Corporate Fraud: How Bankers’ Committee Covers up UBA’s Diversion of Customer’s N123m

Wednesday, July 22,2020

The United Bank of Africa Plc allegedly fraudulently diverts N123 million belonging to Lloyds Energy Limited. Banker’s Committee recovers the money, pays it back to the bank which swallows it again, claiming the company is indebted to it thereby leaving the customer crying foul

KENNEDY Uzorka, group managing director of United Bank of Africa, UBA, has reasons to be satisfied with the banks’ performance in 2017. UBA’s unaudited first-quarter results for the period ended March 30, 2017, shows the group recorded a profit after tax, PAT, of N22.4 billion, showing 32 per cent growth compared to N17.0 billion achieved in the corresponding period of 2016.   On Thursday, July 20, Uzorka met with the board of the UBA to present the egregious profit the bank made in the financial year ending June 30, 2017, and for the board to approve dividend for shareholders. No doubt, the board will be happy with the bank’s performance. But what is not clear is if the group managing director explained to the board how the UBA raked so much profit in what Uzorka described as a “competitive and a very challenging business environment.”

Realnews investigations uncovered the unsavoury ways through which the UBA makes its profit by cheating customers through diversion of their money and using the same money to offer them loan at high-interest rate. The worse part of it is that when customers complain the UBA threatens to deal with them. It also goes further to connive with the Bankers’ Committee to cover up its alleged fraudulent activities thereby leaving customers who take their cases to the committee in the first place out in the cold grieving their losses. As Realnews investigation uncovers, the bank uses its deep pocket to unleash security agencies against its highly aggrieved customers in a bid to intimidate and silence them and as a result, a lot of customers are afraid to fight the UBA octopus.

A case in point is the UBA’s sour relationships with Lloyds Energy Limited which had asked for facility from the UBA to enable it import 30,000MT of PMS under the Petroleum Subsidy Fund, PSF, scheme of the federal government and it was obliged with an offer of $25,945,107.48 for a year. In the course of the event, Llyods Energy detected some irregularities in the operation of the accounts with the bank and when contacted over the issue, the UBA rather than resolve same resorted to using Robert Ohuoha and Co, its solicitors, to harass and criminalise the management of Lloyds Energy through a letter dated 14/09/12.

The letter signed by Robert Ohuoha, counsel to the UBA, which is in possession of Realnews  states: “Be advised seriously that if you fail to pay this outstanding within 7 days of receipt of this letter, these following actions shall be taken against you: (1) Publish your names in the newspaper (2)EFCC shall arrest you and persecute you (3) confiscate your assets/properties (4) Send your name names to Credit Bureau of loan defaulters in accordance with the CBN directives to prevent you and your company from accessing loans from other banks.”

Consequently, the management of Llyod Energy wrote the inspector general of police in a letter entitled: “Threat to Life and Properties by UBA PLC through Messrs Philips Oduoza and Rasheed Olaoluwa, the GMD and ED of United Bank of Nigeria, Respectively,” seeking protection. The letter dated July 3, 2013, signed by Vincent Ottaokpukpu, counsel to Barry Esimone, president of Lloyds Energy Limited, stated that since the UBA made the threat, his client “has not been at peace as he had continued to notice some strange movements around his vicinity both at home and office as his family members have continued to express fear of being harmed. Specifically, the letter humbly requested the inspector general of police to use “your good office to ensure that our clients life and properties which has been threatened by the bank is given the required protection both for him and his family members who are law abiding citizens of the country and ensure that all persons involved in the threat and any continued threat are investigated and brought to book.”

Prior to the letter to the Police, Lloyds Energy had gone to the Bankers’ Committee to seek redress on the nefarious act of the UBA. It was while the Bankers’ Committee was adjudicating the case that the UBA also fled to court and the EFCC apparently in anticipation that the Bankers’ Committee ruling might not be in its favour. After going through the facts of the case between the UBA and Lloyds Energy, Bankers’ Committee found that the UBA actually diverted money from the accounts of Lloyds Energy Limited.

