GTBank Takes 60 Executives From 13 Banks to Court Over AFEX's N17 Billion Debt

• Guaranty Trust Bank has entered into a legal tussle with top officials of no less than thirteen Nigerian banks and the NDIC
• The suit filed in court follows the non-repayment of a N17 billion debt owed to the bank by the AFEX commodities exchange.
• The loan was obtained by the exchange to finance the Anchor Borrowers' programme initiative by the Central Bank of Nigeria.

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Guaranty Trust Bank has taken legal action against over 60 senior executives from 13 commercial banks in an ongoing lawsuit involving the bank and Afex Commodity Exchange concerning a N17 billion Anchor Borrowers Programme loan.

These executives, including chairpersons, chief executive officers, directors, and company secretaries, face contempt charges for allegedly failing to enforce a Post-No-Debit Order on the accounts of Afex Commodity Exchange held at these banks.

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Note: “Post No Debit” is a term used to describe a restriction imposed by banks on specific accounts, preventing customers from making withdrawals, transfers, or any other debits from their accounts.

According to Leadership, this measure effectively freezes the funds in the account, rendering it inaccessible for the duration of the restriction.

13 banks dragged into GTBank's suit

It would be recalled that recently, Guaranty Trust Holding Company Plc (GTCO), the parent company of GTBank, recorded its highest quarterly profit in 12 years.

In case no. FHC/L/CS/911/2024 between Guaranty Trust Bank Limited and AFEX Commodities Exchange Limited, the Federal High Court in Lagos, under the authority of Justice CJ Aneke, issued an order to imprison the chairpersons, managing directors, directors, company secretaries, and the Nigeria Deposit Insurance Corporation for not complying with its ruling from May 27, 2024.

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According to Punch, the parties accused of contempt include key officers from Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria Plc, First City Monument Bank, NDIC (as the liquidator for Heritage Bank), Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank, Taj Bank, United Bank for Africa, and Zenith Bank.

In a court ruling dated May 27, 2024, twenty banks were ordered to transfer the funds in the respondent's accounts to AFEX's account with GTBank until the N17.81 billion debt is settled.

This sum includes N15.77 billion in outstanding and unpaid loans as of April 17, 2024, and N2.04 billion in recovery costs and incidental expenses.

The court also issued an injunction permitting GTBank, recently ranked as one of the best banks in Africa, to take control of AFEX's 16 warehouses in seven states and sell the commodities stored there.

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Background to AFEX's debt with GTBank

Earlier this month, the court served contempt proceedings against AFEX and key officers for failing to repay a loan from GTBank under the CBN Anchor Borrowers Programme.

The loan, meant to support smallholder farmers, was to be repaid from commodity sales.

Despite an extension, AFEX cited economic difficulties impacting 800,000 farmers, leading to non-repayment.

They urged the Central Bank of Nigeria to activate the 70% collateral guarantee clause due to the lingering effects of the cash crunch, which forced farmers to sell below market value for immediate cash.

Bank manager arrested for allegedly stealing N650m

Meanwhile, Legit.ng earlier reported the arrest one Mr Adeniyi Talabi, a manager at a branch of a major bank in Osogbo, for allegedly embezzling N650 million from 35 bank customers.

Yemisi Opalola, the police command's spokesperson, said that Talabi committed the fraud by deceiving the victims and siphoning the funds through an illicit method known as proof of funds.

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She mentioned that the bank has suspended Talabi as he and his accomplices will face charges in court once the investigation is concluded.

Source: Legit.ng