Saturday, 8 March 2014
UK High Court Orders Rogue Banker, Erastus Akingbola, To Surrender £68 Million Loot To Intercontinental Bank
A United Kingdom High Court in London has ordered the former CEO of Intercontinental Bank and pastor of the widely-known Redeemed Christian Church of God (RCCG), Erastus Akingbola, to forfeit nearly seventy-five million British pounds to the bank.
Pastor Akingbola was arrested in 2010 after he returned from the UK, to which he had fled after his financial shenanigans were revealed by the Central Bank of Nigeria and the Economic and Financial Crimes Commission was called in to prosecute such former bank CEOs who were found to have been involved in bank fraud.
According to the UK court judgement obtained by SaharaReporters dated March 24 2011, he will forfeit sums of £8,540,134.58, £68m and £1.3m to Intercontinental Bank. The bank had approached the UK court after it successfully obtained a freezing order against huge sums of monies paid into various shell companies set up by Mr. Akingbola in the Cayman Islands and in which members of his family were beneficiaries.
The fraudulent payments saw Akingbola transferring huge sums of money from Intercontinental bank in 2009. The payments, known as "1st Fuglers Payments", "Tropics Payments" and "2nd Fuglers Payments", together the three payment led to the transfer of a total of £80 Million; monies that were used to purchase expensive properties in the UK and beyond.
Mr. Akingbola siphoned most of the funds in dubious transactions between his shell companies in Nigeria within just six weeks through an illegal shares purchase scheme conducted by some of his companies. Forty-one million pounds (£41m) of the money was looted by Mr. Akingbola in one day alone, on 11 May 2009.
Analysts say Mr. Akingbola's case reflects pervasive greed not only in Nigerian financial institutions, but often in her places of worship, where flamboyant pastors are perennially preaching messages of prosperity. There is also persistent collusion between government and bank officials, one form of which involves governors and ministers transferring key accounts to specific banks with which they have worked out a profitable arrangement. It remains to be seen if RCCG will issue a statement condemning Mr. Akingbola.
Last October, the former Chief Executive Officer of Oceanic Bank, Mrs. Cecilia Ibru, was convicted of bank and securities fraud by the Federal High Court in Lagos, and was stripped of 199 assets and funds worth nearly N200 billion, much of which she had salted away all over the world. On one street alone in the Upper Marlboro area of Maryland, United States, Mrs. Ibru bought at least six palatial homes in 2009, and they were registered either to herself, or to such close relatives as her son, Obaro, her daughter Janet, or her daughter-in-law, Kemi Da silva. Despite the grievous nature of her crimes, however, Mrs. Ibru was sent to jail for only six months. Even that slap on the wrist was "suffered" in the cushy confines of a medical facility that is built like a five-star hotel.
Full text of the judgement:
Case No: 2009 Folio 1680
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 24 March 2011
MR JUSTICE BURTON
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ERASTUS BANKOLE OLADIPO AKINGBOLA
and others Defendants
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Mr Simon Browne-Wilkinson Qc And Mr Adam Zellick (Instructed By Berwin Leighton Paisner) For The Claimant
Ms Elizabeth Jones Qc And Mr John Machell (Instructed By Peters & Peters) For The Defendant
Hearing dates: 3 & 4 March 2011
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I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
MR JUSTICE BURTON
Mr Justice Burton :
1. The First Defendant (“the Defendant”) was the Managing Director of the Claimant Nigerian Bank (“the Bank”) until 14 August 2009, when he was dismissed. The Claimant makes a number of claims against him in very substantial sums. This application for summary judgment, pursuant to CPR Part 24, has related only to three aspects of those claims, although the background has, to an extent, been relevant.
Although there have been 15 files before me, including evidence gathered during the various applications relating to the freezing order against the Defendant, which still continues in place, with the considerable assistance of both leading Counsel the evidence which required detailed consideration for the purposes of this application was reduced into a relatively small compass.
2. The three claims or categories of claims to which I refer above are as follows:
i) The “first Fuglers payment”. This was a payment made out of the Bank to
Fuglers, a firm of London solicitors, at the instance of the Defendant, in the sum of £8,540,134.58 on 11 March 2009 to purchase property in London in
the names of the Second to Fourth Defendants, which, it is common ground,
are companies owned by the Lifeboat Settlement, a Cayman Islands Trust, established by the First Defendant for himself and his family as beneficiaries.
ii) The “Tropics Payments”. This relates to a number of payments paid at the instance of the Defendant and/or with his knowledge by the Bank, totalling in all some £68m or 18.6bn naira (N18.6bn), to, or for the benefit of, four interrelated companies (Tropics Security Ltd, Tropics Finance and Investment Ltd, Tropics Properties Ltd and Bankinson Nigeria Ltd, collectively “the Tropics companies”), of which the Defendant was a director and shareholder, between 11 May and 26 June 2009.
iii) The “second Fuglers payment”. This was a further payment out at the instance of the Defendant to Fuglers in the sum of £1.3m on 13 July 2009, again to purchase property in London, in the name of the Fifth and Sixth Defendants,
which are admittedly companies owned by the Octopus Trust, an Isle of Man
trust established by the Defendant for himself and his family as beneficiaries.
3. There is no issue that the Defendant owed duties to the Claimant during his employment and directorship of the wide ranging nature set out in paragraph 4 of the Amended Particulars of Claim, and admitted in paragraph 10 of the Defence and Counterclaim, by reference to ss279 to 283 of the Companies and Allied Matters Act C20 Laws of the Federation of Nigeria 2004 (“CAMA”) (supplemented, on the Claimant’s case, by obligations owed by the Defendant under the Banks and Other Financial Institutions Act 1991 (Nigeria) (“BOFIA”)). These constitute, as has really been common ground between the parties, statutory codification of the common law duties of a director, as established and explained in a number of well-known English
authorities. The experts on each side, who have at this stage put in short reports commenting on the relevant issues, Mrs Ayoola Modupe Ogunsola Obe for the Defendant, and Dr Tunde Ogowewo for the Claimant, agree that, particularly given the relative paucity of decisions in the area of company law in Nigeria, English authorities are heavily relied upon and highly persuasive in the Nigerian courts.
4. With regard to the first Fuglers payment, it was apparent to me from the evidence that the Defendant’s case, set out in his evidence, was that the money drawn from the Bank and used to purchase the London property was loaned to him by a company called Regal Investments Co Ltd (“Regal”) (of which the Chairman of the Bank, a Dr Obieri was the principal), which was itself loaned to Regal by Intercontinental Capital and Markets Ltd (“ICML”), a subsidiary of the Bank, and that he recognised that he was indebted to Regal in the sum advanced in any event. It seemed to me that the disputed issue as to liability to repay the first Fuglers payment could be resolved if, even on his own case, he was willing to repay Regal, and, in the event, through Regal, the Bank’s subsidiary. In the event, Ms Jones QC, for the Defendant, was able to obtain from Nigeria his instructions to give an undertaking to use his best endeavours (by way of instruction/expression of wishes to the relevant trustees) to secure payment via Regal to ICML, and, if that sum is paid, then it is likely to satisfy the substance of the Claimant’s claim in this regard without resolving the disputed issues of breach of duty: and by agreement this aspect of the summary judgment application has been stood over in the hope that it can be so resolved.
