MTN drags 18 banks to court over N22.3bn ‘Error’ transfer to customers

MTN Nigeria has dragged 18 commercial banks to Federal High Court for failing to refund over N22.3 billion ($53.7 million) erroneously sent to 8,000 bank accounts.

The fintech subsidiary of MTN Nigeria, Momo Payment Service Bank Limited (Momo PSB), said the erroneous transfers were caused by a computer glitch.

MTN’s MOMO payment Bank is seeking a judicial declaration that the money transmitted in mistake belongs to it, not the banks’ customers, in an initiating summons dated 30 May 2022 and filed before a Federal High Court.

According to reports, MoMo PSB experienced a major security breach barely a week after commencing operations, resulting in an N22 billion loss.

In a suit marked FHC/L/CS/960/2022 and filed on May 30, 2022, the PSB asked the court to declare that the deposits worth N22.3 billion belonged to it (Momo PSB) and not the banks’ customers.

The affected banks, listed as defendants in the suit, are Access Bank, Ecobank, Fidelity Bank, First Bank, First City Monument Bank, Guaranty Trust Bank, Heritage Bank, Polaris Bank and Providus Bank.

Others include StanbicIBTC, Standard Chartered, Sterling Bank, Suntrust Bank, Union Bank, United Bank for Africa (UBA), Unity Bank, Wema Bank and Zenith Bank.

The request formed part of the reliefs sought in the suit filed by Lotanna Okoli, a Senior Advocate of Nigeria, on behalf of MoMo PSB.

“A declaration that the deposits of an aggregate sum of N22,300,000,000.00 erroneously transferred by the plaintiff to the accounts of the customers of the defendant banks, having been done in error, belongs to the plaintiff and not the customers of the defendant banks,” the court filing reads.

“An order directing the defendant banks to each, individually, account for the sums available in their customers’ accounts and the sums which have been removed by the customers and are no longer available.

“An order directing the defendants’ banks to immediately return the aggregate sum of N22,300,000,000.00, less those funds that are no longer available, to the plaintiffs’ settlement account in the name MOMO PSB settlement account number: 2041379385 at First Bank Plc Samuel Asabia House 35 Marina, Lagos, from where the funds originated.

“An order directing the defendant banks to release all information, including account name information in respect of the accounts from which the plaintiff’s funds have been transferred to third parties, including the destination accounts and the banks in which they are held to assist in the tracing and recovery of those funds.”

In an affidavit supporting originating summons, Usoro Usoro, chief executive officer of MoMo PSB, said that on May 24, 2022, it was noticed that funds had been mistakenly transferred from its settlement account to various accounts in the banks.

Usoro further claimed that about 700,000 transactions were processed, with credits made into about 8,000 various accounts in the listed 18 banks.

Upon becoming aware of the incident, he said the MOMO PSB Ltd management responded by immediately shutting down the service to limit the impact.

He explained that the PSB engaged with the 18 banks for the commencement of recovery activities from the accounts of the various beneficiaries.

Usoro said MoMo PSB resorted to the court because of the insistence of the 18 banks that they needed a court order to reverse the deposits made into customers’ accounts.

The plaintiff, therefore, prayed to the federal high court to compel the 18 commercial banks operating in the country to make refunds.

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