Business
Tribunal orders FCMB to refund N2.5bn to firm
The protracted legal dispute between First City Monument Bank Plc and Valueline Securities and Investment Limited (a stockbroking firm) has finally been resolved by the Investment and Securities Tribunal.
The legal dispute, which was centered on the repayment of a controversial N2.5 billion shares purchase fund that was misappropriated by the now-defunct Finbank Plc, had been on since 2008. First City Monument Bank Plc had merged with Finbank in 2012.
Valueline Securities and Investment Limited had instituted the suit ten years ago, while implicating City Monument Bank Plc, the Securities and Exchange Commission, and the Central Bank of Nigeria.
Meanwhile, delivering the judgment in Abuja recently, the Investment and Securities Tribunal ruled that FCMB should pay the claimant some N988,533,205.86 in addition to accrued interest calculated at 18%, being repayment of an outstanding loan.
First City Monument Bank was also mandated to pay a penalty charge of about N500.000 which will go to the claimant as the cost of legal action. FCMB will also pay a 10% 10% interest on the judgment debt from the date of the judgment until final defrayment.
Recall that Valueline Securities and Investment Limited had in 2008 paid the sum of N2.5 billion for the purchase of shares during a Finbank public offer. Unfortunately, the stockbroking firm was neither allotted the shares nor refunded the N2.5 billion; in line with capital market regulations.
Consequently, the claimant petitioned the Securities and Exchange Commission who investigated the matter and found the bank guilty, thereby ordering it to refund the money with 18% interest per annum; starting from the date of public offer till liquidation of same.
Following the bank’s failure to adhere to the ruling by SEC, the Central Bank of Nigeria had to intervene. This also happened to be the same time Finbank Plc and First City Monument Bank were finalising their agreement. FCMB agreed to offset the debt, provided that SEC would allow the merger to take place.
An All Parties Meeting (APM) was convened where the FCMB undertook to repay the indebtedness of Finbank and for its account with the CBN to be debited at source by CBN provided the merger of the two banks was approved by SEC to succeed.
The bank later claimed that it had paid the sum of N4.6 billion to the firm, said sum which included the initial N2.5 billion plus the accrued interest of N2.1 billion. The claimant, however, faulted the claim, saying that FCMB never really repaid the full debt.