5. As for the Tropics payments, the Claimant’s primary case is that there is no explanation whatever for the siphoning out from the Bank, at the instance of the Defendant, of £68m to his companies over the period of six weeks. The Defendant has given an explanation, namely that the sums were owed to the Tropics companies (or at any rate to one of them, Tropics Securities, which authorised or requested payment to its associated companies) in respect of outstanding sums due in relation to acquisitions of shares in the Claimant. Tropics Securities were stockbrokers, one of three stockbrokers used by the Claimant at the material time, the others being an in-house subsidiary, Intercontinental Securities Ltd (“ISL”), and a third company, Summit Finance Ltd (“Summit”), of which Dr Obieri was President. The case pleaded in the Defence and Counterclaim is as follows:
“37. From about April or May 2007 and at all material times thereafter, the Bank engaged three stockbroking firms, namely Tropics Securities …, Summit … and … ISL … in respect of various stockbroking transactions, including the purchase of shares. All (alternatively, a substantial part) of the Share Transactions were for shares in the Bank itself.
41. In settlement of debts owing to Tropics Securities arising from its execution of Share Transactions from time to time, and in response to written request for payment, the Bank made a number of payments to and/or at the direction of Tropics Securities. These payments each related to the purchase of shares which were made on the Bank’s mandate.”
6. This explanation, given by the Defendant, is supported by Mr Bayo Dada, the General Manager of Tropics Securities at the time, and still a non-executive director of the Claimant bank, and by Mr Akin Fabunmi, who was, at the material time, Financial Controller of the Claimant bank. The Claimant does not accept that there is any truth in such explanation, and a Mr Jimoh, Head of the Inspection Group of the Claimant, has given evidence that, although he has been able to reconcile acquisitions of shares in the Bank in an amount of approximately N160.7bn (now the subject matter of a separate claim against the Defendant, not the subject of this summary judgment application, relating to an alleged “illegal share support scheme”), he cannot track any record of the alleged further sum of N18. 6 billion, the subject of the Tropics payments.
This first way of putting forward the Claimant’s case on the summary judgment application, namely that there is simply no explanation or justification for the removal of the N18.6 billion, was described by Mr Browne-Wilkinson QC, in his submissions, as Alternative A or, once it became apparent that there were to be three such, then rechristened as Option A. He submitted that his summary judgment application must succeed either on that basis or, even if the explanations put forward were considered to be sufficiently arguable for Part 24 purposes, then on the basis of Option B or Option C:
7. Option B. If the payments were made to, or to the order of, Tropics Securities by way of payment for the acquisition of the Claimant’s own shares, then that was unlawful, and hence a breach of the Defendant’s duty, by reference to s160 of CAMA, which (subject to immaterial exceptions), provides, in subsection (1), that “a company may not purchase or otherwise acquire shares issued by it”.
8. Option C. The explanation is now put forward, which Mr Browne-Wilkinson
categorises as a recent change of case by the Defendant, in his second witness statement, recently served on 24 January 2011, that the payment was made in respect of shares acquired by customers of the Bank (including directors) with monies loaned to those customers by the Bank. That too he submits would have been unlawful, and amounted to a breach of duty by the Defendant, by reference to s159 of CAMA, headed “Prohibition of Financial Assistance by Company for Acquisition of its Shares” whereby:
“(1). In this section, financial assistance includes a gift, guarantee, security or indemnity, loan, any form of credit and any financial assistance given by a company, the net assets of which are thereby reduced to a material extent or which has no assets;
(2). Subject to the provisions of this section – (a) where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company of any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place; and (b) where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.
(3) Nothing in subsection (1) of this section shall be taken
to prohibit (a) the lending of money by the company in the ordinary course of its business [where] the lending of money is part of the ordinary business of a company.”
This then is Option C and completes the set of premises upon which Mr
Browne-Wilkinson submits that, in any event, the Claimant must be entitled to summary judgment on the basis that the Defendant has no arguable defence in respect of the Tropics payments.
9. In the event, Option B, if ever pursued by the Defendant, was not pursued, and Ms Jones made clear that, not only the Tropics payments, but also the entirety of the N160bn, the subject of the alleged “illegal share support scheme”, referred to in paragraph 37 of the Defence and Counterclaim (set out in paragraph 5 above), did not constitute or relate to the purchase by the Claimant of its own shares, but in every case related to alleged acquisition of those shares with the Claimant’s money, but for its customers.
i) In order to succeed, and obtain summary judgment, in respect of Option A, the Claimant must show, albeit that the obligation on the Defendant is to raise a defence, that such defence has no real prospect of success. In this case, that involves inviting the Court to reject the evidence of the Defendant, of Mr Dada and of Mr Fabunmi, to which reference will be made, and to a limited extent the evidence of the Defendant’s wife, Mrs Akingbola, also a director of the Tropics companies, who gave hearsay evidence as to what she was told at the time by Mr Dada, as unreliable or incredible. Both Counsel referred me to the White Book at paragraph 24.2.5, which warns a court to be “wary of trying issues of fact on evidence where the facts are apparently credible and are to be set against the facts being advanced by the other side … unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it.” If the Part 24 application succeeded, there would be judgment for the full amount of the £68m (N18.6bn).
ii) As for Option C, this would depend upon Mr Browne-Wilkinson’s establishing that there is no doubt that, if this was the explanation of the payment, it was plainly unlawful, as being financial assistance in respect of the Claimant’s own shares in breach of s159 of CAMA. If the Part 24 application succeeded on this basis, then there would need to be an enquiry as to the equitable compensation payable by the Defendant in respect of his breach of duty, because it might be that there would fall to be set off, against the £68m, some value to the Claimant.
10. With regard to the second Fuglers payment, the Defendant’s case is that the sum advanced by the Claimant was reimbursed/repaid by a payment from Tropics. Mr Browne-Wilkinson made clear in his skeleton argument that he does not proceed with an application for summary judgment in this regard if the Claimant is successful in respect of all the Tropics payments, including that pleaded in paragraph 6(9) of the Amended Particulars of Claim, which the Claimant asserts to be the source of the monies said to have been reimbursed. If, however, he is not successful by way of summary judgment in respect of the Tropics payments, then he seeks to argue (i) by
reference to the decision in the House of Lords in Guinness plc v Saunders  2 AC 663 (“Mr Ward’s case”) that, even if a sum was repaid/replaced by the Defendant, he is not entitled to credit/set-off in that regard in respect of his breach of duty (ii) that even if he were so entitled, there was no repayment, since the money used was, in fact, the Bank’s money emanating from the Tropics payments.
11. Finally, insofar as necessary, the Defendant relies, in respect of any breach of duty found, upon the statutory relief from liability made available to a director in certain cases by s558 of CAMA, equivalent to s727 of the English Companies Act 1985 (now s1157 of the Companies Act 2006).
The Tropics Payments Option C
12. I turn to deal first with the Tropics payments and Option C, namely, whether, if the explanation is that the Claimant’s monies were paid away to the Tropics companies in May and June 2009 in order to pay Tropics Securities as stockbrokers for the acquisition of shares in the Bank for which the Bank was loaning/had loaned monies to its customers, that would be a lawful explanation, or one which itself would constitute a breach of duty by the Defendant.
