₦868 Million Loan Scandal: Lawyer Petitions CBN to Sanction Polaris Bank Over Alleged Withholding of Client’s Funds
A Fresh Storm in Nigeria’s Banking Sector
In a development that could once again test the integrity of Nigeria’s banking system, a Senior Advocate of Nigeria (SAN), Chukwuma-Machukwu Ume, has petitioned the Central Bank of Nigeria (CBN) to impose sanctions on Polaris Bank over the alleged unlawful withholding of ₦868 million belonging to his client, Kenchez Nigeria Limited.
In a strongly worded petition dated October 2, 2025, and acknowledged by the CBN the same day, Ume accused Polaris Bank of deliberately violating a binding bank guarantee and engaging in actions that he described as “an attempted economic murder and financial strangulation” of a longstanding customer.
The case, now attracting national attention, underscores growing public concerns over corporate governance and customer protection within Nigeria’s financial system — particularly amid efforts by the CBN to restore confidence following years of liquidity crises and bank mergers.
The Crux of the Dispute
According to the petition, Kenchez Nigeria Limited, a construction and engineering firm, had secured a loan from Lecon Finance Company Limited to purchase a 160-ton Terex Demag AC160-2 Crane — a vital piece of equipment for its operations in Nigeria’s industrial and oil services sector.
Following approval of the loan in June 2025, Polaris Bank reportedly issued a bank guarantee of ₦902.7 million in July to secure the facility. As part of the arrangement, Lecon Finance transferred ₦868 million to Polaris Bank as the guarantee bank, which was expected to disburse the funds to Kenchez.
However, despite fulfilling all preconditions — including providing a legal mortgage over a property in Port Harcourt — the company claims the funds were never released.
“Our client duly complied with all requirements, yet the bank has failed to honour its obligation,” Ume wrote.
“This unlawful action amounts to breach of contract, abuse of trust, and a violation of sound banking practice.”
A 22-Year Relationship Under Strain
In the petition addressed to the CBN Governor and copied to the Directors of Consumer Protection and Banking Supervision, Ume lamented that his client had maintained a 22-year banking relationship with Polaris Bank, characterized by trust and loyalty — now jeopardized by what he called a “gross betrayal of confidence.”
The lawyer further alleged that while the bank withheld the ₦868 million, interest of about ₦16.2 million per month continued to accrue on the loan, creating unnecessary financial pressure on Kenchez Nigeria Limited and threatening its operations.
“Withholding ₦868 million meant for the purchase of essential equipment has paralyzed a company that contributes significantly to local employment, commerce, and industrial activity,” Ume said.
“This situation not only jeopardizes the company’s survival but undermines investor confidence in Nigeria’s banking system.”
Allegations of Bad Faith and Regulatory Breach
The petition claims that Polaris Bank cancelled scheduled meetings five times, despite repeated attempts by Kenchez Nigeria Limited to reach a resolution.
Ume described the conduct as a deliberate act of bad faith, contravening Section 13 of the Banks and Other Financial Institutions Act (BOFIA), which mandates banks to maintain fair, transparent, and ethical dealings with their customers.
He urged the CBN to investigate Polaris Bank’s actions, emphasizing that failure to act decisively could set a dangerous precedent for the entire banking industry.
“The CBN must exercise its supervisory and disciplinary powers to safeguard depositor confidence and prevent similar acts from eroding trust in Nigeria’s financial system,” the SAN stated.
A Broader Economic Context
BRANDECONOMY analysis shows that the case highlights structural issues within Nigeria’s financial services sector, where corporate customers frequently complain of opaque transactions, delayed remittances, and arbitrary charges.
In recent years, the CBN has intensified regulatory oversight, introducing reforms to strengthen consumer protection, improve transparency, and promote accountability among deposit money banks.
However, reports of unresolved customer disputes persist — suggesting that institutional bottlenecks and weak internal controls continue to undermine regulatory progress.
Financial analysts warn that the withholding of customer funds, especially under a bank guarantee arrangement, poses reputational risks to the entire banking ecosystem and could deter both local and foreign investors.
