NDIC sues Wema Bank over N125bn Banana Island assets linked to defunct Gulf Bank

The Nigeria Deposit Insurance Corporation (NDIC) has dragged Wema Bank to the Federal High Court in Lagos over Banana Island properties and disputed payments tied to the defunct Gulf Bank Plc.

Filing two suits as liquidator of Gulf Bank, NDIC is seeking to recover assets it says are worth over N125bn at current market rates. The bank’s licence was revoked in Jan 2006 over insolvency.

‘The Banana Island dispute-

The first suit centres on 6 plots in Zones J, K, L and P, covering 13,794 sqm. NDIC values them at N62.07bn at N4.5m per sqm.

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NDIC alleges Gulf Bank bought the plots between 1998 and 2003 using Euston Wenberg Engineering Company Limited as a shell company. It says the bank later listed the acquisition as a loan account, but the assets remained beneficially owned by Gulf Bank.

NDIC claims Wema Bank took custody of the properties to secure a N771.79m interbank deposit. A 2005 CBN/NDIC exam found no record of the deposit in Gulf Bank’s books.

Wema later presented two managers’ cheques totalling N250m from Access and Intercontinental banks in favour of Euston Wenberg. NDIC says that looks like a purchase, not a deposit recovery, and calls the price implausible since one plot was worth over N500m at the time.

The second suit covers 6 more plots acquired through Bacad Finance and Investment Limited, later renamed Supra Commercials Limited, in which Gulf Bank held over 80% shares.

NDIC says Gulf Bank injected N80m into the firm between 2001 and 2003 to buy the land and planned a 72-flat estate with Shelter Afrique. It alleges Wema claimed to have sold the assets for N524m in 2006/2007 without a valid mortgage or court order. NDIC puts the true value at over N4bn per plot.

-The N401m payment row-

NDIC also says Wema Bank collected N401m from UBA, its agent bank, in 2009 despite approving only N1.64m as the bank’s outstanding deposit as of Jan 2006. NDIC says it has no record showing Wema was owed more.

NDIC is asking the court to declare any sale of the properties illegal, void Wema’s claim to them, and order the bank to return the title documents or pay their current value.

-Wema Bank’s response-

Wema, through lawyers Oladapo Olanipekun, Kehinde Ogunwunmiju and Tunde Afe-Babalola, has filed a preliminary objection. The bank argues the case isn’t a banking debt dispute under the Failed Banks Act, says there was no debtor-creditor relationship, and claims the properties belong to Bacad Finance, a separate entity.

It also says the claims are statute-barred, dating back to 2006-2007, and accuses NDIC of abusing court process. Wema is asking the court to strike out both suits.

Gulf Bank collapsed 20 years ago. NDIC says it’s still working to recover outstanding assets for creditors and depositors.