13. I have cited in paragraph 8 above the relevant section of CAMA. I have also referred to the views of Dr Ogowewo, that (i) English decisions which are not part of Nigerian law and are therefore not binding on Nigerian courts are nevertheless of highly persuasive value (paragraph 10 of his Report) (ii) “the paucity of Nigerian case law has meant that Nigerian courts attach substantial weight to decisions of the English courts on company law matters i.e. on post-1900 English decisions” (paragraph 12)
(iii) “the former Federal Supreme Court of Nigeria’s decision …supports resort to persuasive foreign authority in the interpretation and application of a term contained in a Nigerian statute where a similar term in another jurisdiction has already received judicial interpretation or been used in an authoritative statement of the rules of the common law” (paragraph 13) (iv) “it is very likely that Nigerian courts will
place considerable weight on English decisions on the … equivalent provisions under English company law statutes of sections 159 [and] 160 … of CAMA, particularly since (a) these are subjects on which the English courts had extensive case law and Nigerian courts have a dearth and (b) … CAMA does not on these subjects diverge from the broad principles of English law” (also paragraph 13). Mrs Obe does not substantially differ (paragraph 49 of her Report). There are two relevant authorities
which have been cited to me on the meaning and effect of equivalent statutes, Steen v Law  AC 287, a decision of the Privy Council, on appeal from the Supreme Court of New South Wales, relating to the provisions of the equivalent New South Wales Companies Act, and Fowlie v Slater, a short report in 1979 NLJ 465, relating to the then English statute, s54 of the Companies Act 1948. The wording of these
statutory provisions was materially the same as CAMA s159, with the addition of some words, which I shall underline, namely “for the purpose of or in connection with a purchase … of any shares in the company.” This difference may arguably reduce the ambit of the Nigerian statute, as compared with the Australian and English statutes.
14. In Steen v Law, a company, I.V.M., not engaged in the business of lending money, but in the business of selling automatic vending machines, lent money to another company, A.M.H., so that A.M.H. could then acquire all the shares in I.V.M., so as to turn it into a wholly owned subsidiary (with favourable impact on a liability to undistributed profits tax). It seems obvious that (i) the lending of money was not part of the ordinary business of I.V.M., and (ii) the lending of money by I.V.M. to A.M.H.
was not in the ordinary course of I.V.M.’s business, but a one-off transaction involving all its shares. Viscount Radcliffe, giving the opinion of the Privy Council, however, did not restrict his decision to that conclusion, because he said (at 300) that “there seems to have been very little judicial exposition of the meaning of proviso (a) since it was first introduced into company legislation, and in deference to the cogent
arguments that were advanced to their Lordships on this issue they will deal with the interpretation of the proviso in more general terms.” At 301, he said:
“This proviso, then, must be read not as exempting particular loan transactions made for identifiable purposes but as protecting a company engaged in moneylending as part of its ordinary business from an infraction of the law, even though moneys borrowed from it are used and, perhaps, used to its knowledge, in the purchase of its own shares. Even so, the
qualification is imposed that, to escape liability, the loan transaction must be made in the ordinary course of its business.
Nothing, therefore, is protected except what is consistent with the normal course of its business and is lending of a kind which the company ordinarily practises.”
15. He continued: “In their Lordships’ opinion such an approach to the
interpretation of proviso (a) necessarily requires that the “lending of money”, to be part of the ordinary business of a company, must be what may be called a lending of money in general, in the sense, of a registered moneylender or a bank. Such lenders are not obliged to accept their borrowers; but it is characteristic of their business that, if they do lend, the money made available is at the borrower’s free disposition and is not, except in special circumstances, confined to special uses or restricted to particular and defined purposes. Unless the lending of money as part of the ordinary business of a company is understood in this sense, the absurd result would be reached that any lending operations of which it made a practice, however restricted their purpose or remote from general
moneylending, would qualify the company to ignore the prohibition of the section and finance purchases of its shares, provided that it could describe such advances as made in the ordinary course of its business.”
16. He concluded: “… a company which, for instance, lent money from time to
time to trade suppliers or purchases could claim that the lending of money was part of its ordinary business and that it was accordingly one of the companies intended to be protected by proviso (a), if it chose to make loans in connection with the purchase of its shares. Yet it is not possible to suppose that the section could have been intended to provide any exemption or relief for such cases, for there could be no good reason for
allowing a company to use previous lendings for quite different purposes as the justification for share purchase loans, which the legislation is in general intended to forbid.
This interpretation is supported by the fact that in the proviso the “ordinary business of the company” is associated with “lending … of money in the ordinary course of its business.”
The latter words are not intended, their Lordships think, to be synonymous with the “ordinary course of business” itself and seem to refer more particularly to advances of a scale and for a purpose similar to those regularly made by the company in carrying out its business. Such a construction accords naturally with the idea of general moneylending, provided that the advances do not amount to a departure from the usual order of business: but it is, on the other hand, virtually impossible to see how loans, big or small, deliberately made by a company for the direct purpose of financing a purchase of its shares could ever be described as made in the ordinary course of its business.”
17. There are thus drawn out particular questions, such as whether the monies loaned are “at the borrower’s free disposition” – although it does seem to me that that is simply part and parcel of the question whether the monies were advanced for the alleged unlawful purpose. It is also clear in that case that the loan was for the benefit of the lender (and for the purposes of the lender i.e. to have its own shares bought) and not the borrower.
18. In Fowlie v Slater the Queen’s Bench Divisional Court held, in relation to a loan by Slater Walker Ltd to a company for the purpose of assisting that company to purchase shares in Slater Walker Securities Ltd, of which Slater Walker was a subsidiary, that: “Although the lending of money was no doubt part of the ordinary business of the company, the lending was not “in the ordinary course of business”. The loan was not at the free disposition of the borrower, but was specifically and solely for the purchase of shares in the lender’s holding company.
Further the loan was not for the benefit of the borrower.” and Steen v Law was thus applied.
19. Mr Browne-Wilkinson submits that it is clear from the conclusions of Lord Radcliffe, in a decision which was plainly meant to be authoritative, that “it is … virtually impossible to see how loans, big or small, deliberately made by a company for the direct purpose of financing a purchase of its shares could ever be described as made in the ordinary course of business.” If, as now explained in relation to the Tropics
payments (and also as asserted in relation to the N160bn not the subject of this summary judgment application referred to in paragraph 6 above), the monies were caused to be advanced by the Bank to reimburse the stockbrokers for the purchase of the Bank’s shares then (i) if it was pursuant to a prior agreement by the Bank for a loan to a customer for that purpose and/or (ii) in any event in that it was an advance for that purpose i.e. to pay for such shares, then in either case it was financial assistance for the purpose of the acquisition of shares in the Bank, which would fall expressly within Viscount Radcliffe’s condemnation.
20. Ms Jones made two cases, one factual and one legal. As for the factual submission, she pointed to documents exhibited to a recent third witness statement of Mr Tickner, the Defendant’s solicitor, which were passed to the Defendant by Mr Fabunmi, he having obtained them from an internal source at the Bank. These documents relate to four customers whom Mr Jimoh had already referred to as appearing in the Bank’s records as customers in whose names, as he explained, shares acquired by the Bank were put, as part of the alleged illegal share support scheme. In relation to at least three of these customers, such documents included reference to applications for a loan to enable the purchase of the shares of “blue-chip companies in the secondary market” (although one of them specifically applied for a “share loan to enable us [to] purchase Intercontinental Bank shares from the secondary market”). If, she submits, there was at least in some cases not a specific loan for the purpose of the purchase of the Bank’s own shares, but simply a request for a loan to enable the purchase of shares which might include the Bank’s shares, then that would not offend against s159(2). The Claimant’s case would be that such documentation was part of the ‘cover-up’, of which the Defendant and others are accused, and, in any event, the
transactions would be covered by the statutory words “directly or indirectly”.
