Cititrust: The Deal That Short-changed Osun's Interest
With each passing day, the people of Osun are seeing for themselves how penchant for self-aggrandizement under the immediate past administration may have caused the state's interest to suffer irreparable losses. Of a particular interest was the recent disclosure by the Economic and Financial Crimes Commission (EFCC) that CitiTrust Holdings PLC a financial firm that a whopping 41 percent stake in an Osun-owned Bank, the Omoluabi Mortgage Bank was ceded to, is a Ponzi scheme, and that Nigerians should avoid them.
This is scary, right? That was exactly how I felt after my attention was first drawn to the advisory from Nigeria's premier anti-graft body and out of curiosity, I rushed to verify the information on https://www.efcc.gov.ng/efcc/news-and-information/news-release/10779-efcc-alerts-the-public-on-58-illegal-ponzi-scheme-operators, which left me seriously perplexed.
CitiTrust Holding PLC came to the consciousness of many Osun people at the 6th annual General Meeting of Omoluabi Mortgage Bank in 2020 when it was disclosed that it has acquired a majority shareholding in the Osun-owned financial institution, which culminated in change of name to LivingTrust Mortgage Bank PLC. But name was not only the casualty, the organisational structure and almost everything in the bank's set-up was tilted to the side of the supposed private investors.
It was so sudden and that raised curiosity, provoking questions from the discerning public because the significant change of stakes in the bank was shrouded in secrecy. Omoluabi Mortgage Bank isn't just a bank, but one of the heritage bequeathed on generations of citizens, or so they thought, by founding fathers.
The bank was founded in 1993– two years after Osun state was carved out of Oyo state– and incidentally, was under the administration of the First Executive Governor in the state, late Senator Isiaka Adetunji Adeleke. It started as the Osun Building Society Limited, and was set up to provide mortgage banking services, mortgage financing, real estate construction financing and general financial services, creating not just financial identity for the state but also served as a strategic investment meant to benefit citizens.
The lofty vision that birthed Omoluabi Mortgage Bank PLC was however shattered in 2019 after Osun's majority stake was lost out in a controversial manner. The disturbing thing here is that, the financial firm that Osun's interest was jettisoned for, has turned out to be an unknown entity to the Central Bank of Nigeria (CBN) and the Nigeria Security Exchange, two bodies saddled with the operation of financial entities in Nigeria, according to the EFCC.
So, what does this mean? To be candid, it cannot be good and raised serious questions about the motive of those who sanctioned the deal in the first place. From the start, Osun's interest did not seem to be a consideration because the state got almost nothing from the transaction that stripped it of most of its significant ownership of the bank.
In corporate financial parlance, it was more like a "cash out" because the transaction didn't in anyway benefit LivingTrust Mortgage Bank PLC as the share capital of the bank did not change from the ₦2.5 billion, which was the initial capital of the now defunct Omoluabi Mortgage Bank PLC. Although the transaction was painted as a necessary one for the bank's viability, but the reality simply showed that wasn't the case as only a few people benefited at the expense of Osun people.
Painfully, the Osun state government at the time Osun's shares were transferred to CitiTrust Holdings PLC settled for a ridiculous N1.5 billion to transfer control of a bank that was already worth over N5 billion in term of assets. Yet, there was no record of the transfer of the supposed receipt for the shares sale to Osun's treasury in line with Appropriation Law and the state's Public Finance Law. Instead, the money found its way to OSICOL, which utilisation is still a source of misery till this moment.
In a 2021 article, a former Commissioner of Finance in the state, Dr Wale Bolorunduro, disclosed that the Ogbeni Rauf Aregbesola administration had injected "N2 billion to retain that bank through structured leverage capitalization and before Aregbesola left office, the total assets of that bank was over N5 billion. I guess Oyetola’s government has sold some shareholding, which could worth N2 billion in that bank now."
Osun was really short-changed but beyond the financial losses that the state may have suffered from ceding of control to CitiTrust Holdings PLC, I'm afraid that the sustained operation of Living Trust Mortgage Bank may come under great attack. With CitiTrust Holdings PLC adjudged as a Ponzi scheme by anti-graft agency, the EFCC, the reputation of the bank where it hold a significant stake will naturally be recurrently call to question by investors and depositors alike.
Only last year, Justice Friday Ogazi of the Federal High Court in Lagos, directed the EFCC to take over assets of CitiTrust Holdings PLC, pending ruling on the application for a final forfeiture of the firm's asset. On the list of assets to be forfeited is the 40% shareholding in the LivingTrust Mortgage Bank PLC, which is valued at N6.5 billion. In essence, what was taken from Osun may be lost forever and worse, likely to bear negatively on the bank as a whole.
What is the future of LivingTrust Mortgage Bank PLC? That must be the germaine question that should agitate the minds of every conscious Osun citizen, if not for anything, but for the historical attachment to the venture. It is quite disturbing that a few individuals abused their privileges to serve to manipulate what belongs to the entire people in favour of cronies, resulting in a big loss to the real owner of the asset.
Unless we want to continue to deceive ourselves, those who coordinated the sale of Osun's stake in Omoluabi Mortgage Bank to a firm that has been alleged to be illegal, does not have the interest of the people at heart. They choose selfish gain ahead of collective benefits, destroying the visions, the purposefulness, the resources and sweats that went into the creation of the financial company 32 years ago.
To make matter worse, they seem not to be remorseful as there are indications that certain individuals who were surreptitiously planted into the board of LivingTrust Mortgage Bank PLC, are doing everything to frustrate the continued operation of the financial firm. Up till this moment, the bank is yet to hold its 2023 Annual General Meeting (AGM) not to talk of that of 2024, defeating the core principle of transparency and accountability as most of its shareholders, particularly, Osun state government, in the dark on its operation.
AGM is vital to any business entity as provisions of the Companies and Allied Matters Act (CAMA 2020) mandate it for incorporated businesses to lay down audited financial statements before shareholders and to also declare dividends and take other decisions that will aid further growth of the business. In essence, the Living Trust Mortgage Bank PLC is being run in an opaque manner, similar to a one-man business because information in the public domain suggested that only representatives of CitiTrust Holdings PLC are overseeing the operation of the bank.
Even though Osun state government retained a significant 40% stake in the financial institution, there are insinuations that its representative, particularly the Commissioner for Finance, was prevented from chairing committees that are central to accountability by the management of the bank, which are representative of the CitiTrust Holdings PLC. Osun was really bruised and bled badly by the past administration and hopefully, this too will be fixed by Governor Ademola Adeleke.
Sarafa Ibrahim writes from Osogbo, Osun state. He can be reached via [email protected]