According to the letter of Bankers’ Committee Sub-Committee on Ethics and Professionalism to the president of Lloyds Energy Limited dated October 19, 2015, in the course of its investigation, it among other things observed that the UBA “applied a wrong rate in the purchase of funds on the transaction as admitted by the bank. The applicable rate on the date for the transaction should be the CBN effective rate of N158.62/$1 as against the interbank rate of N162.15. The bank had overcharged the petitioner to the tune of N53,172,903.37. They had agreed with the petitioner to the under charge of N29,097,846.47 on the interest and we support this as settled issue.” The committee’s letter, in possession of Realnews, also stated that the UBA admitted using wrong rate and reverted to the agreed rate.

Details of the Sub-committee’s findings revealed that the Lloyds Energy applied for the opening of the letter of credit through its letter dated 10 December, 2010, which was opened on 24 December, 2010. The Sub-Committee’s letter signed by Seye Awojobi, secretary, Sub-committee on Ethics and professionalism which was copied to the group managing director and chief executive of the UBA Plc after due considerations of the findings of its investigation made a 10-point decision.

It ruled that the UBA should refund the sum of N19,629,076.45 as agreed by both parties; refund the sum of N5,910,227.66 as agreed by both parties; refund N38,003,860.05 as agreed by both parties. Also, the UBA is to refund the excess of the overcharge of N53,172,903.37 due to application of wrong rate of exchange on the transaction and recoup the undercharge of N29,097,846.47 on interest; refund the sum of N24,075,056.90. UBA agreed to refund the sum of N26,310,611.54 as interest payment to the petitioner as agreed and refund the sum of N7,673,517.60 to the petitioner as agreed.

After thorough review of the various documents, the committee found that the invoice paid cover more than the L/C value. “While the petitioner is claiming repayment of a demurrage, there is no evidence of a formal request made to the bank that a demurrage was paid or payable. The invoice paid did not indicate any evidence of the inclusion of DEMURRAGE to confirm that the Bank paid demurrage as claimed by the petitioner. We could deduce that the price increase alluded to by the petitioner was the result of the increase in price of the product as shown in the final invoices submitted for payment to the Bank. There is no evidence of payment of demurrage, hence no refund is recommended.

“Consequently, the bank should refund the sum of N121,602,350.20 (N19,629,076.45+N5,910,227.66 +N38,003860.05+ N24,075,056.90 + N26,310611.54 + 7,673,517.60) to the Petitioner with interest at the prevailing Treasury Bills rates plus 2%p.a penal rate. This translates to N193,973,799.09, according to the attached computation,” the committee said.

It was also ratified at the Bankers’ Committee meeting that the above sum (N193,973,799.09) should be credited into the petitioner’s account to reduce its indebtedness pending the resolution of the case in court and forward to the committee the credit advice and statements of account accordingly on or before November 20, 2015, in full and final settlement of the case.

After the rulings of the Banker’s Committee, Realnews learnt that the Central Bank of Nigeria, CBN, deducted the sum from the UBA at source and still went ahead to pay the money into the Lloyds Energy Account with the UBA which the bank pounced on claiming that the company was indebted to it.

This prompted Lloyds Energy to write the Bankers’ Committee again requesting the sub-committee on Ethics and Professionalism to make categorical statements covering  the justification for N121,000,000 loan of established manipulations (by UBA Plc) of its account by N123,864,473.47 between 31/03/2011 and 30/01/2012 as the amount would have provided the credit balance to pay the PEF fee of N120,247,825.80 on February 3, 2012, when the transaction ended with the release of the SDN payable on that date. The company wanted to know justification for the UBA PLC to retain 27.5% compounding interest on the account of Lloyds Energy Limited which had been accruing in the customer accounts since February 3, 2012; the justification for the Sub-committee to continue to rely on the UBA Plc to pay the expected balance of N80,163,573.51 on its account if the bank had been professional in applying the various rulings and directives of the sub-committee.

Lloyds Energy stated that it had via several letters justified the basis of its claims and to its surprise the sub-committee had not made any pronouncement on it, perhaps, in anticipation that the UBA Plc would be honourable and professional in its dealings with the sub-committee. It pointed out that committee inadvertently omitted N2,262,124.10 in petitioner’s principal refund as pointed out in the letter dated October 27, 2015 and that such should be effected.

