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The ongoing publication of names of chronic bank debtors in daily newspapers is causing controversies and denials among customers as well as interest groups
| By Olu Ojewale | Sep 7, 2015 @ 01:00 GMT |
ANYONE who doubts the seriousness of Nigerian banks to recover billions of Naira being owed by their customers should consider the recent publication of names of chronic debtors in the dailies since August 1. After unheeded warnings to their customers to redeem their debts, the banks have been making good their promise and publishing names of their alleged chronic debtors. The action the banks took has generated a lot of controversy, causing some people to raise confidential and legal issues which they ought to be aware of. The worst thing is that some people whose names were published have denied owing the banks and threatened court action.
At the last count, no fewer than 15 names of billionaires who owe the banks N15.83 billion have been published in the newspapers. The debts were the loans, overdrafts and other facilities customers took from the banks but refused to pay back. Top commercial lenders include First Bank, Union Bank, Stanbic IBTC, Fidelity, United Bank of Africa, Diamond Bank, Sterling Bank and Skye Bank, among others.
Going by the directive from the Central Bank of Nigeria, CBN, on the non-performing loans, NPL, companies and their directors risk being banned from accessing foreign exchange from the official window and trading in the Nigerian government securities market. The decision to publish names of bank debtors was taken at the 322nd meeting of the Bankers’ Committee meeting in July, when the banks reported that more than N490 billion debts were still outstanding. Many of the affected banks were said to have reported loan losses ranging between 239 percent and 449 percent. This means that the banks could exceed the CBN’s five percent maximum bad debt ratio, if the trend was not checked.
The meeting reasoned that the situation was very bad for the economy. Hence, the committee directed banks to inform their customers to start paying up or face the indignity of having their names published in the media advertorials as from August 1, this year.
For instance, 92 chronic delinquent debtors owed First Bank a total of N45 billion. Top on the list of the bank’s debtors’ list Shield Petroluem Limited owed N6.9 billion. It was closely followed by Ajaokuta Steel Company Limited with N6.1 billion, Starcomms with N5.5 billion, C & M Limited with N2.3 billion, Sirius Energy Resources Limited with N2.2 billion, Summit Investment and Property Limited with N1.8 billion and Fargo Petroluem and Gas Limited with N1.7 billion. Others are BGL Securities which is owing First Bank N1.6 billion, Grant Properties owes N1.5 billion, Astera Engineering Limited, N1.4 billion, Nigeria Agip Oil Company Port Harcourt Staff Cooperatives, N967 million, Sanshek Nigeria Limited, N698 million, WhitePlains British Schools Limited, N682 million, Calat Services Limited, N674 million while Discover and Company Limited owes N531 million.
Skye Banks customers allegedly owing the bank include, Enikkom Investment Services Limited, whose director, Edward Amene, owes Skye Bank Plc N1.86 billion for a term loan. The loan was approved in December 2010 and it expired December 2013. There is the Prod Integrated Services Limited, whose directors – Sylvester Okonkwo and Bekele Tadesse, who obtained a lease finance loan from Skye Bank Plc in September 2008. The facility expired in February 2013, but currently has outstanding balance of N1.65 billion to pay.
Another alleged debtor is Tim Afrique Services, whose term loan was approved in January 2009 and expired December 2012 with outstanding balance of N998.65 million. The company directors are Captain Billy, Gula Timati and Captain Bob Timondi.
Sunil Pathanani and Ibrahim Bayero are the directors of the national Truck Manufacturers, who obtained an overdraft for the company. The facility was approved in April 2008 and expired in June 2009, but there is an outstanding balance of N728.23 million to pay.
Appaye Engineering Company Limited, whose only director is Richard Asaje, got a term loan which was approved in January 2007 and expired in January 2009. The account has an outstanding balance of N524.3 million.
The big debtors with Enterprise Bank Limited are: Naturelle Extracts Ltd, whose directors – Patrick Acholonu, Steve Agbarakwe, Ebong Nte Basiekanem, Brenda Bassey and Andrew Ahunnaya, who got a loan in April 2011. The loan expired in April 2016 with an outstanding balance of N1.89 billion.
The GIC Oil and Gas Services Limited has Ebolowo Godwin, Evbusogie Ebolo, Osarugue Ebolo and Olabisi Bamidele as directors, also got a term loan which was approved in October 2012 and expired April 2015. The account has an outstanding balance of N1.89 billion.
