Money Gone Bad For Doyin Motors, Banks

Money gone bad for Doyin Motors, banks

In 2005 Doyin Motors won a N1.7 billion contract to operate and maintain Shell’s Light Fleet Vehicles at its Western Division in Warri, Delta State. Its functions included servicing of vehicles and equipment, the purchase of spare parts and the salary payment of its almost 500 staff.

To mobilise, Doyin Motors on February 3, 2006 secured an N80 million facility from Access bank. In return, it irrevocably domiciled its monthly contract proceeds from Shell, estimated at N55 million, as security. It also opened staff salary accounts with the bank.

Doyin Motors presents its invoice to Shell at the end of each month, Shell initiates payment upon the 45th day of receiving the invoice by instructing its bankers - First Bank Nigeria Plc. - to pay the funds into Doyin Motors’ account in Access Bank, and Doyin Motors then pays its staff, at the same time servicing its loan with the bank.

But five months into the contract, something went wrong. . .

What went wrong?