Crisis of confidence has rocked construction giant, Setraco Nig. Ltd between it’s Nigerian partner, the family of the late Ini Umoru and a Lebanese, Engineer Said Fayez Khalaf. The crisis has nudged both parties to the law court.
The family of late Ahaji Umoru, the majority shareholder, plaintiff in the case, is suing the Lebanese partner, for alleged fraudulent dealings.
At the resumed hearing of the case on Tuesday, Justice Ahmed Mohammed of a Federal High Court, Abuja, fixed December 12 to resolve the question of who the true legal representation of the company.
Counsel to the plaintiff, family of Umoru, Mike Ozekhome (SAN), told the court that he represents Setraco Nigeria, by virtue of his client (Umoru’s) being the majority shareholder of the Nigerian company.
He was however opposed by Khrushchev Ekwueme and one B. Nwapi who claimed to also represent the company.
Justice Mohammed after taking submissions from the three lawyers said the case suffered many adjournments and he needed to first resolve the issue of legal representation before going ahead with the substantive matter.
He therefore adjourned to December 12 for a ruling on the true counsel to the company.
The Umoru family in a suit marked:HC/ABJ/PET/6/2018, is specifically challenging the alleged dubious process by which Khalaf acquired the majority stake in SNL and pressing claims against Khalaf for civil fraud and seeking declaratory and injunctive reliefs against some specific actions and transactions.
Following an interlocutory application filed by their lawyers, Justice Mohammed gave an interim order on February 22, 2018 directing parties to maintain status quo until the interlocutory application was heard
Khalaf, who is said to be back in Lebanon, is alleged to be frustrating the smooth running of the company through his cronies holding some board and management positions in the company.
He is accused, among other things, of preventing important resolutions from being taken by not attending board meetings and voting against decisions required for the seamless management of the company through proxies; harassing and threatening SNL expatriate Lebanese employees with forced resignation, thus making realization of company objectives difficult; and, provocative correspondences with SNL’s bankers and suppliers to frustrate genuine business transactions such as renewal of credit facilities.
It is also being alleged that despite these concerted efforts by the Khalafs to ensure that the company is unable to meet its obligations to regulatory agencies and other stakeholders, “the company is doing well judging by all performance indices and when compared with their peers in the construction industry.
The plaintiff stated that the business relationship between him and the defendant started more than four decades.
He averred that since then the defendants had engaged in a systematic plot to assume the status of a majority shareholder in Setraco Nigeria Limited with a view to eventually taking over the company from his Nigerian partner.
Khalaf is also alleged to have assigned contracts won by SNL to other companies in which he has interests without the consent of the board of SNL and also without proceeds shared with SNL.
Listed among the other entities are Setramech/Levant Construction Company Limited and Rockbridge Construction Limited.
Khalaf is accused to unilaterally fix a charge ranging from 7-15% of contract fees on all revenues (including unearned revenue like mobilization for awarded contracts) of SNL as “service fees”, thereby earning double compensation for his role as a director.
According to the claim before the court, the total of such fees earned from February 18, 2008 to July 6, 2015 when it was discontinued, following the intervention of the son of the late Chairman, Alhaji Inu Umoru, who is the new chairman, Engineer Abu Inu Umoru (the plaintiff), amounted to approximately USD27m.
The plaintiff claimed that SNL got four road contracts from the Kwara State Government from 2004 to 2012 totaling a contract sum of N8.43bn, which were seconded for execution to Setramech/Levant without the knowledge of the partner, Alhaji Inu Umoru (deceased). Khalaf was accused of deploying SNL’s funds, equipment and personnel in executing these contracts.
Going by the claims before the court, SNL built a metallurgical fabrication workshop at Mpape to aid in the production of formwork and other ancillary fabrications, but that Said Khalaf floated a company then called Global Equipment Solutions (GES) Limited and instructed that the new company should take over the assets of SNL workshop in June 2009.
The plaintiff further claimed that the value of the workshop (aside the building) was N82.6m, and that without revaluation of the assets and consent of Alhaji Inu Umoru, Khalaf caused SNL to cede the entire workshop to GES at a paltry sum of N54m.
Furthermore, it was claimed that GES started fabricating for SNL without a contract but forwarded debit notes at will without proper accounting procedures.
SNL, as claimed, paid N2.53bn to GES from 2009 to 2017 for mostly unverifiable jobs; in addition to the claim that the liquidated GES in 2017, when SNL’s financial situation could no longer support the pilfering, sold all the equipment including the restaurant furniture and fittings, which had nothing to do with the workshop, without paying their net indebtedness to SNL, which is currently in excess of N379m.
The other claims, among many more, are as follows:
·That Said Khalaf incorporated over 25 different companies within and outside Nigeria in the last 41 years to do business solely with SNL without informing his partner and without approval of the board of SNL. The total sum, owed by these companies to SNL with verifiable evidence, is in excess of N4bn while those with inconclusive evidence are in excess of N5bn
·That he (Khalaf) engineered a kangaroo technological support deal by which he claimed to be rendering technical support via Setraco International Holding (SIH) to SNL; and, that the deal was non-existent on ground but only on paper with a view to siphoning SNL’s funds to Lebanon.
·That through the deal, SNL supposedly owes about N3.5billion. This is outright fraud.
·That bank accounts were opened in the name of SNL in Bank of Beirut and Lebanese Swiss Banks in Beirut, which only Engineer Khalaf and his family members/surrogates operate without accountability. All signatories to the accounts are Lebanese and non-resident in Nigeria.
·That bank statements of account are never sent to Nigeria at their instruction but only excel worksheets from the Lebanese Finance Director to the Chief Accountant for reconciliation purposes; and, that the implication of this is that drawings from the accounts are shrouded in secrecy.
It would be recalled that having failed in their alleged ploy to stop bankers and vendors from doing business with the company, Khalaf and his proxies issued a public notice in ThisDay, The Guardian, Daily Trust and The SUN from 17th to 22nd September, 2019, claiming to be majority shareholders and that they shall not take responsibilities for any liabilities created by the current management of the company because of the ongoing litigations in Court.
Felix Omohomhion, Abuja
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