Sterling Bank, the “one-customer bank”, has one customer giving it
sleepless nights over a loan that not only went bad but has now
snowballed into a major scandal in the banking industry.
Grant Properties Limited, a property development company, has accused
Sterling Bank of excising 10 hectares — which land it values at N5
billion — from a 50-hectare collateral and illegally selling it for
pittance to a front company of a very senior director of the bank.
A Lagos high court has now ruled that the collateral was illegally sold,
but there is also suspicion that the Asset Management Corporation of
Nigeria (AMCON) is less than disinterested in the matter.
AMCON is accused of trying to arm-twist Grant Properties into abandoning
the court judgment that nullified the sale of the collateral.
The business deal started in 2002 when Grant Properties secured a
50-hectare land in Lekki, Lagos state, to build “Victory Park Estate”.
It approached Unity Bank, Skye Bank, Wema Bank and Sterling Bank for an
N8 billion ongoing loan to partly fund the project. Sterling was the
lead of the consortium.
Grant Properties transferred the shares in its subsidiary, Knight Rook
Limited, to the banks as security for the loan.
LOAN TRANSFERRED TO AMCON
After Grant Properties had secured the loan and started developing the
property, it could not meet up with the repayment obligations. This also
came at the time banks were experiencing liquidity problems, with many
of them taken over by the Central Bank of Nigeria (CBN) which then set
up AMCON to buy the bad debts.
The Grant Properties loan, which had gone bad, was transferred to the
AMCON in 2011. At the time, the CBN had spent over $6.8 billion of tax
payers funds purchasing the non-performing loans from failed banks.
Grant Properties was informed by Skye Bank, one of the banks financing
the project, that it had assigned its own share in the project loans to
AMCON.
The property company then approached AMCON with a proposal to finance
the project and repay the loan. AMCON, however, advised the company to
wait for other banks to transfer their share of the loans before
entering negotiations with the corporation.
In handing over the debts to AMCON, Sterling Bank and others were
required to transfer all Grant Properties’ collateral to the
corporation.
ILLEGAL SALE OF LAND
Sterling Bank was expected to transfer, alongside the loan, every part
of the land to AMCON, but it was discovered that the bank leftout 10 hectares which it had sold to the Real Estate Development (RED)
Company — said to be a front for a very senior director of the bank.
Olajide Awosedo, chairman of Grant Properties, said in a recent
interview with journalists that a non-executive director of Sterling
Bank had called him “face to face, brought out a survey of 10 hectares
of my land and said, ‘Sir, sell this portion of land to me, if you want
N10bn from my bank. I will make sure you get it. I am the chairman of
real estate finance of the bank”.
He refused until AMCON took over the non-performing loan.
“They moved my loan to AMCON, but rather than transfer all my collateral
with the loan, the bank (Sterling) withheld the 10 hectares its
director had his eyes on and sold it to him through a surrogate company
owned by the director and his associates,” Awosedo added.
He alleged that the director initially sold the land to his front
company at N18,500/sq. metre, amounting to N1.85b for the 10 hectares — a
far cry from the market worth of N5 billion, according to him.
About 2.4 hectares from the land was immediately sold to UAC Properties
Development Company (UPDC), another property development company owned
by UAC Plc, at a higher rate of N26,000/sq. metre. It was this that
became the subject of litigation that ended in favour of Grant
Properties.
The remaining 7.6 hectares were developed by Aircom Nigeria Limited, an
estate development company, which built the “Cardogan Estate”. A
three-bedroom apartment in the estate, TheCable gathered, goes for N48
million.
Curiously, Aircom is owned by Yemi Idowu — the non-executive director of
the bank who managed the Grant Properties’ loan before the crisis.
In a seeming disregard for conflict of interest, the bank had appointed
Idowu to manage a rival company’s — Grant Properties’ — account.
It appears to be a complicated web of intrigues and interests, which are
said to be quite normal in the banking industry in Nigeria.
COURT SAYS SALE OF LAND ‘ILLEGAL’
Meanwhile, Grant Properties filed an action at the Lagos high court to
challenge the sale of 2.4 hectares of the 10 hectares to UPDC in 2011.
Six years after — precisely on June 2, 2017 — the court ruled that the
land was sold by Sterling Bank AFTER the banks had assigned the
company’s loan to AMCON.
The court also held that the documents of the sale were signed by Yemi
Adeola, managing director (pictured), and Justina Lewa, company
secretary of Sterling Bank. The bank, the court ruled, had acted alone
as the other banks were not part of the sale.
A. J. Bashua, the judge, made an order nullifying the sale of the land.
“Justina Lewa who executed Exhibit F or DD2 (Deeds of Assignment) did
not have power to do so and any such execution was done after interest
had the transferred to AMCON,” the judgment read.
“Having therefore not complied with Exhibit C (Memorandum of
Understanding) coupled to the fact that Exhibit DD2 (Deed of Assignment)
was executed during the pendency of this suit, the sale to the 1st
defendant amount to nullity. The claim of the claimants succeeds.”
