of how Trust receipts from (Standard Chartered Bank), Zenith Nigeria Plc, and Zenith Bank (UK) were involved in the entire arrangement and also, the minutes of the board meetings, copy of the audited financial statements and management letter that arose from the audit of the financial statements of the two entities listed in (1) above as well as those of TTB and UBN from 2018 to date.

Lemo with the two shareholders were also asked to provide the details of any forbearance received from the CBN for UBN (before acquisition by TTB) and if they claimed that they did not know, they were directed to then come along with anyone who knows about it (with evidence), and also, the details of the loan capital from Afreximbank (Egypt), collaterals thereto and the involvement of the CBN in the entire arrangement.

Also requested were the details of any foreign exchange dealings that transacted with the CBN as retail or wholesale or facilitator with TGI, TTB, Luxis, Magna and other related entities, no matter how remotely connected and also, any other documents that can assist the Special Investigator in arriving at an informed decision on the investigation of TTB, UBN, CBN and any person of interest in the entire arrangement.

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