Justice Ibrahim Buba, a retired Federal High Court judge, yesterday charged attorneys and solicitors working for the Nigeria Deposit Insurance Corporation (NDIC) not to fail the corporation in debt recovery and asset realisation in the event of a bank failure.
He recalled that as a judge, he had heard situations in which loans were made to “ghosts” using false addresses and non-existent assets as collateral.
He addressed in Lagos on Thursday at the NDIC’s sensitization event for external attorneys titled “Consolidating the Collaborative Efforts in Mastering Deposit Insurance Scheme and Bank Resolution.”
He urged lawyers to execute their work thoroughly and diligently while managing debt recovery cases in the event of bank failures.
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The retired jurist remarked that the bankruptcy of any bank had far-reaching consequences for the country’s economy and individual depositors, adding that many Nigerians have deposited their life savings in banks.
Explaining that bank collapse is not unique to Nigeria, Justice Buba emphasized that attorneys must comprehend the NDIC Act and the workings of the financial system.
He stated, “We can’t help but lament. It is our responsibility as NDIC representatives to study the Act from 1988 until its amendment in 2022. We must grasp the debt collection strategy and where Nigeria stands today in the community of countries in terms of banks and banking affairs, as this is our responsibility.
“Bank failure is not unique to Nigeria; it happens all across the world. If you do not follow the laws and regulations that govern banks and industries, and you hire personnel who were not taught or were trained by doubtful people, banks will fail.
“Sometimes even when rules are adhered to strictly, banks will still fail and will continue to fail for reasons beyond human comprehension.”
He revealed that as a judge, he once sought a bank for a N2 million loan, but they asked for his mother’s maiden name, which he refused, believing that his credentials as a judge would secure him the cash.
He expressed his disappointment that the loan was rejected yet a case was filed before his court in which someone received a N1 billion loan because his father was the Chairman of the Bank.
“I have adjudicated several situations in which loans were made to ghosts, with bogus addresses that never existed. Even the certificate of origin was from Oluwole.
“As a Nigerian lawyer, do not look at failure in the United States or the United Kingdom; instead, look at failure in your own system. Those systems (abroad) have a means of detecting anything that could destabilize their institutions.
In his keynote presentation, the NDIC’s Managing Director/Chief Executive, Bello Hassan, who was represented by Head, Legal Department, Henry Fomah, urged the attorneys “to continue your diligent efforts in assisting the Corporation with debt recovery and asset realization.”
According to him, in addition to paying insured sums to depositors from the Corporation’s deposit insurance funds (DIF), “the NDIC as liquidator is also obligated to settle uninsured portion of deposits and all legitimate creditor claims from the realised assets of the insured institution in-liquidation.”
“I am pleased to report that the Corporation has consistently fulfilled this responsibility, a success largely attributable to our collaborative partnerships, including the invaluable contributions of our external solicitors.”
He noted that the orderly liquidation of banks whose licenses have been withdrawn by Nigeria’s Central Bank “is a critical function in which the Corporation requires your support to efficiently discharge the mandate and maintain the stability of the financial system.”
Bello stated that the recent bankruptcy of Heritage Bank “highlighted the intricate nature of bank liquidation and the critical role of collaboration with our external solicitors.” Liquidation is inherently linked to litigation.
“The NDIC, in carrying out its tasks, participates in court processes as both plaintiff and defendant, advocating the interests of depositors and creditors while also seeking debt collection from debtors of closed banks. The collection of these debts and the realization of assets are critical to fulfilling our corporate goals,” he said.