Posted by By Juliana Francis on
The renovation and management of two hostels of The Polytechnic Ibadan, in Oyo State, by a private company has become a subject of litigation as a businessman and his wife have dragged the institution and Wema Bank to court.
The renovation and management of two hostels of The Polytechnic Ibadan, in Oyo State, by a private company has become a subject of litigation as a businessman and his wife have dragged the institution and Wema Bank to court. The grouse of Mr. Abraham Olotu is that a project he invested all his resources was not only revoked but also taken over by Wema Bank.
But why would a relationship which led to the securing of a contract, on one hand and loan, on the other, go sour? Olotu said the polytechnic took side when it was supposed to be neutral, while Wema Bank wanted to reap where it did not sow. But the bank has countered this, saying that the businessman reneged on the agreement he entered with it.
The relationship between Olotu and Wema Bank started in January 2002 when his company, Abraham Blessing and Co, won a contract to renovate two hostels of The Polytechnic, Ibadan and manage them for 10 years. Having failed to raise the money he needed to execute this contract, even after selling his father's house, land and cars, he had approached Wema Bank for a loan of N8 million to complete the project which, he said, had gulped N24 million then. He required N32 million to complete it. He had secured the loan and obtained the money to complete the renovation of the hostels, which were let out to students.
Olotu said part of the agreement he had with the bank was that students would pay for accommodation in the hostels through the bank, from which the bank would recoup its money and interest on the loan.
In September 2002, Olotu said, N4.8 million was made from fees paid by students. The following year, he said, N8.7 million was raked in. All money, he said, was paid into Wema Bank.
Trouble started when Olotu and Wema Bank disagreed on the total amount of money paid into the bank. While the bank said the project had realised N11 million, Olotu said it was N13 million.
"The bank gave us documents saying we had paid in only N11 million. I told them we had paid N13 million. They said out of N11 million, they had remitted N4 million into our loss account. There was another part of the document that said we made a total withdrawal of N21 million. I was shocked. How can I take a loan of N12 million and you allow me to withdraw N21 million? Is that possible?"
Olotu said Wema Bank had got in touch with the school over this disagreement, leading to the termination of his contract to manage the hostels he had already renovated. He revealed that the institution said it took the action because he was owing Wema Bank as well as failure to remit the agreed five per cent proceed to the school.
On why five per cent was not paid to the school, he said Wema Bank frustrated it since the proceeds were in its custody. "The agreement was that we would pay the school five per cent of gross earning. I told the bank to pay the school for that year. They said they were working on it," Olotu said.
Olotu said the polytechnic had transferred the contract to Wema Bank for the remaining eight years, an action he had challenged in court. He got a judgment and the school was ordered to return the contract to him. He said Wema Bank has made this impossible as it uses thugs to attack his workers.
But giving Wema Bank's version of the story, Mr. Eddy Ademosu, the bank's public relations manager, said: "On January 15, 2002, the customer, Abraham Blessing and Co was granted a three-month project finance facility of N8 millions with interest. This was to be settled with fees to be paid in by the students. The customer reneged on this agreement.
"After discussions between the two parties, the bank again on 1st March 2002, renewed the project finance facility and an additional N4, 000, 000.00 was granted. This brought the total facility that was granted the customer to N12, 000, 000."
He revealed that part of the agreement was that interest rate on loan would fluctuate according to prevailing interest rate, adding that by "February 28, 2003, when the facility expired only N5.8 million had so far been recovered from the customer."
The image maker said: "Prior to the expiration of the facility, the customer was on several occasion requested to provide additional security and pay down as there was a hard core debit to the tune of N14, 557,173.52 on account. He failed to do this," adding: "The customer equally failed to furnish the bank with a realistic repayment proposal as agreed in one of the meetings held with him."
He said Olotu's contract was terminated because he failed to meet his "debt obligation to the bank in spite of repeated demands," adding that the school authorised the bank to appoint another manager for the hostel, which, he said, was a way to get the account settled.
However, in his suit against the bank and the polytechnic, Olotu is asking for damages. "Let the polytechnic pay me my money. I've sued them for N232 million. I have also sued Wema Bank for N350 million," he said.
He lamented that the matter has rendered him financially handicapped, revealing: "All I ever worked for in my 48 years of existence are sunk into that project. Both the school and Wema Bank have put me through hell. I've sold everything I ever owed," adding: "The bank has embargoed my account. I've lost many businesses. I can't withdraw and I can't pay in."