Access Bank Plc of Nigeria won a 653 million-pound ($1.02 billion) fraud lawsuit in Britain against Erastus Akingbola, the former chief executive officer of bailed-out Intercontinental Bank Plc, which it acquired last year.
Akingbola is liable for directing the bank to buy its own shares at a loss of about 145 billion naira ($902 million), siphoning money to companies controlled by him or his family and using Intercontinental funds to buy real estate in the U.K., Judge Michael Burton said in a ruling in London today.
“Quite apart from being contrary to Nigerian law,” Akingbola’s strategy for the bank to buy its owns shares “was simply wrong-headed, and was plainly a substantial contributing factor to the collapse of the bank,” Burton said.
Intercontinental was among eight lenders bailed out by the nation’s central bank after a 2009 debt crisis caused in part by loans to speculators in equities. Akingbola, who was fired by Intercontinental and then sued after he moved to London, has been back in Nigeria since 2010 defending a criminal fraud case stemming from the bank’s failure.
Burton found Akingbola wrongfully caused the bank to acquire 3.7 billion of its own shares between 2007 and 2009, and that he directed about 68 million pounds to a group of companies in which he had an interest in order to help them pay off “substantial debts,” according to the judgment. Burton rejected his claim that others may have been responsible.
“I have no doubt that all the staff in the bank were in awe of him and of his authority,” Burton said in the ruling. While Akingbola “wasn’t a ‘details’ man,” the judge said he didn’t “accept or believe that anything major in the bank could have occurred or did occur without his knowledge.”
Jonathan Tickner, Akingbola’s lawyer with Peters & Peters in London, didn’t immediately return a call or e-mail seeking comment on the judgment.
During the trial in April and May, Akingbola was questioned by Access Bank’s U.K. lawyers in Nigeria in a proceeding that was broadcast live via video-link to the judge in London. Burton said another hearing would take place in September to determine what will happen next in the case.
The judgment “sends a strong message to international investors in Nigeria that it is no longer ’business as usual’ in its banking sector,” Access Bank’s lawyer, Segun Osuntokun of Berwin Leighton Paisner LLP in London, said in a statement.
The Central Bank of Nigeria said the country had asked the U.K. to extradite Akingbola after the bailout, though he later returned voluntarily to Nigeria in about July 2010 to face the criminal case. A trial in that matter is still ongoing.
In January 2010, the bank won a U.K. court order freezing 83 million pounds of Akingbola’s assets. Nigeria’s Economic and Financial Crimes Commission charged Akingbola later that year with granting unauthorized loans and share-price manipulation.
There have been few public developments in the case since it began more than two years ago, when Akingbola had trouble paying his legal bills. Burton gave him permission at the time to sell an $850,000 home in Ghana or two apartments in London worth a total of about 1 million pounds to begin paying the remaining costs of his legal fees.
Under the freeze order, Akingbola was supposed to be able to pay for his defense using an HSBC Holdings Plc trustee account on the island of Guernsey in the English Channel. The bank declined to release the funds after it was approached by Nigeria, possibly triggering another legal dispute, Akingbola’s lawyer said in court at the time.
Akingbola was managing director of Intercontinental from 1989 to 2009. It was one of Nigeria’s four biggest banks, employing about 20,000 people and running about 350 branches.