21. As for Ms Jones’ legal submission, she submits that Viscount Radcliffe’s dictum, upon which Mr Browne-Wilkinson lays such emphasis, cannot be taken at face value, if it would thus be used to found an argument that there can never be a loan or advance by a company for the purpose of acquisition of its own shares in the ordinary course of business. She submits that, if that is so, then it renders wholly nugatory and ineffective the proviso in subparagraph 3(a). It is only if there is financial assistance (directly or indirectly) for the purpose of the acquisition of the company’s own shares (hence falling foul of subsection 2(a)) that the proviso can come into play. She submits that, in this case, the proviso does arise, because (i) (unlike the company in Steen v Law) for the Bank, the lending of money was part of its ordinary business (ii)
(unlike the one-off transaction in relation to all the Company’s shares in Steen v Law) such lending of money by the Bank was (or was arguably) in the ordinary course of its business.
22. I am of course assessing the issue of Nigerian law, which is to be regarded as a question of fact by this Court, although there is, in this case, the important factor that both experts conclude that English law, and hence the view of an English judge, is highly influential in the resolution of the issue, and it is difficult to see, on the facts of this case, that the slight difference between the wording of the Nigerian and English
and Australian statutes is likely to be determinative. However, even Viscount Radcliffe’s words leave open the possibility of the operation of the proviso, and Ms Jones’ submissions are very persuasive. It seems to me that this is not an issue which can be resolved without reference to the facts themselves. The Defendant asserts that, under his managership, and no doubt, he would assert, with the agreement and involvement of others, the Bank was operating in the ordinary course of its business in providing facilities to its customers (including his fellow directors) to purchase
shares including, or perhaps even exclusively, shares in the Bank. The Claimant however would point to this case that this cannot have been in the ordinary course of its business, by reference to the very methods, including cover-up and non-disclosure, which were used to achieve an exercise which, if it be that these Tropics payments of £68m (N18.6bn) fall to be added to the balance of the N160bn, referred to in paragraph 6 above, in fact meant that 27% of the equity of the Defendant Bank consisted of shares either purchased by the Bank or with the Bank’s monies. This of
itself could not, the Bank would submit, be regarded as in the ordinary course of its business.
23. It can be seen however, that I am not persuaded by Mr Browne-Wilkinson that this is an issue of law which can be resolved on this application, and that, if it is arguable that the Tropics payments of £68m were indeed payments by way of advances to customers in respect of the acquisition of shares in the company, that might amount to advances made in the ordinary course of the Bank’s business of lending. Option A
24. The issue is whether there is an arguable case that the £68m was not simply misappropriated by the Defendant by causing its transfer to his companies, but was paid to reimburse those companies in respect of obligations owed by the Claimant to Tropics Securities as stockbrokers for the cost of acquisition of the Defendant’s shares, arguably not in breach of the provisions of s159 of CAMA. The evidence that supports the Defendant’s case is, on the evidence before me, very slender, and depends entirely on the oral assertions of the Defendant and of Mr Dada and Mr
Fabunmi, both of whom the Claimant alleges to be and have been in concert with the Defendant.
25. The starting point is the second affidavit of Mr Opasanya, the Claimant’s Nigerian lawyer. At paragraphs 15 to 16, he refers to two accounts involved in the Tropics Payments, the Prepayment account and the Time Deposit account, neither of which is an account designated for use in transactions with individual customers or third parties, and to the Claimant’s case that key senior individuals (including Mr Fabunmi
and a Mr Adebiyi, the Bank’s former Executive Director), known to be close to the Defendant were involved in the manipulation of those accounts, and the transfer of the Tropics Payments.
26. He then describes, in paragraphs 18 to 21, how the first Tropics payment of N10bn consisted of three manager’s cheques (bank drafts), drawn on the Prepayment account in favour of Tropics Securities, Tropics Properties and Bankinson in the aggregate amount of N10bn, issued on 11 May 2009, following a letter from Tropics Securities dated 8 May 2009, marked for the attention of Mr Adebiyi (and copied to Mr Fabunmi), simply stating “as discussed, kindly issue the cheque for share payments in the following names”, identifying the three companies and the sums making up the N10bn.
There were no enclosures in the letter nor any explanation of which precise “share payments” or transactions the request for a cheque related. On 11 May 2009 Mr Fabunmi instructed that the managers’ cheques be issued and be debited to the
27. Mr Opasanya continued: “25. When the issuance of these cheques was [subsequently] investigated by the Bank’s Inspection Department, Mr Fabunmi
claimed to have sought and obtained the authorisation of his direct supervisor, Mr Adebiyi for the issue of the cheques and that he himself was not fully in the picture. Mr Fabunmi claimed that he was informed by Mr Adebiyi that the cheques represented payment in respect of the Bank’s shares purchased by Tropics Securities on behalf of the Bank.
26. The Bank in its investigations has been unable to find any evidence to support the claim that the cheques were issued as payment for the purchase by the Bank of the Bank’s own shares.
28. Mr Opanasya stated (in paragraph 27) that manipulating the Time Deposit account and the Prepayment account in order to issue the three managers’ cheques (whether to pay for shares purchased on behalf of the Bank or otherwise) was highly irregular, and that such purchase ought to have been recorded in the Bank’s books by way of a debt to a specific investment account. Other than the letter from Tropics Securities there was no other documentation to support this purported purchase of shares. He said:
“It is remarkable that the Bank should have made a payment of such magnitude without at the very least being provided with a schedule of the shares purchased, the number of units purchased and the price at which they were purchased or, alternatively, contract notes in respect of the shares
29. In paragraph 28, he contrasted the brief letter from Tropics Securities of 8 May 2009, leading to the payment of N10bn, with the letters from Summit, setting out in great detail the shares purchased, the number of units purchased, the price at which the shares were purchased and the total price payable by the Bank for the shares: unlike the ‘share support scheme’, where it appeared that the Bank’s funds had been used for
the acquisition of the Bank’s own shares, as regards the N10bn payment, the Bank had been unable to find any evidence that its proceeds were used to acquire any of the Bank’s own shares.
30. Mr Opasanya then deals with the balance of the Tropics payments, identifying in relation to the N3.35bn (£14,274,556) payment on 18 May 2009 that it was pursuant to a similar letter dated 15 May 2009 with materially the same wording as the earlier letter, again not specifying what shares were allegedly purchased on behalf of the Bank. In relation to each of the Tropics payments, Mr Opasanya confirms that “there is no evidence that the payments were in fact used to purchase any shares on behalf of the Bank” (paragraphs 34, 34.6, 34.15, 34.19, 34.28, 34.32, 34.36 and 34.40).
31. The Defendant’s account is given in his first witness statement of 1 April 2010, confirming (at paragraph 109) that: “to the best of my knowledge and belief, the [Tropics] payments … were reimbursements in respect of the purchase of shares made pursuant to the Bank’s mandate.”
