NDIC Takes Legal Action Against Wema Bank Over Gulf Bank Assets
The Nigerian Deposit Insurance Corporation (NDIC), acting as the liquidator for the now-defunct Gulf Bank, has initiated two lawsuits in the Federal High Court in Lagos against Wema Bank. The lawsuits pertain to the recovery of contentious Banana Island assets valued at approximately N125.38 billion, along with claims of fraudulent payments amounting to N401 million.
Documents made available to PREMIUM TIMES on Thursday indicate that the case, identified as FHC/L/CP/466/26, falls under the Failed Banks (Debt Recovery) and Bank Financial Malpractices Act. This legal action represents the NDIC’s ongoing efforts to reclaim assets linked to Gulf Bank, which lost its operating license following a revocation by the Central Bank of Nigeria (CBN) in January of this year.
The crux of the dispute involves 12 high-value properties located on Banana Island, Lagos. The NDIC contends these assets were acquired through affiliated entities before Gulf Bank’s collapse.
The NDIC is seeking a judicial declaration that the alleged disposal of these properties is unlawful, compelling Wema Bank either to return the property title documents or remit the current valuation for the assets.
Claims of Misappropriation and Asset Stripping
The NDIC also challenges a payment of N401 million that it asserts was wrongfully obtained by Wema Bank from the United Bank of Africa (UBA) acting as its agent bank. Gulf Bank faced regulatory action leading to its collapse when the CBN revoked its license on January 16, 2006, citing insolvency and inadequate capital compliance.
A witness statement filed on March 6 by Mr. Joseph Okoronji, a former NDIC Deputy Director-General, reveals the process of an investigation he oversaw. This inquiry alleged efforts to strip six key properties from the bankrupt bank, specifically registered under Euston Wennberg Engineering Company Limited. He noted that this land, measuring 13,794.145 square meters, currently holds a value of approximately N62.07 billion, based on an estimated rate of N4.5 million per square meter.
Mr. Okoronji further claimed that Wema Bank had no legal stake in the property but suggested it had been sold for N250 million. The investigation did not uncover evidence of legitimate interbank deposits justifying Wema Bank’s claim to the assets.
Disputed Financial Transactions
The NDIC contested Wema Bank’s assertion of obligations based on an interbank offering of N771.79 million allegedly associated with Gulf Bank. However, a joint inspection conducted by the CBN and NDIC in 2005 found no indication of such deposits recorded in Gulf Bank’s financial statements.
The NDIC reports indicated that Gulf Bank subsequently categorized the funds as a risky investment linked to bank acceptances involving Ibom Power Company and Grix Nigeria Limited—a classification the regulator rejected due to lack of supporting documentation, including transaction memoranda and deposit slips.
Additionally, the NDIC pointed out that Wema Bank’s claim relied on checks amounting to N250 million issued by Access Bank and Intercontinental Bank in 2005, arguing that this figure was unrealistic given the market value of Banana Island properties at the time.
Second Lawsuit and Allegations of Fraud
In a related legal action, the NDIC is also contesting ownership of six additional properties on Banana Island allegedly acquired through Vacado Finance and Investment Limited, which has since rebranded as Supra Commercials Limited. The NDIC asserts that Gulf Bank held a controlling interest in this company, which occupies a plot of around 13,979.974 square meters and is valued at N62.91 billion.
The NDIC argues that prior to its collapse, Gulf Bank intended to develop the land into luxury real estate in collaboration with Shelter Africa. It is further claimed that these assets were later commandeered by Wema Bank and subsequently sold for N524 million through administrator checks issued between 2006 and 2007.
The NDIC has also accused Wema Bank of recovering N401 million from UBA in 2009, despite an initial liquidation payout of only about N1.63 million being sanctioned.
Parts of this transaction have been referred to the Economic and Financial Crimes Commission (EFCC) for investigation, naming several prominent individuals, including notable attorneys and former high-ranking security officials.
Wema Bank’s Legal Defense
In response to the NDIC’s claims, Wema Bank’s legal team, led by senior advocates Oladapo Olanipekun, Kehinde Ogunwunmiju, and Tunde Afe Babalola, has challenged the jurisdiction of the court. The bank contends that the disputes do not relate to banking transactions governed by the Failed Banks Act and argue that no debtor-creditor relationship exists between the parties.
Wema Bank has additionally claimed that the lawsuits are time-barred since the transactions in question occurred between 2006 and 2007, requesting the court dismiss the suits.
The court hearing has been adjourned until June 25 for further proceedings.
Regulatory Authority of the NDIC
As the statutory liquidator for failed banks throughout Nigeria, the NDIC possesses the authority to reclaim assets and liabilities on behalf of depositors. This legal action is rooted in the Failed Banks (Debt Recovery) and Financial Malpractice in Banks Act, which grants jurisdiction over such disputes to the Federal High Court. Following the revocation of Gulf Bank’s license by the CBN, the NDIC remains committed to tracking and recovering assets linked to the now-defunct institution.
