Hope Payment Service Bank Limited has lost N6.56 billion to cybercriminals and has filed an application before the Federal High Court in Lagos to recover the stolen funds before they are fully dissipated.

In its legal action, Hope Payment Service Bank has named 30 banks as defendants.

The application, supported by a 17-paragraph affidavit sworn by Abiodun Fade, bank’s chief finance officer, Hope Payment Service Bank Limited, was argued in court by Ukon Uye, Lagos lawyer alongside I.E. Awolola.

According to the affidavit, on Sunday, July 15, 2024, the bank’s platform experienced unauthorized access, leading to the fraudulent transfer of significant sums from customer accounts to unknown beneficiaries.

Fade stated that the fraudulent transfers were made from various customer accounts at Hope Payment Service Bank into the accounts of the beneficiaries.

Upon discovering the breach, the bank immediately approached the defendant banks, requesting that the funds be clawed back.

However, the banks have allegedly refused to act without a court order.

In his affidavit, Fade emphasized the urgency of freezing the accounts of the beneficiaries to prevent further dissipation of the funds.

He warned that unless the court intervened swiftly, the bank risked losing millions belonging to its depositors, investors, and shareholders.

Fade also noted that the perpetrators of the fraud, upon learning of the bank’s recovery efforts, have already begun to deplete the transferred funds.

He explained that the fraudsters have employed various tactics to move and conceal the money, posing a high risk to the bank’s ability to recover the stolen sum.

“If this application is not granted, the funds illegally transferred will likely be dissipated by the beneficiaries, and the bank will face significant financial exposure,” Fade said.

He added that the bank’s financial standing has already been severely affected by the breach and that the court’s immediate intervention is critical to preventing further losses.

The bank assured the court of its willingness to provide an undertaking as to damages, should the defendants or account holders suffer any loss due to the court’s orders.

After hearing the submission of the plaintiff’s counsel, the court granted an interim injunction.

The order directed the defendant banks, their agents, and representatives to place a restriction on the accounts linked to the fraud, freezing any amounts transferred from Hope Payment Service Bank until the hearing and determination of the motion for interlocutory injunction.

The court further instructed that the plaintiff must file an undertaking as to damages, indemnifying the defendants and the account holders in the event that the injunction should not have been granted.

United States District Court Southern District of New York, has given one Louis Emovbira Williams, a Nigerian businessman, the authorisation to withdraw $21 million from Nigeria’s bank account with JP Morgan, used to stash funds from crude oil sales to foreign entities.

Bola Tinubu

Justice Liman Lewis, in August, denied Nigeria’s motion to dismiss the complaint filed by Mr Williams, who was scammed by the Nigerian government over a food importation business deal that cost him millions of dollars in 1986.

People’s Gazette reported that not only was Mr Williams swindled of $6.5 million by the Nigerian government, he said he was also tortured by the SSS and tried for “economic sabotage” after he returned to Nigeria from the UK to retrieve the funds. He was sentenced to 10 years imprisonment in 1986 but left prison in 1989, having languished in jail for three years.

He got a presidential pardon from Ibrahim Babangida, then military head of statein August 1993 and a “Fidelity Guarantee and Abiding Memorandum of Understanding of Assurance” for him to be paid approximately $6.5 million at 17 per cent compound interest on a rollover basis since 1986 and N5 million including a 25 per cent compound interest.

However, the payment didn’t come. CBN’s unwillingness to pay the lump sum left the matter unresolved for decades until Nigeria returned to civilian rule and prompted Mr Williams to file a suit at the UK court, where the West African nation was ordered to refund the businessman with compensation.

In 2018, Justice Mary Clare Moulder of the Queen’s Bench Division of the High Court of Justice in UK okayed the seizure of $21,231,960.74 and £19,763.130 from the Central Bank of Nigeria’s account domiciled in JP Morgan.

The defendants include the federal government, the attorney general of the federation, CBN, JP Morgan & Co. and other parties who have yet to be named in the suit.

