Whether history ultimately judges Ayeni as a principal architect of the crisis or merely one of its most visible casualties may depend on facts yet to emerge fully in the public domain, as the documents seen in the current charges clearly indicated the then managing Director/CEO on whose desk the buck stops, as the person in charge of operations of the bank is now the star prosecution witness against the man who was just a board chairman and had no office in the bank during his tenure, like all chairmen of the bank before him.
This is the inside story of how a promising financial behemoth may have prepared for its own demise from inception; a story far more intricate than the widely publicised allegations surrounding its former Chairman, Tunde Ayeni.
At its birth in January 2006, Skye Bank Plc held immense promise. Industry observers saw it as a potential leader within Nigeria’s emerging Tier-2 banking category — ambitious, well-structured and strategically positioned to thrive in the post-consolidation banking era.
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The bank emerged from the sweeping banking consolidation exercise championed by Charles Soludo, then Governor of the Central Bank of Nigeria. The policy raised banks’ minimum capital base from ₦5 billion to ₦25 billion, compelling mergers across the banking industry.
Five banks came together to form Skye Bank Plc: Prudent Bank, EIB International Bank, Reliance Bank, Bond Bank, and Cooperative Bank.
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Individually, the banks were considered relatively stable and in good standing with regulators. Together, they were expected to form a formidable financial institution capable of competing effectively in the new banking order.
However, beneath the optimism lay structural cracks that would later widen into existential fractures.
Under the merger arrangement, each institution’s shareholding in the new entity was determined by the capital it contributed. Those capital declarations became the foundation upon which the new bank was built.
But according to insiders familiar with the merger process, this was where the first major problem emerged.
Barely a year after commencement of operations, concerns reportedly surfaced regarding the bank’s true capital adequacy position. Investigations allegedly revealed that EIB International Bank — owned by the Lagos State Government — had entered the merger with what insiders described as “bubble capital” amounting to approximately ₦700 million.
The discovery reportedly shocked representatives of the other merging banks on the board and management team.
Under the Share Purchase Agreement (SPA) executed by the merging institutions, any discrepancy exceeding ₦500 million was expected to trigger renegotiations concerning the affected shareholder’s standing within the new entity.
Sources claimed that when the anomaly was raised with EIB International’s promoters, an offer of landed assets was proposed as compensation for the shortfall. However, because such assets could not immediately translate into liquid capital, the bank allegedly continued to operate under mounting capital pressure.
According to several insiders, this marked the true beginning of Skye Bank’s long-term troubles.
“This was the beginning of Skye Bank’s problems,” one source familiar with the bank’s early history said. “Capital inadequacy and endless boardroom conflicts became recurring issues from that point onward.”
The Seeds of Boardroom Warfare
The merger agreement had also carefully distributed positions among the merging institutions.
Under the original arrangement: Prudent Bank produced the Managing Director/CEO, three Executive Directors and four Non-Executive Directors. EIB International Bank produced the Deputy Managing Director, two Executive Directors and three Non-Executive Directors, including the chairman of the bank. Reliance Bank produced one Executive Director. Bond Bank produced one Non-Executive Director and the Company Secretary. Cooperative Bank produced one Non-Executive Director.
It was under this arrangement that Musiliu Smith, representing EIB International, became the chairman, while Akinsola Akinfemiwa of Prudent Bank emerged as the managing director/CEO on the 1st of January, 2006 .
Notably, the alleged “bubble capital” issue reportedly surfaced during Smith’s tenure as chairman, years before Tunde Ayeni joined the board as a Non-Executive Director in 2008.
The controversy deepened mistrust among shareholders and reportedly triggered intense internal rivalries within both the board and the management team.
When Akinfemiwa decided to resign in 2010, the unresolved tensions resurfaced with greater intensity.
Under the merger agreement, replacing him with the Deputy Managing Director, Kehinde Durosinmi-Etti, would create a situation in which EIB International simultaneously controlled both the Chairman and MD/CEO positions — something critics argued violated the spirit of the original power-sharing arrangement.
Nevertheless, EIB International reportedly insisted on Durosinmi-Etti’s emergence as CEO and eventually prevailed.
That development further deepened divisions within the bank.
The following months brought another major transition. Following new corporate governance regulations introduced by the Central Bank of Nigeria limiting Executive Directors to 10 years and Non-Executive Directors to 12 years, Mr Musiliu Smith retired as chairman on 30 September, 2010 along with Mr Akinsola Akinfemiwa . He was succeeded by Morenike Onasanya on 10 October, 2010. Her appointment temporarily restored balance to the bank’s internal power structure: EIB International retained the MD/CEO role; Prudent Bank regained the Chairmanship. But stability proved short-lived.
The Emergence of Tunde Ayeni
Onasanya retired from the board on 13 December, 2011, having reached both the regulatory tenure limit and the age of 70.
Before her exit, she reportedly supported the emergence of Tunde Ayeni — then a non-executive director who had earlier joined the board of the bank sometimes in 2008 — as her successor.
The move immediately sparked fierce resistance from sections of the board, including then-MD/CEO Durosinmi-Etti, who reportedly backed another candidate, Micheal Tarfa, who was appointed as an independent director of the bank .
