Nigeria Content Online

The Central Bank of
Nigeria (CBN) has cleared the management of Spring Bank Plc of any
allegation of fraud. There had been reports that the group managing
director and chief executive officer of Spring Bank Plc, Mrs. Sola
Ayodele, and key officers of the bank had been charged to court for
allegedly defrauding Strand Capital Partners Ltd. the sum of N5.2
billion, for which the GMD/CEO of the bank had been declared wanted.

The clearance,
which was contained in a letter dated September 14, written by the
regulator to the principal solicitor, Legal Resources Alliances, who
are legal advisers to Strand Capital Partners, to affirm that Strand
Capital’s claims to N5.2 billion from Spring Bank cannot be established.

The statement,
which was signed by the director of banking supervision of the CBN, Sam
Oni, stated that, “Your assertion that the offer of an underwriting
facility could be construed and treated in a similar manner as an
underwriting commitment could not also be substantiated, while your
promise to provide evidence, as requested by the CBN, has not been
complied with up till time of writing this letter.”

The CBN said Spring
Bank is not registered as an underwriter by the Securities and Exchange
Commission (SEC) and so cannot underwrite the IPO as claimed by NSL.

The statement,
titled ‘Spring Bank Plc Underwriting Commitment/Agreement in Respect of
National Sports Lottery Plc Public Offer’, which was a response to a
petition by Legal Resources Alliance on behalf of Strand Capital
Partners Ltd. further stated that the management of Spring Bank, in a
letter dated 7th July, 2008, offered an underwriting line facility of
N5.208 billion to Strand Capital Partners Limited to partially
underwrite the IPO (initial public offering) of NSL Plc, subject to
some conditions. The facility was for 90 days and was to expire on 12th
October, 2008. The source of repayment was to be proceeds of the offer
of NSL or a lien on 336 million ordinary shares of NSL, which was yet
to come into existence.

According to the
CBN statement, Strand Capital Partners Limited on 3rd July, 2008, wrote
to Spring Bank Plc requesting for an overdraft and/underwriting line of
up to N5 billion, to part finance its operations and enable it act as
underwriters to public and private security/stock offerings. The tenor
was to be determined on a case by case basis, subject to a minimum of
90 days, with rollover options, while the security pledged were
shares/stocks purchased with the facility.

The Central Bank
explained that NSL failed to meet some of the conditions that would
have qualified it to draw from the facility. These include opening of
an account by Strand Capital Partners Limited with Spring Bank for the
domiciliation of all proceeds of the public offer counter indemnity of
Strand Capital Partners Limited.

Approximately N110
million, which was realised out of the public offer of N12 billion, was
used by NSL in the company’s business.

However, it is not
clear how this information from the CBN will affect the case in court
as the regulatory body advised that both parties should allow the court
process to run its course.