Six properties in Banana Island, Lagos, and doubtful payment for another set of properties, also in Banana Island, have pitched the Nigerian Deposit Insurance Corporation (NDIC) against Wema Bank, leading to a lawsuit at the Federal High Court in Lagos.
The NDIC, acting as liquidator of defunct Gulf Bank, instituted two separate lawsuits over the properties. In the first lawsuit, the corporation is claiming that Wema Bank took custody of Gulf Bank’s 14,000 square metre property, adding that at the market rate of N4.5 million per square metre, the value of the property is approximately N63 billion.
Both lawsuits against Wema Bank were filed under the Failed Banks (Recovery of Debts and Financial Malpractices in Banks) Act, and were part of efforts to recover and liquidate outstanding assets of the defunct Gulf Bank Plc, 20 years after it failed.
The first suit, properties were allegedly acquired through Euston Wenberg Engineering Company Limited, a shell company linked to Gulf Bank. The properties were purportedly used to secure an inter-bank deposit valued at N771.78 million, but no record of such a deposit exists in Gulf Bank’s books.
The second suit concerns another six properties acquired through Bacad Finance and Investment Limited, now known as Supra Commercials Limited. The NDIC alleges that Wema Bank sold these properties for N524 million without any valid mortgage, court order, or proprietary interest.
The corporation is also seeking recovery of N401 million allegedly collected by Wema Bank from the United Bank for Africa (UBA), acting as its agent bank.
Explaining further, NDIC alleges that Gulf Bank acquired six Banana Island plots between 1998 and 2003, using Euston Wenberg Engineering Company Limited as a vehicle, arguing that the assets remain beneficially owned by Gulf Bank plc even though the internal records of the defunct bank reportedly treat the acquisition as a loan account.
The agency disclosed that a joint CBN/NDIC special examination conducted in September 2005 found no record in Gulf Bank’s books confirming that a deposit of N771.79 million existed, adding that the report found the defunct bank’s explanations unsatisfactory, with no supporting documentation produced.
On the second lawsuit, the corporation said it was based on another set of six properties in Banana Island acquired through Bacad Finance and Investment Limited (later renamed Supra Commercials Limited), an entity in which the defunct bank held over 80 percent shareholding.
It alleged that Gulf Bank injected N20 million into Bacad Finance and Investment Limited in 2001 to increase its share capital, and later invested N60 million in the company in 2003.
The defunct bank held over 80 percent of Bacad Finance’s shares and used the entity to acquire the second set of six Banana Island plots.
NDIC accused Wema Bank of claiming to have sold the assets for N524 million by way of managers’ cheques dated 2006 and 2007, without any valid mortgage, court order, or proprietary interest.
The corporation dismissed the claimed sale price as grossly implausible, given that each property was worth over N4 billion at the time.