Wema Bank has responded to recent allegations surrounding the sale of Banana Island properties linked to the defunct Gulf Bank, insisting that the transactions were lawful and part of efforts to recover outstanding debts owed to the bank.

The bank issued the clarification in a statement issued on Saturday, signed by its Company Secretary/General Counsel, Johnson Lebile.

The clarifications come amid reports that the Nigeria Deposit Insurance Corporation (NDIC) has filed two separate suits against Wema Bank at the Federal High Court in Lagos, seeking the recovery of the said properties.

According to Wema Bank, the matter originated in 2002 when it made an interbank placement of N4.6 billion with Gulf Bank.

The exposure was later reduced to about N1.2 billion by August 2004 before the obligation became delinquent.

The bank said it subsequently initiated recovery measures to protect depositors’ and shareholders’ funds, a process that later aligned with investigations involving the former managing director of Gulf Bank.

Wema Bank stated that investigations conducted by the Economic and Financial Crimes Commission (EFCC) discovered that the diverted funds had been used to acquire properties in Banana Island, Lagos, through two companies, Bacad Finance & Investment Company Ltd, now known as Supra Commercial Trust Limited, and Euston Wenberg Eng Ltd.

The lender stressed that both firms were separate legal entities from Gulf Bank and were not under the supervision of the Nigeria Deposit Insurance Corporation.

According to Wema Bank, the EFCC’s asset tracing exercise uncovered significant fraud linked to the transactions.

The bank explained that Bacad Finance & Investment Company Ltd and Euston Wenberg Eng Ltd voluntarily relinquished their interests in the Banana Island properties towards the settlement of Gulf Bank’s indebtedness.

On Thursday, several media platforms reported that the NDIC had filed two separate suits against Wema Bank at the Federal High Court in Lagos, seeking the recovery of disputed Banana Island properties valued at about N125.38 billion and an alleged unauthorised payment of N401 million.

According to court documents seen by the media, the case marked FHC/L/CP/466/26 and another companion suit were filed under the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act.

According to the reports, NDIC is asking the court to declare the alleged disposal of the assets illegal and to compel Wema Bank to either return the title documents or pay the current value of the properties.

NDIC also challenged what it described as a disputed payment of N401 million, which it said was collected by Wema Bank from the United Bank for Africa (UBA), acting as its agent bank.

The bank further disclosed that following the liquidation of Gulf Bank, the NDIC formally acknowledged the indebtedness through letters dated September 26, 2007, and June 10, 2009.

According to the bank, the letters were addressed respectively to the Federal Land Registry and Wema Bank, and have already been submitted in court as part of filings in the ongoing proceedings before Justice Allagoa of the Federal High Court in Lagos.

“These letters constitute clear and formal recognition by the NDIC of the validity of Wema Bank’s claim against the defunct Gulf Bank and its interest over the property in question.

“Fortunately, both letters form part of the documents frontloaded by NDIC lawyer Dr. Dada Awosika SAN in court in the ongoing proceedings before Justice Allagoa of the Federal High Court Lagos,” the bank stated.

Wema Bank also claimed that after the sale of the properties, the NDIC paid the outstanding shortfall owed to the bank, arguing that this demonstrated the corporation’s awareness and participation in the transaction.

The lender acknowledged that the NDIC has filed two separate suits against Wema Bank at the Federal High Court in Lagos in its capacity as liquidator of Gulf Bank.

However, the bank maintained that the pending cases do not change the material facts surrounding the transactions.

Gulf Bank collapsed after its operating licence was revoked by the Central Bank of Nigeria (CBN) on 16 January 2006, due to insolvency and failure to meet capitalisation requirements.

NDIC, as the statutory liquidator of failed banks in Nigeria, is empowered to recover assets and liabilities on behalf of depositors.

Its action in this case is anchored on the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, which gives the Federal High Court jurisdiction over such matters.