UPDC is currently on appeal.
While Grants Properties pursued the case, Idowu and UPDC had continued
developing the land — in defiance of two court orders obtained in 2012
ordering all parties to stop construction activities on the disrupted 10
hectares pending determination of the case.
“I hereby order that all the construction work engaged by either of or
all the parties be stopped or abate forthwith,” T.A.O. Oyekan-Abdullai
of the Lagos high court had ruled in July 2012.
But Idowu went ahead with the construction of Cadogan Estate and UPDC,
on the other hand, built Alexander Miller Estate on the land, and over
the years, and had apparently made huge profit while Grant Properties
has been left to carry the burden of the debt obligations to AMCON.
AMCON COMPLICIT?
When it discovered that Sterling Bank had sold part of the land to its
director, Grant Properties reported the inside trading to AMCON.
AMCON had promised to help retrieve the land, but it has done nothing or
little to getting things rightly done, fuelling fears that the
corporation is in bed with th Sterling Bank.
Section 34(1) of the amended AMCON Act says when the corporation
acquires an asset, the asset will be vested in the corporation alone and
it shall exercise all the rights and powers of the financial
institution. It adds that the debtor concerned and the financial
institution would cease to have those rights.
In the event that the collateral is termed “restrictive”, section 36(1)
of the acts says the financial institution from which the restrictive
collateral is acquired shall hold such collateral in trust for and the
sole benefit of the corporation.
AMCON did not intervene until an action was filed to challenge the sale.
It has now instructed Grant Properties to withdraw the case from the
court. Ordinarily, the court victory would be seen as a positive for
AMCON — it would take possession of the property and recoup the loan it
paid to pay off the bad debt. But it only got curiouser and curiouser.
Meanwhile, terms of settlement were proposed by Lanre Olaoluwa, AMCON’s
receiver/manager, that: AMCON would provide N2 billion to help Grant
Properties complete the project and settle the loan; the banks would
refund the assumed secret profit of N750 million based on the assumption
that the 10 hectares were resold at 26,000/sq. metre; Grant Properties
would ratify the sale of the land; and that the terms of settlement
would be entered in the court as a consent judgment binding all parties.
Before signing the terms of settlement, Grant Properties had been
informed of AMCON’s board rejection of the proposal. The company,
however, met with AMCON top officials and it was agreed that AMCON’s
management would write to Sterling Bank to return the land it illegally
took.
Grant Properties was later invited by the CBN to respond to a complaint
from AMCON’s board. AMCON had refused to write the agreed letter, and
Kola Ayeye, AMCON’s executive director, denied any record of the board
intervening in the resolutions reached.
The role of AMCON has come under scrutiny because technically, it owns
Knight Rook, the company whose shares served as collateral for the loan
to Grant Properties. With a positive court judgment, it means AMCON has
enough collateral to settle the loan.
“That is why it is surprising that AMCON is rejecting the judgement,” an
insider in the deal told TheCable.
EVICTIONS, TORTURE, HARASSMENT
In a debt recovery action, the AMCON Act gives exercising power to its
receiver/manager over all the assets and entire undertaking of the
debtor company notwithstanding that only a part of the assets of the
debtor was charged, or pledged as security in relation to the asset
acquired by the corporation.
This, the act maintains, must be carried out without prejudice.
After securing a judgment in its favour over the land sold by Sterling
Bank, Grant Properties, in June 2017, wrote to AMCON, enclosing a
certified copy of the judgment, and a proposal to repay its loan. The
company, in its letter, asked AMCON to value the land and the
developments on it, and then take its payment from the property.
A day after AMCON received the company’s letter, armed thugs and policemen sent by AMCON’s receiver manager, Olaoluwa, allegedly took
over the company’s property in a coordinated attack across the
premises. In the process, it was alleged, members of staff of the
company were beaten.
“My children and grandchildren have been rendered homeless,” Awosedo
said in a statement. “The eviction of my children from their homes is
particularly baffling, given the fact that two of the residences are
rented accommodations which cannot be attached toward any debt.”
Awosedo and one of his sons suffer from apnea, a condition which affects
the breathing system while sleeping, and they had always slept with the
aid of continuous positive airway pressure (CPAP) machines which were
taken from them.
“We pleaded with them to give us access to our machines, but our
requests were denied,” Awosedo said in the statement. The receiver
threatened that even if they were going to die of apnea, they would not
be allowed access to the CPAP machines, according to him.
In an email exchange between Awosedo and Ayeye, seen by TheCable, Ayeye
said that AMCON would advise the receiver/manager to consider releasing
properties extraneous to the AMCON loan.
The receiver is harassing consumers who bought property in Victory Park
Estate for not having done due diligence before purchasing. He said they
bought AMCON land and they must pay AMCON again to regularise their
titles.
