The Nigeria Deposit Insurance Corporation (NDIC), acting as the liquidator for the defunct Gulf Bank Plc, has initiated two legal actions against Wema Bank at the Federal High Court in Lagos. The corporation is seeking the recovery of disputed Banana Island properties valued at approximately N125.38 billion and an alleged unauthorized payment of N401 million.
These suits, filed under the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, are part of the NDIC's efforts to recover assets linked to Gulf Bank, whose operating license was revoked by the Central Bank of Nigeria (CBN) in January.
The core of the dispute involves 12 high-value properties on Banana Island, Lagos, which NDIC asserts were acquired through companies associated with Gulf Bank prior to its collapse. NDIC is requesting the court to declare the disposal of these assets illegal and to compel Wema Bank to return the title documents or pay the current value of the properties.
Additionally, NDIC is contesting a disputed payment of N401 million, reportedly collected by Wema Bank from United Bank for Africa (UBA), which acted as its agent bank.
Gulf Bank ceased operations after its license revocation on January 16, 2006, due to insolvency and failure to meet capital requirements.
Investigations supervised by Joseph Okolonji, a former Deputy Director at NDIC, revealed alleged attempts to strip the defunct bank of six Banana Island properties registered under Euston Wenberg Engineering Company Limited. These properties, covering 13,794.145 square metres, are now valued at an estimated N62.07 billion.
Mr. Okolonji alleged that Wema Bank gave the impression these assets were sold for N250 million, despite having no legal interest, and that no valid interbank deposit justified Wema Bank's custody of the assets.
NDIC disputes Wema Bank's claim, which was based on a purported interbank placement of N771.79 million linked to Gulf Bank. A joint examination by the CBN and NDIC in 2005 found no record of such a deposit in Gulf Bank’s books.
The corporation also faulted Wema Bank's reliance on two managers' cheques totaling N250 million, issued by Access Bank and Intercontinental Bank in 2005, as unrealistic given that a single Banana Island property was worth over N500 million at the time.
The second suit challenges the ownership of another six Banana Island properties allegedly acquired through Bacad Finance and Investment Limited. NDIC stated that Gulf Bank held majority shares in this company and used it to acquire these properties, now valued at N62.91 billion.
NDIC accused Wema Bank of collecting N401 million from UBA in 2009, exceeding the approved liquidation amount of approximately N1.63 million. Aspects of these transactions have been referred to the Economic and Financial Crimes Commission (EFCC).
Wema Bank, represented by a legal team including Oladapo Olanipekun, Kehinde Ogunwunmiju, and Tunde Afe-Babalola (all SANs), challenged the court's jurisdiction, arguing the dispute did not fall under the Failed Banks Act and that no debtor-creditor relationship existed. The bank also contended that the case is statute-barred, as the transactions occurred between 2006 and 2007.
The court has scheduled June 25 for further hearings.