32. At paragraph 113 he stated that he was aware that the Bank had been purchasing shares since April or May 2007, and that Tropics Securities (along with ISL and Summit) were brokers frequently used by the Bank for that purpose, and at paragraph 117 that in about late January 2009 Mr Dada informed him that the Bank had not paid Tropics Securities the sum of N16bn “in respect of the purchase of shares on its mandate”. He acknowledged (in paragraph 119): “that the amount of credit which Tropics Securities afforded the Bank in the course of these share purchases came to be exceptionally high. At the same time I had in mind the fact that there was a longstanding business relationship between Tropics Securities and the Bank and there was a high degree of trust between those responsible for managing their mutual business … I had no doubt that the Bank would meet its obligations (when agreed) and it never occurred to me that anyone at the Bank would seek to dispute Tropics Securities’ entitlement to be paid what was owed to it.”
33. He said, in paragraphs 121 to 122, that he accepted that for such a situation to have arisen there must have been a lack of proper control at Tropics Securities and within the Bank.
However: “I had no reason to monitor what Mr Dada was doing. I was extremely busy carrying out my responsibilities for the Bank … Tropics Securities knew its customer well and therefore had every confidence that the Bank would meet its obligations. … In other circumstances it is fair to say that I might well have ‘hit the roof’ if told this. For example, in no circumstances would it have been acceptable for another Tropics Securities customer to be afforded such extraordinary latitude.”
34. He said, in paragraph 124, that he spoke with Mr Adebiyi “as the individual responsible for the Bank’s share purchase mandate. Even though I was comfortable that the Bank would pay its debt provided it was satisfied that the amounts outstanding were due, the size of the debt was, on any view, substantial … my immediate concern was that it could potentially cause a loss of confidence in the Bank if it were to be perceived that the Bank was facing liquidity issues. I therefore told Mr Dada to speak to Mr Adebiyi in order to persuade the Bank to agree to pay the amounts outstanding as soon as possible.” He added, in paragraph 125, that he was not involved in arranging the later Tropics payments, although Mr Dada did tell him that the Bank was paying off its debt.
35. It is in paragraph 110 of his second witness statement that the Defendant makes the statement which (as set out in paragraph 8 above) Mr Browne-Wilkinson describes as his change of case from that set out in paragraph 37 of the Defence and Counterclaim (in paragraph 5 above) and in paragraph 109 of his first witness statement, set out in paragraph 31 above: “The Bank’s case in relation to the purchase of shares in the Bank is based on a fundamental misunderstanding. There was never any scheme under which the Bank purchased its own shares for its own benefit, and, as far as I am aware, the Bank never purchased its own shares for its own benefit.”
36. Mr Dada’s evidence, in his first witness statement, was (in paragraph 57) that, Mr Fabunmi, upon his arrival as the new Financial Controller in about November 2008, wanted to know what level of stock the Claimant had purchased and what, if any, outstanding obligations the Claimant had in respect of payments for these purchases, and conducted a detailed exercise by liaising with the three nominated stockbrokers.
He recalls Mr Fabunmi saying at the time that within the Bank it would be very difficult for him to carry out his own reconciliation of all share purchases for the previous year as he had not personally been involved.
37. He said (in paragraphs 59 to 61) that he was not concerned about the extent of the backlog, but “needed the Bank to pay us for the shares that it mandated us to acquire”. In paragraph 67, he says that Mr Adebiyi agreed in early May 2009 that he would authorise a substantial payment, and asked him to send the Bank a letter from Tropics Securities requesting payment of N10bn in the first instance. His letter did not give details of the shares purchased on behalf of the Claimant because “I had already sent this information to the Bank with my earlier payment demands and these demands had been discussed and agreed with Mr Adebiyi.” As for his letter of 15
May 2009, he states, in paragraph 76, that he was “simply asking the Bank to reimburse Tropics Securities for those share purchases by paying the amounts owing direct into the loan accounts of the Bank’s subsidiaries which had been used in order to finance the purchase of the shares in the first place.”
38. Mrs Akingbola, the Defendant’s wife, gave a confirmatory statement, but was unable to add a great deal. She said, at paragraph 26, that Mr Dada told her about the existence of the substantial backlog in payments by the Bank for the acquisition of shares by Tropics Securities, and that she “was concerned by this and … asked him to check what was owed to Tropics Securities and in respect of what transactions so that this could be taken up with the Bank”.
39. She concluded, at paragraph 32, that the payments by the Claimant to the various Tropics companies “are all consistent with my recollection and understanding that they were repayments of borrowings by Tropics Group companies in respect of the purchase of shares.”
40. Mr Fabunmi stated, at paragraphs 17 to 20 of his first witness statement, that when he became Financial Controller in November 2008 he conducted an analysis of the Bank’s trading and other accounts and ascertained that at that time from the Bank’s general ledger it had expended approximately N161bn on the purchase of shares in the Bank itself between April 2007 and November/December 2008: N161bn was a very significant sum to have expended on shares and therefore he was keen to obtain a better understanding of the full extent of the Claimant’s commitments and liabilities in this area, and establish whether the N161bn represented the total value expended on shares, or whether there were still sums which had yet to be paid or processed.
41. At paragraph 24, he stated that he then turned to consider whether there were any outstanding payments due from the Bank to Summit, ISL and Tropics Securities. Mr Adebiyi asked each of Summit, ISL and Tropics Securities to check their records with a view to confirming how many shares had been acquired and details of any outstanding payments.
42. Mr Fabunmi, in paragraphs 25 and 26, describes how he had little involvement with Summit, but there were said to be outstanding payments due to Summit of about N400m (£1.5m). In the case of Tropics Securities, he describes in paragraphs 27ff how he was told by Mr Adebiyi in early May 2009 that very significant amounts were owing to them in respect of transactions which went back as far as July or August 2008, and that he had reviewed the various payment demands by Tropics Securities and was satisfied that the amounts claimed were due. Mr Adebiyi explained to him
that they related to the purchase of shares in the Bank which he had mandated and that Tropics Securities would be writing to him in due course to re-request payment. Mr Fabunmi was “happy to proceed on the basis of his verbal confirmation, but on each occasion when I was asked to process the payment demands, I spoke with him to confirm that the specific payment amounts should be processed”.
43. He states, in paragraph 30, that when he received the 8 May 2009 payment request, he immediately spoke to Mr Adebiyi, due to the large sum of money involved. Mr Adebiyi explained to him that back in 2008 the Claimant had agreed to finance the purchase of a substantial number of unregistered shares on behalf of investors and customers of the Claimant, using Tropics Securities as one of its brokers, and the amount now owing to Tropics Securities was in the region of N16bn, and in addition, substantial interest had accrued: and that due to liquidity issues payment to Tropics
Securities would need to be made in stages.
44. Mr Fabunmi concluded: “31. … I had worked with Mr Adebiyi for over five years and trusted his integrity and judgment completely. I had no reason to question or doubt what he was telling me in relation to these outstanding payments … Nevertheless I did independently call Mr Dada to check that Tropics Securities had the shares in question before each payment request was met.
36. … Mr Dada was, and still is, a non-executive director of the Bank. I would have no reason to doubt either his confirmation or that given by the CFO Mr Adebiyi. It was not my responsibility to audit the decisions taken by Mr Adebiyi to acquire the shares or to question his confirmation that payment was now due.”