The Legal and Regulatory Implications
According to financial law experts, if the allegations are proven true, Polaris Bank could face severe regulatory sanctions from the CBN, including fines, suspension of key executives, or potential litigation.
Under BOFIA 2020, the CBN has the authority to:
- Enforce restitution to affected customers;
- Revoke or suspend bank licenses for repeated misconduct;
- Direct banks to make refunds with accrued interest; and
- Mandate compliance audits to ensure systemic reforms.
“The CBN must demonstrate that customer protection is non-negotiable,” said one banking policy expert interviewed by BRANDECONOMY.
“A case like this tests not just one bank’s integrity, but the credibility of Nigeria’s entire financial regulatory system.”
The Call for Sanctions
In his petition, Ume urged the CBN to:
- Direct Polaris Bank to immediately release or refund the ₦868 million to Kenchez Nigeria Limited, along with accrued interest since August 4, 2025.
- Compel the bank to assume liability for all subsequent interest obligations — totaling ₦26,206,860.66 monthly — until full restitution is made.
- Initiate disciplinary measures against the bank to deter similar violations within the sector.
“This issue goes beyond one transaction,” Ume wrote.
“It speaks to the sanctity of bank guarantees, the foundation of trust that underpins commerce and finance. If banks can issue guarantees and later withhold funds, the entire financial system becomes unstable.”
Polaris Bank’s Silence and the Road Ahead
As of the time of filing this report, Polaris Bank had yet to issue an official response to the allegations. Repeated attempts to reach its Corporate Communications Department reportedly yielded no comment.
BRANDECONOMY understands that the CBN’s Consumer Protection Department has acknowledged receipt of the petition and may open a regulatory inquiry to determine the facts of the case.
If confirmed, the outcome could serve as a defining moment for financial accountability in Nigeria’s post-recapitalization banking environment — especially as the CBN under Governor Olayemi Cardoso continues to emphasize transparency, ethics, and customer trust as core principles of banking reform.
The Bigger Picture: Banking Ethics in a New Economy
The Polaris Bank petition arrives at a time when Nigeria’s financial sector is under renewed scrutiny.
- Bank lending has slowed due to liquidity challenges and high interest rates.
- Non-performing loans have increased across several institutions.
- And customer confidence remains fragile amid ongoing recapitalization policies.
For industry watchers, the Polaris-Kenchez case underscores the urgent need for:
- Clearer enforcement of CBN’s Consumer Protection Framework (CPF);
- Transparent resolution mechanisms for disputes between banks and customers; and
- Public disclosure of compliance penalties to promote deterrence.
The Nigerian banking industry, analysts say, must evolve beyond short-term transactional practices toward a trust-based system driven by ethics, compliance, and customer-centric governance.
BRANDECONOMY Insight: Why This Matters
The controversy surrounding the alleged withholding of ₦868 million reflects a larger confidence gap in Nigeria’s financial architecture.
At its heart lies a fundamental question: Can Nigerian banks be trusted to uphold contracts, honor guarantees, and protect customers’ assets in good faith?
As Nigeria’s economy pushes toward diversification and private-sector-led growth, the financial system must project credibility, fairness, and predictability — values critical to attracting investment and fostering inclusive development.
If left unresolved, the Polaris case could weaken the psychological contract between banks and their customers — the very foundation on which the success of a modern economy rests.
Conclusion: Rebuilding Trust in the Banking System
For over two decades, Kenchez Nigeria Limited reportedly banked with Polaris in confidence. Now, that trust has been severely tested.
Whether the CBN acts swiftly and decisively will determine not just the fate of one company but the credibility of Nigeria’s entire financial ecosystem.
As BRANDECONOMY observes, reforms without enforcement are rhetoric.
To strengthen public trust, regulators must ensure that no financial institution is too big or too connected to be held accountable.
Only then can Nigeria’s banking sector truly embody the values of transparency, fairness, and accountability that define a modern economy.
