• Saturday, May 25, 2024
businessday logo


Supreme Court adjourns till October 7 hearing in $15bn Petro Union fraud case

Currency saga: Is supreme court the scapegoat?

Justice Musa Dattijo Muhammad-led panel of the Supreme Court of Nigeria on Monday July 5, 2021 adjourned hearing in the $15billion Petro Union fraud case to October 7, 2021. “It has been the policy of this Court to give priority to any matter that will affect the economy of this country, Justice Muhammad firmly declared.

The Petro Union case in which the Appellants are asking the Supreme Court to set aside a £2.556 billion judgment entered by the Federal High Court in 2014 against the Central Bank of Nigeria (CBN), Union Bank of Nigeria, the Minister of Finance and the Attorney-General of the Federation came up at the Supreme Court on Monday, July 5, 2021.

The judgment, which Petro Union allegedly obtained by fraud was given jointly and severally against all the four Respondents (that is CBN, Union Bank, Minister of Finance and Attorney-General of the Federation) and attracts interest at the rate of 15percent per annum between 1994 and 2014 and thereafter at the rate of 10percent per annum until it is paid. Today, the total judgment sum is about $15.5 billion.

The Petro Union saga commenced in 1994 when the company 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 petrochemical refinery complexes in Nigeria and establish a bank. While the required due diligence investigations were being carried out, one Mr. Okpala, the Managing Director of Petro Union, inundated the Bank and the CBN with visits and demands for the release of the cheque.

Read also: Baobab MFB plans investment in technology to boost customers business

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.

The lingering controversy over how the proceeds was to be shared and who had the right to represent Petro Union came up again when the case was called, with two lawyers – Joe Kyari Gadzama, SAN and Onyechi Egwuonwu – announcing separate appearances for Petro Union.

Egwuonwu informed the court that he was briefed to institute the case leading to the judgment at the Federal High Court and that when the matter got to the Court of Appeal, he invited Gadzama to lead the legal team for Petro Union as the “instructing counsel”. He also told the court that following his application to disqualify Gadzama from further appearing in the matter and to be disbarred, Gadzama hurriedly informed the court of his intention to withdraw his appearance in the case and followed this up by filing an affidavit to the same effect.

He argued that, having done so, Gadzama is estopped from changing his mind and continuing to act as counsel to Petro Union. He further argued that having been instructed on a contingency fee basis which means that his fee is tied to a portion of the judgment sum and having been instructed through an irrevocable power of attorney, he could not be pushed out of the case.

After the Court tried in vain to get the two warring lawyers to amicably resolve their disagreement, the court enquired from three persons allegedly representing Petro Union who their lawyers are and they each confirmed in open court that their lead lawyer is now Gadzama and that they had asked Egwuonwu to work together with him to no avail.

Following this confirmation, the Court informed Egwuonwu that he could no longer be heard in the proceedings. This paved the way for Chief Adegboyega Awomolo, SAN leading other senior lawyers for the Appellants, to introduce his pending application. Lawyers for CBN, Minister of Finance and the Attorney-General of the Federation, Damian Dodo, SAN and Ghazali, SAN informed the Court that they were not opposing the application of the Appellants but Gadzama told the Court that he had filed a preliminary objection to the application.

In view of the contentious nature of the application, the court adjourned hearing in the case to 7th October, shortly after the Court resumes from vacation in demonstration of its intention to give priority to the case likely to have a huge impact on Nigeria’s fledgling economy.

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 perpetrate the fraud on CBN and Union Bank, Petro Union in February 2012 instituted an action at a Federal High Court, Abuja 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 £2.556billion 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 the 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.

The Federal High Court, Abuja Judge before whom the claim was filed, Honourable Justice Abdu Kafarati 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.

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 £2.159 billion was lodged in the coffers of the Central Bank of Nigeria.

Union Bank appealed to appellate courts to set the case aside, urging the courts to deliver justice in the matter 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 15percent per annum from 22nd June 1995 until payment. Today, that judgment sum together with interest is in excess of £12 billion (about $15.5 billion).