FAILED BANKS (RECOVERY OF DEBTS) AND FINANCIAL MALPRACTICES IN BANKS ACT

(1) The Federal High Court (in this Act referred to as "the Court") shall have power to-
(a) recover, in accordance with the provisions of this Act, the debts owed to a failed bank, arising in the ordinary course of business and which remain outstanding as at the date the bank is closed or declared a failed bank by the Central Bank of Nigeria;
(b) try the offences specified in Part III of this Act;
(c) try the offences specified in the Banks and Other Financial Institutions Act and the Nigerian Deposit Insurance Corporation Act; and
[Cap. B3. Cap. N102.]
(d) try other offences relating to the business or operation of a bank under any enactment.
(2) The Court shall exercise exclusive jurisdiction over all ancillary matters, including remand, bail and any other preliminary issues connected with an offence or hearing over which the Court has jurisdiction.
(3) The Court shall, in the exercise of its powers under this Act-
(a) conduct its proceedings in such manner as to avoid undue delay;
(b) lift the corporate veil of a body corporate, where it is necessary for the purpose of revealing its members who may be-
(i) guilty of an offence under this Act; or
(ii) liable, jointly or severally, for the debts owed by the corporate body to a failed bank.
(c) subject to this Act, adopt its own procedure, where expedient, to ensure speedy determination of cases before it.
(4) The Court shall have the power to admit and act on any evidence which it considers relevant in any civil or criminal proceedings notwithstanding that the evidence is inadmissible under any other law or enactment.
[1995 No. 18. 1999 No. 62.]

Notwithstanding the provisions of any other enactment conferring power to search, if the Court is satisfied that there is a reasonable ground to suspect that there may be found in any building or other place whatsoever, any money or other property or any book, record, account, statement or information in any other form whatsoever which, in its opinion, is or may be material to the subject matter of any trial under this Act, it may issue a warrant authorising any police officer or any member of the armed forces or of any of the security agencies to-(a) enter, if necessary by force, the building or other place and every part thereof; and
(b) search for, seize and remove any money, other property, book, record accounts, statement or information found therein.

(1) Where at any stage of a hearing or trial, the Court is satisfied that a prima facie case has been made out against a person, the Court may by order and for such time as it may direct or require-
(a) prohibit any disposition of property, movable or immovable, by or on behalf of that person, whether or not the property is owned or held by that person or by any other person on his behalf, except to such extent and in such manner as may be specified in the order;
(b) addressed to the manager of the bank or to the head office of the bank where the person has an account or is believed to have an account, direct the manager or the bank to-
(i) stop all outward payments, operations or transactions (including any bill of exchange) for the time specified in the order;
(ii) supply any information and produce books and documents, in respect of the account of that person; and
(c) where necessary or expedient, vest in the Court or otherwise acquire the custody of any property, movable or immovable, of the person for the preservation of the property pending the determination of the proceedings.
(2) An order under subsection (1) of this section shall have effect as specified therein, but any such order may at any time thereafter be varied or annulled by the Court.
(3) Failure to comply with the requirement of an order under this section shall be an offence punishable on conviction-
(a) in the case of an individual, by imprisonment for a term of not less than two years or more than five years without the option of a fine;
(b) in the case of any group of persons not being a body corporate, by the like punishment of each of such persons as is prescribed in paragraph (a) of this subsection;
(c) in the case of a body corporate by a fine of an amount equal to two times the estimated value of the property affected by the non-compliance or N100,000, whichever is higher.
(4) The Tribunal shall have power to admit and act on any evidence which it, considers relevant in any civil or criminal proceedings notwithstanding that the evidence is inadmissible under any other law or enactment.

The jurisdiction or authority of the Court shall not be affected by the fact that a person charged or brought before the Court for trial or hearing-(a) has resigned or retired from the bank; or
(b) has had his appointment terminated in the bank; or
(c) has otherwise left the employment of the bank; or
(d) withdrew his participation from a merger, take-over or the closing of a bank, if the loan, advance, guarantee or any other credit facility, which is the subject matter of the proceeding before the Court is outstanding on the commencement of the merger, take-over or closing of the bank.

Notwithstanding anything to the contrary in any law, deed, agreement or memorandum of understanding, the Court shall have exclusive jurisdiction to hear and determine all matters brought before it concerning the recovery from any person of any debt owed to a failed bank, which remains outstanding as at the date of closure of the business of the failed bank.

In addition to any other primary source of evidence-(a) the examination reports and recommendations of the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation or their joint examination reports and recommendations; or
(b) any report of the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation; or
(c) the report of a person appointed by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation,
on the financial condition of a failed bank shall be sufficient proof that a loan or advance is owed to a failed bank and is due for recovery under this Act.

