By GODWIN DUNIA
The recent actions taken against Guaranty Trust Bank by the Enugu-born motor-man, Chief Innocent Chukwuma may indeed have been a watershed moment in the history of banking in Nigeria.
As things stand even today, many observers are still apprehensive and not really in the grasp of the reason behind why a hitherto smooth relationship between the bank and Innoson Company which dates back to 2003 could degenerated to what it is today.
Indeed, matters appeared to have come to a head about a fortnight ago, when following a Supreme Court order, Innoson Company had gone ahead to close down some of the bank’s branches that were mostly located in the Eastern part of the country.
This was after the indigenous automobile manufacturing company, Innoson Nigeria Limited, which is based in Enugu State, had obtained a legal instrument, a writ of FiFa, from the Federal High Court in Awka, Anambra State, against the bank, to implement the judgement given by Nigerian courts over the lingering crisis between it and the bank.
The company, in a statement signed by its spokesperson, Cornel Osigwe, said that a judgment had been given in its favour by the Federal High Court in Ibadan and upheld by the Supreme Court of Nigeria.
A writ of Fieri Facias (or Writ of Fi Fa) is a document issued by the court for the purpose of effecting court judgment on a debtor’s property. It is also the legal instrument by which the assets of a judgment debtor may be seized.
The Role of GT Bank:
It would be recalled that, in 2004, Innoson company imported about 25 containers of Motorcycle CKDs into the country after it had obtained a concession certificate from the Federal Ministry of Finance which allowed it to import at 5% duty and the certificate was to expire in July 2005. The duty was paid by GTBank and a receipt issue. But Customs refused to release the goods to Innoson Company on the ground that a ‘circular’ had removed the name of Innoson Company from the list of companies enjoying the concession. But the Chairman, Innocent Chukwuma, appealed to the Minister of Finance, who having reviewed his appeal, approved that Innoson Company be allowed to clear their goods with the concession certificate.
On Missing Goods:
The documents were subsequently re-submitted for clearance and final approval came in Feb 2006. But, the goods which involved 25 containers of Motorcycle CKDs, could no longer be found. The Nigerian Customs had already auctioned 18 out of the 25 containers. This triggered a conflict between Innoson Company and the Nigeria Custom Services (NCS). And there was nothing at this point that indicted GTBank on the missing goods saga.
Later in 2006, attempts were made to resolve the crisis and this included several parties namely:
Representatives of Innoson company, Ministry of Finance, Presidential Special Committee on Port Decongestion and the Customs. GT Bank was not among the parties because it was only a banker to the two parties. But, while discussions and efforts were going on at a high level to resolve the problem, the remaining seven containers of Motorcycle CKD were again, auctioned off by the Customs.
Legal Battles and GT Bank:
Following the new development, Innoson Company took the Customs to court (Suit FHC/L/CS/603/2006). And the outcome of the case was that in July 2011, the court ordered the Customs to pay Innoson Company the sum of N2.4 Billion being judgment sum of N700 million plus accrued interest. It was at this point that Innoson Company obtained a legal instrument – ‘garnishee order’ from the Court, which ordered GTBank to pay the judgment debt of N2.4 Billion. This order is not against the GT bank per se, but against Customs fund domiciled in the bank.
But as events unfolded, Innoson Company insisted that the judgment was against GTB as neither NSC nor any other entity was named in the suit, stating that GTB was being “economical with the truth”.
The statement reads in part: “The order was made absolute since 29th July 2011 and GTB held unto the money from that time and is using same for business.
“It follows that by the time the order was made absolute it was nomore the judgment debtor’s money but rather that of Innoson Nigeria Ltd who is the judgment creditor; if a garnishee refuses to comply with the order, then, it becomes a judgment debtor, as GTB has become in the present case, against whom execution of the order will issue.
Therefore, there is no merit or force in the GTB position.
“Furthermore and interestingly, the Garnishee order absolute was against GTB and no one else; and it is only GTB and no one else that will comply with the other; in the circumstance, the order will be executed against GTB and no one else. Please, be guided accordingly.”
It was at this point that GTB decided to appeal the court ruling on the garnishee to the Court of Appeal, Ibadan Division. Why GTBank decided to appeal the garnishee order and not allow Customs appeal the judgment is noteworthy.
But in February 6, 2014, the Court of Appeal dismissed the GTBank appeal, affirmed the judgment of the trial Court and ordered GTBank to pay the said sum of N2.4 billion to Innoson. GTBank appealed to the Supreme Court and it is yet to give its judgment.
