ERHC Energy Inc (ERHE)

[RUBY1100]

[ERHC] Failed Banks: Senate May Seek Prosecution of Debtors
•Summons CBN, NDIC •Chrome proposes payment plan of N934m owed
From Sufuyan Ojeifo in Abuja, 07.09.2009

http://www.thisdayonline.com/nview.php?id=148262

Senate yesterday took a step further to seek the prosecution of former directors of failed banks whose abuse of insider credit totalling N53.3 billion led to the failure of 13 banks.
The Nigerian Deposit Insurance Corporation (NDIC) has so far recovered only N4.722 billion of the debt which the former directors gave to companies in which they had interests.

Senator Bassey Ewa-Henshaw (Cross River South) had on Tuesday, after the list of insider-related credits was declassified on the floor of the Senate, sought to reopen debate on the matter.
He had come under order 53(6) of the Senate Standing Rules (2007 as Amended), but Senate President David Mark refused to approve the request. Mark said it was not properly tabled.
Ewa-Henshaw explained that senators were not privy to the identities of the directors involved in the insider credit abuse when debating the report and that the Upper House should now focus on prosecution of the personalities involved in the insider credit abuse.

The Senate President said he knew Ewa-Henshaw was heading in that direction and that he must necessarily come through a substantive motion which would be slated for another legislative day and that the leadership must be notified in writing.

Yesterday, there were indications that a motion is being planned by some senators, seeking the prosecution of those involved in the insider credit abuse that resulted in the failure of the banks and the agonies of their depositors.
But in a bid to escape prosecution, some of the people whose names were published in the list of debtors are now making quick payments, while some others are submitting repayment plans.

For example, Sir Emeka Offor, who said he was about defraying the outstanding balance of N934.9 million that his Chrome Group of Companies, owed failed African Express (AFEX) Bank, has sent a proposal to the Senate Committee on Banking, Insurance and other Financial Institutions on how to liquidate the debt.
The total loan Offor got for Chrome Group of Companies, as contained in the NDIC report that the Senate Committee Chairman, Senator Nkechi Nwaogu, read out on the floor of the Upper House on Tuesday, was N7.5 billion.


According to the report, Offor paid back only N3.8 billion. But he disputed the claim, saying N934.9 million was the outstanding balance of his company's indebtedness to AFEX Bank.
In a letter dated May 14, 2009, addressed to Nwaogu and signed by Company Secretary/Legal Adviser of Chrome owned by Offor, Anthony Achebe, Chrome said AFEX Bank's total deposit liability as at December 31, 2005 was N6.6 billion.


The letter stated that the deductions/payments to date included N3 billion deposit to Central Bank of Nigeria (CBN) by Chrome Group on January 12, 2006; N449,980,379.00 deposit to NDIC on June 28, 2006; N100 million deposit to NDIC on December 18, 2007; N100 million deposit to NDIC on March 20, 2008; interest on the N3 billion deposited at CBN at 10 per cent per annum up to May 31, 2009; and payment of N1 billion to NDIC by UBA Plc under the cherry picking arrangement.

According to the letter, “Outstanding balance viz-a-viz the defunct African Express Bank total deposit liability is N934, 925, 129.00.”

The letter stated further: “Security-Chrome Group’s Account with the defunct African Express Bank Plc were secured principally by a Lien on 100 (one hundred) million units of the common stock of Environmental Remediation Holding Company (ERHC) - an American registered company listed on NASDAQ. The originals of the share certificates of the above stocks are in the custody of the NDIC.

“We wish to observe that despite our efforts towards the repayment to the outstanding depositors of the defunct AFEX Bank Plc, no effort is being made to recover the outstanding loans of about N4 billion from the other customers of the Bank.
“Our proposal has thus taken into consideration, our previous repayments vis-a-viz the receivables from the cherry picking exercise conducted by the regulatory authorities as well as the entire deposit liabilities of the defunct AFEX Bank Plc.


