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The Nigeria Deposit Insurance Corporation has been inundated with enquiries since the news item carried on NTA Network at 9pm on Friday 3rd April 2009 to the effect that its Managing Director, Mr. Ganiyu Ogunleye was arrested over a so-called controversial N500million interest waiver on the sale of Karu International Market. The same spurious news was carried by virtually all newspapers on Saturday 4th April 2009. We had thought that with the clarifications made to journalists by the Managing Director that he was neither arrested nor detained when they accosted him on Saturday 4th April in Kaduna where he had gone to attend a wedding ceremony, the enquiries would abate. Even though his explanation to journalists was carried on NTA Network News at 9pm on Saturday 4th April, enquiries are still being made on the veracity or otherwise of the purported arrest. In the circumstance, the Corporation is obliged to set the records straight by explaining its position on the embarrassing incident.

 2. By a letter dated 27/02/2009, the Commissioner of Police (Special Investigation Unit - SIU) invited the Managing Director “to interview the Commissioner of Police” on Tuesday 3rd March 2009 at 10am in respect of a petition captioned “Fraudulent Dealings with Public Fund by the Interim Management Committee (IMC) in Charge of Fortune International Bank (In-Liquidation).” The letter further stated that “Investigation so far has unearthed a lot of issues that need clearance from your office.”

3. On March 2, 2009, The Nation Newspaper carried a story captioned “Police summon NDIC Boss over $30million Failed Bank’s Cash.” The paper alleged that “the $30million which was recovered depositors’ fund had been declared missing.” It is intriguing how the invitation got published by The Nation, more so that the letter of invitation did not mention the $30million issue.

4. Given that the issues involved were purely official, three Heads of Departments namely Director-Legal, Head-Claims Resolution and Head-Asset Management, who had detailed knowledge of transactions relating to Fortune Bank, honoured the Police invitation on 3rd March 2009. The issues raised with the three officials included recovery of $30million dollars, recovery from Earth Airline, recovery from Nasarawa State Government in respect of Karu International Market as well as the mandate of the IMC. The three officials provided detailed explanations to all the issues raised with them while the Director, Legal Department made a written statement on the issues raised.

5. On 1st April 2009, another letter of invitation was received from the Commissioner of Police (SIU) which directed that the Managing Director should personally appear before him unfailingly on 3rd April 2009 because he “failed to honour the first invitation on the same matter.” The Managing Director replied the Commissioner of Police’s letter the same day. In his response, he affirmed that, “three competent very senior officers of the Corporation did honour the first invitation, given that the said letter of invitation was not personalized to him. It is noteworthy that no specific allegation was made against him in the letter of invitation.

6. On 3rd April 2009, the Managing Director honoured the invitation extended to him. After oral interview with the Commissioner, he was also requested to make 4 a written statement, which he did. He was accompanied by the Head of Communication and Public Affairs Unit and a Principal Manager from the Legal Department. The two accompanying officers witnessed most of the proceedings. Indeed, the three of them left the Force Headquarters together. The Managing Director revealed that issues similar to the ones raised with the officials that went on 3rd March 2009 were raised with him. Curiously, towards the end of the discussion, the Police brandished a document purported to be a warrant of arrest, which had been prepared in anticipation that the Managing Director would not honour their invitation.

7. Against the foregoing background, the news item on NTA Network News at 9pm on the same day to the effect that the Managing Director of the Corporation had been arrested over N500million interest waiver on the sale of Karu International Market came as a rude shock as he was in fact in his residence when the news was carried. The news item was credited to the Force Public Relations Officer, Asst. Commissioner Emmanuel Ojukwu. The same story was carried by virtually all newspapers on Saturday 4th April 2009 along with the declaration of Mr. Kenny Martins wanted in connection with the Police Equipment Fund.

8. Without prejudice to the on-going Police investigation, the Corporation wishes to make the following clarifications:

8.1 Contrary to the information disseminated, the particular transaction was not a sale of Karu International Market but the recovery of the credit facility granted to Nasarawa Investment and Mining Company (NIMCO) Limited to develop the Karu International Market. The debt had become irrecoverable. It was included in the list of 39 credit facilities totaling N22.24billion which Fortune Bank forwarded to EFCC for recovery under cover of its letter captioned OBTAINING BY FALSE PRETENCE dated December 2, 2004 signed by Mr. Fidelis Tilije, the erstwhile Managing Director. The debt of NIMCO was then put at N1.8billion which was later disputed by the Nasarawa State Government for alleged fraudulent and illegal charges.

