UNCOVERED! How CBN, Union Bank Diverted £2.5bn foreign investor’s money

• Multi-trillion naira Lagos refinery project aborted
• Justice Kafarati orders release of funds, says conduct worrisome
• Firm’s CEO died of frustration – Solicitors
• CBN should explain what happened – finance ministry

The anti-corruption stance of the President Muhammadu Buhari administration and the country’s efforts at attracting foreign investment may be facing their greatest test with the allegation of an illegal withholding of a staggering 2.556 billion pounds sterling private sector investment fund by Union Bank of Nigeria Plc and the Central Bank of Nigeria.

The Point’s investigations revealed that the fund, said to have been raised by Petro Union Oil and Gas Company Limited and its partners in 1994, and meant for the construction of an export-oriented refinery in Nigeria as advised by the Federal Government, became a subject of protracted litigation, which also reportedly culminated in the untimely death of the Chief Executive Officer of the company.

According to documents obtained by our correspondent, the fund was transferred and lodged in Petro Union’s account with Union Bank Plc, through a Barclays Bank Cheque number 010140, dated 3rd June, 1994, on the orders of Gladstone Kukoyi Associates, the financial and management consultants to Petro Union on the project.

Our correspondent, however, gathered that the CBN and Union Bank had refused to release the fund to the investment company, despite three authoritative positions, including a ruling of an Abuja Federal High Court, ordering the apex bank and Union Bank to pay the sum to the claimant.

"IT IS HEREBY ORDERED AS FOLLOWS: THAT AN ORDER OF MANDAMUS IS GRANTED COMPELLING THE RESPONDENTS (CBN AND UNION BANK) JOINTLY AND SEVERALLY TO RELEASE FORTHWITH AND TRANSFER TO THE APPLICANT HER FOREIGN CAPITAL OF £2,556,000,000.00 (TWO BILLION, FIVE HUNDRED AND FIFTY SIX MILLION BRITISH POUNDS STERLING) PRESENTLY IN THE UNLAWFUL CUSTODY OF THE FIRST AND SECOND RESPONDENTS"

In a petition to President Buhari, dated 15th May, 2018, a copy of which was obtained by our correspondent, Counsel to the investment company, Itseuwa H. Unoakhe and Co, said the company’s instruction was for Union Bank to secure the CBN’s approval for the money, adding that Union Bank received the instructions and all documents, including the instruments for the investment capital.

The petition, titled, “A plea for Presidential intervention against denial of justice, unlawful withholding of foreign investor funds, stealing/fraudulent conversion of £2,556,000,000 only and accruing interest of 25 per cent since 1994 to date, perpetrated by Union Bank Plc and Central Bank of Nigeria on the investment funds belonging to Petro Union Oil and Gas Company,” appealed for the President’s kind intervention over the “long standing case of official fraud and privileged cover up by certain officials in the public and private sectors of our economy.”

While proving that the funds were seized without explanation by both the apex bank and Union Bank, the Counsel said, “Union Bank subsequently wrote back to our clients on 29th June, 1994 to indicate that it was transmitting the investment funds to the CBN, but in a rather bizarre and unlawful fashion, it withheld the sum of £396,778,861.46 without a valid explanation.

“Curiously, despite having knowledge of the extant laws of the land, in respect of such transactions, the Union Bank of Nigeria Plc went ahead and transferred the investment funds of our clients in the sum of £2,159,221,318.54, less #398million to the Central Bank of Nigeria, and the CBN acknowledged receipt of the said fund vide: CBN Statement of Account No. GR/2007/466716 of 01/09/95 in line with Authority No. X/194683/1/115, dated 22/06/95.”

An impeccable source informed our correspondent that Petro Union had begun the preliminaries for the establishment of a 200,000 barrels per-day export-oriented petroleum refinery and petrochemical plant in Lagos, with the Lekki Peninsula as the proposed site, as a result of the encouraging response of Nigeria’s petroleum ministry.

But the Counsel said, “Our clients’ dream of setting up an indigenous, viable, economic feat, equal to any in other parts of the world, was shattered by the invisible hammer of corruption. Our clients’ efforts to access what is rightly theirs legitimately for the overall economic development of greater majority of Nigerians was met with ferocious official corruption, official cover-up, criminal silence and indifference, despite the potential of such action to destroy the expected integrity, credibility and transparency of our public institutions.”

In order to challenge the splitting of its investment funds, it was learnt, the company approached the Bankers Committee but was disappointed, as the committee said no more than the fact that it received certain documents from the CBN and that contacts were being made with relevant parties. It also allegedly advised the company “not to speak with the Press.”

