First City Monument Bank (FCMB), one of the retail financial institutions in Nigeria is not having the best of business times presently.
The multiple fraud which the bank is involved in is currently taking its tool on the financial institution, as customers have been embarking on panic withdrawals. Recently, the bank was dragged to court by a stock broking firm over an alleged breach of agreement on a margin trading facility contract.
Fidelity Finance Company Limited sued the Subomi Balogun-led bank claiming damages of N1 billion in a Federal High Court in Lagos. According to information available to www.theoctopusnews.com, the several frauds in the bank has seen some of their top executives about to be sacked.
The crisis between Fidelity Insurance Company Limited, owned by former chairman of Afribank, Osa Osunde, and FCMB started when the bank could not meet the contractual agreement between them. Findings by www.theoctopusnews.com revealed that FCMB, under the contract, had the duty to monitor the transaction with the view to determine when loss of stock value exceeded the acceptable secure limit, and notify it to shore up the stock value either with stock or cash.
The bank, was also obligated to sell the stock in the event that it failed to shore up the stock value or pay down the facility.
But the plaintiff claimed in the statement of claim filed in court that the defendant failed to satisfy its obligation under the contract, a development, which was said to have led to monumental loss.
The plaintiff stated in a supporting affidavit that sometime in April 2007, FCMB, in furtherance of various discussions, offered it a term loan in the sum of N250 million, and the same was accepted on the terms and conditions contained therein. In November 2007, the bank again offered a N1 billion margin trading facility to the plaintiff and the same was also accepted on certain terms and conditions. Several other enhancement margin-trading facilities were also offered to the plaintiff by the defendant and the same were accepted based on terms and conditions agreed.
Findings by www.theoctopusnews.com revealed that Fidelity Finance and FCMB opened a joint account with the Central Securities Clearing System (CSCS) where all settlements on the trading floor were to be made.
By the terms of the contract between the plaintiff and the defendant, the plaintiff contributed 30 per cent of the investment sum, while the defendant contributed N1 billion by virtue of the addition of the shares purchased with the N1 billion advanced by the defendant. “The total shares worth N1.3 billion were placed in a special account over which the defendant had a lien and unilateral right of sales in the event of default in repayment by the plaintiff. “The N1.3 billion worth of shares provided 130 percent security cover for the sum of N1 billion advanced by the defendant.
“In fulfilment of the condition of the contract between the plaintiff and the defendant on the margin trading facility, the plaintiff executed various undated letters of authority in favour of the defendant to dispose of the shares pledged as security.
“By the term of the contract between the plaintiff and the defendant, the defendant had a duty to monitor the daily price movement of the stocks pledged as security and to collect a trading statement to confirm daily transactions.
“It was the decision of the parties that the defendant’s duty and obligation to monitor and when necessary dispose of the shares held as security for the transaction, was to ensure that in the worst scenario, the defendant suffered no loss at all on the transaction and the plaintiff suffers minimal or limited loss on the transaction.
“The contract on the N2.25 billion margin facility expired on 3rd of September, 2008, but in spite of the expiration, the defendant failed to sell the stock pledged as security but instead continued to accumulate interest and other charges on the account of the plaintiff and made continuous demands for payment of various illegal sums as alleged outstanding balance,” Fidelity Finance narrated.
You will recall that sometimes ago this same bank was involved in a dirty insurance fraud, the scam was so messy that operatives at the Economic and Financial Crimes Commission (EFCC) had to intervein in the issue.
Then the bank was alleged by one of its customers, Mr. Segun, the CEO of Eri-Ere Investments Limited of being defrauded by the bank which offered to insure his company and after been given an annuity of N75m (an annual amount to be paid periodically).
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A representative of the bank Temitope Akintayo who heads the Adeola Hopewell branch of FCMB even tried to offered everything humanly possible to the investigating officer at EFCC just to twist the case against the complainant.
Then, the case was handled by the Counter-Terrorism and General Investigations department (CTGI) of EFCC. goes, the CEO of Eri-Ere
We further gathered that, having agreed on this plan, the FCMB management when perfecting its papers and handling over to AIICO-their partner company to finalise the insurance policy for Eri-Ere Investments, the figure changed from N75m to N50m and then N10m.
Such is the manner of frauds taking place in this bank, as major customers who are in the know have began a panic withdrawals.
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