WEMA BANK DRAGS SAGAY TO EFCC OVER N2.8B CLAIM
Can a moribund company in a foreign land maintain an action in a Nigerian court against a Nigerian company? Is it legal to pay Garnishee sums in Nigeria directly to a solicitor or to the Judgment creditor?
These are some of the questions the Economic and Financial Crimes Commission (EFCC) would be finding answers to in the next couple of weeks. The bank is asking the commission to unravel the motive behind the insistence of Mr. Mogbeyi Sagay (SAN) that its management should pay N2.8billion client’s claim into his account instead of the account of the Judgment creditor.
This particular case is one that has dragged on for about 41 years. It is a simple case of business gone sour. Going by a petition before the EFCC, it started with the defunct National Bank of Nigeria (NBN) standing as guarantor for Continental Motors and Engineering Ltd in a transaction involving Auto Import Export Ltd, a Romanian company.
On October 18, according to the petition, the Romanian company and Continental Motors Engineering Ltd entered into an agreement for the supply of vehicles and spare parts. And in May 1971, National Bank gave a 100 percent guarantee to Auto Import for the credit granted to Continental for the supply of goods worth $9.3million. Continental Motors however, defaulted in paying for the goods and NBN was thereafter called upon to cover the debt.
The bank actually fulfilled substantial part of the obligation. It paid a sizeable amount to the foreign company, leaving a balance of $1.7million with a written agreement to pay the outstanding sum through the issuance of three bills of exchange. With the issuance of the bills of exchange, which was endorsed by all the parties and sent to Auto Import, NBN then thought that it has been discharged from any further liability to the Romanian company. However, the event took another twist when the creditor claimed that the bills were not honoured when they were presented and a court process was instituted.
NBN had won at both the High Court and the Court of Appeal, but lost at the Supreme Court in 2005. The Court ruled that NBN should pay the $1.7million with interest from December 2, 1977 to July 16, 1986 at an interest rate of 12 percent per annum.
Armed with the judgment, Mr. Sagay, as counsel to the judgment creditor in January 2006, commenced a Garnishee proceeding at the Lagos High Court, which is the trial court demanding the sum of $15.3million. This time, Wema Bank was joined in the suit as it has acquired the NBN. However, what is curious to the management of the bank is that in his prayers, the solicitor was demanding that the garnishee sum be paid to and in the name of his company Messrs Mogbeyi Sagay & Co.
Surprised and uncomfortable with this prayer, the bank decided to verify the claim of the judgment creditor. According to officials of the bank in their letter to the EFCC, “judgment sum is always paid directly to the judgment creditor except where there is a Power of Attorney from such judgment creditor.” The management of the defunct NBN took the first action by asking its Legal Adviser, Mr. Oye Akintola to investigate the legal status of Auto Import Export. Mr. Oye found out from the Lagos Chambers of Commerce and Industry that Auto Import Export was no longer a going concern in Romania .
“Further to the above and after the merger of NBN with Wema Bank Plc and in a bid to confirm that the Judgment Creditor is no longer in existence in Romania, the former Company Secretary/Legal Adviser Mr. Biodun Ogunlade, traveled to Romania on the order of its Board of Directors and visited the National Office of the Registrar of Commerce (equivalent to our Corporate Affairs Commission) in Bucharest, Romania.
“Mr. Ogunlade carried out a thorough investigation of the status of the Judgment Creditor and a report written in Romanian language and translated to English by Borsan Lilian Angela, a Romanian who is a sworn translator was obtained.
The English version of the report was authenticated by Serban Dunitresu – Bolintu, a Romanian Notary Public on 10th October, 2006. It was clearly stated in the reports that the judgment Creditor is no longer a going concern in Romania and that its name has been struck off the Register of Companies in Romania,” the bank stated in its petition.
The involvement of the Independent Corrupt Practices and Other Related Offences Commission (ICPC) has also helped to unravel the status of the Romanian company.
The ICPC sent one of its officers, Mr. Adeshina Raheem to Romania, with the officer coming up with the same report that Auto Import Export has folded up.
“The bank had presented the above facts to the trial court in the Garnishee proceedings, but was shocked that the judgment Creditor’s lawyer still maintains that the judgment creditor still exists in Romania and that one Lupu Nicolae is its general manager. When our Solicitors applied to court for the issuance of Subpoena ad Testificandum against Adriana Ghitesu, an officer in the National Office of the Registrar of Commerce in Romania and the said Mr. Lupu Nicolae, the alleged general manager of the judgment Creditor, to establish before the court that the judgment Creditor is no longer in existence, the application, which ordinarily should be handled administratively was turned to a contentious application by the trial court, argued by counsels to both parties and was eventually refused in a ruling which we have promptly appealed against.
“Despite our appeal against the refusal of the trial court on our application for issuance of the Subpoena ad Testificandum, the trial court went ahead to hear the main application of the judgment Creditor and granted them Garnishee Order Absolute on 30th May, 2008. This we have promptly appealed against.
“With due respect, we are convinced beyond any reasonable doubt that the judgment Creditor is no longer in existence and cannot for that reason maintain an action in the Nigerian Court, which can be enforced against our bank. The demand by Mogbeyi Sagay (SAN) that the judgment sum be paid directly to his account raises suspicion and trepidation that he wants to convert the judgment sum, which claims if allowed will amount to fraud in the light of the above facts,” the petition stated.