Only Assets, Not Liabilities

Sun, Nov 25, 2012

By publisher

11 MIN READ

Mainstreet Bank Limited, which emerged from the ashes of the defunct Afribank, has refused to honour its obligations to the laid off staff insisting that only assets and not liabilities of the dead bank were transferred

|  By Olu Ojewale  |  Dec. 2, 2012 @ 12:11 GMT

THE fate of the disengaged members of staff of Mainstreet Bank Limited, formerly Afribank, is still hanging in the balance following the refusal of the bank to pay them their entitlements. Federal government’s intervention to get the bank to pay its former employees their entitlements is yet to yield any fruit because the bank’s management has been playing a hide-and-seek game with the committee it set up to resolve the issue.

Realnews learnt that the bank, despite its avowed commitment, did not attend the last three meetings called by the committee. The Federal Ministry of Labour and Productivity set up the committee September 24, following the August 28, mass protest embarked upon by disengaged members of staff that Mainstreet Bank inherited from the defunct Afribank.

The disgruntled former bank officials had drawn public attention to their plight through street demonstration, accusing the bank of sending them home empty handed after more than 20 to 30 years of service. Since then, the committee has met five times in Abuja, but the management of Mainstreet Bank has attended only twice.

The position paper promised by the bank has been the clog in the wheel of the committee to reach an amicable resolution. The committee, which comprises officials of the federal ministry of labour; ministry of finance; Asset Management Corporation of Nigeria, AMCON; Nigeria Deposit Insurance Corporation, NDIC; National Union of Banks, Insurance and Financial Institutions Employers, NUBIFIE; Association of Senior Staff of Banks, Insurance and Financial Institutions, ASSBIFIE, was given 30 days from the day of its inauguration to work out modalities on how much to pay the former staff of the defunct Afribank, who were disengaged from the bank’s service in June this year.

After the first meeting attended by Faith Tuedor-Matthews, managing director and chief executive officer, the bank promised to bring its proposal on the issue at the next meeting. At the second meeting on October 4, an executive director represented the bank at the committee’s meeting held in Abuja. He did not bring along any position paper, but promised to bring it at the next meeting slated for October 18. He did not show up and there was no representation of the bank at the meeting.

When it was obvious that the bank was going to delay the committee’s work in reaching an agreement, the permanent secretary, ministry of labour and productivity, who is the chairman of the committee, mandated representatives of the two unions representing the aggrieved workers, to meet with the management of Mainstreet Bank and work out an agreement and return to the negotiation table in Abuja, for the next meeting scheduled for October 23. But the unions did not get the cooperation of the bank.

Irked by the development, the unions wrote a letter to the ministry of labour and AMCON expressing their displeasure and frustration to resolve the issue. On the basis of that letter, the committee then summoned another meeting for November 8, and invited the management of the Mainstreet Bank. Still, no official of the bank attended the meeting and there was no word from the organisation as to why it did not send a representation. This has given rise to speculations that the bank is now using delay tactics to frustrate the whole process and allow the matter to fizzle out.

However, the former staff who were laid-off in June are still up in arms against the management whom they have accused of being highhanded, inhuman and callous.

When Realnews contacted the corporate affairs manager of the bank on phone, the lady who gave her name as Ogochi, said the bank had “no comment,” and if the bank would like to talk to the reporter, the spokesperson would call him. There was no such call until press time.

Danjuma Musa, president of NUBIFIE, in his own reaction, said the union would do everything in its power to fight for the welfare of its members. He said after his last meeting with the management, the bank promised to get in touch with him on the matter the following week and if that failed, he would be convinced that the bank was not serious about resolving the matter amicably, and then another strategy would be employed.

“I think you have heard that Union Bank has just sacked more than 400 of its staff. We want to ground all these banks together, and if there is no cooperation from Mainstreet Bank between now and next week, we would hold a congress to adopt a new line of action,” Musa said. But he said he learnt that the bank was still working out something to give to its former members of staff.

Sunday Olusoji Salako, president of ASSBIFE, told Realnews on telephone that AMCON had taken the responsibility to pay the sacked workers. This, he said, had given him hope that there would be a solution soon. “If you are talking about social dialogue as a means of resolving conflict, it could be cumbersome. So we have to be patient. We want a situation where there would be a commitment and since AMCON, the owner of the bank, has agreed to pay their redundancy benefits, we have to allow it to work them out,” Salako said. The union leader said the matter has even been made easier with an inter-ministerial meeting being held to resolve it. But the affected former staff said they cannot wait forever because some of them are now living from hand to mouth. One of them is said to be seriously ill but cannot afford a hospital bill.

Trouble started for the former Afribank staff when the Central Bank of Nigeria, CBN, intervened in August 2009 and asked the bank, along with some others, to recapitalise within two years. But when it was clear that the bank would not meet the capitalisation deadline, the CBN wielded the big hammer by revoking the licence of the bank and nationalised it. Consequently, the name of the bank changed to Mainstreet Bank. While announcing the sale of the bank to AMCON, the CBN also said that no staff would be sacked and no depositor would lose his money in the new bank.

