‘How Seplat used firm to obtain Access Bank $85.8m loan’

Access Bank and Seplat Petroleum Development Company are locked in a dispute over  an alleged $85.8million debt, but judicial watchers have condemned an attempt to blackmail the bank’s lawyer Kunle Ogunba (SAN). Legal Editor JOHN AUSTIN UNACHUKWU and Deputy News Editor JOSEPH JIBUEZE examine the contending issue.

 

 

Seplat Petroleum Development Company Plc utilised the loan obtained by Cardinal Drilling from Access Bank, court documents have shown.

According to documents filed in court by the bank through its lawyer Kunle Ogunba (SAN), Cardinal Drilling is a subsidiary of Seplat.

Seplat purportedly wrote a petition against Ogunba to the Legal Practitioners Privileges Committee (LPPC) and the Legal Practitioners Disciplinary Committee of the Nigerian Bar Association (NBA).

It alleged that Ogunba misled the court in obtaining an order for Access Bank to take over Seplat’s offices at 16A Temple Road, Ikoyi as receiver/manager over a multimillion naira debt.

Seplat, in the petition, claimed that Access Bank could not hold it liable for a loan obtained by a third party (Cardinal Drilling).

The oil firm faulted Ogunba’s claim that Seplat employed Cardinal Drilling “as a veritable ‘vehicle’, ‘smokescreen’, and/or ‘shell company’ for the obtainment of the facilities from the plaintiff (Access Bank)”.

But contrary to Seplat’s claim that there was no documentary information exhibited to buttress the claim, findings from the court processes filed by Access Bank showed that the plaintiff provided proof of Seplat benefiting from the loan.

The proof

After Cardinal Drilling obtained the loan and disbursed it, the company passed the obligation onto Seplat.

This is as shown in the company’s statement of account, which Access Bank exhibited in court.

Sources close to the bank said Seplat was paying back the money to the bank by proxy.

The bank has details of Seplat transferring funds into Cardinal Drilling’s account, which in turn would transfer it to Diamond Bank (which was later acquired by Access Bank), as loan repayment.

To the bank, Seplat is the real debtor, which was why the bank and its lawyers joined Seplat in the debt recovery suit and obtained and executed the order against it, which is now a subject of an appeal.

Access Bank is trying to recover legacy debts following its acquisition of Diamond Bank.

The current debt situation relates to a facility taken by Cardinal Drilling to execute some jobs of which Seplat was a direct beneficiary.

Cardinal Drilling Services Limited took the loan from Diamond Bank to purchase four rigs, which in court papers are identified as Rigs 101, 201, 202 and 203.

Court documents further show that Cardinal Drilling secured the loan with a fixed and floating debenture over its assets, which became the debenture.

According to the documents, the rigs were subsequently used to provide drilling services to Seplat, thereby directly benefitting from the deployment of the rigs, which the loan was used to provide.

In the court filings, it was stated that CDS 101 and 201, two of the rigs, were deployed into operation for the 2019 Seplat work programme.

All the four rigs purchased with the loan were said to be critical to Seplat’s future drilling plans.

Trouble started when Cardinal Drilling could no longer service the loan, which is now calculated to be in the region of $85.8 million.

However, Seplat denies that it is a party to the loan and wants to be exempted from it, having been obtained by Cardinal Drilling Services.

Seplat’s lawyers argue neither the oil firm nor its chairman Dr Orjiakor provided any guarantees or indemnities on behalf of the company.

But, as court records show, this strategy may have been a part of the intrigues used to avoid paying back bank loans.

Access Bank is insisting that there is inter-company relationship between Seplat and Cardinal Drilling as both companies are jointly promoted by Orjiako.

“SEPLAT is a sister company to Cardinal, jointly promoted by Orjiako who is the alter ego of the two companies,” the bank insists.

The bank has exhibited the details of the transfers between Cardinal Drilling and Seplat towards repaying the loan, an obligation which they cannot now meet.

 

The order Access Bank/Ogunba executed

Justice Rilwan Aikawa of the Federal High Court in Lagos, in a ruling delivered on December 24, 2020, restrained Seplat and other defendants from tampering in any way with the company’s assets.

Ruling on the application by Access Bank, the judge granted “an order of interlocutory injunction restraining the defendants/respondents, their agents, servants, cronies and/privies by whatever name called from disposing of, selling, mortgaging, pledging or otherwise transferring, appropriating or dealing with the pledged assets of the defendants/respondents…”

The court noted “the vested right of the plaintiff/applicant as the beneficiary of the Deeds of Fixed and Floating Debenture dated 13th March 2012, 24th of January, 2014 and 16th December, 2014 respectively, and indeed the appointor of a receiver/manager over pledged assets (belonging to the defendants/respondents) pending the hearing and final determination of the suit”.