Another Enterprise Bank customer is Nadebo Energy Limited, which has Nuhu Aliyu, a senator, David Ajobola Olorunleke and Ali Jeldi Abubakar-Peters as directors. It secured a term loan which got the lender’s approval in February 2008. The debit balance stood at N1.55 billion by October 2013 when the repayment period expired.
On the Enterprise Bank’s list of billionaire debtors is Vester Services Limited and the directors are Sylvester Unokesan and Labord Unokesan. The company requested and got approval for a term loan in November 2011 which expired in February 2013 but has an outstanding balance of N1.44 billion.
IS Oglass Industries Limited is also indebted to Enterprise Bank Limited to the tune of N895.83 million. Its directors are: Isaac Akinmokun, Muyiwa Akinmokun, Akin Akinmokun, Tokunbo Orimobi and Olubunmi Ajoje. The company’s indebtedness arose from a term loan it got in April 2011 but could not repay when it expired in April 2013.
Zenith Bank Plc. also has its own share of bad debtors. They include: Energy Company Nigeria Limited, whose directors are Abidoye Ayoola, Ojeifo Musa, Grant Gilbert Temisan, Oji Theophilus Ifeanyichukwu, Nom Yunana and Ayoola Oluwole. The company applied for and secured a Bank of Industry, BoI, term loan which got the lender’s approval in January 2012. The facility has an outstanding of N743.49 million.
Olugbenga Onigbogu, who is also the sole director, got a share purchase loan of N502.7 million which was approved by Zenith Bank in January 2008 and the facility expired since February 2009. Prime Marketing Associates Limited, with Adeleke Sebiomo, Adesimbo Sebiomo and Serak Sebiomo as its directors, got a commercial paper loan from Zenith Bank. The facility was approved in October 2007 and expired October 2008. It has an outstanding debt of N472.2 million.
Ekha Agro Processing, whose directors are Samuel Osazenaye, E. Osazenaye, Ede Osayende, James Osarenkhoe, obtained a BoI term loan from Zenith Bank Plc. The facility, which was approved in October 2010 and due to expire in October 2020, has an outstanding balance of N356.39 million.
Also on the Zenith Bank list is Southfield Petroleum Limited, whose directors are Brigidi David, Didi Ndioma and Patrick Ndioma.
The company got import finance facility from Plc and the facility which was approved in September 2007 has an outstanding balance of N323.99 million after it expired in October 2008.
Union Bank has 176 big-time debtors. Six of them collectively owe the bank N27.91 billion. They are Dec Oil and Gas, owing N15.7 billion following a 1999 contract finance loan that expired in 2000. The directors of the company are Patrick Ugboma and Pius U. Malaka.
Other debtors include Alliance Energy, which is owing the bank N4.92 billion. The term loan approved in 2004 expired 2006. The directors are Akinwale Omoboriowo, Kojo Anan and Timi Austen-Peters.
Hajaig Construction is owing the bank N2.99 billion on a loan approved in 2012 and which expired in 2014. The directors are Abdul Nasser Hajaig, Rud Wan Hajaig and Mohammed Hajaig.
Sapta International Industries Limited is owing the bank N1.87 billion over a 1987 term loan that expired in 1988. The directors are Alex Aloy Nwokodikwa and Clement Nwokodikwa.
Petroleum Project International has a debt of N1.25 billion over a term loan obtained in 2004 that expired in 2007. The directors are Akinwale Omoboriowo, Kojo Anan and Timi Austen-Peters.
Best Aluminum owes N1.11 billion for import and lease facilities obtained between 2010 and 2012. The directors are Godwin Nweke and Pius Nweke.
Fidelity released a list of 28 customers with “delinquent” loans. Fidelity Bank’s debtors include the telephone firm Starcomms Limited, which owes N3.08 billion cumulatively in the three accounts it runs with the lender under the same name and directors. The first account, which got in 2009 an overdraft which expired in 2014, is owing the bank N1.68 billion; the second account, a term loan approved in 2011 and which expired in 2014, is indebted to the tune of N1.16 billion. The third account, also an overdraft approved in 2007 and expired 2014, is indebted up to N239.65 million. The directors are Maan Lababidi, Paul Edwards, Tajudeen Dantata, Omar Lababidi, Chris Ogbechie and Olusola Oladokun.
