The Nigeria Deposit Insurance Corporation (NDIC) has sued Wema Bank Plc over disputed Banana Island properties valued at about N125.38 billion and an alleged unauthorised payment of N401 million.
According to court documents obtained on Thursday, the cases were filed under the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act before the Federal High Court in Lagos.
NDIC said the legal action is part of ongoing efforts to recover assets linked to Gulf Bank, whose licence was revoked by the Central Bank of Nigeria (CBN) in January 2006.
At the centre of the dispute are 12 high-value properties in Banana Island, which NDIC said were acquired through companies linked to Gulf Bank before the bank collapsed.
The corporation asked the court to declare the alleged disposal of the assets illegal and compel Wema Bank to either return the title documents or pay the current market value of the properties.
NDIC also challenged what it described as a disputed payment of N401 million allegedly collected by Wema Bank from United Bank for Africa (UBA), acting as its agent bank.
Gulf Bank collapsed after the CBN revoked its operating licence on 16 January 2006 over insolvency and failure to meet recapitalisation requirements.
In a witness statement filed on 6 March, former NDIC Deputy Director and ex-head of its Criminal Investigation Unit, Joseph Okolonji, said he supervised investigations into the disputed transactions.
According to him, investigators uncovered alleged attempts to strip the failed bank of six Banana Island properties registered under Euston Wenberg Engineering Company Limited.
He said the properties, covering 13,794.145 square metres, are currently valued at approximately N62.07 billion, based on an estimated N4.5 million per square metre.
Okolonji alleged that Wema Bank presented the assets as having been sold for N250 million despite lacking any legal interest in the properties.
He further stated that investigators found no evidence of any valid interbank deposit that justified Wema Bank’s custody of the assets.
NDIC said Wema Bank based its claim on a purported interbank placement of N771.79 million allegedly connected to Gulf Bank.
However, the corporation said a joint special examination conducted by the CBN and NDIC in 2005 found no record of such a deposit in Gulf Bank’s books.
According to NDIC, Gulf Bank later claimed the funds were investments tied to Bankers’ Acceptances involving Ibom Power Company and Grix Nigeria Limited, but regulators rejected the explanation.
The corporation added that there were no supporting banking records — including placement memoranda, deposit slips, or account statements — to validate the transaction.
NDIC also questioned Wema Bank’s reliance on two managers’ cheques issued in 2005 by Access Bank and Intercontinental Bank totalling N250 million, arguing the amount was grossly below the value of the properties.
According to the corporation, even a single Banana Island property at the time was worth more than N500 million.
In the second suit, NDIC challenged ownership of another six Banana Island properties allegedly acquired through Bacad Finance and Investment Limited, later renamed Supra Commercials Limited.
NDIC said Gulf Bank held majority shares in the company and used it to acquire the properties, which span 13,979.974 square metres and are now valued at N62.91 billion.
The corporation alleged that Gulf Bank intended to develop the land into a luxury estate in partnership with Shelter Afrique before the bank collapsed.
It further accused Wema Bank of later taking possession of the assets and claiming they were sold for N524 million through managers’ cheques issued between 2006 and 2007.
NDIC also alleged that Wema Bank collected N401 million from UBA in 2009 despite an earlier approval of only about N1.63 million following liquidation proceedings.
The corporation said aspects of the transactions had been referred to the Economic and Financial Crimes Commission (EFCC) for investigation.
Among those involved in the probe, according to NDIC, are Senior Advocate of Nigeria D.A. Awosika, Pekun Sowole, retired Deputy Inspector General of Police Abiodun Alabi, and Joseph Okolonji.
The corporation also said estate valuer Adebare Esan would testify in court.
Wema Bank, through its legal team led by Senior Advocates of Nigeria Oladapo Olanipekun, Kehinde Ogunwunmiju, and Tunde Afe-Babalola, challenged the jurisdiction of the court.
The bank argued that the matter did not arise from a banking transaction covered by the Failed Banks Act and maintained that no debtor-creditor relationship existed between the parties.
It also contended that the suits are statute-barred because the disputed transactions occurred between 2006 and 2007.
Wema Bank urged the court to dismiss the cases.
The court adjourned the matter until 25 June for further hearing.
As the statutory liquidator of failed banks in Nigeria, NDIC is empowered to recover assets and liabilities on behalf of depositors. Its actions in the case are based on the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, which grants the Federal High Court jurisdiction over such disputes.
Since the revocation of Gulf Bank’s licence, NDIC has continued efforts to trace and recover assets allegedly linked to the bank before its collapse.