8.2 In recognition of NDIC’s status as Liquidator of banks, Nasarawa State Government (NSG) approached the Corporation with a proposal to pay only the principal and requested that all the accrued interest be waived. In May 2008, both the NDIC and the CBN-appointed IMC met with the State Government team led by the Deputy Governor, Chief John Abdul. After protracted negotiation, the NSG finally agreed to pay the principal sum of N698.9million in full and also 40% (or N359.7million) of the accrued interest both totaling N1.058 billion within 90 days in full liquidation of the debt.

In August 2008, NSG forwarded an Intercontinental Bank Plc Manager’s Cheque No.00000900 for the agreed sum of N1,058,658,065.60 in full settlement of its indebtedness to Fortune Bank. The cheque was forwarded by the Corporation to the IMC for lodgement into the bank’s account. The IMC confirmed receipt of the instrument, which it said was lodged into Fortune Bank’s account at Fidelity Bank Plc. The Corporation obtained the approval of the Hon. Minister of Finance for the negotiated settlement. If the EFCC had been able to recover the debt connected with Nasarawa State Government submitted to it in 2004, there would have been no need for NDIC’s intervention in 2008. Without being immodest, NDIC should be commended for the debt recovery, rather than being scandalised.

8.3 The list of debtors submitted to EFCC in December 2004 included Suffolk Petroleum Limited (an associated company of the Chairman of Fortune Bank). As at December 2004, the debt of Suffolk Petroleum to Fortune Bank was put at N16.22billion. It is possible, the alleged $30million recovery by EFCC took place in that context. As a Regulatory Institution, NDIC is aware that Wema Bank also laid claim to the $30million recovered by EFCC. It is our firm view that any enquiry in respect of $30million should be directed to EFCC and not the Corporation.

8.4 It is also pertinent to disclose that NDIC intervened in the recovery of the debt owed to Fortune Bank by the companies related to the erstwhile Chairman in November 2004 before the referral to EFCC. But the erstwhile Chairman was very uncooperative. In this connection, we reproduce below extracts from the letter of the erstwhile Managing Director of Fortune Bank dated December 1, 2004 to the Managing Director of NDIC to illustrate the circumstances that led to the failure of Fortune Bank:

“I would like to place on record that this bank has not received even one kobo from my Chairman since this bank, wherein he holds 94% interest, went out of clearing four (4) months ago despite his companies’ magnitude of indebtedness, which is now over 70% of the bank’s portfolio.

I am shocked that the same Chairman who has variously been briefed in series of my memoranda on the attendant pains of our numerous depositors, employees and their dependants will have the courage to seek NDIC’s approval of an 18-month repayment plan. Please find attached my internal memo dated 27 September, 2004.”

Furthermore, by a letter dated August 1, 2005, Fortune Bank informed NDIC that debts owed by the Group of Companies related to the Chairman had been reduced to N4.5billion by the Board. This was rejected by NDIC through its letter dated 17^th 9 October 2005. It should be noted that the bank’s action violated Section 20(2)(e) of BOFIA under which a bank must obtain written approval of the Central Bank of Nigeria before it can remit in part or whole a debt owed by any present or past director. It is therefore, incontrovertible that the bank sought NDIC’s assistance in 2004. We are of the firm view that an investigation of those who caused the failure of Fortune Bank would be of greater benefit to the Nigerian economy and a valuable input into the vision 20-2020 Economic Agenda of the present Administration.

8.5 It is on record that NDIC had assisted several banks in debt recovery over the years. In this connection, in 1997, NDIC facilitated the recovery of debts owed by Federal and State Governments and their agencies to all banks in Nigeria. In that exercise, the various governments paid only the principal amount of N3.1billion and got 100% interest waiver. Furthermore, the Corporation’s proactive stance facilitated the recovery of over N10billion when it oversighted the Interim Board of Bank of the North from 2003-2005. Interest waiver is a normal incentive in debt recovery or loan work- out by banks. Simply put, interest waiver is debt relief for borrowers.

9. In conclusion, the Corporation wishes to assure its numerous stakeholders of its resolve to vigorously pursue its mandate of depositor protection regardless of the distractions by mischief-makers.

HEAD

COMMUNCATION & PUBLIC AFFAIRS UNIT

NIGERIA DEPOSIT INSURANCE CORPORATION

APRIL 8, 2009