Other customers include Kesio Associates, which is owing the bank N328.1 million and Diesel Solutions (N324.28 million). Patemglobal Limited is owing the bank N268.5 million.
Kasolute Nigeria Limited owes Sterling Bank Plc N475.3 million over an overdraft loan approved in 1999, which expired in 2000. Just Jays Limited owes the bank N254.7 million; Alcun Industries Limited owes N192.1 million. G. Cyrus Global Resources is owing the bank N187 million.
Since the publications started, some of the debtor customers were said to have paid, while others went ahead of publication to negotiate terms of repayment. However, several notable individuals and corporate customers have also raised various objections ranging from the listing of non-existent relationship, non-harmonisation of account before publication to inflation of figures.
For instance, Abike Dabiri-Erewa, former chairman, House of Representatives Committee on the Diaspora, denied being a director of Thriller Endeavours, a firm which owes Diamond Bank N122.9million. Reacting to the publication alleging her culpability, on Tuesday, August 4, Dabiri-Erewa said in a statement: “I know nothing about the said company, Thriller Endeavour, or its activities, as mentioned in the publication. If the bank claims I am a director in the said company, then the company has definitely done so without my knowledge and without my permission. If this is the case, it is a case of fraud and will have to be brought to the attention of relevant security agencies, the bank in question, and the Central Bank of Nigeria.
“I once again state categorically that the company, Thriller Endeavour, is not known to me. As a very contented person, I owe nobody any money, not even myself, she said, adding that she had briefed her lawyer to institute a legal action against Diamond Bank and The Punch newspaper which carried the story on its front page.
The bank has since apologised to Dabiri-Erewa for wrongful inclusion as a director of a company having N143.8 billion debt in four banks.
Arthur Eze, a renowned philanthropist and business mogul, is not taking his inclusion as a debtor lightly. He said he had asked his lawyer to institute a legal action against Wema Bank, demanding N200 billion from the management of the bank to assuage the damage he suffered on account of the false and defamatory publication of his name and photograph among the debtors of the bank in a national daily on August 7, 2015.
Eze also demanded the sum of N200 billion from the management of the national newspaper, Punch Nigeria Limited, within seven days for publishing and circulating the “highly defamatory and injurious falsehood” to the effect that what he (Eze) was among the directors of a debtor company, Genesis Electricity Ltd which owes Wema Bank Plc the sum of N136.93 million. The business mogul, however, disclosed that the company in question was made up of distinguished and upcoming entrepreneurs that deserve encouragement.
Also threatening court action is Dayo Adeyeye, the immediate past minister of state for Works. Adeyeye said he was not in any way indebted to any bank in Nigeria and outside the country, but admitted being a nominal director of the International Payment Devices Limited, which Unity Bank Plc claimed owed it N81.24million.
The ex-minister said he was only nominated as a nominal director by the owner of International Payment Devices Limited, Ayo Arise, a senator. He blamed banks in the country for the huge amount of non-performing loans, questioning why they would grant loans to their clients without securing adequate collaterals.
Adeyeye said: “Truly, a friend of mine, Senator Ayo Arise, owner of International Payment Devices Limited, included my name as one of the directors just to satisfy the Corporate Affairs Commission requirements. I have never been part of the operations of the company since it was incorporated. I have never shared any dividend from the company or carried out any function on behalf of the company.
“Most importantly, I was never involved in any transaction between the company and Unity Bank Plc, and the bank never informed me that I was involved in any transaction on behalf of any company. The company also did not inform me that it had any financial obligation or transaction with Unity Bank Plc or any financial institution until I saw the publication in the newspapers today (Tuesday). In the whole world, neither me nor any company that I have interest in owes any bank or financial institution.”
Besides, Adeyeye said it was wrong for any bank to publish names of its customers in newspapers without court decision. “As a lawyer myself, I know that it is only a competent court of law that can say whether or not any individual or organisation is a debtor and it is unethical for a bank to publish names of its clients and categorise them as debtors when it should have simply taken over the collaterals used to secure the loans,” he said.
Thus, the former minister said he had instructed his lawyer to institute legal action against Unity Bank, with a view to getting it to pay damages.
