JDZ Funds Entangled In Busted Bank

Some $58 million of funds belonging to the Nigeria-Sao Tome and Principe Joint Development Zone are hung up in a bank whose chief executive was arrested this week "in connection with" the JDZ funds shortly after the bank itself was shut down by Nigeria's central bank.

It's a tangled tale, and it's by no means clear that it will not have consequences for developments in the JDZ.

Here it is, as posted on Raging Bull this morning without a link to ThisDay Online, the Nigerian daily Websitewhere it first appeared:

EFCC Arrests Wabara, Hallmark Bank's Managing Director
By Ayodele Aminu, 11.07.2005

The Economic and Financial Crimes Commission (EFCC) has arrested Chairman and Chief Executive, Hallmark Bank Plc, Mr. Marc Wabara in connection with about $58 million (N7.5bn) belonging to the Joint Development Zone (JDZ) trapped in the bank.

The money, THISDAY gathered, was placed in fixed deposit account with Hallmark Bank by JDZ but could not be produced on demand. Nigeria and Sao Tome and Principe shares the resources in the JDZ. While Sao Tome and Principe holds 40 per cent of JDZ, Nigeria owns 60 per cent.

It was based on this development, THISDAY checks revealed, that the EFCC was invited to help recover the JDZ funds. Wabara has been in custody of the EFCC since Friday, last week.

Sources disclosed that when the EFCC officials moved into Hallmark they discovered that the bank also had some questionable dealings with one state in the Southeast.
Hallmark Bank, according to sources, had an Irrevocable Standing Order (ISO) from the Southeast state said to have borrowed from it some billions of naira. In order to recover its loans, when federal allocation is released every month, Hallmark Bank makes direct deduction a certain percentage of the loans it gave to the said state including interest.

Last Friday, EFCC officials were said to have collected print outs of the financial transactions between Hallmark Bank and the said Southeast State from 1999 till date. Thereafter, the EFCC was said to have initially attempted to arrest one of the Executive Directors of Hallmark Bank, Mr. Edward Ajayi, before eventually picking up Wabara.

Contacted, officials of Hallmark Bank who craved anonymity, confirmed that Wabara was being quizzed for what they described as “some operational issues.”

Hallmark Bank and two other banks – Broad Bank and Universal Trust Bank- recently sealed a merger deal with Union Bank of Nigeria Plc after the latter had concluded due diligence and valuation of the three banks.

Hallmark Bank, a founding member of the First Consolidated Bank (the first merger group to emerge in the wake of the consolidation exercise announced by the Central Bank of Nigeria, CBN Governor, Prof. Charles Soludo last year) however, opted out of the merger.

Just a couple of weeks ago, Central Bank of Nigeria (CBN) wielded the big stick by sacking the entire board and management of Allstates Trust Bank Plc over alleged financial malpractices.

The Chairman of the bank, Chief Ebitimi Banigo, was arrested by the EFCC based on the recommendation of the CBN, which had earlier met with the bank’s board in Abuja.