Earlier in May 2013, Justice Salihu had granted Innoson the sum of N559,374,072.09 against the bank, “with a 22 percent interest on the admitted sum to be paid from March 1, 2004 and at the same rate of 22 percent till satisfaction of the judgment debt. It also added a 100% penalty as stipulated in the CBN Guidelines (Many people don’t know this penalty exists for excess charges by banks – But this is a conversation for another day). This brought the total judgement cost to N4.7 Billion against GTBank. GTBank appealed this judgment.
In Sept 2014, GTBank secured an ex parte order on Innoson that was basically freezing their accounts. “All commercial banks in Nigeria were restrained from accepting, honoring, or giving effect in any manner whatsoever to any instruction by Innoson …”
On December 9, 2014, the Court of Appeal upheld the judgement of the Federal High Court and ordered GTBank to pay its debt to Innoson into an interest-yielding account operated by the court. By then, the debt had accumulated to over N6 billion.
In June 2015, the FHC, Lagos struck out the ex parte order freezing the bank accounts of the companies in the Innoson Group. Innoson then slammed a N30 billion suit on the bank for what it had suffered in monetary terms and reputational terms during the months when the accounts of its companies in all Nigerian banks were frozen.
The Issues of Excess Charges:
However, despite the fact of this on-going court case concerning the NCS’ sale of the ‘containers goods’, both GT bank and Innoson company continued to do business. And the bank in 2010, gave Innoson a N2.4 billion loan facility, which was restructured into a three year term to finance its motorcycle’s CKD import business. And it was on this facility, that Innoson discovered strange charges in their account and decided to do an audit.
By 2012, the audit had revealed that GTBank over-charged Innoson to the tune of N786 million over the course of several years and dating back to 2004. Innoson wrote to the bank and not surprisingly, the bank did not accept to refund the charges. Innoson sued GTBank for refund of the excess charges. This was the second suit between Innoson and GTBank.
Chief Chukwuma and his Innoson company, thereafter, stunned the bank again when it filed a suit (No: FHC/AWK/CS/2012) against the bank at the Federal High Court, Awka, Anambra State, claiming that its account with the bank had been debited for excess charges totaling N559,374,072.09. He obtained a judgment in excess of N4.7billion against the bank.
This was despite an ‘amicable agreement’ between the company and the bank for a full and final settlement of N1,095,107,822.95, which saw the bank forgo the sum of N559,374,072.09, which accrued on its account during the period.
In 2009, Innoson Motors as a customer to GT Bank was granted a series of credit facilities totalling N2.4 billion.
The loans represented part-finance and working capital for the importation of new motorcycles, motorcycle spare parts, agricultural machinery spare parts and plastic manufacturing equipment.
Sources told Business Hallmark that under the loan terms agreed by Mr. Chukwuma on behalf of Innoson, proprietary interest in the imported items was exclusively consigned in favor of the GTBank.
What it implies in strict terms, is that, the bank owned the imported goods with the original Bills of Lading, duly held by GTBank and remaining in its possession. On this account of the bank’s exclusive ownership of the goods, only it can transfer ownership to Innoson or any other party.
A condition in the loan agreement for the release of the goods by the bank to Innoson was the payment of 25% of the value of each Letter of Credit transaction by the auto assembly company.
Chukwuma, on behalf of Innoson, thereafter allegedly approached GTBank requesting the release of the shipping documents without fulfilling the condition requiring him to pay the agreed 25% of the value of each letter of credit. On account of Innoson’s failure to meet the stated condition in the agreement, the bank reportedly turned down the request.
On the Forged Documents:
With the refusal of GT Bank to release the shipping documents to Innoson company, the bank discovered in June 2011 that the shipping documents for the goods it declined to release to Innoson because of its failure to meet the agreed conditions had fraudulently been obtained by Innoson company. The revelations that followed, according to a reliable source shocked the bank. The bank discovered that the Chairman and his company, had allegedly forged the endorsement on the Bills of Lading to the shipping line and fraudulently effected clearing of the imported goods consigned to the bank. This means, being the property of the bank, the items should never have been cleared from the ports without the bank endorsing the original shipping documents in favor of Innoson or any other third party.
