MTN subsidiary goes to court and seeks repayment of N22 billion from 18 banks

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Momo Payment Service Bank Limited (Momo PSB), the fintech subsidiary of MTN Nigeria, has taken 18 commercial banks to court to recover 22.3 billion naira “transferred by mistake to 8,000 banking customers”.

The company said the erroneous transfers were due to “system exploitation”.

According to reportsMoMo PSB suffered a major security breach just a week after starting operations, resulting in a loss of N22 billion.

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 belong to it (Momo PSB) not bank customers.

The affected banks, listed as defendants in the lawsuit, 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 claim was part of the relief sought in the lawsuit brought by Lotanna Okoli, Nigeria’s lead attorney, on behalf of MoMo PSB.

“A statement that the deposits in the aggregate sum of N22,300,000,000.00 mistakenly transferred by the plaintiff into the accounts of the defendant banks’ customers, having been made in error, belong to the plaintiff and not to the customers of the defendant banks “, reads the court filing.

“An order directing the defendant banks to return each, individually, an account of the sums available in the accounts of their customers and of the sums which have been withdrawn by the customers and are no longer available.

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

“An order directing the defendant banks to disclose all information, including account name information, regarding the accounts from which plaintiff’s funds were transferred to third parties, including the destination accounts and the banks at which they are held to assist in the search and recovery of these funds.

In an affidavit in support of the original subpoena, Usoro Usoro, Managing Director of MoMo PSB, said that on May 24, 2022, it was noticed that funds were mistakenly transferred from his settlement account to various bank accounts.

Usoro further claimed that around 700,000 transactions were processed, with credits disbursed to around 8,000 various accounts at the 18 listed banks.

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

He explained that the PSB is committed to the 18 banks for the start of the activities of recovery of the accounts of the various beneficiaries.

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

The plaintiff therefore requested the Federal High Court to compel the 18 commercial banks operating in the country to make repayments.


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