First Bank renews N2b suit against govt, others over Ajaokuta

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WEDNESDAY, 30 JUNE 2010 BY JOSEPH ONYEKWERE


First Bank of Nigeria Plc has renewed its suit at the Lagos High Court against the Federal Government of Nigeria (FGN), over N1.98 billion debt owed it under the concession agreement reached between the FGN and Global Infrastructure Holdings Limited (GIHL) on Ajaokuta Steel Company Limited.


The suit, formerly before Justice Oluyinka Gbajabiamila, was later reassigned to Justice Owolabi Dabiri (former chief registrar of Lagos State), following the transfer of Justice Gbajabiamila to the Ikeja division.The suit number ID/98/09 which was filed before Justice Oluyinka Gbajabiamila, had GIHL, Delta Steel Company Limited and the National Iron Ore Mining Company Limited, all owned by the Federal Government, as co-defendants in the suit.


The amount is an outstanding sum of debt owed the bank as a result of credit facilities given to the investors to execute the concession agreement of the steel company.The bank had also sought interest on the N1.98 billion at the rate of 25 per cent per annum from December 1, 2008, until judgment delivered on the suit and thereafter at the rate of 10 per cent per annum until full and final payment of the debt.


According to the bank, pursuant to the divestment of ownership and control by the Federal Government over a number of its wholly or partially owned enterprises under its privatisation and commercialisation policy supervised by the Bureau of Public Enterprise (BPE), GIHL, the second defendant, became the concessionaire for Ajaokuta Steel Company Limited, the first defendant, Delta Steel Company Limited, the third defendant, and National Iron Ore Mining Company Limited, the fourth defendants.


The bank averred that due to the relationship that existed between it and the first, third and fourth defendants, it offered some credit facilities to them in the sum of N150 million overdraft, N6 billion stock replacement facility and $40 million for bill of collection and a series of guarantees was executed as security for the facilities.In addition to the security, the bank averred that the first defendant had in June 6, 2005, created a floating debenture over all its assets in favour of the claimant to secure all debts owed to the claimant.


Towards the utilisation of the facilities, the bank claimed that it financed the importation of diverse goods valued at N1.3 billion and to specifically secure the defendants’ indebtedness to the bank arising from the import finance, it was agreed that the shipping documents be kept with the bank who must give its consent before the goods is to be cleared from the seaport.However, the bank alleged that the first to third defendant fraudulently cleared the said goods from the seaport with the intention of nullifying the specific security for the said import finance, as the goods were cleared without any knowledge of the bank, which is still in possession of the shipping document.


According to the bank, after discovering the clandestine clearance of the goods, it protested to the first defendant and demanded an immediate repayment of the total naira value of the goods plus interest but the defendant did not give any response.Notwithstanding the demands, the bank alleged that the defendants failed to pay the debt and other drawings on their account, which had risen to N1.97 billion.


Besides, the bank averred that the defendants and their solicitors engaged the claimant and its solicitors in an ultimate futile efforts to stay their hands from the prompt recovery of the debt and in the course of which engagement, the defendants rather than liquidate the whole debt, only paid relatively paltry sum with the result that their total indebtedness to the bank as at    November 30, 2009 was in the sum of N1.98 billion.GIHL, which was forced out of the Ajaokuta concession agreement with the Federal Government in 2008 is said to have obtained loan facilities worth over N400 billion from a number of financial institutions in Nigeria.


It would be recalled that the Nigerian government recently won the first round of the suit filed by GIHL in a United States court challenging the cancellation of the concession agreement with the Federal Government.However in a notice of preliminary objection filed by the defendants, they contended that first, third and fourth defendants are agencies of the Federal Government of Nigeria and the Federal High Court is vested with the exclusive jurisdiction to entertain the suit.


The defendants contended that the Lagos High Court lacks the competence or the jurisdiction to entertain the claimant’s case as it is presently constituted, on its merit.The second and third defendants denied taking any part or giving their approval or consent to any intention or act allegedly geared towards nullifying the specific security for the claimant’s import finance.


Besides, the defendants contended that the claimant is speculative as to the amount outstanding against the third defendant as it has failed to specify the amount alleged outstanding against the third defendant.The defendants also contended that the claimant’s claim is premature, improper, incompetent and in the alternative without merit as it is an attempt at gold-digging and ought to be dismissed with substantial costs.Justice Dabiri has adjourned till July 14, 2010 for commencement of trial where witnesses are expected to testify.


http://www.proshareng.com/investors/company.php?ref=FIRSTBANK


(Source:Guardian)

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