Cool Financial sues FCMB over alleged violation of loan agreement

First City Monument Bank (FCMB) has been sued by Lagos-based finance company, Cool Financial Services, over allegations that it facilitated an unauthorized withdrawal of N150 million from a frozen account in violation of an active loan agreement.

The lawsuit, filed before the Federal High Court in Lagos, also names Goewe and Sons Ltd., the borrower, and the Central Bank of Nigeria (CBN) as defendants in the case.

According to court documents, Goewe and Sons Ltd., owned by Ewere Godwin Orobosa, initially secured a N100 million loan from Cool Financial Services in July 2023 at a 3.5% interest rate for 30 days.

In September 2023, the borrower obtained an additional N50 million loan at 1.5% interest for another month, bringing the total facility to N150 million.

As part of the loan terms, the borrower and lender agreed to freeze the loan account with FCMB to ensure the funds remained untouched during the transaction period.

A board resolution dated September 15, 2023, instructed FCMB to alter the account mandate, appointing two signatories: Ewere-Egharevba Orobosa, representing the borrower, and Roseline Anibueze, representing the lender.

The agreement explicitly required that withdrawals above N150 million be jointly authorized by both signatories, while withdrawals below that threshold needed the lender’s approval.

Despite these provisions, Cool Financial Services alleged that FCMB allowed the borrower to withdraw the entire N150 million without proper authorization, violating the agreement.

After the loan duration expired, the lender wanted to withdraw it. So, on October 23, 2023, the finance house presented a transfer cheque at the Chevron branch of FCMB in Lagos confident that the money was intact. But the cheque was dishonoured and the bank revealed that the borrower had already withdrawn the loan.

Shocked by the discovery, the finance house initiated an investigation, which allegedly uncovered forgery of the lender’s signatory to authorize the withdrawal.

“At the time we went to the bank to verify how the money was withdrawn, we found out that the freezing instruction was still active on the account. We observed that our director’s signature was forged to make the withdrawal. The question the bank has not answered is, ‘How was it possible to withdraw money from an account with an active no-withdraw order?’” a legal representative of Cool Financial Services stated.

In a letter dated September 26, 2023, and another dated October 26, 2023, Justice John, a legal practitioner, representing the lender, accused FCMB of criminal conspiracy, negligence, and falsification of signatures.

FCMB’s Response

Following complaints from the lender, FCMB’s officials at the Sanusi Fafunwa Branch, including Chukwuma Chukwuka and Isiaq Babatunde, reportedly requested a 72-hour cure period to rectify the situation. An additional 48 hours was later granted, but the issue remained unresolved.

On October 31, 2023, FCMB’s legal team, led by Tosin Talabi and Akin Akintola, acknowledged receipt of the lender’s complaint, stating that an internal investigation had commenced.

“In accordance with our internal procedure, we have commenced investigations into the issues raised in your letter under reference and shall revert to you shortly with the bank’s position once the investigation is concluded,” FCMB’s legal counsel wrote.

More than a year later, the finance house claims FCMB has yet to disclose the outcome of its investigation.

Seeking Redress in Court

In November 2023, Cool Financial Services filed suit FHC/2377/2023 at the Federal High Court in Lagos, seeking to recover its N150 million capital, plus 21% interest per annum. The suit demands:

• Immediate payment of the N150 million with interest from October 23, 2023.
• General damages of N250 million for financial losses and reputational harm.
• Enforcement of compliance by CBN if FCMB fails to repay the sum.
• N5 million compensation for legal costs.

At press time, the court had not set a hearing date, and FCMB had not filed a formal response to the lawsuit.