http://www.thisdayonline.com/nview.php?id=80822


CBN Fires Spring Bank’s MD
•To drag directors before EFCC •Resign now, Agbetuyi tells Soludo
By Ayodele Aminu in Lagos and Kunle Aderinokun in Abuja, 06.13.2007

A few days after the Central Bank of Nigeria (CBN) sacked the board of Spring Bank Plc, excluding its Managing Director, Mike Chukwu, the banking watchdog yesterday descended on the bank’s MD and reconstituted a “totally neutral board” of directors to take over the affairs of the bank.
But the ongoing board squabbles in the bank took another dimension yesterday as  the  erstwhile Chairman of the bank, Reverend Segun Agbetuyi, asked the CBN Governor, Prof. Chukwuma Soludo, to resign.
Spring Bank emerged from the defunct Guardian Express, Omega Bank, Fountain Trust Bank, ACB International Bank, Citizens International Bank and Trans International Bank.
The CBN Governor who announced the new board for Spring Bank in Abuja, however assured customers of the safety of their deposits, vowing to hand over the directors to the Economic and Financial Crimes Commission (EFCC) for  investigation and prosecution,  if found culpable.
The board, which was reconstituted by the CBN and Nigeria Deposit Insurance  Corporation (NDIC), is made up of Mr. Vincent Omoike as chairman; Dr. S.A. Ndanusa as Managing Director and Abdulrahaman Umar, Bature Muhammad Abubakar, Bulus Dareg, H.I. Muhammed and Emmanuel Onucheyo as members.
Soludo said the Board of Spring Bank was dissolved upon the discovery that the bank made false claims on its capital at end of the recapitalisation exercise which ended on December 31, 2005.
Specifically, he said only two of the six “legacy banks” brought positive capitals to the merger. He however, assured on the safety and soundness of the banking system.
He said although the CBN had asked the legacy group of shareholders to nominate some members of the board and the bank with the highest shareholders’ fund to produce the Managing Director, “but the CBN cannot rely on the reconstituted board to make a positive impact, because the members could not agree with each other.
“Initially, we decided to give the legacy group of shareholders a chance to nominate some members of the board and the legacy bank with the highest shareholders’ fund, Guardian Express, to produce the MD. From the acrimonious public pronouncements of the various camps, it is evident that we can’t rely upon the reconstituted board drawn from the legacy groups to move forward.
“Consequently, the CBN and NDIC have decided to reconstitute a totally neutral board.”
Soludo assured that “the CBN and NDIC stand to provide necessary support to the new board to recapitalise the bank and ensure that it meets the aspirations of the shareholders, depositors and the Nigerian public,” which he said would be completed within the shortest possible time.
He also assured all depositors of Springbank that their money is safe, advising that “the public should go about their normal banking business with Springbank.”
Soludo however stated that the Central Bank was “compiling the infractions of the various directors and management of the legacy groups and will ensure that appropriate sanctions are applied and /or report same to the EFCC and the Police for any criminal investigations and prosecution.”
He added that the apex bank was also “compiling the list of non-performing loans of the bank, stressing that the culprit will be handed over to the EFCC and the Police for necessary action.”
The CBN governor appealed to “the general public to ignore the vexatious, albeit libelous publications of those who either want to divert attention or destroy the bank,” pointing out that “some want to hide under the umbrella to reopen their lost debate on banking sector consolidation.”
He assured Nigerians and the world that the CBN and NDIC are committed to ensuring that the Nigerians banking remain the safest and fastest growing among the emerging markets.
Soludo recalled: “The Springbank merger was consummated some few days to the end of the consolidation programme, after each of the six legacies institutions had experienced repeated failed attempts to merge with other banks.”
He noted that the inability of the bank’s board to resolve the issue of the contributions of each legacy institution to its capital led to special CBN/NDIC examiners to re-certify the bank’s capital. A bank-by-bank contribution to the shareholders’ fund revealed that only the former Guardian Express Bank and ACB International brought positive capital to the merger.
