Finbank’s fraud: Improper for bank to purchase shares with its money – Witness

An officer in the legal department of the defunct Finbank, Mr. Elonna Ezulu, on Tuesday, informed an Ikeja High Court that it is improper for a bank to use its own money to purchase shares.

Ezulu made this revelation in his testimony before the court as a defence witness in the trial of a former Managing Director of the defunct Finbank Plc, Mr. Okey Nwosu, who is facing N10.9billion fraud charges.

While being cross-examined by EFCC counsel, Mr. Rotimi Jacobs, SAN, the witness stated that himself and his team was 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.

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 and the EFCC had since closed its case.
The case recently recommenced after it had journeyed all the way to the Supreme Court at the instance of the defendants who challenged the jurisdiction of the lower court to try them.

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 are in grave situations.
He stated that the grave situations were capital inadequacy and liquidity ratio, which were 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 that to stabilize Finbank, the CBN extended N50bn, seven 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 question on the executive management compensation, Ezulu stated that despite 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.

“Members of the board noted with satisfaction what the chairman has done to help the bank so the interim chairman was asked to step out of the meeting and the members unanimously decided to compensate the interim chairman with N200m,” Ezulu said.

Justice Lateefa Okunnu adjourned the case till November 6, 2017 for continuation of trial.