Cool Financial Services Sues FCMB Over Alleged Unauthorized Loan Withdrawal

Cool Financial Services, a Lagos-based finance house, has sued First City Monument Bank (FCMB) for allegedly allowing Goewe and Sons Ltd., one of its borrowers, to withdraw N150 million from an account that was under an active freezing instruction.

Goewe and Sons Ltd., a merchandise company owned by Ewere Godwin Orobosa, first approached Cool Financial Services in July 2023 for a N100 million loan at a 3.5% interest rate for 30 days. In September 2023, the company secured an additional N50 million loan at a 1.5% interest rate for one month, bringing the total loan to N150 million.

The borrower intended to use the loan as proof of funds to secure a contract but was not permitted to utilize the money for executing the contract. Both Goewe and Sons Ltd. and Cool Financial Services instructed FCMB to freeze the loan account to ensure the funds remained untouched during the transaction period, as stipulated in a loan agreement dated September 18, 2023.

Prior to this, the borrower had written to FCMB to modify its account mandate through a board resolution dated September 15, 2023. The resolution appointed Ewere-Egharevba Orobosa, representing the borrower, and Roseline Anibueze, representing the lender, as ‘Category A’ signatories to the account. The directive specified that withdrawals below N150 million required authorization from the lender’s representative, while withdrawals exceeding that amount needed joint authorization from both signatories.

“These measures were implemented to ensure compliance with the loan agreement,” said Oluwafemi Adediran, head of the legal unit at Cool Financial Services, speaking to FIJ on Wednesday.

When the loan term expired, Cool Financial Services attempted to withdraw the funds. On October 23, 2023, the finance house presented a transfer cheque at FCMB’s Chevron branch in Lagos, confident the funds were intact. However, the cheque was dishonored, and the bank disclosed that the borrower had already withdrawn the money.

“Upon investigation, we were shocked to discover that FCMB disregarded the lien on the account and processed a withdrawal of N150 million from the restricted account meant solely as proof of funds. More concerning is the apparent forgery of our client’s representative’s signature to authorize the unauthorized transaction,” wrote Justice John, legal counsel for Cool Financial Services, in letters to FCMB officials dated September 26 and October 26, 2023.

On October 25, 2023, representatives of Cool Financial Services visited FCMB’s Sanusi Fafunwa branch, where bank officials Chukwuma Chukwuka and Isiaq Babatunde requested a 72-hour period to resolve the issue. An additional 48 hours was later granted, according to court documents signed by Anibueze in November 2023.

Despite these extensions, the issue remained unresolved. On October 31, FCMB, through its legal counsel Tosin Talabi and Akin Akintola, confirmed it had commenced an internal investigation.

“We have initiated an investigation into the issues raised and will respond with the bank’s position upon its conclusion,” FCMB stated.

Cool Financial Services claims that when it visited the bank to verify the withdrawal, the freezing instruction was still active, and it discovered that its director’s signature had been forged. “The key question remains: how was it possible to withdraw funds from an account under an active freeze order?” the lender’s legal representative asked.

Legal Action

In November 2023, Cool Financial Services filed a lawsuit (FHC/2377/2023) at the Federal High Court in Lagos, seeking to recover its losses, which it attributes to “a criminal conspiracy.” The defendants named in the suit are FCMB (first defendant), Goewe and Sons Ltd. (second defendant), and the Central Bank of Nigeria (CBN), FCMB’s regulator (third defendant).

The lender is seeking the following reliefs:

A declaration that FCMB breached its fiduciary duties to Cool Financial Services.
An order directing FCMB to pay N150 million with 21% interest per annum, or the prevailing CBN rate, from October 23, 2023, when the transfer request was dishonored.
General damages of N250 million for economic loss, reputational harm, and financial exposure.
Interest on the judgment sum at 21% per annum from the date of the suit until judgment, and 14% per annum from judgment until full payment.
An order directing CBN to enforce compliance by FCMB if it fails to pay, using FCMB’s deposits held with the central bank.
Legal costs of N5 million.

As of press time, the court has not scheduled a hearing date, and FCMB has yet to file a response to the suit. FCMB also did not respond to FIJ’s request for comment. Rafiu Muhammed, a corporate affairs officer at the bank, acknowledged receipt of FIJ’s inquiry on January 15, promising a response after an investigation. Follow-up requests on January 24 and subsequent calls were met with assurances of an impending reply.

Borrower’s Response

In the lawsuit, Cool Financial Services accuses Goewe and Sons Ltd. of forging Anibueze’s signature and conspiring with FCMB to withdraw the funds. On January 15, FIJ contacted Ewere Godwin Orobosa, director of Goewe and Sons Ltd., who denied the allegations.

“The loan from Cool Financial Services has been fully repaid. No signatures were forged. We owe them nothing,” Orobosa claimed, adding that he also plans to sue FCMB. “I see my name listed as owing over N20 million on the credit bureau, which I don’t understand.”

Orobosa provided FIJ with documents, including a series of cheques issued to the lender. When informed of Orobosa’s statements, Cool Financial Services’ legal head dismissed them as false, maintaining that the borrower defaulted on the loan and withdrew the funds illegally.

money illegally.