“However despite its weak capital base, the other indicators show that the bank has a strong promise; its deposit base and liquidity situation are strong. It was in the light of this that the new capital structure of the bank (and relative contributions of the legacy institutions) as well as the deeply divided and acrimonious board, that the CBN decided earlier to dissolve the board and call for a reconstitution by the legacy institutions,” he explained.
Meanwhile, the letter asking the CBN Governor to resign, dated June 11, 2007, and copied President Umaru Musa Yar’ Adua and several heads of government agencies including the regulators, accused  the officials CBN and Nigerian Stock Exchange of facilitating the acquisition of Spring Bank by a fellow bank.
“In supervising the post merger adjustments, CBN officials consistently and glaringly adopted double standards. They collaborated with some Directors of Guardian Express Bank towards a hidden-agenda to push out the real and true owners of Spring Bank; to weaken Spring Bank and thereafter sell it for next to nothing to another bank.
“Cosmas Maduka, principal owner of legacy GEB,  is a major shareholder in that bank. He is probably also one of the few, if not absolutely the only one in Nigeria today who was able to secure CBN approval to serve on the Boards of 2 out of 25 mega banks. That Bank is currently raising funds in the capital market, part of which is to be used to illegally acquire the Spring Bank “carcass” for nothing.
“In preparation for this, Mr. Maduka acting jointly with Spring Bank MD and with subterranean regulatory support had long gotten the Nigerian Stock Exchange to fully suspend trading on shares of Spring Bank, so as to weaken its value. This was done arbitrarily, recklessly and without Board consent, knowledge or approval. This fraudulent action has caused Spring Bank shareholders to lose billions of naira on the Stock Exchange,” Agbetuyi alleged.
Efforts to get Spring Bank’s response to these allegations proved abortive yesterday.
But the spokesman of the NSE, Mr. Sola Oni refuted Agbetuyi’s claim, saying the shares of Spring Bank were placed on full suspension to protect the fortunes of the bank, its shareholders and other stakeholders.
“We placed the shares of Spring Bank on full suspension when we were reliably informed that there were unresolved issues arising from post merger and we gathered that the issues will materially affect the fortunes of the bank.
“In order to protect investors and prevent a run on the bank’s share price, we placed it on full suspension. The suspension of the company’s board by the CBN has justified our position,” he stressed.
The ex-chairman of Spring Bank also accused the CBN officials of aiding and abetting the alleged fraud in Spring Bank.
“Despite disagreement amongst the shareholders representatives, which has stalemated the post merger adjustment, CBN has locomoted and coerced the exercise to a fraudulent outcome showing that the only bank with a positive shareholders capital is GEB! In pursuance of a tribal and commercial agenda, the CBN has abandoned its role as a regulator and arbiter, descending into the arena by aiding and abetting fraud.
“Once it became clear that CBN was involved in this complicity,  some of our Directors sought help in the law courts and petitioned the office of the Attorney-General & Minister of Justice. The Attorney-General and Minister of Justice reviewed the criminality of legacy GEB’s bubble capital and indicted its five directors; namely – Maduka, Chukwu, Onejeme, Ezenna and Moemena with directives that they should be removed from the Board and prosecuted.
“Mr. Governor Sir, you ignored this directive contained in the Attorney-General’s letter of the 24 May 2007 and an earlier one to you, and in defiant prejudice to various litigations before the Law Courts where the CBN was duly represented, you moved, through your directive of 6 June 2007 to remove every Director of Spring Bank , except Mr. Chukwu, the Managing Director,  citing the provisions of Banks & Other Financial Institutions Act No 25 of 1991 (as amended),” he said.
With these developments, he added, Soludo has “given institutional support to depriving the true owners so as to hand their bank over to another bank, under a well orchestrated agenda. In a civilized world, you do not deserve to remain in office as Governor of the Central Bank.”