“In view of the foregoing representation, we humbly request that Chrome Group makes a good faith payment of N1,200,000,000.00 (One Billion, Two Hundred Million Naira) in twelve equal instalments effective June 1, 2009 in full and final settlement of its indebtedness as against the outstanding balance of N934,952,129.00 needed to pay the outstanding deposit liabilities of the defunct AFEX Bank Plc.

“Our request to pay the above stated sum is borne out of our genuine desire to offset the indebtedness and taking into consideration that other debtor customers of the defunct Bank are yet to take steps towards liquidating their outstanding indebtedness.”


Also, a member of the Senate (2003 to 2007), Senator Chris Adighije, who was mentioned in the NDIC report to have collected N1.9 million loan from the defunct Metropolitan Bank in insider abuse, yesterday paid up the entire debt vide a Guaranty Trust Bank draft dated July 8, 2009.


In his letter to the Managing Director of the NDIC, entitled, “Indebtedness to Metropolitan Bank (In Liquidation), he said: “It has just come to our notice through newspaper publications that we are indebted to Metropolitan Bank now liquidated to the sum of N1.9 million only.


“This state of affairs was not known to us. We had no information about this. One Okolonji of NDIC called a month ago and promised to forward the details to us. He did not do that; he said he was ill.”

Also, an industrialist, Chief Samuel Adedoyin, yesterday denied any indebtedness totalling N5.584 billion to the defunct City Express Bank.


Reacting through his solicitors, Sanusi, Akinrimisi & Co, Adedoyin stated that he was not indebted to the defunct City Express Bank in the sum stated.

Text of the solicitors' statement reads: “Sequel to the takeover of the defunct City Express Bank by the Central Bank of Nigeria (CBN) in December 2005, an Interim Management Committee appointed by the Central Bank of Nigeria alleged that our client and his companies were indebted to the defunct City Express Bank in contradictory sums ranging from N585,000,000 (Five Hundred and Eighty-Five Million Naira) to N1.2 bn (One Billion, Two Hundred Thousand Naira). These contradictory figures our client has vehemently denied owing.


“Nigeria Deposit Insurance Corporation (NDIC) also forwarded a petition to the Economic and Financial Crimes Commission (EFCC) but was unable to substantiate the sum allegedly owed by our client and his companies. Series of suits have been filed and are pending at the Federal High Court, Lagos in relation to the sum allegedly owed by our client and his companies.

“However, the sum of N5.584bn (Five Billion, Five Hundred and Eighty-Five Million Naira) forwarded to the Senate Committee on Banking, Insurance and Other Financial Institutions by the NDIC as the amount allegedly owed by our client was never at anytime owed by our client and his companies.

“Our client denies owing the defunct City Express Bank the sum of N5.584bn (Five Billion, Five Hundred and Eighty-Four Million Naira) and stated that the figures forwarded to the Senate Committee on Banking, Insurance and Other Financial Institutions by NDIC are fictitious and untrue.


“Our client shall forward a detailed and comprehensive petition to the Senate Committee on Banking, Insurance and Other Financial Institutions to refute the libellous and mendacious publication as presented to the Senate Committee on Banking, Insurance and Other Financial Institutions by NDIC,” the solicitors stated.


In the meantime, the Senate Committee has already invited the CBN, NDIC and debtor directors to a meeting on Monday, next week.


The meeting is coming on the heels of Tuesday’s adoption of the report and recommendations of the Committee on the Public/Investigative hearing on the agonies of depositors of failed banks and financial institutions.
The Upper House had directed the NDIC and the CBN to immediately convene a meeting of parties to all pending court cases.


They are to meet with the Senate Committee to facilitate its resolutions.
The NDIC, as resolved by the Senate, is to come up with a plan for immediate payment of all depositors irrespective of the pending court cases and to put a definite deadline for the completion of the process.
The CBN is to re-examine the practice under “Purchase and Assumption” whereby assuming banks were allowed to cherry pick the good assets of failed banks.