How former bank MD, others, allegedly used N18bn for fraud

Justice Lateefa Okunnu of a Lagos High Court sitting in Ikeja in
Tuesday heard how embattled former Managing Director of the defunct
FinBank, Okey Nwosu allegedly used funds sourced from within the
bank to fraudulently buy shares in the same bank.

Elonna Ezulu, who was an officer in the legal department of the
defunct bank revealed this while testifying in a N10.9 billion
fraud brought against Nwosu and 3 others, further added that it is
not proper for the bank to use its own money to purchase
shares.

Ezulu said this while being cross-examined by the prosecuting
counsel for the Economic and Financial Crimes Commission (EFCC), Mr
Rotimi Jacobs (SAN).

The witness further opened up that himself and his team were not
aware that the directors used N18bn of the bank money to purchase
its own shares.

“I was not informed that the N18bn of the bank money would be
used to purchase its own shares.”

“My unit was not involved in the purchase of the shares.”

“It’s illegal for the bank to use its own money to buy its own
shares,” Ezulu said.

Ezulu under cross-examination further revealed that in 2009, the
Central Bank of Nigeria and the Nigerian Deposit Insurance
Corporation conducted special examination on 24 Nigeria deposit
banks and the examination revealed that Finbank and some other
banks were in grave conditions.

He stated that the grave conditions detected as at that time
were: capital inadequacy and liquidity ratio which was below
regulatory ratio, weak corporate frameworks, and high ratio of
non-performing loans.

He further revealed that Finbank has a loss of N150bn for the
2009 financial year.

He, however, added during cross-examination that to stabilize
Finbank, the CBN extended N50bn 7 years facility to the bank, gave
an order that the executive management team be replaced with the
CBN appointed management and immediate order to recapitalize.

While answering questions on the executive management
compensation, Ezulu stated that despite the fact that the bank was
wallowing in debt, the board approved some special package for
executives.

“Following due deliberation, the board approved special
compensation package for the MD CEO, executives, group
executives.”

“The MD CEO was to be given N60m, the executive directors N45m
and the group executive directors N35m.”

Justice Okunnu thereafter adjourned the case till November 6, 8,
9 and 14, 2017 for continuation of trial.

Nwosu has been standing trial since 2003 alongside three former
directors of the defunct Finbank – Dayo Famoroti, Danjuma Ocholi
and Agnes Ebubedike for an alleged banking fraud of N10.9bn.

They were arraigned on 26 counts which they all pleaded not
guilty to.

The case suffered a setback when the defendant went all the way
to the Supreme Court challenging the jurisdiction of the lower
court to try them.

Justice Lateefa Okunnu of a Lagos High Court sitting in Ikeja in
Tuesday heard how embattled former Managing Director of the defunct
FinBank, Okey Nwosu allegedly used funds sourced from within the
bank to fraudulently buy shares in the same bank.

Elonna Ezulu, who was an officer in the legal department of the
defunct bank revealed this while testifying in a N10.9 billion
fraud brought against Nwosu and 3 others, further added that it is
not proper for the bank to use its own money to purchase
shares.

Ezulu said this while being cross-examined by the prosecuting
counsel for the Economic and Financial Crimes Commission (EFCC), Mr
Rotimi Jacobs (SAN).

The witness further opened up that himself and his team were not
aware that the directors used N18bn of the bank money to purchase
its own shares.

“I was not informed that the N18bn of the bank money would be
used to purchase its own shares.”

“My unit was not involved in the purchase of the shares.”

“It’s illegal for the bank to use its own money to buy its own
shares,” Ezulu said.

Ezulu under cross-examination further revealed that in 2009, the
Central Bank of Nigeria and the Nigerian Deposit Insurance
Corporation conducted special examination on 24 Nigeria deposit
banks and the examination revealed that Finbank and some other
banks were in grave conditions.

He stated that the grave conditions detected as at that time
were: capital inadequacy and liquidity ratio which was below
regulatory ratio, weak corporate frameworks, and high ratio of
non-performing loans.

He further revealed that Finbank has a loss of N150bn for the
2009 financial year.

He, however, added during cross-examination that to stabilize
Finbank, the CBN extended N50bn 7 years facility to the bank, gave
an order that the executive management team be replaced with the
CBN appointed management and immediate order to recapitalize.

While answering questions on the executive management
compensation, Ezulu stated that despite the fact that the bank was
wallowing in debt, the board approved some special package for
executives.

“Following due deliberation, the board approved special
compensation package for the MD CEO, executives, group
executives.”

“The MD CEO was to be given N60m, the executive directors N45m
and the group executive directors N35m.”

Justice Okunnu thereafter adjourned the case till November 6, 8,
9 and 14, 2017 for continuation of trial.

Nwosu has been standing trial since 2003 alongside three former
directors of the defunct Finbank – Dayo Famoroti, Danjuma Ocholi
and Agnes Ebubedike for an alleged banking fraud of N10.9bn.

They were arraigned on 26 counts which they all pleaded not
guilty to.

The case suffered a setback when the defendant went all the way
to the Supreme Court challenging the jurisdiction of the lower
court to try them.