Arise, Adeyeye’s friend, described his inclusion as “lacking probity and organisational competency.”
Domkat Bali, retired lieutenant general and former Defence chief, denied ever taking the loan from Fidelity Bank Plc in the first instance not to talk of refusing to pay. The retired army general was listed alongside Tokunbo Adesanya, pastor and pro-chancellor/chairman of the Governing Council of the Redeemer’s University, in a publication by the bank in respect of a N279 million loan facility by Lucratel Limited, a telecommunications infrastructure service provider. Both men said in a statement that they were never shareholders of the company.
Others who have protested their inclusion in the bad-debt list include Kalu Idika Kalu, former minister of finance; MRS Oil and Gas Company limited as well as Sam Nda-Isaiah, former presidential aspirant and publisher of Leadership newspapers.
Apart from individuals, members of the Federation of Construction Industry, FOCI, have expressed serious reservation over publication of names of bank debtors.
Solomon Ogunbusola, president of the FOCI, during a press conference expressed displeasure over the CBN’s threat. He said the inability of his members to pay back bank loans was caused by governments’ indebtedness to them. Ogunbusola lamented that his members had spent the loans they obtained from banks on projects such as roads and building construction in the hope that governments would pay them as and when due, but lamented that governments failed to pay up.
Members of the FOCI include big construction companies such as Julius Berger Plc, C and C Construction, Costain West Africa, Hitech, Brunelli Construction, Jagal Nigeria, G. Cappa Plc, PW Nigeria Limited, Dantata and Sawoe and RCC, among others.
According to Ogunbusola, the federal ministry of works alone currently owed its members more than N500 billion. He said one of the firms was being owed N70 billion by the federal government.
He argued that the CBN should also publish names of government ministries, departments and agencies indebted to the FOCI members. He said: “We are indebted to banks and CBN is threatening our members, saying that it will publish their names as chronic debtors. How can you explain it that someone borrowed money from the bank for two to three years and government refuses to pay for the contract done with the money? What will CBN do to government that refuses to pay the contractor? The names of such governments must be published too.”
To worsen the situation, Ogunbusola disclosed that construction firms in the country were currently working below 30 percent capacity, as many contractors were handicapped because they could not get paid for work done.
Nonetheless, some Nigerians are in support of the bank’s action. Boniface Okezie, national chairman, Progressive Shareholders Association of Nigeria, PSAN, in supporting the publish and shame measure, noted that the issue of NPL in Nigerian banks had been having adverse effects on shareholders and therefore, urged the CBN to continue with the process.
Okezie said that shareholders always suffered and bear the brunt of the chronic debts in the banking industry because it affects their returns on investment. He said: “if the names of the chronic debtors are published today heaven will not fall because they are the people wrecking havoc on banks. The fact is that names should be made known so that they could run to pay. They shouldn’t stop them from doing business with those banks.”
Similarly, the Coalition Against Corrupt Leaders, an anti-corruption group, said chronic bank debtors were sabotaging the nation’s economy. The group, therefore, called on concerned authorities to sanction any errant banks involved in the ongoing debt crisis, if it did not follow laid down guidelines. Debo Adeniran, executive director of CACOL, commended the publication of names of debtors by some banks, describing it as “bold and proactive.”
Adeniran said the debtors and “their collaborating bankers should be seen, not only as corrupt elements but also as saboteurs of the nation’s economy.” He alleged that the banks had been ignoring low-income citizens who form the larger part of the informal sector in the country which contributes a larger percentage to Nigeria’s Gross Domestic Product compared to the formal sector.
He condemned the practice whereby some banks would discriminate against artisans, small and medium-scale loan applicants, regardless of the viability potential of their projects. Adeniran said: “Prerequisites for qualifying for credit facilities should be relaxed and made more elastic in such a way that every innovative and developmental mind would cultivate a general sense of belonging in the economic arrangement of this country.”
In addition and in line with directive of the Central Bank of Nigeria, CBN, the debtors are to be blacklisted and banned from participating in the foreign exchange market as well as trading in the Nigerian government securities market. The publication of the debtors’ lists is to be a continuous exercise.
