Fraudulent Withdrawals: Otedola, Zenith Bank Reach Out-of-Court Settlement

The Federal High Court of Nigeria, Lagos Division, has dismissed a lawsuit involving Femi Otedola and Zenith Bank following a notice of discontinuance from the plaintiffs. The case was officially dropped on Thursday, June 13.

Femi Otedola, chairman of FBN Holdings and majority shareholder of Geregu Plc, alongside several of his companies, pursued legal action against Zenith Bank over allegations of “fraudulent transactions” on their accounts. The plaintiffs included Zenon Petroleum & Gas Limited, Seaforce Shipping Co. Limited, Luzon Oil & Gas Limited, Garment Care, and Mr. Otedola himself. The defendants were Zenith Bank, Quantum Zenith Securities & Investment Limited, Veritas Registrars Limited, and Central Securities Clearing System Plc.

Court documents revealed that Justice A.O. Faji dismissed the case after legal representatives from both sides agreed to discontinue the matter. The decision came after multiple failed attempts at reconciliation, leading Mr. Otedola to initially pursue judicial resolution.

The legal dispute stemmed from allegations that Zenith Bank unauthorizedly sold shares, manipulated accounts, and fabricated documents to conceal these actions. Otedola’s companies claimed that the bank miscalculated debts and improperly sold these to the Asset Management Corporation of Nigeria (AMCON). Specifically, Zenon Petroleum argued that the bank opened letters of credit before AMCON took over the debts, resulting in substantial financial losses.

Sources close to the matter indicated that the resolution came after both parties met several times in May without reaching a satisfactory conclusion. It was reported that Zenith Bank agreed to refund N205 million wrongfully debited from Zenon’s account, including accrued interest.

Further disputes involved Seaforce Shipping Company Limited, which challenged a claimed debt of N5.9 billion. Evidence showed that the account had been in credit since 2018, leading to the abandonment of the bank’s claim.

Additional accusations involved the sale of Zenon’s shares in Zenith Bank, resulting in significant financial losses due to discrepancies in the repurchase prices.

In response to these issues, Isyaku Mohammed, commissioner of police at the Force Criminal Investigation Department, summoned Zenith Bank’s managing director to address alleged unauthorized debits and other financial discrepancies.