Inside Zenith Bank of Fraud

The outcry that greeted the award of $9.6 billion to Process and Industrial Projects Limited {P&ID} against Nigeria may not be the last, as a Nigerian bank, Zenith and a Judge of Federal Capital Territory, Justice Angela .O. Otaluka, sitting in Lugbe, a satellite town of Abuja, have incurred the wrath of an international trade agency through alleged willful, fraudulent and criminal flouting of the treaty on the part of Zenith Bank Plc.

If the threat of legal action against the Nigerian Government for forgery on the one hand and the FCT judiciary for defamation on the other, are carried out by the international body, then the infamy and possible blacklisting that may result therefrom will most definitely overshadow the monetary award given the P&ID.

This is because international trade or transactions are governed by the Uniform Customs and Practices, a treaty that Nigeria is signatory. These same ground norms were allegedly brazenly flouted by Zenith Bank and allegedly forged by Justice Otaluka to give legal backing to the banks misconduct.


Owigs and Obigs Nig Ltd, an indigenous Nigerian company and a customer of Zenith Bank Plc had sometime in 2014 appointed the bank as the Confirming Bank in conformity with international trade protocol known as Uniform Customs and Practice, following a duly secured letter of credit based contract involving shipment of solid mineral ores worth of USD64,107,180.04(sixty four million, one hundred and seven thousand, one hundred and eighty dollars, point four cents).

Zenith Bank Plc formally accepted the appointment as required by law for the issuance of the letters of credit to be issued to her from the Issuing bank (ICBC) as required in favour of Owigs and Obigs.

A documentary letter of credit is a mode of Payment between the importers/buyers and sellers/exporters bank, which serves as the Payment Guarantee from the importers bank to the exporters bank in favour of the exporter on behalf of the importer.

Meaning that letters of credit is between the importers and exporters bank on behalf of their customers and as a matter of principle, letters of credit are not issued to the banks customer (exporter) but issued directly to the exporters /confirming bank with a requirement and a mandate to confirm the issued letter of credit to the exporter by the exporters/confirming bank.

Now, the confirmed letter of credit by the exporters/confirming bank to the exporter serves as the instrument/approval/authorization, required and utilized by the exporter for shipment of goods and without the said shipping instrument (confirmed letter of credit) as required, it is practically impossible under international trade protocol (UCP RULES) for the exporter to carry out the shipment.

According to court papers sighted by Paparazzi, the ICBC, acting as the issuing bank for the Letter of Credit, a mandatory feature in international trade, fulfilled its own obligations by issuing the two Letters of Credit as required based on Zenith banks approval. The letters of credit bear confirmation Instruction s to Zenith bank, mandating Zenith bank to confirm the issued letters of credit to the exporter (Owigs and Obigs) accordingly as required.

Zenith bank as the confirming bank, received the acceptable letters of credit and endorsed them in acceptance for confirmation as its own contractual duty but for inexplicable reasons, failed to carry out the required confirmation of the LC in fulfillment of its own contractual duty, thereby kept the exporter stranded with goods already procured for shipment worth of ten million dollars(USD10M), at the port of loading and this constituted a breach of fundamental term of the contract ,triggering off damages as consequences.

Prior to this, a profitability and risk assessment jointly carried out by parties to the contract on the Nigerian side, Owigs and Obigs and Zenith Bank, established that the profit to be accrued to the Nigerian firm was in the region of $38, 432, 470.04 {Thirty eight million, four hundred and thirty two dollars, four cents}. The discovery of the huge profit margin to be made by the company allegedly unsettled Zenith Bank, allegedly triggering greedy and manipulative desire to keep a chunk of the action.


The realization of the huge profit margin to be made by Owigs and Obigs allegedly unsettled Zenith Bank and reportedly prompted a process of criminal manipulations that eventually led to the cancellation of the contract, albeit through the action of the bank.