Ibrahim Muazu, director, Corporate Communications of the CBN, said that the publish and shame strategy was “an effort to get them (debtors) pay back what they owe,” so that the banks could recover facilities granted them. He described the exercise simply as a recovery drive, saying it was not aimed at removing the listed debtors from the banking system.
He said ordinarily, the banks “would have blacklisted the debtors if they so desired, but that the essence of publishing the list of debtors is to shame these delinquent debtors into paying up.” According to him, “the idea is not to blacklist them from paying but to shame them into paying.”
Muazu, however, said the Credit Bureau would have seen these delinquent debtors, adding that this might affect the debtors’ ability to access credit facilities in the future. He noted that those whose names were published “were given three months to make good on paying back what they owed,” but refused to take advantage of the window.
The publications of debtors’ names have also raised some legal issues. Lawyers have refused to agree on the legality or otherwise of the action. For instance, Kemi Balogun, SAN, said the banks were in order in publishing names of debtors, adding that it would only become unlawful if someone who did not take a loan was accused of doing so without paying up.
“If he has taken a loan and has not paid back, it is lawful. There is a need to balance law with justice. Law doesn’t operate in a vacuum. It operates within so many contexts, including the need to keep the society and economy in check,” Balogun said, adding: “When you take loan and don’t pay back, you create what is called systematic collapse in the economy. When that happens, the ripple effect is that people won’t be able to find work. The multiplying effect of that is armed robbery, prostitution and so many social vices.”
But Tony Odiadi, SAN, disagrees. In a newspaper interview, Odiadi said the publications violated some of the banking regulations. He said: “Banking regime is based on confidentiality. Transactions between any bank and its customers have certain fiduciary content. A bank is not to throw open the fact that there have been some kind of failures to payments.
“If there is any issue about inability to repay loan, the proper thing for a bank to do is to go ahead and approach the courts. The banks by publishing that Mr. A or Mr. B owed them money, is not a proof in the eye of the law that there is a debt. They are trying to illegitimise the other party.”
Nevertheless, Odilim Enwegbara, an economist and public commentator, said publishing names of chronic bank debtors in the media was not enough, “I think that we need a law that forces chronic debtors into bankruptcy in a way that they forfeit their assets,” he said.
Besides, he said some of the contract agreements of those whose names were published could easily go to court insisting that the contracts didn’t include publishing their names in the media should fail to meet their debt obligations.
According to Enwegbara, the razzmatazz of media publication would soon fizzle out, but he said what could be adduced in the whole episode is that “the lender is as guilty as the borrower.” “Some of the so-called debts were fraudulently given by the lender and fraudulently received by the borrower, especially when both knew that the facilities’ terms were made to be difficult to execute. At 20 percent, it’s obvious that such debtors would have difficulty meeting the terms, especially if the inflation rates too were out of control,” he said.
Hence, he said rather than embarking on trying to wash their hands off by mere publishing debtors’ names, the lenders and the debtors should explain to the Nigerian public how they came about the NPL. “This is because there’s no way the lender lends without sound exit strategy,” Enwegbara said.
Also, he said the CBN should be indicted for its failure as regulatory body, to regularly supervise and determine the credit and liquidity risks of banks to ensure the healthiness of their credit risks. “That’s why we need to spin off the banking regulatory functions of the CBN. As it’s now common, we should establish the Nigerian Banking Regulatory Commission. Like China’s Banking Regulatory Commission, it should regulate and supervise banks, particularly formulating prudential rules and regulations as well as off-site and on-site bank risk investigations, detecting credit risks in the banks and establishing an early-warning system,” he said.
Alesta Wilcox, an accountant and human rights activist, said the CBN and the commercial banks should be blamed for the toxic debts. Wilcox said the interest rate is too high for any Nigerian business to succeed. “What we are to think about is that interest rates in other countries are between five to nine percent. So, when investors from the US or any European country come to the country with their money, it is almost impossible for any Nigerian entrepreneur to compete with them,” he said. Besides, he said government should also take into consideration the fact that each business enterprise provide all the facilities that government supposed to provide.
Thus, Wilcox said the CBN would need to bring down interest rates and make the business environment to be more friendly to Nigerian investors and not to harass them with loans. “Let us learn from China and other Asian countries which are using their indigenous ways of doing business,” he said.
Be that as it may, the issue of unpaid debts is not likely to be resolved soon.
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