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News Update (September 14, 2009 04:10 PM...)

Akingbola challenges CBN action-lawyer

Nigerian Central Bank Governor Lamido Sanusi did not follow due process in removing the heads of five banks last month during a $2.6 billion bailout, a lawyer for one of the sacked executives said on Monday.

Erastus Akingbola, former chief executive of Intercontinental Bank, is challenging Sanusi's actions at a Federal High Court in the commercial hub Lagos and seeking to be reinstated.

The case is seen as a litmus test of whether the central bank will have the backing it needs to push through a wider clean-up of Nigeria's banking system.

"The case we are putting forward is that the governor of the central bank was arbitrary in his power to remove him, was reckless about it," Akingbola's lawyer, Felix Fagbohungbe, told Reuters outside the court.

"The process of removal is very clear in the statutes. He ignored it, he abandoned it, he removed him without complying with the law ... He became the accuser, the prosecutor and the judge," he said.

The central bank injected 400 billion naira ($2.6 billion) into Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank a month ago and sacked their top management.

Sanusi has repeatedly said he acted within the law and that the basis for removing the bank chiefs was that they had allowed their banks to become so weakly capitalised that they posed a systemic risk to sub-Saharan Africa's second biggest economy.

"We made sure that everything we did was in complete compliance with the law," he told Reuters a week after the bailout. He had also said he expected legal challenges.

Akingbola has been declared wanted and is the only one of the five sacked chief executives not to have been charged by the Economic and Financial Crimes Commission (EFCC), Nigeria's anti-corruption police.

The heads of the four other banks and directors of Intercontinental -- who between them face charges ranging from recklessly granting loans to conspiring to manipulate share prices -- were in court on Monday for bail hearings.

Fagbohungbe said Akingbola was in Britain. He said his client's legal challenge -- being heard separately to the bail applications -- had been postponed to Sept. 24 as the judge meant to hear the case was not available.

Source: Reuters

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