In UBA’s reply to the sub-committee, it stated that in compliance with its decision, the CBN had debited UBA. The bank had also written off all the debit balances outstanding after compliance, adding that after crediting Lloyds Energy Limited account with N102,595,315.95 on November 23, 2015, a debit balance of N1,084,690.47 was outstanding and grew to N2,311,097.73. The UBA said it wrote off this amount on October 2016, claiming it was transferred to a memorandum account. It also stated that after crediting Lloyds Energy Limited account with committee sanctioned amount of N91,378,483.14 on 30 September, 2016, a debit balance of N321,318,290.19 which grew to 329,318,202.55 was outstanding. The bank claimed that it wrote off this amount on October 4, 2016, as it was transferred to a memorandum account. Both accounts were nil, UBA said.

However, the Bankers’ Committee sub-committee in its final ruling conveyed to Lloyds Energy ignored its prayers. In its summary of findings, the sub-committee said that it reviewed its previous decision on the case on the workings of its technical team and observed that the petitioner had been refunded the total amount of the N193,973,799.09 based on its petition to the sub-committee. “Consequently, the sub-committee, had dwelt with the case and resolved the matter that brought the petitioner to the sub-committee which led to the realisation of the sum of N193.9 million from UBA as excess charges on account. After due consideration of the above, the sub-committee came to the conclusion that Lloyds Energy petition has been dealt with as conveyed in our letter with reference ODA/FMA/BUA/1288 dated October 19, 2015.

“Our investigation led to the refund of the sum of N193,973,799.09 (inclusive of interest) to Lloyds Energy Limited by United bank of Africa Plc. In the Light of the above, the Sub-committee sees no further basis to continue to adjudicate on the case given that your initial petition had been dealt with and refund made by the bank as directed by the sub-committee. Therefore the case is considered closed,” the letter to Lloyds Energy signed by Awojobi said.

It appears the Banker’s Committee is covering up for one of its own. For one thing, UBA’s group managing director is a member of the committee. Secondly, Lloyds Energy is still alleging foul play and that justice is yet to be served as can be seen in its letter to the sub-committee on March 6. 2017.

In the letter addressed to the registrar, Bankers’ Committee through Awojobi, Lloyds Energy stated that it only presented one petition on June 25, 2013, and did not know where the idea on “initial petition” the committee referred to in its decision suddenly came from. “We also did not appeal your decision on the total refund under their corresponding headings. All we said was that the statement produced after the purported credit refund does not represent our banking relationship with the UBA Plc.

“You will recall that we had vehemently protested to the Bankers’ Committee through various correspondences not to transfer the proceeds of the direct debit of N92,292,267.97 to UBA because it contained our balance in the sum of N80,163,573.51 as at the end of our transactions with UBA which we feared we would not be able to access from UBA considering their antecedent with our account. Despite our protest, Bankers’ Committee in its decision via letter dated 23 August, 2016, transferred the N92,292,267.97 to UBA with the assurance that “Lloyds Energy was free to come back to the sub-committee if UBA does anything unprofessional.”

“Expectedly, UBA, was highly unprofessional in applying the reversals and produced a zero balance account statement for us. We immediately came back to the sub-committee and complained that the statement produced for us does not reflect our relationship with UBA, and presented our version of what our statement should look like. We thought the Sub-committee would ask UBA to react to our position and justify their zero balance position ostensibly arrived at by fathom ‘write-off’. All we got is the recent letter of the sub-committee informing us the matter had been closed without addressing our prayers especially the status of the purported ‘loan’ and the attendant spurious interest accumulation on our account. The narrative on the account should be called what it is: Reversal/Cancellation of wrong debits and not write-off!” Lloyds Energy said.

According to the company, the sub-committee’s conclusion also ignored the outcome of its “investigative Technical Panel held on December 7, 2016, that established UBA’s reckless and unprofessional management of the relationship, when it concluded that the IFF term has sufficient room for the payment of the PEF without additional loan. Additionally this account reconciliation process also unequivocally established that a total illegal debit on our account of N123,864,474.30 occurred before the N120,247,825.80 PEF payment request date! The loan and the accrued interest therefore NEVER existed. We have been vindicated in our persistent claim that the ‘loan’ was forced on us,” it said.

