CBN absolves self from N50bln ATM fraud suit …….. We are all in it……. says Bank

CBN absolves self from N50bln ATM fraud suit …….. We are all in it……. says Bank By: Felix Adewumi The Central Bank of Nigeria (CBN) has made moves to get its name struck out from a N50 billion class action filed by some Nigerians who claimed to be victims of authorised ATM withdrawals against all the 24 banks in Nigeria and Interswitch Nigeria limited and the Apex bank. In the suit filed before Justice James Tsoho of the Federal High Court, Lagos, as a class action by Mr Tochukwu Onyuike from the Punuka Attorney and Associate chambers on behalf of the members who are victims of unauthorised ATM withdrawals, the plaintiffs wants the court to give an order directing the banks, CBN and Interswitch to pay the sum of N50 billion as general damages for the withdrawals However, the Apex bank through Chief Theo Nkire, its counsel, brought an application before the court wanting it to strike out its name from the suit because the plaintiff has not complied with the pre-condition for bringing it into the suit as required by S.46A of the CBN Act. The apex bank contended that none of the plaintiffs evidence show any wrong doing against the apex bank as the closest the plaintiffs came to linking the CBN to their claim was that the Apex bank have failed in its regulatory duty to promote monetary stability and sound finance system in relation to electronic money withdrawals. CBN argued that the present action have brought no evidence of any wrongdoing against it and the plaintiffs cannot under the Nigerian law bring an action against it unless they show evidence of bad faith against as a precondition for their action. In a swift reaction to the application, Bank PHB, represented by Barrister Joseph Olowo, its counsel, who claimed not to have been served with the application of CBN argued that the CBN cannot seek to absolved itself from any complicity since the Apex bank is a party to the suit. “We are all in it together, we will swim, sink or win it together, the Apex bank cannot try to leave us to face the suit alone, if it did not want to be a party, we must all be carried along and agree on it together” the counsel said. Justice Tsoho has however adjourned till October 12, 2010 to hear the application of CBN while also adjourning till July 26, 2010 to rule on an earlier application by the plaintiffs to bring in additional witness. In the statement of claim of the plaintiffs, they had also demanded for the sum of N2.5 million being the joint value of the sum lost by them at four of the banks as well as N100 million as the cost of litigation and N10 million as cost of providing appropriate notice to the defendants and administering the class action for their benefit. The plaintiffs who were represented by Miss Daba West, a civil servant with the Nigerian Ports Authority (NPA), Miss Nwajiagah Omeruo, a consultant, Mr Tochukwu Onyuike, a lawyer and Mr Sydney Aguwamba, a fashion designer representing all Nigerians who have been victims of unauthorised ATM withdrawals. Union Bank of Nigeria Plc, United Bank of Africa Plc, Bank PHB and Intercontinental Bank Plc were chosen as representative of the all 24 banks and any decision taken against the four banks affects the 24 banks as well as the CBN and Interswitch. They had sought a declaration that the defendants are liable to Nigerians for the losses and damages occasioned by the negligence of the defendants in relation to the provision of debit card services. Besides, they had sought a declaration that the defendants are strictly liable for any damages or losses caused to them by reason of the use of the debit cards offered to them by the defendants. More importantly, they had sought a declaration that the four banks are representative defendants of the class of defendants being those designing manufacturing supplying and offering of debit card services. Moreover, the plaintiffs sought a declaration that CBN failed in its regulatory duty to promote monetary stability and sound financial system in relation to the electronic money withdrawals. According to the plaintiff, since the introduction of the ATM in 2007, Nigerians have at all times had their inclination towards its use as they have build their daily living around the use of such cards and have always done so with the daily limit withdrawal of N60,000.00. However, they averred that at various time, they had went to make withdrawals from ATM in the usual practice but were declined by the ATM for non-availability of funds despite the fact that their accounts was funded in excess of N300,000.00 at the time of the withdrawals. According to them, in each of the occasion, after their experience, they had requested from the banks for their statements of accounts and discovered to their dismay that their accounts had been tampered with unauthorised and illegal withdrawals in rapid succession made from different ATM cash machines thereby reducing the account to zero balance. The plaintiffs contended that the banks had been negligent in their duties as commercial banks and service provider in safeguarding the plaintiff’s funds through installation of security software in total protection of the plaintiff’s fund and this is the duty ought to be observed at all time. Moreover, the plaintiffs had argued that the defendants owed then a duty of care as regard the protection of their fund by providing security mechanisms towards the safe use of the debit cards. According to the plaintiffs, the defendants have failed to take all reasonable and effective measures whether by installation of any software or any part of the information technological devices to install devices to protect the plaintiffs’ funds from unusual, unauthorised and fraudulent withdrawals. The plaintiffs also contended that the defendants failed to enhance their ATM systems to detect and retain clone cards when used as it is the standard practice all over the world and had also failed to realise the hazardous nature of offering debit card by not taking all reasonable steps to ensure that the ATM do not release funds more than N60,000.00 daily. While adding that the defendants failed to provide debit cards with the chip and pin technology which operates against unauthorised withdrawal as done in other countries, the plaintiffs added that the negligence of the defendants have caused Nigerians to suffer financial losses, physical trauma, emotional distress, loss of reputation and severe personal unrest.