In an unexpected twist that has rocked 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 catastrophic error has not only jeopardized the bank’s financial stability but has also set off a legal domino effect involving 45 financial institutions across Nigeria.
The debacle began on July 20th, 2024, when a routine fix on Lotus Bank’s e-Bills Pay platform resulted in a system glitch. This malfunction enabled 718 customers to make multiple transfers to other banks without their accounts being debited, effectively giving them access to funds they did not possess. The glitch, described as a “rollback fix,” spiraled out of control, leading to unanticipated consequences and substantial financial exposure for Lotus Bank.
In response to this grave situation, Lotus Bank has swiftly taken legal action. The bank, represented by Lagos lawyer Adebayo Oyagbola, has filed an urgent application before the Federal High Court in Lagos. The application seeks an interim order to freeze the accounts across 45 banks where the un-debited funds were transferred. The court, recognizing the urgency of the matter, has agreed to hear the bank’s motion on notice filed on July 22, 2024.
Gbenga Ojerinde, a Fraud Investigation Officer at Lotus Bank, swore an affidavit detailing the gravity of the situation. He emphasized the bank’s commitment to recovering the lost funds and reassured stakeholders of the institution’s compliance with all regulatory requirements. Mr. Ojerinde, in his affidavit, noted that Lotus Bank is a duly registered entity with the Corporate Affairs Commission and is licensed by the Central Bank of Nigeria to provide financial services.
According to the affidavit, if the court does not expedite the hearing and grant the bank’s application for an interim order, there is a substantial risk that the funds fraudulently transferred into accounts held with the respondent banks will be dissipated. The potential delay in recovering the funds could irreparably harm Lotus Bank’s business operations.
The court’s decision to grant Lotus Bank’s request to place restrictions on the affected accounts marks the beginning of what promises to be a long and complex legal battle. As the financial sector braces itself for the fallout, questions are being raised about the adequacy of security measures in place at banks and the potential implications for customers who may be caught in the crossfire.
As this situation unfolds, the eyes of the financial world are fixed on Lotus Bank. The outcome of these legal proceedings will not only determine the bank’s future but could also have far-reaching implications for the financial stability of the Nigerian banking sector. In the meantime, Lotus Bank has pledged to cover any damages should their legal pursuit be deemed unwarranted, signaling their determination to rectify this unprecedented blunder.
In a market already fraught with volatility, this development serves as a stark reminder of the fragile nature of financial security and the ever-present risks lurking behind digital banking.