(1) An application for the recovery of a debt owed to a failed bank shall be brought before the Court by the Receiver or Liquidator of the failed bank and where there is no Receiver or Liquidator, by a person appointed by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation.
[FORM A.]
(2) The application referred to in subsection (1) of this section shall contain the following, that is-
(a) the name and address of the borrower;
(b) if the borrower is a body corporate, a partnership or a sole trade-
(i) the address of its principal place of business;
(ii) the names and addresses of its shareholders, directors, proprietors or partners, as the case may be;
(c) the amount of loan and advance outstanding;
(d) details of securities pledged, if any; and
(e) such other information as may be useful to the Court.
(3) An application may be brought against a debtor under this section and the Court shall proceed to hear the application in accordance with the provisions of this Act, notwithstanding that a criminal proceeding is pending against the debtor in respect of the same matter.

(1) The Court shall on the return date and on receipt of a reply to the notice of an application made under section 7 (1) of this Act, if the debtor admits the debt, enter judgment and ask the debtor to appear before it to show cause why the Court should not invoke its powers under this Act to recover the outstanding debt.
(2) The Court shall, if satisfied with the explanation of the debtor, give the debtor not later than 30 days to pay to the Receiver or Liquidator the outstanding loan and interest thereon.
(3) If a debtor pays the outstanding loan and interest within the period specified under subsection (2) of this section, the Court shall-
(a) issue to the debtor a certificate of clearance; and
[FORM F.]
(b) order that all the documents and properties pledged as security for the loan be released to the debtor.
[Form G.]

(1) If the debtor-
(a) at the expiration of the period specified under section 8 (2) of this Act, fails to repay all the outstanding loan and interest; or
(b) disputes the loan or interest,
the Court shall proceed to hear the case and enter judgement and make such order as it deems appropriate for the purposes of this Part of this Act.
(2) Where the Court makes an order for the payment of the loan and interest and the debtor fails to comply within the time specified in the order, the Court shall make an order to levy execution on all the properties of the debtor pledged as security for the loan.

A Receiver or Liquidator may, with leave of the Court at any time before judgment is entered, withdraw an application made under section 7 (1) of this Act.
[Form H.]

(1) A property against which an order is made under section 9(2) of this Act shall, with the concurrence of the Receiver or Liquidator, be sold by auction or by private contract and the money obtained from the sale shall be applied in accordance with the provisions of this section.
(2) Where a property is sold under subsection (1) of this section, the Court shall execute an instrument to transfer, convey or assign the property to the purchaser or in any other way vest the property in the purchaser.
(3) An instrument executed under subsection (2) of this section shall be conclusive proof of title of the purchaser and shall, where necessary, be a registrable instrument under the various registration laws, without the consent required under sections 21, 22 and 26 of the Land Use Act.
[Cap. L5.]
(4) Any money obtained from the sale of properties under subsection (1) of this section shall, within two weeks from the date of sale, be paid to the Receiver or Liquidator of the failed bank after all the recovery expenses have been deducted.
(5) If the money obtained from the sale under subsection (1) of this section is not sufficient to offset the outstanding loan and interest thereon, the Court may, where the debtor-
(a) is an individual, levy execution on the other properties of the debtor;
(b) is a body corporate, partnership or other association of individuals, notwithstanding anything to the contrary in the Companies and Allied Matters Act or any other law for the time being in force, levy execution on the other properties of the body corporate, partnership or association of individuals.
[Cap. C20.]
(6) Where the Court levies execution under subsection (5) of this section, the properties shall be sold as specified in subsection (1) of this section and the provisions of subsections (2) (3) and (4) of this section shall apply to the sale and money obtained from the sale.
(7) If the money obtained from the sale of properties under subsection (6) of this section is still not sufficient to offset the outstanding loan and interest thereon, the Court may, subject to section 290 of the Companies and Allied Matters Act, levy execution on the personal properties of the directors of the body corporate, partners of the partnership or individuals of the association, as the case may be, which shall be sold and applied in satisfaction of the outstanding debts, in accordance with the provisions of this section.

(1) Where-
(a) the information and details on the security pledged for the loan and filed before the Court is impossible to locate; or
(b) no security is pledged at all; or
(c) the identity of the debtor is difficult to locate; or
(d) the debtor is found to be non-existent, fake or fictitious or in any way unidentifiable,
the Court shall hold liable, for the outstanding loan and interest thereon, the directors, shareholders, partners, managers, officers and other employees of the failed bank who in the performance of their duties were found to have been connected in any way with the granting of the loan which has become irrecoverable.
(2) The Court shall proceed to recover from the person referred to in subsection (1) of this section, jointly and severally the outstanding loan and interest thereon in accordance with the provisions of this Act, unless the Court is satisfied that the debt was incurred with the consent of the director, partner, shareholder, manager, officer or employee and that he exercised all such diligence as he ought to have exercised having regard to the nature of his functions and all the circumstances of the case.