The quest for justice, according to findings, inspired Petro Union to approach the Presidency, after which the Economic and Financial Crimes Commission was reportedly instructed to investigate the matter.

The Counsel said the EFCC “submitted its report, dated 10th May, 2005. In the said report, the EFCC advised Union Bank to return the cheques and other relevant documents to our clients. The Bank refused to do so.”

Our findings showed that the firm thereafter approached the then Minister of Finance, Nenadi Usman, who upon reviewing the case, advised the CBN to pay back the said sum, even as the finance ministry debunked alleged claims by the CBN that the mandate of the Accountant General was needed to effect the payment.

In a letter to the CBN, signed by the then finance minister, and sighted by our correspondent, the minister said, “It is clear that the funds under reference are private sector funds, the release of which does not require the mandate of the Accountant General of the Federation.”

According to an insider source, who confirmed the foregoing, the company decided to approach a court of competent jurisdiction as a result of what he described as repeated refusal of the CBN and Union Bank to honour the advice of institutional authorities.

In a March 2014 ruling, obtained and confirmed by our correspondent at the Abuja Federal High Court, Justice A. Abdu-Kafarati condemned the actions of the CBN and UBN.

“From the processes before me, I feel satisfied that the applicant has proved its case against the respondents,” the judge said while granting five of the claimant’s reliefs as prayed.

Kafarati, who is now the Chief Judge of the Federal High Court, expressed concern about the actions of the CBN and UBN, stating that “the conduct of the CBN and UBN, first and second respondents respectively, is “worrisome because it will certainly discourage foreign investors.”

The judge thereafter called on the EFCC to prosecute those involved in the cover up.

In an order of mandamus, the Federal High Court compelled CBN and Union Bank to “release forthwith and transfer to the applicant her foreign capital of £2,556,000,000.00 (two billion, five hundred and fifty six million British Pounds Sterling) presently in the unlawful custody of the first and second respondents.”

Abdu-Kafarati further granted the company’s second prayer by “compelling the first respondent (CBN) to abide strictly as a matter of legal obligation with the directive of the 3rd respondent’s letter (Hon Minister of Finance at the time, Nenadi Usman) and release to the applicant her foreign capital of £2, 159,221,318.54” being the sum transmitted to the CBN after Union Bank illegally deducted £396,778,861.46 from the original sum of £2,556,000,000.00.

Granting another relief, Justice Kafarati ordered the Central Bank of Nigeria to present to the court, “a Certified True Copy of the print out of the CBN statement of account containing the applicant’s £2,159,221,318.54” and went further to compel Union Bank to also present to the court a certified true copy of the print out of the applicant’s statement of account containing the sum of £2,556,000,000.00.

The court also ordered Union Bank to pay back to the applicants – Petro Union Oil and Gas – the illegal deduction of £396,778,681.48, which is reportedly still in the unlawful custody of Union Bank, four years after the ruling.

The court also ruled that Petro Union “is entitled to interest at the rate of 15 per cent to be paid by the 2nd respondent on the sum of £396,778,681.46 per annum, from (the) 7th day of June, 1994 until the judgement sum is liquidated and transferred to the applicant, pursuant to Section 81(1) of the Foreign Exchange (Monitoring and Miscellaneous Provision) Act, No. F, 34 Law of the Federation of Nigeria 2004.”

The Point authoritatively gathered that the CBN and Union Bank seemed to have ignored the orders, as the company, according to its Counsel, has not been paid, even after four years of the judgement.

The solicitors further expressed shock at the failure of the CBN to end the protracted delay in dispensing justice, citing greed and self-interest as the only possible reasons.

They commended the Muhammadu Buhari administration for its “zero tolerance for corruption in the conduct of public affairs and the commendable disposition of the administration to economic development” but sought direct intervention of the President in the matter, noting that the actions of the CBN and Union Bank were “capable of portraying Nigeria as an unfriendly destination for domestic and foreign investments.”

When contacted, the Ministry of Finance said it was not in the position to tell why the CBN and Union Bank failed to honour the directives, adding that only the CBN could explain the reasons for its actions.

Director of Information in the Ministry, Hassan Dodo, told our correspondent to visit the CBN and seek further explanation. “As you can see, the then minister of Finance, Nenadi Usman, advised the CBN to pay Petro Union Oil and Gas, so it is left for the apex bank to explain why it did not heed the advice,” he said.

When our correspondent visited the CBN with a copy of the court order, an official in the Corporate Affairs Department, who said he was not authorised to speak on the matter, asked for an official letter, which the apex bank would respond to.

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, did not return calls made to his mobile number. He also did not respond to a text message sent to him.