VZCZCXYZ0029
RR RUEHWEB

DE RUEHOS #0034 0261236
ZNR UUUUU ZZH
R 261236Z JAN 09
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0450
INFO RUEHUJA/AMEMBASSY ABUJA 0080
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS LAGOS 000034 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN 
DOC FOR 3317/ITA/MAC/OA/KBURRESS 
DOC FOR 3310/USCS/OIO/ANESA/CREED 
TREASURY FOR RHALL, DPETERS 
STATE PASS EXIM FOR JRICHTER 
 
E.O. 12958: N/A 
TAGS: EINV EFIN NI
 
SUBJECT: NIGERIA: FCS HELPS COMPANY OBTAIN RELEASE OF FUNDS FROM 
BANK 
 
Ref: Lagos 426 
 
¶1. (SBU) Summary: Oceanic Bank refused both to pay interest on a USD 
1 million dollar deposit made by U.S.-based Carmen Consulting 
Nigeria Ltd and to transfer the funds to the United States at 
Carmen's request.  Oceanic provided misleading instructions for the 
release of the funds and even attempted to block the company from 
transferring the funds to another bank.  Mission Nigeria, through 
the Foreign Commercial Services, successfully advocated for the 
transfer of the fund. End Summary. 
¶2. (SBU) In a teleconference with EconOffs and CommercialAttache on 
December 5, 2008, Constance Newman and Michael Russell of U.S.-based 
Carmen Consulting discussed Oceanic Bank's refusal to release 
approximately USD 1 million to Carmen Consulting Nigeria Ltd. (a 
joint venture 96 percent owned by Carmen Consulting) from their 
deposit account or to pay interest on the funds. The funds had been 
deposited by Carmen on November 5, 2008, at Oceanic's Yenegoa Branch 
following payment by Bayelsa State to the company for services 
rendered. Bayelsa State Government maintains an account at the same 
Yenegoa Branch. 
¶3. (SBU) According to Russell, Oceanic refused his request to 
convert approximately 90 percent of the funds to dollars and to 
transfer the money to the United States.  The Yenegoa Branch Manager 
correctly stated that, under Nigerian law, Russell as one of the two 
directors of Carmen's Nigerian subsidiary needed to acquire a 
Nigerian residency permit prior to transferring funds out of the 
country.  He then suggested that the bank would transfer the funds 
if the Carmen subsidiary were to add another Nigerian cosigner to 
the account.  When Carmen did so, the Branch Manager told Russell 
that that he still could not transfer the funds to the United 
States.  The Branch Manager's next two suggestions were that Russell 
remove himself as a cosigner from the account and that he resign as 
a board member of Carmen's Nigerian subsidiary in order to achieve 
the transfer. Oceanic also would not allow Carmen to draw on the 
account to cover the company expenses in Nigeria until Russell 
received his residency permit. When Russell initiated the transfer 
of the funds to another bank, the Yenegoa Branch Manager and a 
Lagos-based Executive Director of Oceanic said Carmem did not have 
the right to transfer the fund and threatened to return the funds to 
Bayelsa State if Russell pursued the transfer. 
¶4. (SBU) CommercialAttache confirmed that transferring the funds 
from Oceanic to another bank was within the company's rights and 
intervened with Oceanic on Carmen's behalf. After repeated contacts 
by CommercialAttache, Oceanic relented and authorized the transfer. 
 
¶5. (SBU) Comment: Cases of Nigerian banks' not allowing their 
customers to withdraw funds are not uncommon in the Nigerian banking 
system.  This practice can be attributed to the fierce competition 
among banks to increase their deposit portfolios, the desire to 
shore up their books at particular points in the accounting year, or 
the simple need to use customer deposits interest free. (Ref A) 
Incompetence among middle level managers is also a serious and 
widely-recognized concern, as is the low level of compliance to 
banking standards and procedures by distant bank branches. End 
comment. 
 
¶6. (U) This cable has been cleared with Embassy Abuja. 
BLAIR