45. It is clear that Mr Fabunmi does not say that he saw any documents to justify such payments, whether in addition to the N161bn that he had apparently reconciled on his audit in November 2008, or at all.
46. Mr Jimoh, the Head of Inspection Group of the Bank since November 2009, stated in paragraph 10 of his witness statement that the existence of what he calls the illegal share purchase scheme was kept hidden from the Bank’s Board of Directors, external auditors and the Central Bank of Nigeria, and that it was not until September 2009 that the significant sums which had apparently been spent on such share purchases were recorded by Mr Fabunmi in the Bank’s books as an investment. He explains, in paragraph 11, that neither he nor any members of the Inspection Group who had been involved in the Bank’s investigations had come across any written instructions given
to the stockbrokers involved in buying the Bank’s shares, nor of their terms of engagement.
47. As to the N18.6bn paid to the Tropics Companies, Mr Jimoh notes, in paragraph 14, that the Defendant’s case is that it was reimbursement for the cost of shares purchasedon the Bank’s behalf by Tropics Securities under the share purchase scheme, notwithstanding the lack of any contemporaneous documentation indicating the units of shares that had allegedly been acquired for which the payment is said to be a reimbursement.
48. He confirms, in paragraphs 16 and 17, that there was in late 2008 and early 2009 a reconciliation exercise undertaken by the Claimant to ascertain how many units of the Bank’s shares had been purchased by the Bank as of 31 December 2008, which showed that, as of 31 December 2008, 3,748,130,591 units of the Bank’s shares had been purchased through ISL, Summit and Tropics Securities between 2007 and 2008, at a cost of N140,969,395,020.83, broken down as per a schedule. There were memos,
with attached letters, requesting payment and/or contract notes or other evidence of the number of units of the Bank shares purchased by the stockbroker. In those instances where contract notes could not be located, the payments to the stockbrokers had been matched to units of shares in the records. In this way the Claimant satisfied itself that as at 31 December 2008 Tropics Securities had acquired and been paid for the Bank’s shares in the amount of 283,357,199 units at a cost of N8,277,181,901.93.
There was also a schedule showing the total number of units of the Bank’s shares held by ISL and Summit on the Bank’s behalf.
49. In paragraph 20, he stated that no such correspondence as is referred to by Mr Dada, being requests for payments in respect of a backlog, has been located and that Mr Fabunmi did not provide copies of any such correspondence when he was questioned about the transactions at various times between September and November 2009, at which time he had unfettered access to the Bank’s records.
50. Mr Jimoh then describes, in paragraphs 21 to 23, the contrast between the lack of any documentation relating to sums due to Tropics Securities, compared with the clear audit trail that existed in relation to a similar claim by Summit. On 30 January 2009 Summit wrote to the Defendant, attaching evidence of the units of the Bank’s shares which Summit said it had purchased. Summit’s claim for payment in respect of the shortfall was investigated, and compared with the Claimant’s records, over a period of
some five months, and in the end the Claimant agreed to pay half of Summit’s claim of approximately N312m in three monthly instalments.
51. Mr Jimoh concludes: “24. Given the way the Bank dealt with the shortfall in payment to Summit by way of a reconciliation process that lasted for about five months, it is inconceivable that it would not have conducted a similarly lengthy audit had it received an authentic request from Tropics Securities for payment in respect of a shortfall, in order to ascertain whether any such request was well-founded. This is more so when it is borne in mind that the alleged cumulative shortfall of N18.6 billion was approximately 50 times as much as that paid to Summit (N381 million) in
respect of its shortfall and more than twice the total amount that had previously been paid to Tropics Securities for any share purchases (according to the reconciliation carried out as at 31 December 2008). However, on the contrary, no such audit exercise was carried out. In the first instance, N10 billion was paid to the Akingbola Companies a mere three days after 8 May 2009 when the Bank supposedly received a letter of demand from Tropics Securities, apparently on the basis of the
oral discussions between Mr Adebiyi, Mr Dada and Mr Fabunmi. In the second instance, 11 payments totalling N8.6 billion were paid principally to Akingbola Companies, mostly without any written demands and, again, apparently on the basis of conversations between Mr Adebiyi, Mr Dada and Mr
25. The Bank’s case remains that the payments totalling N18.6 billion to the Akingbola Companies and others in May and June 2009 were straight misappropriations of the Bank’s funds. The payments might have been made under the guise of the share purchase scheme but thus far there is not one iota of evidence of the Bank’s shares allegedly purchased.”
52. Finally in this regard Mr Jimoh refers, in paragraphs 56 to 58, to the way that Mr Fabunmi in the end (in November 2009) accounted for the payments to the Inspection Group. He provided a table which showed that Tropics Securities had acquired 1,397,684,119 units of the Bank’s shares at a value of N47.7bn, including the shares allegedly purchased with the N18.6bn which is the subject of the Tropics claims. He continues:
57. It is my view that this table is … a fiction. On his own evidence … Mr Fabunmi did not know the details of the Bank’s shares, including the number of units, that had allegedly been purchased by Tropics Securities for which the N18.6bn was said to be a reimbursement. Therefore I cannot see how he was able to calculate the total number of shares that had apparently
been purchased by Tropics Securities … The only information he had was the total amount of the payments which had been debited to the Bank’s Time Deposit Account supposedly in connection with the purchase of the Bank’s shares.
58. As such, I believe that what Mr Fabunmi did in reaching his conclusion that Tropics Securities had bought 1,397,864,119 units of the Bank’s shares was to ascribe a fictitious price to the shares, which he claims were acquired by Tropics Securities for which the payments of N18.6bn was said to be a reimbursement … Mr Fabunmi simply ascribed a notional share price of N18.75 to the shares allegedly purchased with the payment of N18.6bn and from this calculated the number of units allegedly purchased. This was pure reconstruction by Mr Fabunmi … if the shares were allegedly purchased over a period of time, they could not all have been acquired at the
53. The Defendant put in a second witness statement. He stated (in paragraph 131) that he “had no reason not to believe” that documents supporting the case were within the Bank’s records, and that he was unable to obtain the records in Tropics Securities offices, to which he currently did not have access, and which would also show that the claim to payment was entirely valid. With regard to the payments to Tropics and
i) (Paragraph 132): “There is a clear difference between the Summit claim,
which was unclear and doubted and the well known outstanding claim of Tropics, which was not doubted but could not be paid due to liquidity problems …”
ii) (Paragraph 133):
“As I have already stated, the money outstanding to Tropics Securities had been the subject of almost 8 months of discussions, and the only reasons it had not been paid was the Bank’s lack of liquidity. There was no need for any lengthy or complicated investigation because it was acknowledged that the money was owed.”
54. Mr Dada, in his second witness statement, also referred to the documents he believed would be found in the Tropics offices, which had been sealed by the Economic and Financial Crimes Commission (“EFCC”), which documents he said should include correspondence between Tropics and the sellers of the shares, copies of letters sent to the Bank confirming their purchase, the share certificates and the relevant payment requests.
55. Mr Fabunmi put in a short second witness statement, standing by his previous account. However he made no response to paragraph 58 of Mr Jimoh’s witness statement, set out in paragraph 52 above.
