IN what appears a response to the renewed resolve of the apex bank, as reiterated by the Central Bank of Nigeria Governor, Mallam Sanusi Lamido Sanusi while on official tour outside the country last week, a cross section of Nigerian lawyers have taken a swipe at the retinue of agreements, in the form of Memoranda of Understanding (MOUs), being reached by some of the rescued banks and would-be core investors in utter disregard for court cases against moves to sell the banks.National Coordinator of the Independent Shareholders Association of Nigeria, Chief Sunday Nwosu, had, in a recent advertorial, faulted the agreements and warned intending investors to steer clear of Union Bank Plc in particular until the suits (Nos. FHC/L/CS/1313/2009 and FHC/L/CP/1511/2010) questioning the legality of the CBN and its Governors interference and intervention in the business of Union Bank of Nigeria Plc since the 14th August, 2009 till date is determined by the courts.This comes as the CBN repeatedly denied involvement ion the processes leading to the signing of the agreements. Head of corporate communications of the apex bank, Mr. Mohammed Abdullahi, had recently, told The Guardian that the decision of who gets what in the process of bringing ion core investors was the exclusive preserve of the rescued banks and their advisers. The denial notwithstanding, the apex bank appointed the advisers for the bailed-out banks.A handful of shareholders, last week, reportedly sued the CBN, Intercontinental Bank and Access Bank for allegedly going ahead with the sale process despite unresolved issues.Consequently, legal practitioners across the country, including Chairman of the Nigerian Bar Association (NBA) in Rivers State, Mr. Chima Boms, and Chairman of the Civil Rights Congress, Shehu Sani, among others, hit hard on the deals being reached by some of the rescued banks.Boms described the moves as show of impunity. According to him, it is judicially frowned at that a case is in court and the parties to that matter, or their agents, are still going ahead, taking steps that appear to ridicule the judicial process. Impunity is not only when the executive behaves against the law; impunity is also applicable in this case. If the matter is in court, why dont you wait for the outcome if shareholders have gone to the court of law It is a typical feature of a backward country, he said.He argued that since banks owned banks, they should be allowed to decide what they do with it when the chips are down. Banks are owned by the shareholders. That is the truth of the matter; and you know it. People come together, put their money together to establish a bank. So the banks are owned by these shareholders and regulated only by the CBN. The owners of the banks should decide where it they should go. If the CBN wants to persuade them, it should be by agreement. The owners of the bank should press forward with the case unless thee is agreement or compromise from the CBN.Civil Rights Congress Sani specifically decried the spate of MOUs being signed with selected core investors by boards of some of the rescued banks preparatory to the sale of the banks. In a telephone conversation with The Guardian he urged the CBN to exercise restraint, saying that the fact that the case is in court calls for caution in the decision to sell the banks.Making direct reference to the Memorandum of Agreement signed between Union Bank of Nigeria Plc and African Capital Alliance Consortium despite a subsisting court case, Sani said it would be better to resolve the legal issues surrounding ownership of those banks before bringing in core investors.He warned that if the regulatory authorities did not take adequate conciliatory measures, failure experienced in proposed sale of public enterprises, like NITEL, could befall the banks, leaving the new investors with burnt fingers. You have seen how legal cases in the past had affected the sale of even public owned enterprises like NITEL and Daily Times. What will happen is that if you sign MOU and the judgment is not in favour of those who sold it, you will still have to go back to the basics no matter the transaction that might have taken place.The very fact that this case in the court calls for caution in the approach or the decision to sell these banks. You cannot sell a bank when the status is under question in the courts. It will be better to resolve the legal issues that surround the ownership of those banks before they are being sold, he said. Describing the banking system in Nigeria as still being elitist, the human rights activist, noted that the majority of Nigerians still do not know what the functions of banks are other than them going to keep their money there and getting them back in a safe manner.Sani said that no matter the positive steps that the CBN Governor, Mallam Sanusi Lamido Sanusi, has been taking to reform the banking sector, he should demonstrate readiness to observe the rule of law, if his steps are being challenged in court, by first of all, waiting to see the issues being resolved before the banks are sold. It is going to be an exercise in futility, no matter the signing of the MOU, if the judgment goes against the move at last. No reasonable person should buy anything being challenged in court. Nobody should try it, said SaniLagos-based lawyer, Adedeji, said the Company and Allied Matters Act (CAMA) under which we operate in corporate matters is very clear with respect to the rights of shareholders, including even minority rights.Speaking further on the issue at the weekend, Mike Ozekome (SAN) said: The management of Union Bank is wrong to have gone ahead to sign an MoU with any other party while the case is still in the court. There was a motion seeking an injunctive relief against them; still the management went ahead to sign an MoU.Ozekhome maintained that shareholders are the owners and strongest stakeholders of a corporate entity while the management are appointed agents assigned to manage the company, saying: The management are massagers, they cannot be greater than the shareholders who are the principals.Former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Principal Consultant with Madonna Law Office, Mazi Okechukwu Unegbu, said the matter constitutes another clear case of arbitrariness and disregard for the rule of law.Agreeing with the argument of Ozekhome, Unegbu said the sale process would not make any process unless the management agrees with the existing shareholders. He discarded as the position of the apex bank that the investment of the shareholders has been eroded as untrue.He added that the action of the management could be prosecuted for Contempt of the Court if a case is instituted against them, noting that if charged it would serve as a deterrent.Meanwhile, sources suggested that management of the bank might not have got legal clearance form its lawyer before they went ahead to publish a notice about the signing of the MoU, just as the shareholders counsel noted that the publication gives false impression that the matter has been legally exhausted.At the weekend, National Coordinator, the Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, reiterated that shareholders of the affected banks have never opposed the capitalisation move if the banks actually need more capital to operate at maximum capacity.However, he said they would not accept anything short of due process, which includes active participation of the shareholders through the boards, in any discussion aimed at stabilising the banks.What we hear is that the CBN does not accept the MoUs signed by the banks. CBN must give a free hand for the boards to give approvals for the investors who come on board to invest in the banks. It is not the prerogative of the CBN to decide who buys and who should not buy.CBN is now claiming ignorance of the MoUs being signed; this is where lied the danger. What this implies is that the CBN has pre-determined who they want to sell the banks to. That is wrong because it should be the boards decision.He called on the CBN to allow any MoU singed with the approval of the boards to sail through, as they remain the only voice of the minority shareholders.He alleged that the undue influence of the CBN in the recapitalisation process portends danger to the survival of the banks as well as the performance of the industry.Chief Executive Officer, Lambeth Trust & Investment Company Limited, David Imafidon Adonri, noted that it is the interest of the shareholders who could lose all the investments in event of collapse, that the rescued banks are timely sold and recapitalised.He added: Notwithstanding the repair of their damaged balance sheets by AMCON, they still lack the capacity to operate and meet the demands of their creditors should their debts crystallise.
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