How Emefiele used proxies to ‘buy’ Union, Keystone, Polaris banks

Late Ismaila Funtua fingered

The sacked governor of the Central Bank of Nigeria (CBN), Godwin Emefiele allegedly used proxies and purchased Union Bank of Nigeria (UBN), a report by Jim Obazee, the special investigator appointed by President Bola has shown.

The late Alhaji Ismaila Isa Funtua, an ally of former President Muhammadu Buhari, was also fingered alongside Emefiele in the acquisition of Keystone Bank and Polaris Bank.

The acquisitions were carried out separately over time as seen in the report submitted to President Tinubu on December 20, 2023.

Daily Trust Saturday got access to some of the documents through credible sources as the report has not been made public yet.

It was on July 30, 2023 that President Bola Ahmed Tinubu appointed Obazee, the chief executive officer of the Financial Reporting Council of Nigeria as the special investigator.

The Union Bank acquisition

In the report seen by our reporter, the detailed stages followed to acquire the Union Bank, one of the first generation financial institutions in Nigeria, were contained in a memo to President Tinubu, titled, “Report of the Investigation of the Acquisition of Union Bank of Nigeria by Titan Trust Bank.”

The special investigator had requested the CBN to provide his team with all relevant documents, and from what he got, the name of Titan Trust Bank (TTB) was seen as the Special Purpose Vehicle (SPV) for the acquisition.

According to the report, in the documents from the apex bank, it was found that TTB had in a letter of October 25, 2021, sought CBN’s no-objection to its proposed consolidation with Union Bank excluding its UK operations.

This, the letter noted, should be in four phases: the acquisition of 91.5 per cent of the issued shares of the UBN; Mandatory Tender Offer (MTO) for the remaining shares of the UBN; buyout of any share not voluntarily sold to TTB on the MTO; and merger of TTB and UBN with UBN as the surviving entity.

It also stated that consolidation was to be funded via a combination of debt and equity, and CBN via letters dated March 3 and 9, 2022, which granted no objections to TTB’s request to obtain a $300,000,000 facility from Afrexim Bank, as well as capital injection of $175,000,000 from two existing shareholders of TTB; Messrs Luxis International DMCC and Magna International DMCC, all purportedly operating from Dubai in the United Arab Emirates.

And the TTB, via a letter dated June 3, 2022, informed the CBN that it had made the payment of the purchase consideration to the selling shareholders on June 1, 2022, and had thus successfully completed the acquisition of 93.4 per cent of the issued shares of the Union Bank.

The investigator stated in his report to the president that, “When carrying out our investigation, we discovered that some persons were used as proxies by Mr Godwin Emefiele to set up Titan Trust Bank and acquire Union Bank, all from ill-gotten wealth. We were able to secure some documents, and investigation reports will lead to the forfeiture of the two banks by the federal government.

“We have completed our investigation on this acquisition and have also held meetings with relevant parties except for Mr Cornelius Vink (currently hospitalised in Switzerland). We are on the verge of recovering these two banks for the federal government,” the document showed.

Acquisition of Keystone Bank

In another finding titled, “Report of the Investigation of the Acquisition of Keystone Bank,” submitted by the special investigator to President Tinubu, it was stated that after due diligence, it was discovered that some persons were used as proxies with the connivance and assistance of Emefiele and the CBN to acquire the bank without evidence of payment.

It stated, “AMCON MD moved N20billion to Heritage Bank as placement sometime in 2010. On the back of that, Heritage Bank granted a loan of N25billion to the promoters of Isa Funtua/Emefiele group’s acquisition vehicles to buy Keystone Bank.

“The loan was further backed by the shareholders of the bank. Upon acquisition, Keystone Bank returned the N20bn back to Heritage Bank as placement. Thereafter,

Heritage Bank repaid AMCON from the cash flow created.

“When the loan granted by Heritage Bank to Isa Funtua/Emefiele’s acquisition vehicles matured with outstanding balance, the MD of Heritage Bank (which was then in serious liquidity crisis), called for repayment. Unfortunately for the shareholders of the bank, the Isa Funtua/Emefiele Group could not repay.

“Consequently, the MD of Heritage got his lawyers to write to the bank on two occasions, threatening to take over Keystone Bank based on the shares they had pledged as security.

“After much pressure from him, Keystone Bank created internal loans of about N50bn between June and October 2019 and moved the proceeds to repay Heritage Bank on behalf of their group. However, the MD of the bank at that time had resigned due to consistent pressure from him and the shareholders to comply. The internal loans so created are not being serviced and have gone bad.

“The special investigator has commenced the interrogation of the MD of AMCON to clarify the situation of the acquisition of both Polaris and Keystone banks beside Arik Air, Aero Contractors and the financial reporting by AMCON,” it stated.

The document showed that the investigator would continue the interrogation of the AMCON MD yesterday, December 22, 2023; and based on preliminary report, Keystone was acquired for free, just as Polaris Bank.

On the issue of Union Bank acquisition, our correspondent last night tried to hear from the officials but was not successful.

However, after insider information in June this year, Daily Trust also wrote to Mrs Olufunmi Aluko, Head, Corporate Communication, Union Bank, to provide some clarification on the transaction surrounding the acquisition of the bank by Titan Bank.

This was before the appointment of the special investigator on happenings in the CBN.

Specifically, one of our reporters sought to know the core investors or individuals behind the acquisition, but unfortunately, that enquiry has not been answered.

Polaris and Keystone banks have not yet reacted to the report.