4 September 2014

Nigeria: Court Stops First Bank From Disbursing N16 Billion Oil Funds

Lagos — A Federal High Court in Lagos on Wednesday restrained First Bank of Nigeria Plc and its subsidiary, FBN UK Limited from going ahead with plans to disburse N16 billion to petroleum trading firm, Arcadia Energy (Suisse) SA, and its shipping subsidiary, VTN Shipping Limited.

Justice Okon Abang, who made the interim mareva injunction while ruling in a suit filed by Capital Oil and Gas Industries Limited and its majority shareholder, Patrick Ifeanyi Ubah, held that the injunction became imperative owing to the need to preserve the res (subject matter) in the suit.

The judge further held that it would be in the interest of justice for First Bank and FBN UK to be restrained from disbursing the funds said to be in account number 2015774626 to Arcadia Energy and VTN Shipping pending the hearing and determination of the suit filed by Capital Oil and Ubah.

Specifically, the judge ruled that the funds should not and must not be disbursed to Arcadia Energy, VTN Shipping or any body whatsoever pending the hearing and determination of the suit.

The plaintiffs (Capital Oil and Ubah) had filed the suit through their lawyer, R.A Oluyede against Arcadia Energy, VTN shipping, First Bank and FBN UK.

According to the processes, the plaintiffs had specifically urged the court to stop the disbursement of the said N16 billion, which they claimed was about to be transferred to the said Arcadia Energy and VTN Shipping by the Assets Management Corporation of Nigeria (AMCON) as part of the continuous "hostile takeover of Capital Oil."

Justice Abang, in his ruling, had first dismissed the objections raised by the defendants to challenge the court's jurisdiction to entertain the suit.

The judge held that the defendants misconstrued the provision of the law with regard to the suit, and that the Federal High Court had jurisdiction to adjudicate in the suit.

The court also dismissed the point raised by the defendants that the motion for mareva injunction was an abuse of court process in that there were two other rulings by judges of the Federal High Court in respect of the same issue as in the instant suit.

According to the judge, the other suits referred to by the defendants had different parties from the instant suit.

Justice Abang specifically referred to the ruling of Justice Musa Kurya directing parties to maintain status quo, adding that the ruling was not specific.

Justice Abang, however, ordered the plaintiffs to file undertaken before the collection of the enrolled order to indemnify the defendants in the event that the order of mareva injunction stopping the disbursement of the said N16 billion ought not to have been made.

Ubah, in a supporting affidavit which he deposed to, recalled that Arcadia Energy had been doing business with his company in the last five years, and that the said Arcadia Energy had always granted credit facilities to his company in the process of doing mutually beneficial business together.

He added that by 2013, the size of credit granted to his company was very substantial due to temporary cash flow problem, which he claimed occurred as a result of investment in infrastructure and technology in anticipation of a proposed policy change by the Federal Government, which was eventually not implemented.

He added: "The huge investment in real assets caused illiquidity in the finances of Capital Oil, which was compounded by an attempt by some persons within Nigeria, utilizing their strategic positions in the Nigerian financial industry to carry out a hostile takeover of Capital Oil ownership from my family and I.

"This hostile takeover was executed under the cover of the recovery of alleged debts, claimed to be about $103 million, allegedly owed to Access Bank by Coscharis Motors Limited, which had allegedly been guaranteed by Capital Oil and myself," Ubah averred.

Speaking further, Ubah added that a Worldwide Freezing Order (WWFO) obtained by Access Bank before an English High Court, then caused panic in the financial industry worldwide among the creditors of Capital Oil including Arcadia Energy, who was immediately made victim of the order when a vessel laden with cargo for delivery to Capital Oil was arrested on the basis of the WWFO.

Flowing from that, Ubah said AMCON, purporting to have taken over the debts owed some banks by Capital Oil, and without any notice to him, then swiftly obtained an ex-parte interim order enabling it to take over the business and assets of Capital Oil.

He contended that it was even clear to AMCON that it had no statutory vires to take over his alleged debts to Access Bank because the debts were not in the category of debts which AMCON could lawfully take over.

Meanwhile, the matter has been adjourned to September 9 for hearing.

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