Justice Lateefa Okunnu of a Lagos High Court sitting in Ikeja in Tuesday heard how embattled former Managing Director of the defunct FinBank, Okey Nwosu allegedly used funds sourced from within the bank to fraudulently buy shares in the same bank.
Elonna Ezulu, who was an officer in the legal department of the defunct bank revealed this while testifying in a N10.9 billion fraud brought against Nwosu and 3 others, further added that it is not proper for the bank to use its own money to purchase shares.
Ezulu said this while being cross-examined by the prosecuting counsel for the Economic and Financial Crimes Commission (EFCC), Mr Rotimi Jacobs (SAN).
The witness further opened up that himself and his team were not aware that the directors used N18bn of the bank money to purchase its own shares.
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“I was not informed that the N18bn of the bank money would be used to purchase its own shares.”
“My unit was not involved in the purchase of the shares.”
“It’s illegal for the bank to use its own money to buy its own shares,” Ezulu said.
Ezulu under cross-examination further revealed that in 2009, the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation conducted special examination on 24 Nigeria deposit banks and the examination revealed that Finbank and some other banks were in grave conditions.
He stated that the grave conditions detected as at that time were: capital inadequacy and liquidity ratio which was below regulatory ratio, weak corporate frameworks, and high ratio of non-performing loans.
He further revealed that Finbank has a loss of N150bn for the 2009 financial year.
He, however, added during cross-examination that to stabilize Finbank, the CBN extended N50bn 7 years facility to the bank, gave an order that the executive management team be replaced with the CBN appointed management and immediate order to recapitalize.
While answering questions on the executive management compensation, Ezulu stated that despite the fact that the bank was wallowing in debt, the board approved some special package for executives.
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“Following due deliberation, the board approved special compensation package for the MD CEO, executives, group executives.”
“The MD CEO was to be given N60m, the executive directors N45m and the group executive directors N35m.”
Justice Okunnu thereafter adjourned the case till November 6, 8, 9 and 14, 2017 for continuation of trial.
Nwosu has been standing trial since 2003 alongside three former directors of the defunct Finbank – Dayo Famoroti, Danjuma Ocholi and Agnes Ebubedike for an alleged banking fraud of N10.9bn.
They were arraigned on 26 counts which they all pleaded not guilty to.
The case suffered a setback when the defendant went all the way to the Supreme Court challenging the jurisdiction of the lower court to try them.
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