GTBank Takes Legal Action Against 60 Bank Executives Over N17bn Loan Dispute
Written by Jerry Alomatu on June 17, 2024
Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks over a N17 billion Anchor Borrowers Programme loan dispute with Afex Commodity Exchange. The executives, including chairmen, chief executive officers, directors, and company secretaries, face contempt charges for allegedly failing to enforce a No-Debit Order on Afex Commodity Exchange’s accounts.
The Federal High Court in Lagos, under Justice CJ Aneke, issued an order in case no FHC/L/CS/911/2024 for the bank executives to be jailed for not complying with a May 27, 2024, ruling. This ruling mandated the transfer of funds from Afex’s account to GTBank until the N17.81 billion loan, comprising N15.77 billion in outstanding principal and N2.04 billion in recovery costs, is repaid. The court also authorized GTBank to seize and sell commodities in Afex’s 16 warehouses, financed through the Central Bank of Nigeria’s (CBN) Anchor Borrowers’ loan facility.
The legal notice, titled ‘Order to Serve Notice of Disobedience to Order of Court via Newspaper Publication,’ was published in national dailies, including The PUNCH. The notice highlights the contempt proceedings against the executives from 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.
GTBank had earlier initiated contempt proceedings against Afex and its key officers, including Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi. Afex had obtained the loan from GTBank to finance smallholder farmers under the CBN’s Anchor Borrower’s programme, with repayment expected from the sale of commodities. However, Afex failed to meet this obligation despite an extension.
In response to the court order, Afex claimed it had repaid about 90% of the loan but acknowledged a portion remained outstanding due to economic challenges affecting the farmers. Afex called on the CBN to activate the collateral guarantee clause of up to 70% included in the Anchor Borrowers programme to mitigate the losses.
The CBN launched the Anchor Borrowers’ Programme in 2015 to link smallholder farmers with processors, enhance agricultural output, and stabilize food prices. By 2022, at least 4.8 million people had benefited from the programme, with over N1.079 trillion released, of which more than N500 billion is due for repayment. The programme has since been discontinued as the CBN refocuses on ensuring price and monetary stability.
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Author: Jerry Alomatu
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