The provisions of the Limitation Law of a State or Limitation Act of the Federal Capital Territory, Abuja shall not apply to matters brought before the Court under this Part of this Act.

The rules of procedure to be adopted in civil matters before the Court under this Act shall be as set out in the Schedule to this Act.
[Schedule.]

(1) Any director, manager, officer or employee of a bank who-
(a) knowingly, recklessly, negligently, wilfully or otherwise grants, approves the grant, or is otherwise connected with the grant or approval of a loan, an advance, a guarantee or any other credit facility or financial accommodation to any person-
(i) without adequate security or collateral, contrary to the accepted practice or the bank's regulations; or
(ii) with no security or collateral where such security or collateral is normally required in accordance with the bank's regulations; or
(iii) with a defective security or collateral; or
(iv) without perfecting, through his negligence or otherwise, a security or collateral obtained; or
(b) grants, approves the grant or is otherwise connected with the grant or approval of a loan, an advance, a guarantee or any other credit facility which is above his limit as laid down by law or any regulatory authority or the bank's regulations; or
(c) grants, approves the grant or is otherwise connected with the grant or approval of a loan, an advance, a guarantee or any other credit facility to any person in contravention of any law for the time being in force, any regulation, circular, or procedure as laid down, from time to time, by the regulatory authorities or by the bank; or
(d) receives or participates in sharing, for personal gratification, any money, profit, property or pecuniary benefit towards or after the procurement of a loan, an advance, a guarantee or any other credit facility from any person whether or not that person is a customer of the bank; or
(e) recklessly grants or approves a loan or an interest waiver where the borrower is known to have the ability to repay the loan and interest,
is guilty of an offence under this Act.
(2) A person who, being indebted to or being a customer of a bank, negligently, wilfully or recklessly-
(a) makes a statement, whether written or oral, or gives any information; or
(b) fills any form to a bank,
knowing it to be false, fake, non-existent or fictitious, with the intention of concealing his identity from the bank so as to avoid the repayment of a loan, an advance, a guarantee or any other credit facility granted him by the bank, is guilty of an offence under this Act.
(3) Where the person referred to in subsection (2) of this section is a body corporate, any of its directors, managers, officers, employees or partners who is responsible or is in any way connected with the doing of any of the acts referred to in that subsection is guilty of the same offence under this Act and liable on conviction to the same punishment.
(4) A person who fails to comply with an order of the Court under section 9 (2) of this Act for the payment of the loan and interest within the time specified in an order under that section is guilty of an offence.
[1995 No. 18.]

(1) A person who commits an offence under section 15 of this Act is liable on conviction, subject to subsection (4) of this section, in the case of an offence-
(a) under subsection (1) (a), (b) or (c) of that section, to imprisonment for a term not exceeding five years without an option of a fine;
(b) under subsection (1) (d) or (e) of that section, to imprisonment for a term not exceeding three years without an option of a fine;
(c) under subsection (2) of that section, to imprisonment for a term not exceeding three years without an option of a fine;
(d) under subsection (4) of that section, to imprisonment for a term not exceeding three years without an option of a fine.
[1995 No. 18.]
(2) The Court shall order the refund of the value equal to the amount involved in the offence or of such other value as the Court may deem fair and just in the circumstance or the confiscation of the property, movable or immovable of a person convicted of an offence under this Act.
[1999 No. 11.]
(3) A person convicted of an offence under this Act may voluntarily surrender property, movable or immovable, of the value equal to the amount involved in the offence or such other value as he may decide.
(4) A property confiscated or surrendered under this section shall be forfeited-
(a) to the bank that suffered the loss; or
(b) in the case of a failed bank, to the Receiver or Liquidator for the benefit of that bank; or
(c) to such other person who, in the opinion of the Court, deserves to be compensated for loss suffered.
(5) Where, by reason of the confiscation or voluntary surrender of property, under this section, there is full or substantial recovery of the amount involved in the offence, the Court may, if it deems it equitable, reduce or decline to impose the penalty specified in subsection (1) of this section or in any other enactment.
[1995 No. 18.]