According to a reliable source from GT Bank, what Innoson did, was to forge the signatures of Messrs Taofeek Olalere, Dan Attah, Bunmi Adeyemi and Amazu Amalachukwu, all GTBank staff, as well as the bank’s stamp on all the shipping documents to clear the goods at the ports. Insiders said the bank never endorsed or transferred the shipping documents to Innoson, as their original copies remain in the bank’s possession.
Consequently, GTBank filed a petition to the Inspector General of Police (IGP), alleging that Innocent Chukwuma and five others (including Innoson and Mitsui OSK Lines) criminally conspired to commit forgery. That Innoson Company with five others, criminally conspired to falsify shipping documents between Jan 2010 and April 2011 at the Apapa Wharf which was subsequently used to obtain a N2.4 Billion term loan facility from GTBank. This led to the prosecution of the 6 accused persons by the police prosecutor. (Suit No: FHC/L/565C/2015).
However, in February 2016, the police withdrew the charge against the accused based on its need to further investigate the case.
EFCC Invitation to Innocent Chkwuma:
In May 2016, the Attorney General of Federation (AGF) office approached the court to take over the prosecution of the case. And the application was granted. It seems the prosecutor in the IGP office did not inform the court that they had already withdrawn the charges before the DPP took over. It was the EFCC’s dramatic invitation to Innocent Chukwuma that first blew this story into the public consciousness. And indeed it is the fifth case in the whole story.
Without doubt, the EFCC invitation to Innocent Chukwuma appears to be in connection with the investigation of the GTB petition alleging fraud against Innoson and its Chairman and subsequent prosecution by the IGP.
According to the EFCC, Innocent Chukwuma jumped an administrative bail, which suggests he must have already been interviewed and granted bail.
Giving reasons for Mr. Chukwuma’s arrest, the EFCC, in a statement signed by Mr. Wilson Uwujaren, its spokesman, Mr. Chukwuma refused to respond to invitations by the commission after initially being granted administrative bail by the commission, while his surety could also not be found. He was also said to have resisted arrest.
“Unfortunately, the industrialist resisted arrest and stirred controversy by bringing six truck-loads of thugs to block the entrance to his Plot W1, Industrial Layout, Abakaliki Road, Emeni, Enugu, home.
“This was after he initially misled the Police Command by informing them that his home had been invaded by armed robbers and kidnappers despite the fact that operatives of the commission duly identified themselves to policemen guarding his home,” said the EFCC.
His thugs added the commission, assaulted its operatives, forcing the EFCC to call its Enugu office for reinforcement.
“In all of this, the commission’s operatives acted with decorum and civility. No one was manhandled or assaulted by the EFCC team and not a single shot was fired, despite the provocation.
“Chief Chukwuma and his brother, Charles Chukwuma (who is still at large), are being investigated by the Insurance and Capital Market Fraud Section of the Commission’s office in Lagos over matters bordering on N1, 478, 366, 859.66 fraud and forgery.
“The industrialist, among other infractions, allegedly used forged documents to secure tax waivers,” said the commission. It was also revealed to Business Hallmark, that in order to stall the criminal proceedings against him and his company, Mr. Chukwuma instituted suits at the Federal High Court, Abuja, as well as the Federal High Court, Awka in January 2014 against the Inspector- General of Police, Nigeria Police Force and investigating officer(s), seeking declaratory and injunctive reliefs, including orders restraining the Police from commencing criminal proceedings against him and his company.
Also, a Lagos based lawyer, who did not want his name to be mentioned, told Business Hallmark that, “what the bank did not disclose was that in responding to Innoson’s motion for a stay of criminal proceedings at the Court of Appeal, Justice J.S Ikyegh, on September 17, dismissed the motion as unmeritorious and ordered that proceeding in the criminal case against Innoson should proceed. A Copy of the Bill of Lading in possession of GT Bank that Mr. Innocent Chukwuma allegedly forged.’
It was also alleged that, to thwart the bank’s recovery bid as well as distract it from focusing on the criminal action and civil actions filed for recovery of the debt, Mr. Chukwuma and his company, have continued to institute lawsuits before various courts, claiming frivolous and outrageous sums against the bank.
On October 12, the Police filed an application (No. FHC/L/565C/2015) for the issuance of bench warrants against Mr. Chukwuma, Charles Chukwuma and Annajekwu Sunny for fraudulent clearance of goods, forgery, conversion, stealing and conspiracy presently pending before Federal High Court, Ikoyi, Lagos.