Having obtained a court order authorising him to seize millions of dollars from Nigeria’s account with JP Morgan, the businessman argued his entitlement to the funds before the Supreme Court of the State of New York.

But CBN requested that the suit be transferred from the Supreme Court to a lower court where Nigeria can plead sovereignty.

There, Nigeria argued it had sovereign immunity, which made it impervious to the UK court order in that a sovereign state cannot subject itself to the orders of other nations.

But Mr Liman of the U.S. District Court of New York court dismissed Nigeria’s argument and held that the West African nation had already waived its sovereign immunity per the terms of the Fidelity Guarantee issued to Mr Williams in 1993.

“Therefore for the avoidance of doubt, both the Nigerian State and CBN must be deemed to have waived any immunity from levying of execution on amount kept in the name of CBN or State of Nigeria or any institution of Nigeria (save diplomatic) to the extent to which any amount in [paragraph] (14) above remains unpaid,” stated the 1993 Fidelity Guarantee that the Nigerian government issued to Mr Williams.

“Neither the Nigerian State nor the CBN shall raise or invoke any defences so as to deprive Dr Williams of his monies in [paragraph] (14) above or make it financially onerous and burdensome such as requiring Dr Williams to suffer,” the Guarantee added.

Mr Liman determined that Nigeria could not turn around to contend for sovereign immunity, which had already been waived in the Guarantee.

“Accordingly, the Fidelity Guarantee reflects a waiver of sovereign immunity for any proceeding in any court to recognise and enforce a judgement pertaining to Plaintiff’s seized funds,” the U.S. judge stated on August 12.

But the Nigerian government, reluctant to part with its cash asset, already sought to appeal the ruling at the Second Circuit in New York as records have been transmitted to the appellate court where the arguments will again be re-examined and redetermined.

Nigeria has already lost on a similar ground from another court of appeals in the U.S., the one in the District of Columbia in Washington D.C., which ruled in favour of Zhongshan Chinese investors to seize Nigerian assets abroad over a botched free trade zone deal.

The appellate decision in the Chinese case in the District of Columbia Circuit is not binding on the courts under the Second Circuit, where New York falls.

The case adds to the mounting list of litigations that sully Nigeria’s reputation among its international counterparts as courts in France, UK and Canada have similarly given orders greenlighting the confiscation of Nigerian assets abroad.

Mr Williams said the funds, when recovered, would be used to improve children’s health and education in Nigeria.

The Naira, Nigeria’s currency, has been ranked among the 10 worst-performing currencies in the world, according to a report by Bloomberg.

The report outlined that five of the worst-performing currencies globally are from Africa, including the Zambian kwacha, Angolan kwanza, and the naira.

Meanwhile, the sharp drop in the performance of African currencies has been attributed to several factors, including economic challenges, unstable commodity prices, inflationary pressures, and a lack of dollar liquidity.

The report noted that many African economies, heavily reliant on oil exports, are particularly vulnerable to drops in oil prices.

Keonethebe Bosigo, portfolio manager at Mazi Asset Management, stated that while oil prices are a significant factor, the real issue lies in poor currency management and economic imbalances. He explained that for the naira, the problem stemmed from not allowing it to adjust, which led to overvaluation and a subsequent loss of confidence in the currency.

Irmgard Erasmus, an economist at Oxford Economics, also weighed in on the naira’s struggles, citing ongoing issues with liquidity and dollar supply.

Despite reforms geared towards liberalizing Nigeria’s current account following the election of President Tinubu in 2023, the currency continues to face phenomenal pressure.

“The naira remains undervalued relative to its long-term neutral value due to ongoing issues around liquidity and dollar supply,” said Erasmus.

The economic expert added that while declining Brent crude prices have worsened the situation, improvements in dollar liquidity could potentially aid in the naira’s recovery over time.

Erasmus also stated that the naira should be trading around N1,100 per dollar in the absence of distortions, compared to its recent close of N1,544/$.

However, he warned that without major policy reforms and better dollar supply, the outlook for the naira remains uncertain.