Over the last century, Union bank has made a fortune from the Nigerian
banking industry, it is however a tragedy that a lot of that fortune has
been made by officials defrauding customers.
Union Bank Plc recently released its H1 2017 earnings, posting N73 billion
in Gross Earnings, a growth of 22.6% over the last year.
However according to insiders, the bank is exposed to litigation issues
that could see it in serious financial trouble in the future as events
unfold in the courtroom.
Union Bank has had its fair share of legal issues like all players in the
banking sector, however its low profitability (the bank posted N9 billion
PAT for H1 2017), could take a further hit as legal issues continue to
fold.
There are several legal issues plaguing the bank. According to one source
with knowledge of the bank’s legal issues, there is a case that has been
instituted against the bank for over two decades and is recently making
headways, after one of Nigeria’s top legal firms was hired to prosecute
the matter at the Lagos High Court.
The matter alleges the bank acted improperly by exercising their right to
sell the property of a client, a late accountant from the South-West, in a
fraudulent manner thereby causing the family untold hardship, pain and
suffering, over a period exceeding two decades.
The family is reportedly in court claiming over nine figures in damages
against one of the oldest lenders in the country.
Over the years, the fraud perpetrated by various employees and agents of
Union Bank exceed tens of billions of Naira.
For instance in 2009, the Central Bank of Nigeria sacked Bart Ebong, then
MD of Union Bank Plc, for his part in a $90 million fraud perpetrated
against the Nigerian people. The bank was also at the same time involved
in a N500 billion margin loan default. 20 charged were filed by the
Economic and Financial Crimes Commission bordering on money laundering and
other offences.
Also in 2016, the Federal High Court issued a writ of summon to C. S.
Sankey, chairman, Nigeria International Bank Limited, Citi Bank; Emeka
Emuwa, managing director, Union Bank Plc and Olusola Fagbure, legal
adviser/company secretary, Citibank, to appear before it on Monday,
January 25 in a N10.7 billion criminal charge preferred against them and
14 others by the federal government of Nigeria.
Order charges filed against the bank in relation to that suit included
419, conspiracy, and forging of documents against others.
Also in 2014, two senior managers of the bank diverted depositors funds
totaling N661 million for personal use.
In the process of their crime, they falsified documents to cover their
tracks.
These are just a few of the instances of criminal fraud allegedly
perpetrated by the management and staff of Union Bank Plc, which place the
company’s financial future in a place of uncertainty.
Other banks in Nigeria have recently been made to settle their legal
disputes to the tune of billions of Naira. The advantage the banks have
over the customers and other little guys who have been ripped off is they
have the money to keep the litigation tied up in the courts for years.
However recent decisions, some even by the Supreme Court of Nigeria have
been in the favour of defrauded bank customers, and some litigants are
ready to continue spending money to ensure that the banks pay what they
owe.
Banks have a fiduciary duty to their clients, and in situations where the
breadwinner goes to a bank like Union bank and takes a loan, but is unable
to settle it due to his untimely death. And instead of showing
professionalism, the bank goes ahead to collude with unscrupulous persons
in order to circumvent the wishes of the late customer and dispose of his
assets in a fraudulent manner so as to receive illicit gains, such
situations are unfortunate.
Union Bank Plc is planning a N50 billion rights issue, shareholders who
intend to increase their shareholding in the bank would do well to ensure
the bank has disclosed its exposure to potential multi-billion Naira
judgments so as to avoid even more litigation in the years, and even
decades to come.
One of the bank’s largest investors, Bob Diamond is a former top executive
of Barclays Bank UK who was forced to step down amid an interest rate
scandal that saw Barclays employees who were directly under his
supervision, commit multi-billion pounds fraud in order to make a profit
or spruce up their books during the 2008 financial crisis. A crisis that
began in Europe and eventually affected banks in Nigeria, including Union
bank.
Barclays was fined £290 million (N145 billion) and Bob Diamond was forced
to resign. He has since set up shop in Africa were banking regulations are
not as stringent as the United Kingdom or United States of America.