Nigeria: Okorie Drags Zenith Bank to CBN Over ‘Disappearance’ of $64.1 Million

An alleged disappearance of over $64 million from the vaults of the Zenith Bank has landed the multinational financial services provider in trouble.

Zenith bank is rated as a large financial service provider in Nigeria and Anglophone West Africa. As at the ending of 2016, her total assets was N4.7 trillion with shareholders’ equity of N616.3 billion. She is listed  on the Nigeria Stock Exchange and the London Stock Exchange.

But the Managing Director of Owigs and Obigs, Emeka Okorie, has dragged the bank before the Central Bank of Nigeria (CBN) over an alleged unethical conduct which resulted in the termination of a foreign business transaction of over $64 million, with a Chinese firm, King-Tan Tantalum Industry.

Okorie is praying the apex bank for clarification on the validity of letters of credit issued by the Industrial and Commercial Bank of China (ICBC) to his company, through Zenith bank.

In a representation to the CBN dated January 30, 2019 the aggrieved businessman is seeking answers to questions bothering on banking protocol, customer relations and applicable rules of international trade policy.

The petitioner wants CBN to confirm if the said letters of credit issued by ICBC LC Nos. 456011400024 and 365991400013 were actually unconfirmed irrevocable letters of credit, not issued based on the approved draft copy of Zenith bank.

The bothering issues on banking practice: request for urgent clarification on the definitions and interpretation of trade terms and sudden disappearance of customer’s funds with zenith bank and loss of $64, 107 180.00 foreign trade deal.

According to Okorie, they wrote CBN for clarification as they no longer understand the banking protocol on customer relations and the meanings of the applicable rules of international trade policy.

‘’It became exigent that we seek CBN’s timely advice/clarification on issuance of Confirmed Irrevocable Letter of Credit (LC) and to help our company identify the internationally acceptable standard, according to the Uniform Custom Practice (UCP latest version) as specified in the letters of (LC No: 456011400024, LC No: 365991400013).

‘’In 2014, our company was issued two Irrevocable Confirmed Letters of Credit by ICBC for a contract to supply tin, columbite and tantalite valued at $64,107,180.00, having relied on Zenith bank for guide in international trade documentation as our firm being the first exporter, was naive.

‘’Instead of confirming the letters of credit, the bank rather cancelled and rejected them. This is not a general enquiry, but a specific enquiry dealing with specific issues that require specific answers for avoidance of further occurrence of issues as we pray that our cry and yelling for guide and direction may really touch your heart as our shrieking voice may start fading away if you do not attend to us speedily.’’

He claimed that bank, after receiving the two letters of credit cancelled and subsequently rejected them on the grounds that the issuance did not comply with the approved standard by the bank.

‘’Zenith bank assured our firm that ICBC had agreed to abide by the new rules to transfer the fund to them and that we should get our shipment ready as ICBC reissues the LC accordingly.

‘’Without any hint from our banker, we were informed by the Singapore broker (Eglone Group Asia PTE Ltd) that Zenith bank has without notice terminated the contract without a recourse to Owigs and Obigs by paying off from the company’s account, the fund which was to secure the performance guarantee, as a default payment to ICBC for breach of contract.

Since there was no debit notification or advice, steps taken immediately to clarify the information were frustrated when the bank stated that the transaction notification messages platform linking to the company’s account has been disconnected and cut off and that the company has been barred from accessing any information on the state of its account with Zenith bank (both USD and naira account) and hence declined to release the company’s statement of account till date without reason.

‘’The management refused to communicate despite the persistent effort made to get answer from Zenith bank for unwarranted and unaccounted withdrawal from the company’s account, without notice and or authorisation, instead they responded with threat of fire and brimstone if this matter should go to press but promised to settle based on dialogue which never came to be.

‘’As pressure continued to mount from our firm, Zenith bank on October 10, 2016 sent a message of the account’s closure without notice after refusing and failing to release our statement of account since 2014 till date which was a violation of depositor’s right, breach of trust and accountability by the bank.

‘’Indeed, several jobs were lost as a result of this, our financial fortune was severely affected in the adverse and the international reputation of our firm significantly dented. An NGO- Empowerment for Unemployed Youth Initiative, had sought clarification from your Office on this matter in a letter dated  November 25, 2015 which letter was received by you on December 7, 2015 without any response.

‘’Nigeria Deposit Insurance Corporation (NDIC) through her letter dated January 6, 2016 with reference No: NDIC/BEU/7/VOL.8 and titled RE: CONTRAVENTION OF BANKING RULES AND DEPOSITOR EXPLOITATION: NEED FOR URGENT CLARIFICATION AND REQUEST FOR SWIFT INTERVENTION, had sought to collaborate with CBN to investigate the matter but was turned down.

‘’We have not yet been formally advised with detailed explanation as to the failure of transaction. We continued wondering if perhaps the failure was linked to the unresolved background issue between us and Zenith Bank which bordered on Zenith bank’s demand for 34% share of the established expected net profit ($38,432,470.04) of the transaction, as its own entitlement in conformity with the CBN directive according to them (Zenith Bank Plc.).

‘’The fact that the contract was illegally terminated by Zenith bank left us with so many unanswered questions as to whether the illegal termination suggested an unresolved LC issue or disagreements over the demand of 34% share from our pay off entitlements from the transaction.

‘’This letter serves as a distress call to CBN to come to our aid as presently, Owigs and Obigs Nigeria Limited has entered into a pre-contract processes with the Nigerian Army involving a European Government Finance Support Scheme through its military pension fund, for supply of modern solar energy infrastructural equipment and materials; and confirmed Letters of Credit will be utilised in the said contract with Nigerian Army.

‘’We do not want the transaction with the Nigerian Army to suffer a similar fate that befell our transaction with ICBC. We herein seek your advice/clarification on the following: The relevant rules and conventions guiding confirmation of an issued Letter of Credit and the internationally acceptable standard/format of a Letter of Credit according to the uniform custom practice (UCP).

‘’We will appreciate if we can be furnished with the various standards/formats of LC if any, so that we might be guided accordingly as required, to verify if the Letter of Credit expected to be issued in the extant transaction according to the standard format attached herewith, meets the Universal Customs and Practice of the International Chamber of Commerce, Geneva, and as such if it can be relied upon in the transaction with Nigeria Army or if there are any other standards we are not yet aware of for our Company to be guided.

‘’Whether a confirmed LC based contract comes into effect, and becomes operative without the acceptance of the issued LC by the beneficiary bank and the subsequent confirmation of the issued LC to the beneficiary company.

‘’Which portion of the banking rules that applies to withdrawal of depositor’s money from its account without notice and or authorization to make a default payment by bank for breach of contract when the contract in question has not come into effect and become operative.

‘’Can a  issued letter of credit be cancelled orally (without any document to so establish), hence clarify whether the issued LC as attached herewith, were actually reflective of, as rejected/cancelled or endorsed in acceptance by Zenith bank.’’