56. I have referred in paragraph 9(i) above to the difficult task which a Claimant has, faced with an assertion of a defence, in persuading a court to reject such case summarily as unarguable. In particular, Ms Jones QC understandably relies on the assertion in the second witness statement of the Defendant, set out in paragraph 53 above, that he believes that there are documents which will support or corroborate the case which he and his witnesses are putting forward, which is said by the Defendant to be incredible. It is obvious that, where judgment is sought summarily, prior to disclosure by the Claimant and to the taking of interlocutory steps such as summonses for production of documents by third parties, it would inevitably be open to a defendant to assert that, even though he may not have a credible defence at present, he is being deprived of the opportunity of establishing that defence if judgment is given against him before any documents can be obtained. Thus there can be cases where, if it can be shown that there may be documents, not presently in the possession, custody
or power of a defendant, which might become available by the time of trial, that could be, within Part 24.2 a “compelling reason why the case … should be disposed of at a trial”. It can even found the basis for an application, not made in this case, for disclosure prior to the resolution of a Part 24 application, such as was ordered by Goff J, prior to an Order 14 hearing, by way of an exceptional case for ordering discovery prior to summary judgment: Grindlays Bank Ltd v Henson (Commercial Court, 17 July 1980). Two areas are relied upon by the Defendant: first, documents which may be in the Bank’s possession, and, secondly, documents which may be in Tropics’
offices, which, as Mr Dada described (paragraph 54 above), have been sealed by the EFCC.
Documents at the Bank
57. I have set out above the powerful case that is made, particularly by Mr Jimoh, that, whereas there are documents in the Bank’s possession which document the share sales made through all three stockbrokers, including Tropics Securities, which were reconciled by Mr Fabunmi and his department in November 2008, totalling N161 billion (now the subject matter of the separate claim referred to in paragraph 6 above), there are however no documents which evidence any such share sales relating to the
payment of £68m (N18.6bn) by way of the Tropics payments. As to this:
i) Mr Jimoh and his team assert that they have found none. Mr Tickner, in his recent third witness statement referred to in paragraph 20 above, sought to cast doubt on this by reference to the documents there referred to. However, I remain wholly unimpressed by this suggestion. It is true that reference can be made to paragraphs 10 to 13 of Mr Jimoh’s second witness statement, which could be read so as to suggest that he is saying that there are no documents at all at the Bank evidencing any purchases of the Bank’s shares for their customers, but, as he explains in his third witness statement, it is clear that this is not what he intended to convey: and that in fact he was simultaneously casting doubt on the genuineness of such documents as there are (see paragraphs 46, 48 above) which relate to what he refers to as the Defendant’s new case (Option C, paragraph 8 above), while repeating that, in relation to the Tropics payments (paragraph 13), there is “no evidence of any shares allegedly purchased by Tropics Securities for which these payments could be said to represent a reimbursement”. The reality is, in fact, that:
a) All the four customers, the subject of the documents now exhibited by
Mr Tickner, were in fact expressly referred to by Mr Jimoh in his first
witness statement in describing, and exhibiting, the documents, which
indeed the Bank did have, showing the make-up of the N161 billion: Mr. Jimoh confirms that all four customers are recorded in the Claimant’s
books as owners of the Bank’s shares, although he asserts that this is a
front. He also exhibited to his witness statement a similar letter, from
another customer, to those subsequently produced by Mr Tickner.
b) However, in any event, as is clear both from Mr Jimoh’s exhibited schedule and from the documents now produced by Mr Tickner, none of these four customers had any dealings with Tropics Securities, but all of them dealt with the other stockbrokers. Thus the newly exhibited documents not only do not add anything but (i) do not evidence in any way the case made as to the £68m paid to Tropics, nor (ii) falsify Mr Jimoh’s case that the Bank has no documents justifying any payments to Tropics over and above those reconciled in November 2008.
ii) In any event, what seems to me to be significant, when it is suggested that there may, notwithstanding the Claimant’s evidence to the contrary, be
documents in the possession, custody or power of the Bank, is that there is no suggestion by any of the Defendant’s witnesses, and in particular by Mr
Fabunmi, that there were any such documents in the possession of the Bank in May 2009 when the payments were made. Mr Fabunmi does not say, as set out above, that there were any documents when he authorised the payments: he says he relied simply on what he had been told by Mr Adebiyi. Further, Mr. Fabunmi does not suggest that there were any such documents when he looked again and carried out his further investigation, at the request of the Inspection Group, in November 2009, when he did his reconstruction, referred to by Mr Jimoh, set out in paragraph 52 above.
Documents at Tropics Offices
58. It is indeed the case that the offices at Tropics were sealed by the EFCC, who locked the doors and took away the keys. A ruling was made at the instance of the Tropics,Companies by Mrs Justice Obadina on 16 December 2009, in the High Court of Lagos, when, in a lengthy judgment dismissing the Tropics Companies’ application, she concluded that there was nothing to prevent the Tropics Companies from making copies of the documents in the custody of the EFCC, and indeed that there was nothing stopping the Tropics Companies from transacting their business in their premises while the EFCC investigations were ongoing. It appears that the Judge accepted a sworn affidavit from EFCC that Tropics were permitted to enter the premises. Chief Fagbohungbe, the Defendant’s Nigerian lawyer, however stated, in
his first witness statement of 23 January 2011, that that decision was “rendered academic by subsequent events”, namely in that the EFCC obtained orders on 31 December 2009 for an interim attachment of various properties, including the Tropics offices, and that, although there is a pending appeal against that order in Nigeria, the attachment prevents entry into the Tropics offices. This is disputed by the Claimant, but more significantly the Claimant relies upon the second witness statement of Mr Opasanya, served as long ago as 8 July 2010, which exhibited an exchange of
correspondence between the Claimant’s Nigerian lawyers and the EFCC, when, by letter of 10 May 2010, those lawyers requested from EFCC “a written confirmation …as to whether it will allow Tropics Finance access to its office premises, even if such access will be supervised by the Commission”, and the EFCC’s Director of Operations replied, on 21 June 2010:
“The Executive Chairman has approved your request that the solicitors, witnesses and/or authorised representatives be granted access to Tropics Finance Limited as earlier requested by you. However this will be supervised by operatives and legal representatives of the Commission.”
59. Notwithstanding the exhibiting of these two letters to Mr Opasanya’s witness statement, no effort has been made by the Defendant to take up this suggestion. The reason is now given by Mr Tickner in his second witness statement that, although he accepts that those letters were exhibited on 8 July 2010, he had overlooked them (there being a change of representation on the part of the Defendant in November 2010), and the Defendant and Chief Fagbohungbe have confirmed they have not seen them. This is obviously most unfortunate, although the existence of the letters plainly detracts from any suggestion that in fact there would have been any difficulty in
obtaining entry to the offices for the purpose of taking copies of any documents there existing, had the Defendant only asked. However, no effort has been made at all, nor request made, by the Defendant, by Tropics or by Chief Fagbohungbe to obtain access to the premises, and the first such request was only made shortly before this hearing, by a letter dated 13 January 2011, to which the EFCC has made no reply. If reliance is
to be placed upon the absence of documentation which may exist in the Tropics offices – and again it must be pointed out that it is not suggested that, unlike Summit, Tropics supplied any such documentation in May 2009 when it made its requests for payment - the Court must be satisfied that reasonable steps have been taken to obtain such documents prior to summary judgment.
