In a shocking twist that has sent ripples through the financial sector, Lotus Bank has reported a staggering loss of N1,134,491,604.31 due to a major system glitch that allowed customers to execute transfers without proper debit instructions on their accounts.
This major blunder has prompted the bank to take legal action, as they have filed an application before the Federal High Court in Lagos against 45 financial institutions across the country. Lotus Bank is determined to recover the lost funds, leaving other banks on high alert.
According to an affidavit sworn by Gbenga Ojerinde, a Fraud Investigation Officer at Lotus Bank, and filed by Lagos lawyer Adebayo Oyagbola, the bank is taking this matter very seriously. Mr. Ojerinde disclosed that, due to his position, he has the authority to represent the bank’s interests in court.
In his statement, he reassured stakeholders that Lotus Bank is a duly registered company with the Corporate Affairs Commission and holds a license from the Central Bank of Nigeria to provide financial services.
The Respondents are banks and other financial institutions licensed by the Central Bank of Nigeria to provide payment services, banking and financial services and/or mobile money services.
On the 20th July 2024, the Lotus Bank experienced a system glitch due to a rollback fix carried out on its e-Bills Pay platform to address a complaint.This fix led to unexpected behaviour which allowed customers with no-debit instructions on their accounts to initiate transfers without their accounts being debited,as a result of the foregoing,some customers of the bank made multiple transfers to the Respondents financial institutions listed before the court beyond the balances in their accounts.
This glitch affected 718 customers of the bank who made successful withdrawals and transfers from their accounts without those accounts being debited.
The initial financial exposure of the bank from this incident is about N1,134,491,604.31 One Billion, One Hundred and Four Hundred and Ninety-One Thousand, Six Hundred and Four Naira. Thirty-One Kobo) as is more comprehensively detailed in the schedule of accounts Exhibited before the court.
Subsequently, Lotus bank seeks the Order of the Court to place restrictions on the said accounts pending the determination of the bank’s motion on Notice dated 22nd July 2024. Unless the bank’s application is granted an accelerated hearing, there is an imminent risk that the sums fraudulently transferred into the respective bank accounts domiciled with the Respondents financial institutions would be dissipated.
Any delay in the hearing of this application will severely and irreparably affect the business of the bank.
The bank undertakes to pay damages if this application turns out to be frivolous.
An interim order of this court directing, mandating and compelling each of the Respondents financial institutions to attach the amounts standing to the credit of the named accounts held with each of them, as listed in the schedule of the accounts contained in Exhibit attached to the Affidavit in Support of this Application, deposed to by Gbenga Ojerinde, which amounts were domiciled with the different Respondents in respect of the un-debited transaction amounts carried out due to a system glitch on 20th July 2024 and which said amounts are in the aggregate sum of N1,134,491,604.31 (One Billion, One Hundred and Thirty-Four Million, Four Hundred and Ninety-One Thousand, Six Hundred and Four Naira, Thirty-One Kobo) pending the hearing and determination of the Motion on Notice in this suit.
Consequently, the court has acceded to the request of the bank. This shocking development raises concerns about the security measures in place at financial institutions and the potential implications for customers. As this situation unfolds, all eyes will be on the court proceedings and the future of Lotus Bank in a volatile market