The company said that “UBA’s claim of voluntary application and acceptance of the loan by Lloyds Energy, as their reason for retaining the loan and the ‘interest’ cannot be further from the truth, considering our reluctance UBA insisted, in writing, that we did not have sufficient funds for the PEF payment and that a loan application was the only way the payment could be made. This was pure blackmail!”

Lloyds Energy reminded the sub-committee that the magnitude of injustice it has suffered from the UBA on the issue in the last four years which could not be wished away. “This is a bank that demonstrated the highest degree of unprofessionalism by diverting to itself, without justification, the whopping sum of $233,500.61 from our account in one of the instances. We do not think that asking for our balance is an additional petition. All we have said were issues that would eventually be faced by UBA in producing our statement and do not amount to additional petition. We also maintain that our balance is not ZERO as presented by UBA. This is to put the records straight.” it said.

The Lloyds Energy letter which was signed by Esimone was copied to Yinka Adeola, chairman, Bankers’ Committee on Ethics and professionalism; Prof. Segun Ajibola, president, Chartered Institute of Bankers of Nigeria, Umma Dutse, director, Consumer Protection Department, CBN; Godwin Emefiele, governor, CBN; Umaru Ibrahim, managing director, Nigeria Deposit Insurance Corporation, NDIC; Kennedy Uzorka, group managing director, UBA Plc, and Tony Elumelu, chairman of UBA Plc.

It highlighted that the approved refunds of the sum of N2,262,124.10 which UBA expressly admitted but was inadvertently omitted by the Sub-committee in its computation and consequently, was not added. “By extension, this amount could not enjoy the interest and penalty which other debits enjoyed. This would have amounted to N1,186,984.95 and in total become N3,449,109.05,” it said, stressing that the company pointed this out repeatedly in its various correspondence with the Sub-committee.

Also, Lloyds Energy said that the credit of N102,478,852.97 and N91,378,481.14 by the UBA were applied by the bank at the dates convenient to it and not as directed by the committee, a fact which it pointed out severally to the committee.  “The soft landing ‘write-off’ of the residual balances on our accounts was a unilateral decision by UBA, apparently to escape producing the correct statement of account of the customer. Unfortunately, nobody has directed UBA to justify the zero balance position till date,” it said.

Based on the facts presented, Esimone argued that the “closure of this case in this matter will only protect and promote injustice, illegality and criminality in the banking industry and the destruction of the entire values of the banking profession. Also, the decision will mean that UBA misappropriated/diverted our money; the money was recovered by the Bankers’ Committee and was given back to UBA. This is what has happened to Lloyds Energy Limited as all its principal, interest refunds and penal charges have been given to UBA and the customer, a zero balance. We do not believe the Bankers’ Committee should stand for this act of impunity. We have also justified the calculation of our expected balance.”

Consequently, he reiterated that the statements produced for his company did not reflect its relationship with the UBA and that its balance was the sum of N90,712,770.73 as at 31 January, 2017 (which is still accruing interest) was trapped in UBA and should be transferred to its account earlier advised.

“We believe that the Bankers’ Committee can still resolve this problem especially when monumental misappropriation of funds, account manipulation and injustice are involved like our case, in order for the committee not to be seen as condoning these acts of unprofessionalism and criminality at a time our banks are operating globally and the Institute is show casing the nation and the banking industry by hosting the 22nd World Conference of banking Institutes,” Esimone said.

Contacted, Nasir Ramon, spokesperson of the UBA Plc, admitted that Lloyds Energy Limited is a customer of the bank and that there was an infraction on its account with the UBA. According to him, “the company petitioned the Bankers Committee (Sub-committee on Ethics & Professionalism) on alleged excess charges on its accounts and demanded for refund of N502.07Million from the bank.

