Why Citibank, S&T trade finance deal went awry
By Lola Olaiya
CITIBANK Nigeria did not breach any contract term with security and Trust Investment Limited (S&T) stressing that claims of contract breach are baseless.
Fact available show that S&T did not fulfil the terms of the contract agreed upon when it opened a letter of credit to enable it finance the importation and sales of elections from Dubai, United Arab emirate (UAE).
The terms of contract, stipulates that Security & Trust was to provide 30 per cent of the value of the letter of credit while Citibank provides 70 per cent.
The bank, it added having perceived reluctance by the company to fulfil its own part of the agreement did thorough investigations and follow-up into the company's financial base and it confirmed that the chief executive of S & T, Mr. Magnus Oliyide obtained credit from Citibank under false pretence.
Informed by the company's inability to fund the excess which varied between N639 million as at August 21, 2001 to N1.587 on October 22, 2001, and the additional margin of 40 per cent expected of it before the document endorsement stage, the bank then decided to take prompt additional measures beyond the ordinary to ensure that it was not ripped off.
This prompted the cleaning of the goods by the bank and their subsequent sale since Security and Trust has no input as agreed.
"Citibank thus had to take all measures to secure and safeguard the goods since the goods were consigned to the order of the bank and were financed with the bank's funds.
Furthermore , the bank also dispelled speculations that it gives preferential treatment to Asians at the detriment of Nigerians in terms of credit facilities pointing that this was absolutely untrue.
According to a customer of the bank, complies strictly with all the directives of the Central Bank of Nigeria (CBN) on credit policies which eliminates the possibility of selectively bestowing favour on a set of customers. Infact, after a while in operating on the top tier of the market it had to on the very volatile middle tier of the economy and the credit portfolio includes a large number of Nigerian companies and individuals.
Citibank is understood within banking industry in Nigeria to have a very strong financial base stressing that it had an enviable track record in the banking sector.
The CBN, the Nigerian Deposit Insurance Corporation (NDIC) and quite regularly look at the operation of the bank in such a way and they have never had cause to complain about its lending operation.
Besides the external auditors regularly audit the bank, which has a very strong franchise in Nigeria. Actually Citibank ranks among the top six banks in the country in terms of total assets and core capital. The bank complies strictly with all the rules and regulation is of the operating environment in Nigeria, which has therefore given it a long-standing reputation for the highest ethical standards.
Also contrary to claims, that Arif Usmani, the former managing director of the bank was sacked, he was re-assigned within the Citigroup franchise to a senior credit function at Saudi American bank (SAMBA).
The move actually resulted in the former Citibank's boss's promotion from senior credit officer two to senior credit officer one, while former. Executive director, Mrs. Oyinkan Adewale voluntarily resigned from the bank after about 14 years of service.
Adewale was said to have made significant contributions to the development of its financial control group which she supervised until her resignation.
And with the acting managing director, Mr. Peter Harris and the assistance of board member drawn from Nigerians and foreigners the stakeholders can therefore be assured of continued services for which has its global reputation.
Recently the bank terminated the services of some of its staff because of the urgent need for re-alignment of its franchise.
And this, was done basically to reflect current market and industry conditions and also to better position itself for future growth.
The termination of the employment of the workers was on terms consistent with their contracts of employment and other policies of the bank.