(1) A person who attempts to commit any of the offences specified in section 15 of this Act is guilty of an offence and liable, on conviction to the same punishment as is prescribed for the full offence under section 16 of this Act.
(2) Where a person is charged with any of the offences specified in this Act, but the evidence establishes an attempt to commit that offence, he may be convicted of having attempted to commit that offence although the attempt is not separately charged and shall be liable to the same punishment as is prescribed for the offence under section 16 of this Act.
(3) Where a person is charged with an attempt to commit an offence under this Act, but the evidence establishes the commission of the full offence, the person shall not be acquitted but shall be convicted of the offence and be liable to the same punishment as is prescribed for the offence under section 16 of this Act.
(4) Where, in respect of an act which is an offence under this Act, the Court is satisfied that a person, not being a person charged with an offence under this Act-
(a) acted in concert or conspired with any person; or
(b) knowingly took part to any extent whatsoever in the commission of an act constituting an offence specified in this Act,
the Court shall have power to treat the person in like manner as a person charged with an offence under this Act and shall proceed against him accordingly notwithstanding anything to the contrary in any other enactment.

(1) Where an offence under this Act which has been committed by a body corporate is proved to have been committed with the connivance of or to be attributable to any neglect on the part of a director, manager, registrar or other similar officer of the body corporate, or any person purporting to act in any such capacity, he, as well as the body corporate, where practicable, shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(2) Where a body corporate, other than a bank, is convicted of an offence under this Act, the Court may order that the body corporate be wound up and the body corporate shall thereupon and without any further assurance but for that order, be wound up and all its assets, after satisfying all the claims of the Receiver or Liquidator, shall be forfeited to the Federal Government.

(1) Notwithstanding anything to the contrary in any law (including any rule of law), no witness shall, in any trial under this Act, be presumed to be unworthy of credit by reason only that he took part in the commission of the offence.
(2) Where a person is charged with an offence but the evidence establishes an attempt to commit the offence he may be convicted of having attempted to commit that offence, although the attempt is not separately charged, and punished as provided under this Act.
(3) Where a person is charged with an offence under this Act, but the evidence establishes the commission of another offence under this Act, the offender shall not be entitled to acquittal but he may be convicted of that other offence and punished as provided under this Act.
(4) Where a person aids, abets, counsels, procures or conspires with any other person to commit any of the offences under this Act, he is guilty of the offence and liable on conviction to the same punishment as prescribed for that offence under this Act.
[1999 No. 62.]

A person who commits an offence under this Act may be arrested without warrant by a police officer.
[1999 No. 62.]

(1) The Court shall have power to grant bail to an accused person charged with an offence under this Act or any other law triable by the Court upon such terms as the Court may deem fit including-
(a) the payment of a deposit of one quarter of the amount of money involved in the offence;
(b) the provision of a surety or such number of sureties who shall deposit adequate security for the balance of the amount involved in the offence; and
(c) the handing over of his passport to the Court for the duration of the bail.
(2) Notwithstanding the provisions of subsection (1) of this section, the police shall, before any person is charged before the Court for an offence under this Act, have power to grant bail to any person who is arrested or detained upon such terms and conditions as are reasonably necessary to ensure compliance with the provisions of subsection (1) (a)-(c) of this section.
[1999 No. 62.]

Where a provision of this Act is inconsistent with that of the Evidence Act or any other enactment or law, the provisions of this Act shall prevail and that other provision shall, to the extent of its inconsistency, not be applicable.
[Cap. E14.]

In this Act, unless the context otherwise requires-
"application" means an application made by a Receiver or Liquidator of a failed bank for the recovery of a debt owed to the failed bank;
"bank" has the meaning assigned to it under the Banks and Other Financial Institutions Act and includes-
[Cap. B3.]
(a) a financial institution as defined under that Act or under the Nigerian Deposit Insurance Corporation Act; and
[Cap. N102.]
(b) a development bank;
(c) a mortgage bank or any other bank established by law;
[1995 No. 18.]
"Court" means the Federal High Court;
"debt" means any loan, advance, credit accommodation, guarantee or any other credit facility, together with the interest thereon, which remain outstanding and unpaid against a customer of a bank in favour of the bank;
[1999 No. 62.]
"director" means a director as defined in the Companies and Allied Matters Act and within the meaning of section 20 (5) of the Banks and Other Financial Institutions Act and includes a wife, husband, father, mother, son or daughter of a director;
[1999 No. 62. Cap. C20. Cap. B3.]
"employee" means a person who is or has been employed, or connected in any capacity with the affairs of a bank or any person arraigned before the Court under this Act;
''failed bank" means a bank or other financial institution whose licence has been revoked or which has been declared closed, placed under receivership or otherwise taken over by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation or whose capital to risk weighted assets ratio is below such minimum percentage as may be prescribed from time to time by the Central Bank of Nigeria or such other appropriate regulation or authority and includes a bank which may otherwise be described as failed by the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation or such other appropriate regulatory authority;
[1995 No. 18.]
''Liquidator or Receiver" includes a person appointed by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation under section 7(1) of this Act;
"loan" includes an advance, a guarantee and any other credit facility;
"unsecured" means without security or collateral.

This Act may be cited as the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act.