“The complaints were investigated and discussions were held with the customer (and his consultants), but due to inability of all the parties to reach a consensus, the Sub-Committee stepped in and mediated on the case. After their review, the Sub-Committee ruled that the bank should refund the total sum of N193.97Million to the customer’s account. This amount comprised of total excess charges of N121.6Million plus penal interest ofN72.37Million.

“The total refund of N193.97Million has been credited to the customer’s account” he said, adding that: “Part of the sub-committee ruling was that the recommended refund should be credited into the Petitioner’s account to reduce its indebtedness pending the resolution of the case in court. Hence the total refund ofN193.97Million was credited to the customer’s account with UBA.

“Since the account was in debit, the fund was used to reduce the company’s liability to the bank, hence the reason the refund was not made available to the customer as he has alleged. No money was diverted by the bank as alleged,” Ramon said.

He said further that: “The customer later approached the Bankers’ committee that the refund should be backdated to Jan 2012 when the infraction occurred. With the backdating, the customer would not have requested for a certain loan of N121million that created the debit in the account in the first place. The request was turned down as the committee ruled that penal interest had been awarded to the customer, which was to compensate for loss attributable to the overcharge by the bank.”

Besides, he said that UBA sued the customer for recovery of the outstanding balance in the account. “This case is still in court. He was never threatened by the bank using the court or EFCC as alleged by you.”

Contrarily, Realnews found out that the UBA Plc petitioned the EFCC alleging fraudulent and criminal diversion of N121 loan given to Lloyds Energy. Also, UBA Plc filed suit No: FHC/L/CS/886/2014 at Federal High Court for recovery of delinquent debit against Lloyds Energy Limited and Engr. Barry Esimone.

“In the petition to EFCC, we were invited by EFCC on May 17, 2013, made our representations and cooperated with investigation as directed by EFCC. During the last conference between UBA Plc representative and us, the Commission confirmed that the debit of N121m was transferred to PPPRA Account in line with the IFF term and therefore amounted to no diversion. All CIBN proceeding have been forwarded to the Commission. Yet UBA Plc did not inform EFCC that they have made refunds base on CIBN mediation,” Esimone told us.

UBA Starts 2020 on Strong Note - THISDAYLIVE

On the Federal High Court, FHC, Case, “we filed our statement of defense immediately we were served, but the case is yet to be heard since 2014 till date due to frequent request by UBA Plc for adjournments. The last two attracted severe rebuke by the presiding judge and awarded costs against UBA Plc,” Esimone said. The next adjourned date for the case is Nov 2, 2017.

On prejudice, the UBA Plc is actually the party to worry, he said adding: “while the matter was subsisting in court and yet to be heard, and the CIBN administrative mediation found the bank guilty of infractions and ordered UBA to make refunds, the bank went ahead to publish our names in two national dailies as debtors and also sent the names to Credit Bureau, when we have not be found guilty in any of the platform the matter was being considered. Our statement of defence and counter claim were properly filed and served on the bank.”

On the insinuation that the matter in court is for recovery of balance on account after crediting the judgment debt, Esimone said nothing could be further from the truth. “UBA has been in court before refunds were ordered by CIBN and no amendment of claim has been served on us, therefore it is not true that the balance is what UBA is seeking to recover in court. The suit  was filed in 2014, while refund was ordered in 2015.

“It is important to note that Lloyds Energy Limited and Engr. Barry Esimone have maintained due process of Law in pursuing their right in spite of the obvious determination of UBA Plc to use their resource weight, connection and devious machination to destroy our entrepreneurial programme. We will stop at nothing in extracting justice in this matter using all legal means available to us in law and in equity. If a bank will commit infractions from one customer in excess of N123 million, in about 18months of relationship, then what other customers are suffering in their hand is better imagined.

“We shall, at appropriate time unleash to the world, an avalanche of documentary evidence gathered during this process on UBA Plc.’s modus operandi.  The divine law of God and Nigerian Law are our source of strength. The biblical case of David Vs Goliath Shall Prevail because one with God is majority,” Lloyds Energy said in a reply to email from Realnews seeking its reaction to UBA’s allegation against it.

Leave a Reply

Your email address will not be published. Required fields are marked *