GTBank’s Legal Claims :
What has so far been deduced from the court documents and statement indicated that a loan of N2.4 billion was granted to Innoson company to import motorcycles and it also establishes different LCs in favour of Innoson under this facility. The bank also reserved propriety interest until a percentage of value of LC is paid. And the original Bill of Laden (still with bank) was security for loan. The bank also said, Innoson cleared the goods with bank endorsement forged on the BoL and the bank then referred the case to the Police who commenced investigation and charged the men for forgery.
Innoson’s Legal Claims:
But Innoson’s position is that GTBank never gave it a loan of N2.4 Billion. It claimed the only loan they got was N1.3 Billion which has been fully repaid. The company said BoL couldn’t have been security for loan since it is released at the point of shipment when payment must have been made or guaranteed. It also claimed, GTBank paid the duty for the goods without which it would be impossible to clear it.
And that GTBank released the original BoL to Innoson. After clearing, Innoson returned to GTBank the relevant exchange rate documents for onward transmission to the CBN.
Move to Reconcile with GT Bank:
Chairman of Innoson company later approached GT Bank for a reconciliation of his account and pleaded for debt forgiveness. The bank agreed and reconciliation was carried out on the account, which had a debit balance of N1,654,481,895.04 as at December 31, 2011. On account of the conciliatory posture by Mr. Chukwuma and EFCC intervention, GT Bank, agreed to forego the N559m, which represented default charges that had accrued on the account and debited in line with the loan agreement.
On the basis of this, the bank decided to accept from Innoson the sum of N1.095billion as full and final payment of the company’s indebtedness to the bank with the proviso that it must be paid in full not later than (30) days from the date of the letter written conveying the decision was written to Innoson.
What is Letter of Credit and Bill of Landing:
Letter of credit is one of the international payment terms. After completion of export formalities at customs, the seller collects original BoL from carrier. The said original BoL along with other shipping docs are submitted along with the LC to the seller’s bank.
After satisfying the terms and conditions (T/C) of the LC, the seller’s bank negotiate document and sends to the buyers bank. The buyer’s bank notifies buyer and instructs him to accept documents.
Buyer accepts and makes to clear goods. He surrenders Original BoL with carrier and takes delivery of goods. The point is, without the Original bill of laden, the buyer cannot take delivery of goods. The buyer’s bank delivers original BoL only after receiving the export proceeds (value of goods shipped or percentage of value of goods agreed).
At the onset, it seems that the police believed GTBank as per its petition of 2013. It was probably at this point that the EFCC got involved. But it is instructive that the police did not charge Mr. Innocent until 2015; a charge it withdrew in Feb 2016. Innoson in the meanwhile had made several attempts since 2014 to stop the IGP’s investigation. But in Sept 2017, the Court of Appeal, dismissed the motion for being unmeritorious and ordered that proceeding in the criminal case (of forgery) against Innoson should proceed.
What we now know is that on October 12, 2017, the Police through its Charge No. FHC/L/565C/2015 (now handled by the DPP) filed an application for the issuance of bench warrant against Innocent Chukwuma and others. This was adjourned to the 8th Dec 2017. It is possible that the recent arrest by the EFCC is linked with this development.
One thing is clear though, this case is not going away and Mr. Innocent Chukwuma will still need to clear his name in court against this forgery charge. And if you analyze both claims above, one would be able to make the following deductions.
That there was a loan. Whether it is N2.4 Billion or N1.3 Billion is a different issue.And for Innocent Chukwuma and his Innoson company to import, GTB must have opened LC in favour of Innoson. There is no way Innoson could have cleared the goods without duty payment which follows after assessment notice after Risk Assessment Report (RAR) has been issued. To get the RAR, you need the Original BoL.
So where would this end?
As the saga continues and the nation waits for a resolution of the issue somewhat, some day, a Lagos based economist and Public Relations Manager with a manufacturing company, who spoke to Business Hallmark on the soured relationship, said: “No matter what has happened between the duo, Innoson Motor Company ought to have chosen a better option to resolve the matter instead of this act of confrontation.
“The court has given an order, but based on the existing relationship things can still be managed. If you follow the matter keenly, you see that GT bank had maintained its relationship with the company and its Chairman, Innocent Chukwuma, for quite a while even at the beginning of the crisis. And, what brought about this legal tussle is not between Innoson Company and the bank alone, it also involved the Customs. That is where the matter started, GTBank is just a banker to the two parties”.
A case of three elephants fighting? We wait.