In a striking development that has sent ripples through Nigeria’s financial sector, a prominent lawyer has called on the Central Bank of Nigeria (CBN) to impose sanctions on Polaris Bank due to the alleged wrongful withholding of a substantial N868 million loan, raising serious questions about trust and accountability in banking practices. This dispute, involving Kenchez Nigeria Limited, a long-standing client of the bank, has sparked widespread concern. Chukwuma-Machukwu Ume, a Senior Advocate of Nigeria (SAN) and former Attorney-General of Imo State, has taken a firm stance against what he describes as a severe breach of financial ethics. His petition to the CBN highlights the devastating impact of the bank’s actions on the client’s operations, igniting a broader conversation about the need for stringent regulatory oversight to protect businesses from such alleged misconduct. As this case unfolds, it underscores the critical role of transparency in maintaining confidence in financial institutions.
Allegations of Financial Misconduct
The core of this controversy lies in Polaris Bank’s alleged failure to release an N868 million loan facility intended for Kenchez Nigeria Limited to acquire a 160-ton Terex Demag AC160-2 Crane. According to the accusations, the bank issued a guarantee worth N902.7 million to support the transaction with Lecon Finance Company Limited. Despite Kenchez fulfilling all necessary preconditions, including providing a legal mortgage over a property in Port Harcourt, Rivers State, the funds have reportedly not been disbursed. Ume argues that this refusal constitutes a clear breach of the bank guarantee agreement, accusing the bank of undermining a loyal client relationship that spans over two decades. The financial implications of this alleged inaction are profound, casting doubt on the bank’s commitment to contractual obligations and raising concerns about the broader impact on customer trust in the sector. Such disputes, if unresolved, could set a dangerous precedent for how financial institutions handle client agreements.
Beyond the contractual breach, the situation has been labeled as an act of “economic murder and financial strangulation” by the lawyer representing Kenchez. This strong language reflects the severity of the operational challenges faced by the company due to the withheld funds. With the capital lying idle, the monthly interest burden of N16.2 million continues to accrue, placing immense pressure on the company’s financial stability. This has disrupted day-to-day operations, threatening the livelihoods of employees and hampering industrial activities that rely on the company’s services. The legal perspective, as articulated in the petition, points to a violation of Section 13 of the Banks and Other Financial Institutions Act (BOFIA), emphasizing that such conduct by a financial institution is not only unethical but also potentially illegal. This case highlights the urgent need for mechanisms to ensure that banks adhere to their commitments, protecting clients from unforeseen financial distress.
Push for Regulatory Intervention
Ume’s appeal to the CBN is not merely a request for resolution but a call for accountability within the banking industry. The petition urges the regulatory body to use its supervisory powers to compel Polaris Bank to release the N868 million or refund it with accrued interest since the initial agreement. Additionally, there is a demand to hold the bank liable for ongoing monthly interest costs, which currently stand at over N26 million until the matter is resolved. This request underscores a growing concern about the need to maintain stability and trust in financial institutions, especially when client operations are jeopardized by alleged misconduct. The broader implication of this case is the potential erosion of confidence in banking services if such issues are left unchecked, prompting a reevaluation of how regulatory bodies address grievances against banks to prevent systemic risks.
Efforts to resolve this dispute amicably have reportedly been met with resistance, further complicating the situation. It is alleged that Polaris Bank has canceled scheduled meetings on multiple occasions, showing a lack of willingness to engage in good faith discussions. This apparent disregard for dialogue has intensified the frustration of Kenchez Nigeria Limited and its legal counsel, who view this behavior as a deliberate attempt to delay resolution. The lack of constructive engagement raises questions about the bank’s internal policies on conflict resolution and customer relations. For the CBN, this presents an opportunity to reinforce its role as a guardian of financial integrity by ensuring that banks prioritize client interests and adhere to ethical standards. The outcome of this intervention could serve as a benchmark for how similar disputes are handled, shaping future interactions between financial institutions and their clients.
Path to Restoring Trust
Reflecting on the events surrounding this financial dispute, it becomes evident that the alleged actions of Polaris Bank have inflicted significant harm on Kenchez Nigeria Limited, disrupting its operational capacity and financial health. The legal battle, spearheaded by a seasoned advocate, brings to light the critical importance of honoring contractual agreements in the banking sector. The repeated failure to engage in meaningful dialogue only deepens the rift between the parties involved, highlighting a missed opportunity for an amicable resolution.
Looking ahead, the focus should shift toward actionable steps to prevent such disputes from recurring. The CBN’s response to this petition could set a powerful precedent, encouraging stricter compliance with financial regulations. Banks must be held accountable through transparent mechanisms, while clients should have accessible avenues for redress. Strengthening oversight and fostering a culture of ethical banking practices will be key to rebuilding trust and ensuring that financial institutions serve as reliable partners to businesses across Nigeria.
