The Propriety of Indiscriminate Freezing of Bank Accounts by Government Agencies – The Case of Adetokunbo Odutola v. Diamond Bank
The interference with the relationship between a bank and its customers by law enforcement agencies has long been an issue of great concern. In many cases, account holders are subjected to various forms of deprivation, hardship and inconveniences by activities of agencies of government in the course of the performance of their statutory duties with little or no regard to the law and the rights of citizens as guaranteed under the Constitution of the Federal Republic of Nigeria.
In carrying out these infringements on peoples’ rights, the law enforcement agencies (notably the Economic and Financial Crimes Commission (EFCC) and the Police) coerce the banks into freezing the accounts of persons purportedly under investigation without following due process.
The EFCC has in many cases instructed or requested banks to place a Post-No-Debit (PND) notice on bank accounts, while the Police routinely employ the issue of a purportedly legal instrument called “Bankers Order” to deprive account holders of the right to freely operate their accounts.
The banks, on the other hand, have over the time complied with such instructions without querying the legality of same for fear of intimidation, harassment and sometimes persecution in the hands of these law enforcement agencies. In most cases, the banks claim that they comply with such orders as a precautionary measure only.
In the light of the foregoing, the judgment of the High Court of Lagos State in Suit No. LD/ADR/800/17 – Adetokunbo Odutola v. Diamond Bank delivered on 16th December, 2019 is a laudable contribution to our legal jurisprudence.
The claimant, a lawyer, sued the defendant bank for freezing his account. The bank purportedly acted on an instruction by the EFCC requesting it to place a PND notice on the claimant’s account. The Court faulted the action of the bank stating that the account of a bank customer can only be frozen by a court order. The Court held that the EFCC cannot under any guise usurp the powers of the Court by asking the bank to freeze an account without following due process. The Court found the action of the bank to be wrongful and awarded damages to the sum of twenty-five million naira (N25,000,000.00) against the bank.
It is unfortunate that the bank has incurred such liability for acting on the instructions of the EFCC. The lesson for the defendant bank in this case (and other banks) is that notwithstanding the pressure from law enforcement agencies, they must stand firm and insist on full compliance with the law in dealing with such matters.
In closing, it is recommended that banks should hold the law enforcement agencies responsible for such infractions by instituting third-party proceedings against law enforcement agencies in cases such as this in order to ensure that the liability arising from such infractions are placed at the feet of the government agency responsible for same.
About the Author
Mr. Olawumi Alajiki is a Managing Associate at Chris Ogunbanjo LP. He heads the Litigation department of the Firm. He has extensive experience in advising both private and commercial clients in relation to a variety of commercial disputes, including pursuing, and defending all types of contractual disputes, shareholder disputes, debt recovery and enforcement action. He is also experienced at giving general litigation advice.
You can contact him at ola.alajiki@chrisogunbanjo.com
