Nigeria: £2.556b Fraud Attempt - Supreme Court to Hear CBN's Appeal Against Petro Union Tomorrow

19 October 2020

The Supreme Court will tomorrow begin hearing on the appeal filed by the Central Bank of Nigeria (CBN) and Union Bank of Nigeria (UBN) against Petro Union Oil and Gas Company Limited (Petro Union) over an alleged £2.556 billion fraud attempt.

This is even as the directors of Petro Union will on Wednesday also face criminal charges at the Federal High Court in Lagos on the same matter, which has been established by the EFCC as an attempt to defraud CBN, UBN and indeed, the Federal Republic of Nigeria.

The case has garnered public attention, especially because the alleged attempt by Petro Union to swindle the CBN and UBN of £2.556 billion is strikingly similar to the P&ID directors' efforts to defraud Nigeria of $10billion.

The appeal at the Supreme Court is coming shortly after Nigerians eulogised a United Kingdom (UK) court for delivering impartial judgement in Nigeria's favour in the highly publicized P&ID $10 billion arbitration claim.

Prior to the UK judgement being delivered, there was apprehension in Nigeria that the UK Court could favour the claimant (P&ID), a European company, which had also corralled the support of some highly placed Nigerian government officials and lawyers who worked against the best interest of Nigeria in deliberately failing to put forward a good defence for Nigeria for pecuniary gains.

These fears were however laid to rest when the UK Court in its wisdom, having reviewed the case on its merit, delivered justice in the matter and awarded more than £1.5 million in favour of Nigeria.

The matter began in 1994 when Petro Union's allegedly fraudulently procured a cheque from a branch of Barclays Bank in the UK with a value of £2.556 billion and presented it at one of Union Bank's branches in Lagos, under the pretext that it was meant to construct three petro- chemical refinery complexes in Nige- ria and establish a bank.

While the required due diligence investigations were being carried out, one Mr. Okpala, the Managing Director of Petro Union, allegedly inundated the Bank and the CBN with visits and demands for the re- lease of the cheque.

Eventually, both the CBN and Union Bank advised Petro Union that Barclays Bank in the UK had been contacted and it confirmed that the cheque could not be given value to because the company that purportedly issued the cheque dated 29 December 1994 (a company, known as Gazeaft Limited) did not exist on the Register of Companies in the UK.

The response similarly affirmed that the account on which the cheque was drawn was closed on 21st September 1989 whereas the cheque was issued on 29 December 1994 - five years after the account was closed.

Despite the foregoing startling discovery and decisive response, Petro Union and Isaac Okpala persisted with their demands and this culminated in a petition by the company to the Lagos office of the EFCC, for alleged offences of stealing and criminal conversion against the CBN and Union Bank.

Following the petition, the EFCC investigated the allegation by interrogating the CBN through a letter dated 12th January 2005. In a letter dated 27th January 2005, The CBN responded to the query by the EFCC wherein it denied the allegations of Petro Union.

The EFCC also made other efforts to investigate the allegations including corresponding with Barclays Bank in the UK. Having concluded its investigation, the EFCC issued a letter dated 10th May 2005 addressed to the Managing Director of Union Bank exonerating the Bank from any wrongdoing.

However, in its desperation to use the allegedly forged cheque to per- petrate the fraud on CBN and Union Bank, Petro Union in February 2012 instituted an action at a Federal High Court, Abuja in Suit No. FHC/ABJ/M/104/2012: PETRO UNION OIL & GAS CO. LTD .V. CENTRAL BANK OF NIGERIA AND ORS., seeking sundry reliefs against (1) CBN, (2) Union Bank, (3) Hon. Minister of Finance and (4) The Attorney-General of the Federation following the allegation that Union Bank of Nigeria received the sum of £2,556,000,000.00 on behalf of Petro Union and transferred the sum of £2,159,221,318.54 to the CBN while retaining the sum of £396,778,681.46 as commission.

In support of this startling claim, Petro Union alleged that the money is kept in an account in the name of a company called Goldmatic Limited at the CBN and tendered a purported CBN Statement of Account of Goldmatic Limited.

Justice Abdu Kafarati of the Federal High Court, Abuja, before whom the claim was filed, accepted the purported CBN statement of Account as conclusive evidence that CBN had retained the money alleged to belong to Petro Union, ignoring the elementary fact that globally a central bank cannot open an account for a private entity the CBN is statutorily empowered to act as bankers to government and bankers to banks.

It was learnt that although Petro Union and its directors allegedly knew these facts to be false from the onset, they pursued the so-called fraud up to the Court of Appeal where they obtained judgement to establish that the £2.159billion was lodged in the coffers of the Central Bank of Nigeria.

Both the CBN and the Union Bank appealed to appellate courts to set the case aside, urging the courts to deliver justice especially when the truth of the alleged fraud had been uncovered following the arrest, detention and ongoing criminal prosecution of Petro Union and its officers at a Lagos Federal High Court.

The judgment obtained by Petro Union at the Federal High Court in 2014 for the sum of £2.556 billion also carries an interest of 15% per annum from 22nd June 1995 un- til payment.

Today, that judgment sum together with interest is in excess of £12 billion (about $15.5 billion) this is 50% more than the award in the P&ID case and represents 44% of Nigeria's foreign reserves today!

If upheld, the judgment will throw Nigeria into immediate bankruptcy as the country will not be able to meet its debt repayment obligations, pay for imports into the country and will result in a cataclysmic upheaval of the Nigeria financial system such as has never been seen before.

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