Troubles For Zenith Bank Directors As Otedola Battles Financial Institution Over Alleged Fraud On Companies’ Account

Femi Otedola, the chair of FBN Holdings and majority owner of Geregu Power, and some of his companies are up in arms against Zenith Bank, over a controversial debt involving his former company, Zenon Petroleum & Gas and some other firms in which he has interests.

Mr Otedola is accusing Zenith Bank of perpetrating banking fraud against him and some of his companies. He claims the lender controversially disposed of his shares in the bank, manipulated the company’s bank accounts, and forged documents to cover up the alleged crimes.

The businessman has also triggered litigation and police action against Zenith Bank, with the Force Criminal Investigation Department now probing the matter.

The battle between Mr Otedola and Zenith Bank began after the businessman accused his bankers of dishonest accounting in the computation of his liabilities before selling his multi billion naira debt to the Asset Management Corporation of Nigeria (AMCON), an agency of the Nigerian Government, buys bad loans in banks’ books, aiming to pursue recovery afterwards.

AMCON Headquarters

Reliable sources with knowledge of the matter told PREMIUM TIMES that the billionaire tycoon turned to the court and the police for a resolution after the dispute became knottier, and efforts to resolve it and other related issues without legal intervention failed.

PREMIUM TIMES learnt that the technical teams of Zenith Bank and Zenon Oil met on 20 May 2024 to resolve the logjam, but the meeting was inconclusive.

Zenon Oil did not find the deliberations of another meeting held a day after at Lagos Oriental Hotel satisfactory and has threatened to launch a fresh legal action against the bank.

That was the third reconciliation meeting the two parties held this month, none of which has resolved the conflict.

“It is clear that Zenith Bank Plc is not sincere in resolving this issue out of court and as such a time-wasting exercise,” one of our sources said. “At this juncture, we have resolved to pursue our claims via the judiciary, law enforcement, the CBN and the court of public opinion as we know that our claims are very genuine.”

Zenon claimed its letters of credit that deteriorated into the problematic loan acquired by AMCON were opened before the corporation bought the debt in December 2011. Zenon ceased to operate the account the moment the takeover happened.

Zenon claimed Zenith Bank admitted at meetings that it controversially opened letters of credit after AMCON procured the debt, a practice an official of the oil and gas firm described as unprofessional.

A document seen by PREMIUM TIMES listed the overdue amount on Zenon’s account at the time of AMCON’s intervention as N39 billion. However, Zenon claims Zenith Bank offered the debt to AMCON for N49 billion instead. After intense negotiations, AMCON paid the bank N44.1 billion for the bad debt.

Sunday Enebeli-Uzor, who heads the bank’s corporate communications unit, did not immediately respond to PREMIUM TIMES’ request for comment. Neither did Ayoola Kusimo, the team lead for media relations.

But a top bank official had earlier told one of our reporters that since the matter is already in court and before the police, there was no need discussing it in the media.

When contacted, Mr Otedola confirmed his face-off with Zenith Bank over some unclear transactions on his companies’ accounts but declined to provide details. “We are still trying to resolve it,” he said. “If that fails, I can give you details.”

Another document containing the details of a meeting held by both sides on 20 May said Zenith Bank agreed to refund with compounded accrued interest rate the N205 million it wrongly deducted from Zenon’s account using a backdraft.

Seaforce Shipping Company Limited, owned by Mr Otedola, disclosed that Zenith Bank presented some bank statements claiming that Seaforce owed the lender N5.9 billion as of February 2024. The company added that Zenith Bank later abandoned the claim after it showed the bank proof that Seaforce’s account was in credit as of 2018.

According to a company document obtained by PREMIUM TIMES, Seaforce reviewed a bank statement of the company Zenith Bank shared with it and established that no facility existed.

“This is clearly a fraud as it is evident that they prepared fake bank statements,” Seaforce said.

This March, Zenon, Seaforce, Luzon Oil & Gas, Garment Care Limited, and Mr Otedola obtained an injunction against Zenith Bank, Quantum Zenith Securities and Investment, Veritas Registrar, and Central Securities Clearing System.

The interim injunctions forbade the defendants, their agents, and their servants from trading with the plaintiffs’ shares or paying dividends on them until the hearing of the motion on notice for interlocutory injunction already filed before the court, the Federal High Court Lagos.

According to the insider, Zenith Bank sold the 415 million shares Zenon held in the bank for N4.9 billion in December 2010. The shares were repurchased by Zenith Bank in January 2011 for N5.4 billion, resulting in a net loss of N142.9 million.

The source said similar transactions were carried out on Mr Otedola’s account, with a net loss of N61.5 million recorded in that case, resulting in a cumulative loss of N205.4 million.

The insider said the amount was debited to Zenon’s main account on 27 January 2011. He claimed Zenith Bank admitted to trading on the account and agreed to reverse the debit and pay the accumulated interest to date. PREMIUM TIMES has not been able to verify the claim independently.

Police steps in, summons Zenith Bank
The police have stepped into the matter based on a petition by Mr Otedola and his companies. On 16 May, Isyaku Mohammed, the commissioner of police in charge of administration at the Force Criminal Investigation Department, summoned the managing director of Zenith Bank over what he described as an alleged unauthorised debit to Zenon’s account.

“This office is investigating an alleged case of fraudulent misrepresentation, wrongful debit and unauthorised transactions referred from the assistant inspector general of police, FCID Annex, Alagbon Close, Ikoyi, Lagos, involving your financial institution,” the letter, a copy of which was obtained by PREMIUM TIMES, read.

“A precis of the petition at disposal reveals that sometime in 2011, an unauthorised withdrawal was carried out on the account of Zenon Petroleum Gas Limited with number 10110385211 to the tune of Two Hundred and Five Million, Three Hundred and Forty-six Thousand, Five Hundred and Seventy-Three Naira (N205,346,573.00) without justification.”

The letter also stated that several letters of credit were unlawfully opened by Zenith Bank after the takeover of Zenon by AMCON in 2011, leading to some unsolicited loan disbursement that further plunged the company into indebtedness.

The summon requested Zenith Bank’s managing director to report to the Force Criminal Investigations Department Annex, Alagbon Close, Ikoyi, Lagos, on Monday, 20 May 2024, for questioning.

It is unclear whether the bank chief has honoured the invitation, but those familiar with the matter said some bank legal department officials have met with the police in recent weeks.

Source: Premium Times