Unity Bank’s Credibility In Question Over Debt Mess, Panic Grips Customers

Information reaching SG indicates that all is presently not well with one of Nigeria’s financial institutions, Unity Bank, which has been in the news recently for the wrong reasons. Few weeks ago, the Managing Director of the bank, Henry Ibim Semenitari, was accused of beating his wife silly over his alleged affair with the daughter of former President Olusegun Obasanjo, Funsho. Unity Bank is presently trying hard to ensure that its reputation is not stained but with the latest happenings, two of its foreign partners are not happy with the bank and may have to think twice next before doing business with the bank. This is because Unity Bank’s former Managing Director, Falalu Bello, who is now the Executive Chairman of MBS Merchants Limited, was accused of unilaterally approving the sum of $21.067 million (N3.4 billion) for his company to import fertilizers into the country and has refused to pay back. This has made Unity Bank to petition the Central Bank of Nigeria, CBN, which has waded into the matter. Bello retired as the Group Managing Director of Unity Bank on June 30, 2011. According to the petition signed by Ahmed Yusuf, Acting Executive Director, Enterprise Risk Management and Umar M. Adamu, Divisional Head, Legal and Compliance, with Ref. No UB/L&C/UMNHJSIMB5FB/02l14, and dated 3rd February, 2014, it was stated that Bello’s action amounted to the “Violation of Code of Corporate Governance.” It was narrated in the petition that, “sometime between June to September 2013, three Deferred Letters of Credit(LCs) totalling $21,067,500.00 were opened in favour of MBS Merchants Limited. “The LCs were for the importation and supply of fertilzer. It is worthy to note that there was no formal application and/or approval for the LCs. “The former Managing Director, Alhaji Falalu BelIo, used his influence to get the LCs opened without adherence to laid down rules and regulations of the bank. “For the records, Alhaji Falalu Bello is the Executive Chairman of the company and also its alter ego. Not only did he use his position to influence the opening of the LCs, he also flagrantly refused to ensure adequate and sufficient cash collateral at the maturity of the LCs. This was in spite of several demands from management. “Without doubt, this irregular action of the former managing director has undoubtedly caused the bank a lot of reputation risk with our Correspondent Banks-Deutsche Bank and FBN London. “As a result of the improper way the LCs were opened, i.e. not authorised, the Board only came to know about the matter much later. This was when the Correspondent Banks became agitated and increasingly kept demanding for their money. “Thus, to quickly salvage likely unpleasant consequences from the Correspondent Banks, the Board quickly directed that one of the Term Loans of Alhaji Falalu Bello be used to reduce our commitment with Deutsche Bank. This was quickly done. Being a long standing business partner, we are presently managing the situation to ensure that residual balance is paid as quickly as possible. . “On the bank’s commitment to FBN London, the Board approved that a Credit Line for the company be established in the sum of $1,530,000,000.00 and same be used to effectively settle the bank’s commitment to FBN London. This was immediately done and the account was fully cleaned up. “Further, in order to ensure full recoveries on the company’s account, management has directed that all the three warehouses be taken over so that sales of the goods could be directly channeled to the company’s account. “Unfortunately, instead of Alhaji Falalu Bello to assist the bank towards meaningful recoveries, he negatively scares away and blocked all prospective buyers. “In fact, what is more worrisome is the established fact that Alhaji Falalu Bello has gone about de-marketing the bank amongst its long time customers and friends. “Being a former managing director of the bank and by virtue of Section 20(5) of Banks and Other Financial Institutions Act, 2004 as amended, all borrowings associated with him or his companies are regarded as insider related. “It is on this premise, therefore, we catalogue the following as infractions: using his former office and influence to process and approve the LCs without adherence to the laid down rules and regulations of the bank; his refusal to fund the company’s account at the point of maturity of the LCs. “This was in spite of several entreaties and demands by the bank; his attitude to scare away prospective buyers of the goods, thus frustrating our efforts towards quick and genuine recovery and frustrating the bank’s business by de-marketing it amongst its long time customers and friends. “It is in consequence to the above that we hereby invite the apex bank through your humble self to appreciate and note this unfortunate development. “Meanwhile, it could be gleaned from the •above, that the bank is doing everything reasonably possible to ensure that we settle our obligations with Deutsche Bank, while we continue to vigorously tackle the company and its executive chairman for the total liquidation of the indebtedness.” Following the above petition and subsequent events, a statement released MBS Merchants to clarify some issues revealed that “the MBS has answered all CBN enquiries on the matter. Also, Mallam Falalu Bello was invited by the IGP to discuss the same issues involved, being a recipient of the same petition. MBS further stated that, “based on his position as chairman of MBS, Bello equally answered the invitation of the IGP just as he did that of the CBN so that such high level discussions between the parties involved will bring closure to a matter, which is basically a financial transaction between two parties that have been business partnersfor over seven years.” Meanwhile, the recent happenings in Unity Bank has caused fear among customers of the bank. They are unsure if their hard-earned savings with the bank is still in safe hands because of the tussle between the bank and its former MD. Some of the customers who spoke with this magazine on the condition of anonymity informed us that they now sleep with one of their eyes open, but stated that if the matter drags for long, they would be left with no option than to quickly withdraw their monies from the bank. ‘I can’t let my money to go down the drain,’ one the Unity Bank’s customers told SG. Another said, ‘I am even not enjoying the best of banking services from them. I think it is time to close my account with Unity Bank.’ Efforts made by SG to speak with the bank’s representative proved futile as at press time.