THE CURIOUS CASE OF AYEYE
Ayeye, an AMCON executive director, allegedly told Grant Properties that
the court judgment in its favor was of no consequence.
“The issue of the land was settled as far as AMCON is concerned,” he
reportedly said. Ayeye also reportedly revealed that AMCON had taken
N501 million from the bank — profits secretly made from the sale of the
land — in order to ratify the title.
When Ayeye was reminded that AMCON cannot ratify an illegal act, or
refuse to recognise a court judgment, he said Grant Properties should
forget about the judgment and the 10 hectares of land.
AMCON and Ayeye insist that Grant Properties must not refer to the
judgment, leading to speculation about the neutrality of AMCON. It had
also warned Grant Properties to refrain from making any complaint to the
Economic and Financial Crimes Commission (EFCC) or any other law
enforcement agency.
The land illegally sold by Sterling Bank and the property on it are
worth at least N30 billion today, according to Grant Properties. This is
more than enough to settle their loan obligations to the corporation,
which might have ballooned to about N20 billion when interests and
penalties are factored in.
‘PROCEEDS OF SALE WAS PASSED TO GRANT PROPERTIES’
Responding to TheCable’s enquiry, Sterling Bank said the proceeds of
sale of the 10 hectares was passed to Grant Properties.
“It is instructive to note that the proceeds of sale of the 10 hectares
was passed to Grant Properties/Chief Awosedo for onward transmission to
the subscribers that had demanded for a refund,” Olubukola Adejokun, the
bank’s spokesperson, said in the email sent to TheCable.
The bank also said the 10 hectares was sold to RED and not Idowu,
althought it was silent on the beneficial owner of RED.
“Sterling Bank could not have singlehandedly sold any part of the land
as the security was pledged to the banking consortium that financed the
project,” Adejokun explained, adding that “the decision to sell the 10
hectares was a joint decision between the consortium of banks (Wema,
Skye, Unity and Sterling) and the developer (Grant Properties/Chief
Olajide Awosedo).”
Asked if the sale was is in line with the AMCON Act which states that an
eligible financial institution, Sterling Bank and others in this case,
must hand over all assets to the corporation, Sterling Bank said “the 10
hectares had been sold before the transfer of loan to AMCON and
therefore did not form part of the assets transferred to AMCON by the
consortium of banks”.
The bank also said that it is not true that the court pronounced the
sale illegal.
“The court ruling related to only 2.4 hectares out of the 10 hectares
which the RED Company subsequently sold to UAC Property Development
Company (UPDC) and this is now subject of an appeal at the Court of Appeal
Lagos,” he added.
Although the case was between Grant Properties and UPDC — with a larger
focus on the 2.4 hectares sold to the latter — the judgment, as against
Sterling Bank’s claims, declared that the sale to either RED company or
UPDC was done after the banks had transferred its right and interest to
AMCON. This is against AMCON’s Act.
‘OUR LAWYERS WILL ISSUE A RESPONSE’
When TheCable spoke with Ayeye, he sounded furious on the phone.
“Grant Properties is just throwing wrong news everywhere,” Ayeye said.
“You guys should be careful of somebody who was owing banks for about
five years before AMCON took over, and for eight years that AMCON has
taken over, the company has not paid us one penny.”
He asked TheCable to reach the corporation’s corporate affairs
department for details.
Jude Nwauzor, AMCON’s head of corporate affairs, told TheCable that the
legal department was working a rejoinder to these allegations.
“It is a running case, it didn’t just start. Our lawyers have looked at
all these and they are coming with a response. We have never acted
outside the jurisdiction of the law,” he said.
He explained that AMCON, being a creation of the law, is regularly being
monitored by committees from the national assembly.
“These committees have an oversight function on AMCON, and from time to
time, they invite the management for questioning. So, whatever we do,
when we take over properties, we only do that by the order of a court as
mandated by the act establishing us,” he said.
Further asked why AMCON has ignored a court order obtained in favor of
Grant Properties, Nwazor urged patience as AMCON’s lawyers have been
directed to issue a proper response to all allegations.
Idowu, a key player in this matter, was not ready to provide answers to
questions thrown at him. “It is a personal corporate matter between two
big businessmen and it has nothing to do with public interest,” he told
TheCable.
“The case is in court and it is not something I should talk about,” he
added.
In its code of conduct, Sterling Bank warns its directors to avoid
conflict of interest in the discharge of their duties.
“A conflict of interest can arise when a director or a member of his
immediate family receives improper personal benefits as a result of his
or her position as a director of the bank,” part of the code of conduct
reads.
“Competing with the bank for the purchase or sale of property, products,
services or other interests” is listed as an example of situations that
may constitute conflict of interest.
In the meantime, Grant Properties has petitioned the President Muhammadu
Buhari, the CBN, the senate president, the speaker of the house of
representatives and the inspector general of police. There is yet to
response or action from any of them, according to the
company.@thecableng
