GTBank drags 60 bank executives to court over N17bn loan dispute

Guaranty Trust Bank (GTBank) has initiated legal action against 60 senior executives from 13 commercial banks amidst a protracted legal battle involving Afex Commodity Exchange.

The dispute revolves around a significant N17 billion loan linked to the Central Bank of Nigeria’s Anchor Borrowers Programme.

The executives, which include chairmen, chief executive officers, directors, and company secretaries of the 13 banks, face contempt proceedings. They are accused of failing to enforce a court-ordered No-Debit-Order placed on Afex Commodity Exchange’s accounts.

In suit no FHC/L/CS/911/2024 filed at the Federal High Court, Lagos division, and overseen by Justice CJ Aneke, GTBank secured an order for the executives, along with the liquidator of Heritage Bank (Nigeria Deposit Insurance Corporation), to be committed to jail for non-compliance with the court’s May 27, 2024 ruling.

A legal notice titled ‘Order to serve notice of disobedience to order of court vide newspaper publication’ was published in national dailies, outlining the court’s directive to serve contempt notices on the implicated parties. The matter has been adjourned to the following week for further proceedings.

The court’s ruling instructed 20 banks to transfer funds standing to the credit of Afex Commodity Exchange into GTBank’s account until the N17.81 billion loan, comprising N15.77 billion in unpaid principal and N2.04 billion in recovery and incidental expenses as of April 17, 2024, is fully repaid.

Additionally, GTBank was granted an injunction allowing it to take control of Afex’s 16 warehouses across seven states and sell commodities procured through the Anchor Borrowers Programme. This action follows earlier contempt proceedings against Afex and some of its principal officers.

According to court documents, Afex obtained the loan facility to finance smallholder farmers registered under the CBN’s Anchor Borrowers Programme. Despite an extension, Afex allegedly failed to fulfill repayment obligations, citing economic challenges that impacted farmers’ productivity and market participation.

In response, Afex stated it had repaid about 90 per cent of the loan, highlighting challenges stemming from macroeconomic policies and cash flow constraints that affected farmers’ ability to repay fully. The commodities exchange called on the Central Bank of Nigeria to activate the collateral guarantee clause to mitigate losses and sustain agricultural activities.

The Anchor Borrowers Programme, launched by the CBN in 2015 to enhance agricultural output and stabilise food prices, aimed to create economic linkages between smallholder farmers and processors.

By 2022, the programme had benefitted at least 4.8 million people, with over N500 billion due for repayment out of N1.079 trillion released under the programme.

The programme has since been discontinued by the CBN as it refocuses on its core mandate of ensuring price and monetary stability.

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