The board vote ended in a deadlock.
In the end, Onasanya cast the deciding vote that elevated Ayeni to the position of the chairman.
He thus assumed office within what insiders described as a deeply hostile corporate environment, marked by entrenched factions and long-standing mistrust. Industry insiders maintain that Ayeni’s tenure began under intense internal opposition. More so that the executive directors led by Kehinde Durosinmi-Etti voted for Mr Tafar. Relations between him and Durosinmi-Etti were reportedly strained from inception.
Durosinmi-Etti later resigned in May 2014, officially citing health concerns. Even though he chose to resign, it was alleged that he told the shareholders he represented that he was being forced out, further deepening the hostility against Ayeni from this block of bank investors.
Sources within the banking industry claimed Durosinmi-Etti left with lingering grievances over succession battles within the institution. His preferred successor reportedly lost out to Timothy Oguntayo, whose appointment enjoyed broader board support. From that point onward, insiders say, the Ayeni/Oguntayo leadership team operated under sustained pressure amid intense power struggles within and outside the institution.
The Controversial Loan Exposures
Much of the public scrutiny surrounding Ayeni later focused on loan facilities linked to him during his tenure. Financial analysts, however, argue that the matter is more nuanced than is often portrayed publicly. According to industry sources, the facilities were allegedly backed at the time by crude oil transportation contracts whose value was a little above $1.1 billion.
The loans were reportedly deployed towards major acquisitions, including: the purchase of Ibadan Electricity Distribution Company Plc, purchased for approximately $167 million; the purchase of the Yola Electricity Distribution Company Plc, acquired for a little above $59 million; and the later the successful bid for the acquisition of Nitel/Mtel for the sum of $252 million.
It should be noted that these significant level of investments was said to have been supported by Mr Ayeni’s group equity capital contributions of between 30 per cent to 40 per cent depending on the privatisation guidelines provided by the Bureau of public Enterprises .
The point has been made that it is not unusual for investors to source funds from the financial market to invest in worthwhile ventures to grow the economy and generate employment. This, analysts contend, was exactly what Ayeni did in each of these instances, as these payments were in actual facts made to the Federal Government of Nigeria after detailed and painstaking privatisation processes laid down were implemented to produce winners.
Indeed, the Federal Government was aware that all the 11 electricity distribution companies sourced funds from banks to invest in the distribution value chain of the power sector and, at that time, it was echoed as the best practice and a guide to privatising public assets in other African countries.
It is also a notorious fact that all of these investors ran into storms as a result of systemic rot and the operating environments they found themselves. The challenges, which were beyond their control, including but not limited to the inability of generating companies to generate enough electricity owing to the shortage of gas supply to the generating companies, obsolete transmission facilities, which made transmitting generated electricity to the DisCos a big problem, metering challenges and, most crucially, pricing regulation by the government, which made charging the appropriate price for electricity by DisCos impossible. All the investors in the DisCos, and not just Tunde Ayeni, ran into problems with their banks as a result of these challenges.
Analysts further contend that repayment obligations were reportedly being serviced until the cancellation of the crude oil movement contracts by the Federal Government in 2015, without any justifiable reason but the change from an PDP-led federal Government to that of the APC.
Observers also point to the fact that Ayeni was chairman of the board of Directors of the bank and not the Managing Director/CEO and was therefore not directly involved in the day-to-day operational authorisations of the bank.
Witch-Hunt or Accountability?
The continuing legal and regulatory scrutiny surrounding Ayeni remains sharply divisive within financial and legal circles.
Although critics say corporate governance failures under the bank’s leadership must be fully interrogated, however many finance watchers argue that the narrative surrounding him ignores the deeper historical dysfunctions that predated his emergence as a non executive director and even later as chairman of the board of the bank by years later .
To them, the roots of Skye Bank’s eventual collapse lay not in one individual, but in: disputed capital foundations; unresolved shareholder rivalries; succession battles; chronic governance instability; and years of corrosive boardroom politics.
In any case, his current ordeal is widely seen as unusual, as the present charges are largely a rehash of the 2019 case, which was brought before the courts, tried and with judgment delivered, restitution made, and the matter conclusively settled.
Whether history ultimately judges Ayeni as a principal architect of the crisis or merely one of its most visible casualties may depend on facts yet to emerge fully in the public domain, as the documents seen in the current charges clearly indicated the then managing Director/CEO on whose desk the buck stops, as the person in charge of operations of the bank is now the star prosecution witness against the man who was just a board chairman and had no office in the bank during his tenure, like all chairmen of the bank before him.
Aside these facts, Dr Tunde Ayeni, as the chairman of the board of the bank, and Timothy Oguntayo as the managing director/CEO, were jointly charged in 2019. They were tried together and discharged by the court. Industry watchers are, therefore, amazed at this current proceedings in which Ayeni has now been singled out, while Oguntayo is elevated as a prosecution witness.
In this unfolding drama, what appears increasingly difficult to dispute, is that the crisis that consumed Skye Bank Plc did not begin with Tunde Ayeni.
By many accounts, the seeds of the institution’s downfall may have been planted from the very beginning.
Tunde Oyesina is a lawyer and writer.
