Courts and the challenge of compliance with their orders

The National Industrial Court of Nigeria (NICN), few weeks ago ordered the reversal of the suspension of Managing Director of Federal Housing Authority (FHA) Homes Limited, Mr Roland Igbinoba in an interim injunction.

Igbinoba, a mortgage banking professional, who was appointed to turnaround the fortunes of the mortgage finance institution in 2013 was suspended on June 2 by the Board of the Federal Housing Authority (FHA) through a letter referenced: FHA/MD/OCE/GEN/89.

He was ordered to proceed on suspension so that several allegations raised against him could be investigated. Some of the allegations levelled against him includes the granting of loans without board approval or without equity contributions, employment/deployment of staff without Board approval, incurring expenses above approval limits. Others are discriminatory tendencies against staff, disregard of the directives of regulatory bodies, persistent negative returns, lack of risk management plans among others.

On the circumstances of his suspension, the FHA Board wrote: “An emergency Board meeting of the bank was convened by the FHA Managing Director, who also doubles as the Board’s Chairman. The meeting was to study the two reports and help the bank’s Chief Executive to quickly address the lapses identified in especially the CBN risk assessment report. The Board could not however secure the cooperation of the bank’s CEO during the two hour meeting; as he viewed the observations of the CBN report un-alarming and those by the management committee as incorrect and skewed against him.

“In the absence of any meaningful agreement/cooperation with the bank’s CEO, the Board unanimously decided to involve an expert financial firm to conduct an independent forensic audit of the bank’s affairs with the aim of ascertaining which of the CEO’s or the Boards’s position is correct. The bank’s MD was then put on suspension to allow for an unhindered review by the experts. The need to take such decision was informed by the fact that the FHA’s assets worth N11billion could be trapped; if the bank is left to collapse or taken over by the CBN.”

Angered by this decision, Igbinoba approached the NICN for redress over the perceived injustice and obtained the orders of the court. The respondents in the action are the FHA (first respondent), the FHA Homes Limited (2nd respondent) and the Managing Director/Chief Executive Officer of the FHA, Prof. Mohammed Al-Amin (3rd respondent). The orders were made following an experte application and the affidavit of urgency filed on Igbinoba’s behalf by his counsel, Mr C. Okafor.

The trial judge, Justice Maureen Ewose, who made the order, also restrained the respondents from enforcing the suspension letter given to the applicant.

The judge said: “Having also read through the written address of counsel to the applicant in compliance with the orders of the court including the authorities supplied by him in support of the application before the court. The court believes that unless and until this application is granted, there will be serious breach of the peace and the res in this case cannot be righted and/or restored, if it is upset. Whereby, the court hereby grants all the prayers of the applicant and in the following terms:

“The court hereby makes an order of interim injunction restraining the respondents themselves directors, agents, servants, privies and others however called from implementing the contents of the letter dated June 2, 2015 written by the 3rd respondent to the applicant purportedly suspending the applicant from office pending the hearing and determination of the motion on notice.”

The court also made an order directing the first to third respondents to reverse all the steps taken by them or their agents in pursuant to the letter and restore the control and powers vested in the applicnat as managing director of the second respondent pending the hearing and determination of the motion on notice. Parties were rather asked to return to court on July 16 while maintaining staus quo ante bellum.

The applicant alleged that these vivid orders were not complied with by the respondents, a situation that is usually considered an affront by the courts.

As concrete, convincing and compelling as the position of the respondents could be, it is imperative to obey the orders of the court and then take their grievances before the it for adjudication. In any case, the injunctions were merely interim, meaning that they can be vacated, if the respondents show cause at the next adjourned date.

Consequent upon this alleged disobedience, Igbinoba, in the suit numbered NICN/ABJ/194/2015, filed a Notice of Consequence of Disobedience of Court Order, dated June 24. The notice warned Prof. Al-Amin of the consequences of disobeying the order.

The notice reads: “Take notice that unless you obey the directions contained in this order, you will be in contempt of court and be liable to be committed to prison.”

Also warned in the Notice is the Acting Managing Director, FHA Homes Ltd, Haytuddeen Awwal Atiku.

The applicant had consistedly denied the allegations raised against him. Reacting to the in-house committee report, he said: “The first time I saw the report of the committee dated April 2015 was on the 2nd June 2015 (which was the day of the emergency board meeting. I received the report during the emergency meeting). If I had the opportunity of seeing the report before the emergency board meeting, I would have come with documentary evidence to refute the allegations levelled against me. As it appeared I was already judged by the report as I did not get a chance of fair hearing or even defend myself. However, I have made efforts to provide some documentation to correct the misrepresentations in the report based on the available documentation I have at this time.”

On the CBN report, he said it covered the period between October 1, 2013 and September 30, 2014. According to him, upon receipt of the report, they reviewed and noticed that there were several anomalies in the report. “We communicated these anomalies to CBN. We also communicated this to the chairman as a response to his letter dated April 14, 2015 on this subject matter.

“It is important to note here that significant portions of the report by CBN are legacy issues (for example the fraud cases covered during the period) while some others were incorrect (for example the capitalization amount of the bank during the period). However, as is the case and practice in the sector, we have been working on the relevant recommendations and pursuing to achieve same before the next supervisory meeting in October 2015. We have achieved a commendable feat in this regard and are awaiting a formal board meeting to make presentations on this (For example we developed a more robust ERM Framework; ICT Policy; Contingency Funding Plan; Management Risk Charter; etc. all awaiting presentation to the board). Another important point to note is that the CBN is reviewing our letters stating the anomalies to them and we are awaiting their response.

“Finally, the examiners could not hold an exit meeting with the management of the bank at the completion of the exercise due to unforeseen circumstance as adduced by them. This is usually the norm. An exit meeting would have addressed many of the concerns that we are currently dealing with and it would have resolved several concerns regarding the anomalies in the report. Some of the anomalies in the CBN report are that profit for 2013 is N27.09m whereas the same CBN approved audited report for the bank at N147M for the same year”, he explained.

He denied ever granting loans without Board approval or any other that are within the approval limit of the Management Credit Committee (MCC), adding that the redeployment of the acting Head of Finance and acting Head of Operations was meant to address capacity issues. “While I am aware that the Board meeting of 4th March 2015 specifically asked the Board Establishment Committee to review the redeployment of the acting Head of Finance, this is the first time I am hearing about any issue(s) concerning the redeployment of the acting Head of Operations.

“Furthermore redeployment of the acting Head of Finance came up in the board meeting of 4th March 2015 and was subsequently the subject matter of the chairmans letter dated 17th March 2015. The details of the redeployment and the reason for his redeployment are captured in the Board Establishment Committee (BEC) meetings and the summary of resolution of the BEC”, he stated, adding that during the board committee meeting, the committee resolved that the redeployment is justified. He equally denied other sundery charges levelled against him, which allegedly necessitated his suspension.

Igbinoba argued that the bank’s liquidity position has not fallen below the statutory requirement of 20%. “As at today the bank’s liquidity position is well over 30%. A contingency funding plan has been developed and is receiving considerations for presentation to the board for approval. This will help to address any potential liquidity crisis.

The huge difference in cumulative profit of N64.9m in November 2014 and N226.4m at year end was as a result of recognition of income that had not been earlier passed during origination of various transac