But two months after, the new management team headed by Tuedor-Matthews, a former staff of the United Bank for Africa, took over the bank. Soon after, evidence of trouble began to emerge. It started with a memo that asked all those who would want to remain with the Mainstreet Bank to indicate their interest. A handful of personnel who declined to work with the new team were sent away without their entitlements.

Apparently not satisfied with the number of staff that left, those who elected to stay were then given new appointment letters backdated to August 5, 2011, when the new bank officially emerged, with a caveat that they would be on probation for six months. During the probation period, the bank informed the staff that those who had spent at least 25 years or above 55 years in age who voluntarily opted out would be paid two years’ salaries and all their loans written off. When the response was low, the bank decided to bring down the length of service years to 20. Only 55 persons accepted the bank’s offer and left.

But the bank was not done. On June 22, this year, it laid off about 700 members of staff, some of them were senior managers who had received commendations during the time of their appraisal. The bank said in a statement that because of the hard economy, the disengaged staff were given “ex-gratia benefits”, which included writing off their car loans, outstanding share loans, and allowed to retain their status cars. But the ex-gratia was like a Greek gift. For that, the sacked workers who accepted the ex-gratia benefits were made to sign an undertaking acknowledging that the ex-gratia payment was not based on any contractual rights, and that “it was not to be construed as severance payment which the disengaged employees were not entitled to.” Part of the undertaking was “That you hereby waive your right to institute any lawsuit or action against the Bank disputing the validity of the termination of your employment, and that you shall not either by yourself or in conjunction with any other persons… seek relief through any lawsuit or action arising out of, based on or relating to the termination of your employment with the Bank.” Also the disengaged bank officials were not to engage in any action to disrupt the activities of the bank and that the bank reserved the right to reclaim the ex-gratia being granted to them.

To justify the bank’s position, Tuedor-Matthews said in one of her press statements that the bank would not pay any entitlement because “certain liabilities such as pension liabilities and gratuities were not transferred to Mainstreet Bank pursuant to the said instrument of transfer. She insisted that liabilities that were not assumed by Mainstreet Bank remained with the defunct Afribank.

The disengaged staff have argued that if the current management could pay more than N50 million each to former members of the executive management of Afribank as exit/severance package for spending only 18 months in the defunct bank after the takeover, there was no reason to justify its refusal to settle their own entitlements. And that since the takeover, the bank has paid N37 million and N36 million mortgage loans to a general manager and an assistant general manager for a 10-year repayment period at 3.5 percent interest rate while other members of staff were given consumer loans at 25 percent interest.

Besides, they argued that it was part of the bank’s social responsibilities to ensure that their welfare was taken care of. They said even as disengaged workers, they were still stakeholders in the industry and that the management of the bank owed them an obligation to look after their interest. “Therefore, getting transfer of the pension liabilities and gratuities from the NDIC or AMCON (whichever body is responsible for it) for us, if truly they were not transferred to Mainstream Bank Limited, is an obligation for which Mainstream Bank Limited’s executive management should be held accountable,” the group said.

They argued that if their services were not carried over into Mainstreet Bank, why did the management include their service years in the letters of introduction to embassies requesting for visas for them to travel? They also argued that while they were supposed to be on probation, some of them went on their annual leave and wondered whether a staff on probation could be granted an annual leave.

The disengaged staff are also unhappy with the management style of Tuedor-Matthews. They said that before Nebolisa Arah, former chief executive officer, left the bank, he upgraded the banking software to Globus (T24), one of the best in the world in January 2011. He did not send any bank personnel for overseas training before the software was introduced until six months later.

But when Tuedor-Matthews assumed duty, she came to the bank with a retinue of staff from the UBA. The first thing she did was to change the software application because the management felt the inherited members of staff already understood how the application worked. So, the management sent 20 loyal staff to train on the newly acquired Finacle software application and blocked access to accounts of all staff members as against the common practice, whereby every staff had access to accounts of other staff members.

The reason became apparent when it was discovered that the management had created two salary structures-one for the new members of staff and another for the inherited Afribank staff. The newly engaged members of staff were paid super-scale salaries which were more than twice the amounts the old staff received.

The purpose of changing the software was also to block every member of staff from knowing all illicit transactions going on in the bank. The argument being advanced by some former staff of the bank was that there was no urgent need to replace Globus (T24), which is the software also used by the CBN. They said, it was irresponsible for a bank which was still experiencing financial problems to waste millions of Naira to replace a software that even the CBN is currently using. Moreover, the former staff also condemned the decision by management to spend millions of Naira to train 20 staff in India. It is believed that this was to ensure their loyalty and make them close their eyes to whatever fraud were perpetuated by the management. For these reasons, they have asked the CBN, the NDIC and the AMCON to critically examine the financial transactions in the bank before it is too late.