Assessment of the Evidence
60. Mr Browne-Wilkinson has laid considerable emphasis, so far as credibility of the Defendant is concerned, on what he categorises as the Defendant’s change of case referred to in paragraph 8 above, exemplified, as he submits, by reference to acomparison of the paragraphs of the Defence and Counterclaim, set out in paragraph 5 above, and paragraph 109 of his first witness statement, set out in paragraph 31 above, with his correction of the misunderstanding set out in paragraph 35 above. That may reflect upon the arguability of the Defendant’s defence to the additional claim in
respect of the N161bn share support scheme, not the subject of this application, but even if it be a change of case, and even if it does reflect upon the Defendant’s credibility, I do not consider that it is determinative in relation to the fundamental question which I am now addressing in respect of Option A, namely - whether or not there was legality or justification in respect of the N161bn - were the £68m Tropics
61. As to that, and subject to the question of documents referred to above, a convincing case is made out for the Claimant:
i) Payments amounting to £68 million were paid out by the Claimant bank to the Defendant’s companies in a period of six weeks: £41m in one day, on 11 May.
ii) An audit was carried out by Mr Fabunmi and his team in November 2008 in
respect of the share sales, showing the total of N161bn in all, N8.2bn of which related to Tropics (paragraphs 41 and 49 above). Somehow a further sum of twice that amount was missed, and was now said to be owing to Tropics.
iii) Notwithstanding the care which Mr Fabunmi and his team had taken in
analysing the documents in November 2008, the sums totalling £68m were
paid out in May-June 2009 without any check or audit, without any supporting documentation and on the say so of Mr Adebiyi: even the Defendant’s wife apparently thought the position would be checked before being taken up with the Bank (paragraph 38 above).
iv) Mr Dada says that it was Mr Adebiyi who asked him to send to the Claimant, addressed to him, a letter from Tropics Securities requesting the payments (paragraph 37 above).
v) The method which was used involved, on Mr Opasanya’s case, an unusual and inappropriate manipulation of the Time Deposit account and Prepayment
Account (paragraphs 25 and 28 above).
vi) The sum is said to have involved in fact not N18.6bn but N16bn, with a
substantial dollop of interest on top (paragraph 43 above).
vii) As Mr Jimoh points out (paragraph 50 above) – and see also Mr Fabunmi’s evidence (paragraph 42 above) – the way in which the £68m was paid out to Tropics contrasts strangely with the treatment of the claim for payment by Summit. That claim was, unlike Tropics’, accompanied by documentation, and five months was taken on investigating it, prior to a compromise payment of half the amount claimed – and that in relation to a sum one fiftieth of the amount claimed by Tropics Securities. The Defendant’s explanation (paragraph 53(i) above) rings somewhat hollow.
viii) There is no evidence at all from, or of, any customer for whom shares were purchased by Tropics Securities which are said to form part of the £68m.
ix) Finally, there is the unanswered allegation referred to in paragraph 52 above, that when it came to subsequent investigation in November 2009, Mr Fabunmi put together a wholly fictitious justification for the payment, and even then without any documentation to support it.
62. I conclude that the asserted defence put forward as to the £68m Tropics payments is very shadowy indeed. I consider the explanations wholly improbable, and unlikely to be supported by any documentation, even after disclosure by the Bank or access to Tropics’ offices. It seems to me likely that Option C will not arise, because, in respect of consideration of Option A, it is highly likely that the truth is as succinctly described
by Mr Jimoh in paragraph 25 of his first witness statement, set out in paragraph 51 above.
63. However, I am conscious of the fact that, if I were to give judgment, I would be concluding summarily that there has been dishonesty by the Defendant, by Mr Fabunmi and Mr Dada, and that all three have given false evidence to this Court (and relief in such circumstances under s558 of CAMA would plainly not arise). I bear in mind also that there are in any event other issues which remain for a trial, pending which there remains a freezing order. I conclude that, having been satisfied that the
defence is shadowy, and that I am very nearly minded to give judgment in respect of the Tropics payments, I should take the course of granting conditional leave to defend.
64. The principles upon which a conditional order can in those circumstances be made have been established since M.V. Yorke Motors v Edwards  1 WLR 444 HL.
A condition should not be imposed whose fulfilment is impossible. It is equally clear however that the simple fact that a defendant claims to have no assets is insufficient, for there must be an enquiry as to whether there is a source of funding which would enable satisfaction of the condition. In this case it would appear there may be free assets and/or assets to which the Defendant has an entitlement, such as the Trust assets (whether or not those referred to in paragraph 2 above), which have been referred to in evidence, which may be available to satisfy such a condition. Ms Jones
asked to be able to address this question, if it arose, and I anticipate argument when judgment is handed down and/or the order is settled as to the proper condition to be imposed upon the grant of leave to defend.
The Second Fuglers Payment.
65. This can be taken relatively shortly. I refer to paragraph 10 above, in which the respective arguments are fully set out. One significant factor is that, as there recorded, Mr Browne-Wilkinson conceded that if the Claimant is successful in respect of all the Tropics payments, he would not seek recovery of this payment, although strictly, on the basis of his own argument, that concession does not follow. As there set out, his case is that, even if the monies were ‘repaid’, then that is no answer to a trust claim, by reference to Mr Ward’s case. Ms Jones does not accept that what the Claimant has is such a trust claim. Of course, if the monies that were used to ‘repay’ the Fuglers’ payment were in fact the Bank’s money, then there was no such ‘repayment’ in any event, but, in the light of my conclusion that (conditional) leave to defend should be given to the Defendant in respect of that issue, that has not yet been determined.
66. I conclude that it is at least arguable that Mr Ward’s case can and should be distinguished. It is quite clear that both Browne-Wilkinson VC at first instance ( BCLC 43 at 51c) and Fox LJ in the Court of Appeal ( 1 WLR 863 at 870D) concluded that in that case, because Mr Ward was counterclaiming an unquantified sum for consultancy services to set-off against the £5.2m which was being claimed against him, “since any such claim is unquantified, any set-off would have to be equitable”; and Fox LJ referred to Lord Denning MR in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc  QB 927 at 974-975 for the principle that it is not every cross-claim that can be deducted. It seems to me at least arguable that, although the point was not specifically addressed in the House of
Lords so far as I can see, the basis upon which, in Mr Ward’s case, his cross-claim was not permitted to be set off is that it was thus only an equitable set-off. In this case, the sums which were paid into the Bank, emanating from Tropics, which purportedly repaid the second Fuglers payment, were quantified, and the Defendant would have a quantified legal set-off, even if the Claimant’s claim were a trust claim. Mr Browne- Wilkinson submits that the dispute as to whether there was a valid ‘repayment’ is a matter entirely to be resolved by way of a counterclaim, and should not prevent judgment for his claim. I consider however that it is at least arguable that any dispute as to whether there has been a repayment arises in the context of an arguable defence and/or legal set-off.
67. There should therefore be leave to defend as to the second Fuglers payment, and as to the first Fuglers payment I refer to paragraph 4 above. With regard to the Tropics payments, I give leave to defend conditional upon payment into Court of a sum to be agreed or ordered within a specified time limit, in default of which there will be judgment in the sum of £68m or N18.6bn or such other sum as is agreed or ordered, plus interest.