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Sunday, August 30, 2009

Sacked Nigeria bank chief launches legal challenge

By Tume Ahemba

LAGOS, Aug 21 (Reuters) - A senior Nigerian bank executive sacked by the central bank last week has asked a federal court to reinstate him and demanded 50 billion naira ($333 million) in damages, court papers showed on Friday.

Nigeria's central bank fired senior executives at Afribank , Finbank, Intercontinental Bank, Oceanic Bank and Union Bank last Friday and injected $2.6 billion into them, saying lax governance had left them so weakly capitalised they posed a systemic risk.

The legal challenge by former Intercontinental Bank chief Erastus Akingbola is seen as a litmus test of whether initial reforms by central bank Governor Lamido Sanusi can develop into more substantial changes in economic policy and corporate governance in sub-Saharan Africa's number two economy.

Sanusi vowed on Thursday to prosecute any executive found to have broken the law following the massive bailout, as challenges to his efforts to recover $5 billion of bad loans mounted.

Akingbola has asked a Federal High Court in the commercial capital Lagos to grant him a 'perpetual injunction restraining' the financial sector regulators from interfering in his duties as Intercontinental bank's chief executive.

The ex-bank chief, whom local newspapers reported on Friday had fled to London after the anti-corruption police declared him wanted, has also asked the court to grant him 50 billion naira in damages.

He argues the audit of the bank's books by the central bank 'did not comply with the requisite enabling statutes, due process of the law and the rule of natural justice.'

Presiding Judge Abdullahi Mustapha set the hearing for Aug. 28, but the case could take months before a ruling is reached.

Analysts have said the move by Sanusi, who took office just two months ago, could be the start of a long-overdue clean-up of corporate governance and banking regulation in Nigeria.

But his efforts could also be hamstrung by drawn-out wrangling among powerful corporate and political interests, particularly if bankers or tycoons decide to challenge the auditors' assertions in Nigeria's sluggish courts.

(For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ )

(Editing by Randy Fabi) ($1 = 150.33 Naira) Keywords: NIGERIA BANKS/COURT

(Reuters messaging:tume.ahemba.reuters.com@reuters.net, Lagos Newsroom +234 1 463 0257)


Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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