Disappeared! Report says Union Bank Share Funds is Missing

About N8 billion raised by Union Bank in a public offering in 2005 has gone missing and could not be accounted for, contributing heavily in dragging the entire capital market down, a House of Representatives investigation has found.


“The sum of N8 billion arising from the Union Bank Plc offer since 2005 had remained unaccounted for. The circumstances surrounding the accounting, custody and use of the N8 billion, being amount realised from public offer is a major source of the near collapse of the capital market,” a report of the House of Representatives ad hoc committee on the ‘near collapse’ of the capital market said.


“One of the major sources of loss of investor confidence in the capital market in recent times is the fear that proceeds of public offers are usually diverted and in most cases unaccounted for by issuers,” the report added.

The committee, chaired by Rep Ibrahim Tukur El-Sudi, submitted its 84-page report on July 17, after months of controversial probe that led to the ouster and prosecution of capital market standing committee chairman Herman Hembe over corruption allegations which he denied.

In the report, the committee said efforts by the legal department of the Securities and Exchange Commission (SEC) to recover the Union Bank share monies proved abortive while the Assets Management Corporation (AMCON) “attempted to reclassify the amount to N6.067 billion instead of N8 billion.”

It said AMCON Managing Director Mustapha Chike Obi on November 17, 2011 accepted “a loss which was never disclosed in the books of Union Bank and included losses which origin was doubtful as a reduction of shareholders funds.”

The House committee blamed AMCON over the Union Bank funds because “the content of the AMCON letter show clearly that process of NPLs valuations, determination of the asset values of intervened institutions is largely open to manipulations.”

“Union Bank failed to provide additional details and information required by the committee in respect to the missing N8 billion,” the report added.

The committee therefore asked the Economic and Financial Crimes Commission (EFCC) to prosecute the past board and management of Union Bank, the chief executive officer of issuing house and financial adviser to the offer, the present members of the board and management of the bank, including Managing Director Mrs. Funke Osibodu, with a view to “establishing and recovering the missing N8 billion.”

It also urged for the prosecution of SEC Director General Ms. Arunma Oteh and AMCON boss Mustapha Chike-Obi “considering their roles in attempting to conceal the fraudulent diversion and missing fund.”

Last week, Chike-Obi told our reporter that all the allegations made by the ad hoc committee were not true. He also threatened to sue the lawmakers for making false accusations against him in the panel’s report.

When contacted on phone, Ms. Osibodu did not answer her calls. She also did not respond to text message sent to her line.

Calls to the spokesman for the bank Francis Barde did not go through and there was no response to a text message sent to him.

The House had since debated and adopted the committee’s report.