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Saturday, July 13, 2024

GTBank Drags 60 Top Bank Executives to Court Over N17bn Loan Dispute with AFEX

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Guaranty Trust Bank (GTBank) has initiated contempt proceedings against 60 top executives from 13 commercial banks, including chairmen, CEOs, directors, and company secretaries. This action comes amidst a prolonged suit between GTBank and AFEX Commodity Exchange over a N17 billion loan under the Anchor Borrowers Programme.

The Federal High Court in Lagos, presided over by Justice CJ Aneke, signed an order to commit these executives to jail for allegedly failing to enforce a No-Debit Order on AFEX Commodity Exchange’s accounts. This ruling, originally issued on May 27, 2024, directed 20 banks to transfer funds from AFEX’s accounts to GTBank until the loan is fully repaid.

A legal notice published in national dailies, stated: “An order granting leave to the Plaintiff Applicant to serve Form 48 (Notice of Consequences of Disobedience to Order of Court) dated 11th June, 2024 and all other forms and processes that may be issued in this contempt proceedings inclusive of Form 49 on the 1st-60th parties cited for contempt.”

The executives from banks such as Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria Plc, First City Monument Bank, NDIC (liquidator for Heritage Bank), Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank, Taj Bank, United Bank for Africa, and Zenith Bank are implicated.

The court’s directive included transferring N17.81 billion, covering the outstanding loan of N15.77 billion and recovery costs amounting to N2.04 billion. Additionally, GTBank received approval to seize and sell commodities from AFEX’s 16 warehouses across seven states.

AFEX, in its defense, claimed that it had repaid approximately 90% of the loan. “A portion of the loan remains outstanding with the farmers, and while we have paid out a portion from our own purse, we remain in discussions with CBN over the outstanding amounts,” AFEX stated. The organization attributed its repayment issues to economic challenges impacting the farmers.

AFEX also highlighted the significant impact of macroeconomic conditions, including the Naira redesign policy, which affected the farmers’ ability to repay their loans. “This resulted in less than 40% repayment from farmers on their input loan bundles, down from our 90% repayment rates in previous years,” AFEX explained.

Furthermore, AFEX called on the Central Bank of Nigeria (CBN) to activate the collateral guarantee clause in the Anchor Borrowers Programme, which covers up to 70% of the loan. They criticized GTBank’s legal actions as premature, given ongoing discussions to resolve the matter.

The Anchor Borrowers Programme, launched in 2015, aimed to link smallholder farmers with processors to boost agricultural output and stabilize food prices. By 2022, it had benefited over 4.8 million people, with the CBN disbursing N1.079 trillion under the scheme. However, over N500 billion is still due for repayment.

This programme has since been discontinued as the CBN shifts its focus back to its primary duties of price and monetary stability.

The court has adjourned the matter to next Thursday, pending further deliberations.

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