Shortly after the receipt of the Letters of Credit from ICBC, Zenith Bank, sources say took undue advantage of the fact that Owigs and Obigs was exporting for the first time and might not be conversant with foreign trade documentations, Zenith Bank requested for Owigs and Obigs and ICBC to deposit funds for the contract with the bank, a move that was completely alien to rules guiding such international trade and totally forbidden in Banking Rules. To be sure, the bank stood no risk in the transaction as it was acting as the receiving/confirming bank, for which it would have earned handsome commission.

The bank allegedly went ahead to automatically deduct claims from the account of Owigs and Obigs as charges for Letters of Credits confirmation commission/fee without confirming the letters of credit as required, a gross contravention of banking Rules, amounting to defrauding of the said customer.

This request by the bank was not only rebuffed but seen as an unprofessional move by Zenith Bank against internationally laid down procedures and practices. That alone, cast the Nigerian banking industry in bad light as a bunch of amateurs who are not properly versed in the handling of international trade.

Followed closely by this was another disingenuous request by the bank to Owigs and Obigs for a percentage of the profit if it must confirm the Letters of Credit, which is the only instrument that will enable the company fulfill its contractual obligations to its Chinese partners.

Curiously, Zenith asked for a whopping 34 percent from a deal it had no other obligations except to act as receiving and confirming bank, from which it would earn good commission! This request, which was turned down by the company, more than any other thing, infuriated the bank and revealed the greedy nature of the Nigerian banking system where most banks have no qualms involving in backroom under the table deals. Despite the illegality of such illicit demand, the bank allegedly insisted on collecting the 34 percent through illegal means.

A refusal by the company, Owigs and Obigs, made the bank embark on a process of manipulative delays and underhand fraudulent dealings that eventually vitiated the contract, leading to the loss of the entire profit of over $38 million dollars and payments of huge penalties and other monetary obligations to third parties.

The rules guiding international trade imposes a time limit to the lifespan of Letters of Credit, this, of course is known to Zenith Bank and its officials but in their own manipulative wisdom, the bank employed strange delay tactics to ensure that the contract lapsed since it could not get its desired 34 percent.

Curiously also and in a fraudulent move, the bank, according to court papers in the possession of Paparazzi, went ahead to pay from a dedicated account of Owigs and Obigs, without the knowledge and authority of the company, the stated penalty for default in confirming the Letters of Credit.

The action of the bank has the following implications according to court papers.

Firstly, the bank behaved fraudulently by passing its liability to the company for defaulting in acting on its assigned role in the transaction. The payment of the penalty for non-confirmation of the Letters of Credit, was a liability solely to be borne by Zenith bank, but it went ahead to fraudulently pay the penalty from the account of the company. To hide this fraudulent activity, the bank allegedly cut off the company from receiving SMS alerts from the account, while also refusing to oblige the request of Owigs and Obigs for a statement of account.

Secondly, the account from which the money was paid from was a dedicated account with the funds in it solely for guaranteeing of the contract between Owigs and Obigs. It was not to be touched for any other purpose so as not to violate the contract.

As the bankers to the company and contract, this fact was said to have been known to Zenith Bank but it went ahead to tamper with the funds to the tune of over $4,000, obviously in a bid to frustrate the company for its refusal to accede to its greedy demands. The payment was made from the account of the company to pass it off that the company willfully flouted a term of the contract!

Thirdly, the payment of the penalty by Zenith Bank was the banks own way of intentionally ending a contract it was only invited to be receiving/confirming bank. The bank, according to sources in the know, took the step without the knowledge of the Nigerian company so as to punish it for refusing its overtures for profit sharing.

The manipulative and greedy disposition of the bank did not only deprive Owigs and Obigs its due profitability but also deprived the Federal Government of Nigeria taxes and levies that would have been due to it in millions of naira.

The actions of the bank have also effectively painted the country is bad light and dragged its name in the mud as a country of people who are unprofessional and dubious in business and unable to follow through simple contractual obligations, processes and procedures.

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