The Central Bank of Nigeria (CBN) yesterday exonerated the management of Spring Bank Plc from any allegations of fraud as recently reported in some daily and evening newspapers.

 

Some newspapers had reported that the Group Managing Director/Chief Executive Officer of Spring Bank Plc Mrs. Sola Ayodele and key officers of the bank had been charged to court for allegedly defrauding Strand Capital Partners Ltd the sum of N5.2billion, for which the GMD/CEO of the bank had been declared, wanted.

 

But the CBN in a letter dated September 14, 2010 to the Principal Solicitor, Legal Resources Alliances, who are legal advisers to Strand Capital Partners stated clearly that Strand Capital’s claims to N5.2 billion from Spring Bank cannot be established.

 

The statement signed by the Director of Banking Supervision states as follows:

 

“At the meeting of the CBN examiners with the petitioner on 19^th January, 2009 and the subsequent meeting held with the directors of Banking Supervision, CBN, on 23^rd February, 2010, your claim that Spring Bank’s offer letter of 7^th July, 2008, extending a N5.208 billion underwriting line facility to Strand Capital Partners Limited was an irrevocable underwriting agreement in accordance with the enabling statutes between Spring Bank Plc and NSL could not be established because you failed to provide a copy of an executed underwriting agreement between the bank and NSL. Your assertion that the offer of an underwriting facility could be construed and treated in a similar manner as an underwriting commitment could not also be substantiated while your promise to provide evidence as requested by the CBN has not been complied with up till time of writing this letter”

 

The statement titled “Spring Bank Plc Underwriting Commitment/Agreement in Respect of National Sports Lottery Plc Public Offer”, which was actually a response to a petition by Legal Resources Alliance on behalf of Strand Capital Partners Ltd further states that:

 

·        Strand Capital Partners Limited on 3^rd July, 2008, wrote to Spring Bank Plc requesting for an overdraft and/underwriting line of up to N5 billion, to part finance its operations and enable it act as underwriters to public and private security/stock offerings. The tenor was to be determined on a case by case basis, subject to a minimum of 90 days, with rollover options while the security pledged were shares/stocks purchased with the facility

 

·        The Management of Spring Bank Plc in a letter dated 7^th July, 2008, offered an underwriting line facility of N5.208 billion to Strand Capital Partners Ltd to partially underwrite the IPO of NSL Plc subject to some conditions precedent to draw down. The facility was for 90 days and was to expire on 12^th October, 2008. The source of repayment was to be proceeds of the offer of NSL or a lien on 336 million ordinary shares of NSL, which was yet to come into existence

 

·        Based on Spring Bank’s offer letter, the Board of Directors of Strand Capital Partners Ltd passed a resolution at its meetings of 7^th July, 2008 authorizing the company to accept the credit facility/banking accommodation of N5.208 billion from Spring Bank Plc

 

·        There was an internally transferred credit of N5.208 billion into NSL offer proceeds account No.001203910002101 of Spring Bank. The statement of account referred to above which you claimed was your client’s money was in fact an “Account Payable/suspense” account that was created by Spring Bank. The account was an internal account of the bank that was non operating and maintained for record keeping purpose. It was not meant for disbursement as one of the Management’s directives was that there should be no outflow of funds from the account. The two credit entries that made up the N5.208 billion were reversed by the bank on 19^th January, 2009. We noted that the account was opened on 11^th September, 2008 after the offer had closed and as such could not have been credited to the customer on the day the offer opened, which was 14^th July, 2008. Also NSL Plc did not direct the bank to open the account, and thus it cannot lay claim to it

 

·        NSL Plc suit no. M/610/2008 filed in the High Court of Lagos State on the 5^th November, 2008 making claims of N5.208 billion underwriting commitment amongst other prayers. However, it was noted that the firm of Oghogho Ayauru & Co, Lawyers to NSL, filed a notice of discontinuance at the High Court of Lagos State on 19^th February, 2009

 

·        On 24^th April, 2009 the firm of Silas Ukaro & Co filed a statement of claim in respect of the issue under consideration against the bank on behalf of Strand Capital Partners Ltd in the High Court of Lagos State. The case was yet to be determined

 

·        At the meeting of the CBN examiners with the petitioner on 19^th January, 2009 and the subsequent meeting held with the Director of Banking Supervision, CBN, on 23^rd February,2010, your claim that Spring Bank’s offer letter of 7^th July, 2008, extending a N5.208 billion underwriting line facility to Strand Capital Partners Limited was an irrevocable underwriting agreement in accordance with the enabling statutes between Spring Bank Plc and NSL could not be established because you failed to provide a copy of an executed underwriting agreement between the bank and NSL. Your assertion that the offer of an underwriting facility could be construed and treated in a similar manner as an underwriting commitment could not also be substantiated while your promise to provide evidence as requested by the CBN has not been complied with up till time of writing this letter

 

·        The bank was not registered by the Securities and Exchange Commission (SEC) as an underwriter and could, therefore, not underwrite an issue of shares

 

·        Some of the conditions precedent to drawdown, which included the following, were not met:

 

–         Opening of an account by Strand Capital Partners Limited with Spring Bank  for the domiciliation of all proceeds of the public offer

 

–         Counter indemnity of Strand Capital Partners Limited

 

·        Approximately N110 million, which was realized out of the public offer of N12 billion was used by NSL in the company’s business

 

After its detailed findings, the apex bank further counseled that since the case is before a competent court, NSL should allow the court process to run its course.

From the foregoing, it becomes obvious that the sponsored and carefully orchestrated smear campaign against the new management of the bank was masterminded by the Kola Daisi family, who are owners of both NSL and Strand Capital Partners Ltd, in order to avoid the critical issue of repayment of over N7bn debt which it has owed the bank since its consolidation in 2006.

It is also important to note that contrary to claims in some quarters, the GMD/CEO is not on the run, but has vowed to frustrate every effort by the smear campaigners to fraudulently take away N5.2bn from the vaults of the bank.

Already the bank has secured an order of court restraining the Police from further harassment of the GMD and others mentioned in the matter.

 

SIGNED: MANAGEMENT