|
Listen now
|
Union Bank of Nigeria in its ordinary course of business is involved in a number of litigation related contingent liabilities amounting to N1.497 trillion as at 31 December 2022, which presents a risk to its going concern.
The major litigation is a case instituted by a claimant Petro Union in 2012 against the Central Bank of Nigeria (CBN), Union Bank, the Minister of Finance and the Attorney-General of the Federation in which the Federal High Court (FHC) gave judgement in 2014 against the defendants jointly and ordered them to return the claimant’s foreign capital amounting to £2.56 billion which was allegedly deposited with the Bank through a Barclays Bank cheque for this amount and of which a substantial part was allegedly transferred to the CBN.
Out of the total face value of the Barclay’s Bank cheque, the Bank was directed to pay £396.8 million with interest at 21% per annum from 1994 up till the liquidation of the judgement debt.
As at December 2022, the Naira equivalent of the total judgement debt awarded directly against the Bank was N1.495 trillion, according to data from the banks 2022 financial statement.
Union Bank loses at Appeal and Supreme Court
In 2018, the Court of Appeal dismissed the Bank’s appeal against the judgement of the FHC and a further appeal was filed to the Supreme Court.
While the Bank’s appeal was pending before the Supreme Court, its application for leave to amend its notice of appeal, to appeal on grounds of mixed law and fact and to extend time to apply for leave, was dismissed.
The Bank subsequently filed another application seeking the leave of the Supreme Court to appeal the judgement of the lower court, and on 22 December 2021, the Supreme Court unanimously granted leave to Union Bank to appeal the judgement of the Court of Appeal and to file its Notice of Appeal. The Bank filed an appeal on the 5 May 2022, but the Court is yet to fix a date for hearing after initial adjournment.
Potential impact of judgement debt on Union Bank operations
Union Bank had total equity or shareholders’ funds of N297 billion as at December 2022, which risks being wiped out if the judgement debt against the bank stands. Union Bank however claims that based on legal advice received by the Bank, its Directors believe that its current appeal before the Supreme Court has chance of success.
As such Union Bank did not make any major provisioning for this particular judgement liability, which was flagged by its auditors, Ernst & Young.
“This matter was considered to be a key audit matter due to the size of the potential liability and the significant judgement made by the Directors in determining that no provision is required in the consolidated and separate financial statements,” Ernst & Young, said.