Justice Aikawa further granted an order directing the Assistant Inspector-General of Police, the Commissioner of Police and other officers in Lagos “to assist the receiver-manager in his lawful duties”.

In opposition to the application, Seplat’s lawyers raised several issues, including whether the first defendant (Seplat) is privy or the actual beneficiary of the loan in contention.

The lawyers also raised issues as to the relationship between Seplat and Cardinal Drilling Services Limited (second defendant), the role of Dr Ambrose Orjiako and Kalu Nwosu (third and fourth defendants), as well as the status of the loan itself – whether it was hinged on fixed assets or floating debenture or both.

In granting Access Bank’s application, Justice Aikawa held: “In my view, all these are issues which touch the substance of the case and should therefore be reserved for substantive trial.

“It is my opinion that an attempt to delve into any of them at this stage has the potential and danger of determining substantive issues at this interlocutory stage, a tendency which has been frowned upon by the appellate courts.”

Citing several authorities, the judge said he would refrain from making any comments on the issues until after the hearing of the originating motions.

Justice Aikawa noted that the plaintiff sought an interim intervention of the court by way of Mareva injunction, adding that it was primarily intended to secure assets of the defendant within the court’s jurisdiction and not final.

“Upon perusal of the respective processes and taking a cue from decided cases, it is obvious that the plaintiff has an action against the defendants. The plaintiff displayed its fear that the defendant will dispose of their assets…,” the judge said.

The court also took into consideration the bank’s undertaking to pay damages for injury or losses occasioned to the defendants if it is later discovered that the application upon which the order is based is “frivolous” or “a sham”.

Justice Aikawa added: “There is no evidence of suppression of any material facts by the plaintiff in this application.

“Taking all these into consideration, it is my view and I so hold that the balance of convenience in this circumstances tilt in the favour of the plaintiff/applicant.”

 

Bid to blackmail Ogunba condemned

Sources close to the bank say rather than Seplat repaying the loan or awaiting the outcome of its appeal on the matter, there is a bid to tarnish the image of Ogunba or intimidate him by writing petitions against him in a bid to frustrate him as Access Bank-appointed receiver-manager.

The petitioner has also embarked on media articles to further portray Ogunba in a bad light and mount pressure on the LPPC and the NBA to sanction him.

One of such articles was written by one Sampson Olusola and published on an online medium, with the headline: “Kunle Ogunba Again: Caesar’s Wife Must be Above Suspicion.”

The writer went on to describe Ogunba with terms as “devil” in a “temple”.

The article concluded with the words: “His Lordship, the CJN, who also chairs the LPPC and the President of NBA, Olumide Akpata, must swing into action and treat this matter with dispatch.”

But Access Bank and Ogunba insist they acted on a valid court order, adding that the judge, despite objections by Seplat’s lawyers, granted the bank’s application.

The issues raised in the purported petition, which are yet to be officially served on Ogunba for his response, but which are being circulated on social media and legal circles, were also raised before the judge, who dismissed them.

The judge, among others, held: “There is no evidence of suppression of any material facts by the plaintiff in this application.”

Also noteworthy is the fact that the petition against Ogunba was written even before the ruling on Seplat’s application to discharge the order made by Justice Aikawa was given.

 

Seplat’s petition was submitted on December 18, 2020, while Justice Aikawa delivered his ruling on December 24, 2020.

Judicial watchers see an attempt to blackmail Ogunba over an earlier petition written against him by Honeywell Group, which led to the LPPC striping him of his SAN rank and later restoring it.

The sponsored reports and opinion articles on Seplat’s petition refer to the Honeywell petition.

But the articles, such as the one by Sampson Olusola, ignore the fact that Honeywell’s petition was found to be unmeritorious and that Ogunba was eventually cleared of any wrongdoing in his conduct of the case.

Besides, Honeywell also lost the case at the Appeal Court – the case which formed the basis of the petition.

In effect, Ogunba also got the Court of Appeal’s clearance despite the injustice of his rank being stripped, although it was restored within a year.

Besides, even before the LPPC restored Ogunba’s rank, the NBA LPDC, after investigating the petition, also cleared the SAN of any wrongdoing.

The NBA dismissed Honeywell’s petition for not disclosing any prima facie case of professional misconduct against the insolvency practitioner.

Observers are worried that lawyers are being blackmailed with petitions over issues that should be subjects of appeal or matters that should be decided by the courts.

They also see it another case of shooting the messenger and as the tactics of some powerful debtors who will rather intimidate lawyers for doing their jobs instead of paying back huge loans they undeniably took from banks.

Such debtors, the Federal Government has said on numerous occasions, are a menace to the economy and should be made to face the consequences of their actions rather than being indulged.

To them, the actions of such debtors should be deplored and the LPPC and LPDC of the NBA ought not to give such petitions emanating from them any serious consideration.