UBN Drags Judge Before NJC, EFCC over Alleged Collusion with Churchgate Owner


• Bank accuses Mahtani of refusing to repay $82m loan for construction of World Trade Centre, Abuja
• Company denies allegation, says Union Bank got judgment in its favour

Davidson Iriekpen

Union Bank of Nigeria (UBN) Plc has dragged a judge of the Federal High Court, Justice Ibrahim Buba, before the National Judicial Council (NJC), the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS) for alleged professional misconduct.

The 44-page petition with attachments accused the judge of allegedly colluding with one of its huge debtors, Mr. Bhagwani Mahtani, a naturalised Nigerian businessman of Indian origin and chairman of the Churchgate Group, to defraud the bank and pervert the cause of justice.

According to the petition, the judge used his intellectual prowess to bend the rules and use his position to the advantage of the debtor by allegedly turning the law upside down in favour of the debtor – Mahtani the alter ego of First Continental Properties Limited, a subsidiary of the Churchgate Group.

However, the Churchgate Group has denied the allegation in the petition, insisting that Union Bank actually got judgment in its favour on February 28, 2018 but was dissatisfied with the judgment and had gone on appeal.

The petition alleged that Justice Buba deliberately destroyed the legal mortgages that were entered into to guarantee repayment of a $68 million loan originally granted Mahtani and First Continental Properties in 2011 for the construction of the World Trade Centre (WTC), Abuja.

The World Trade Centre, Abuja, is a complex of eight buildings under construction in the Central Business District of the Federal Capital Territory (FCT). There are seven skyscrapers planned for the site, two of which are nearing completion, with the others either under construction or at various stages of development.

The 58-paragraph petition from Union Bank accused the judge of delivering a judgment that appeared most unreasonable and difficult to understand, thereby conferring benefit to the “unrighteous at the expense of the righteous” in an alleged bid to make financial gains.

The petitioner claimed that the judge, by his questionable judgment, exposed the bank to great risk, as the loan facilities extended to the company were part of its depositors’ and shareholders’ funds.
It urged the anti-graft agency and the NJC to intervene and investigate the judge, saying it could not afford to lose such a huge amount of its depositors’ and shareholders’ funds to the debtor, particularly in this crushing economic environment.

The petitioner expressed utmost confidence in the EFCC and the NJC to carry out a prompt and painstaking investigation of the criminal allegations and the consequent prosecution of the offenders.
The crisis of confidence between Union Bank and Mahtani the alter ego of First Continental Properties Limited began on March 27, 2011 when a loan facility amounting to $68 million was granted to the company promoted by Mahtani.

According to the petition, the loan was to be used to build the then new Churchgate development in Abuja otherwise, known as the World Trade Centre, which Union Bank said has since been completed in Abuja.

The loan remains unserviced with an outstanding balance currently standing to the sum of $81,941,230.84 as of February 7, 2018.
The bank alleged that the debtor had at the time of obtaining the loan provided two legal mortgages as collateral for the loan tenor of the facility of four years and the loan was meant to be liquidated by April 30, 2015.

According to the petitioner, the loan was disbursed in U.S. dollars and the interest was initially fixed at 15 per cent per annum and payment was to be done through proceeds to be obtained from the sale of residential apartments and rental proceeds from the office space at the World Trade Centre, Abuja, and also from the rental proceeds of Plot 40 Afribank Street, Victoria Island, Lagos as well as Plot 473 AO Cadastral Zone, Constitution Avenue, Abuja.

The bank said payment was also expected from proceeds of other businesses of the company and its holding company – Churchgate Investment Ltd.

The petition stated that upon the application by the company, the loan was restructured by another offer letter dated March 13, 2015, endorsed by the directors.
But despite all the acknowledgements, Union Bank claimed that the company continued to default in the repayment of the loan.

In one instance, in a letter dated June 28, 2016, the defaulting company acknowledged its indebtedness to the bank by admitting owing it $61.089 million and proposed a repayment pattern of N250 million and N388,890 million in five installments.

But the loan increased to $81,941,230.80 because the debtor failed to service it.
However, while this was on going, the debtor proceeded to a Federal High Court in Lagos and filed Suit No. FHC/L/1334/16 between First Continental Properties Ltd vs Union Bank of Nigeria Plc.

The company sought 12 reliefs from the court. These reliefs, according to the petition, were a total reversal of the obligation of the defaulting customer – First Continental Properties Ltd – and contrary to its earlier admittance of responsibility towards the repayment of the facility.

The bank claimed that when the case presided over by Justice Buba went on trial, the court made contradictory rulings by declaring the loan facility illegal, voiding the legal instrument/agreement on the loan, and granting an order of perpetual injunction restraining the bank from exercising its right to appoint a receiver-manager, even after the same court also held that the amount owed the bank must be paid by First Continental Properties in another breath.

The bank claimed that the far reaching orders, among others by Justice Buba, were meant to destroy completely the risk assets or legal instruments, i.e. deeds of legal mortgages, upon which the bank would have fallen back on to recover the huge indebtedness of the company in the event it failed, refused or neglected to repay the debt, and the helplessness foisted on the bank by the orders.

Describing the judgment as a premeditated one, the bank wondered: having held that the company was indebted to the bank and should pay its indebtedness to the bank, how will the bank recover the money (without the institution of another time consuming suit), if the bank is no longer allowed to fall back on the collateral security of the facility if the company /debtor defaults on the facility.

The bank claimed that the conduct of the learned trial judge and the said alter ego of the company amounted to criminal perversion of justice, tantamount to financial or economic crimes, hence the call for a thorough investigation into the matter.

In the petition received in the office of the chairman of the EFCC on March 29, 2018 and the office of the Chief Justice of Nigeria on the same day, the petitioner claimed that the judge was unable to balance the interest of both parties because the risk assets that would have been used to recover the loan were fully destroyed by Justice Buba.

The third instance of misconduct, according to the petition, was the allegation that the judge failed to release the said judgment until March 22, 2018, that is, 22 clear days from the date he delivered the judgment, in violation of Section 294(1) of the Constitution.

This, the bank said, affected the perfection of its appeal at the Court of Appeal.
In another allegation of misconduct levelled against Justice Buba, the petitioner claimed that the debtor filed a new suit No. FHC/L/CS/370/2018 against the bank joining the counsel to the bank, Chief Ajibola A. Aribisala (SAN), seeking an order restraining Union Bank from acting and or purporting to act as receiver-manager whether by themselves or their agents, pending the determination of the suit.

According to the bank, Justice Buba who had foreknowledge of the matter that was brought before him ought not to have adjudicated on it.

But when First Continental Properties Ltd and Mahtani later discovered that the receivership action had finally been filed by Aribisala in two suits, the company rushed to the Federal High Court Registry seeking the particulars of the receivership suits instituted by the bank and claiming that the sister suit was already before Justice Buba.

The debtor further claimed, said the bank, that the two new suits, FHC/L/CS/413/2018 and FHC/L/CS/419/2018 should be assigned to Justice Buba, even though the matter was already before Justice Aikawa.

Following the granting of the ex-parte orders by Justice Aikawa, the company also wrote a petition to the acting Chief Judge of the Federal High Court that the case should be reassigned from Justice Aikawa to Justice Buba. Sadly the two case files were then moved again to Justice Buba, the bank said in the petition.

All these infractions, the bank claimed, were indicative that Justice Buba was working with the debtor to deny the bank the right to retrieve its money.
According to the bank, Justice Buba has used his position to obstruct the course of justice, adding that he also made another order that both parties should maintain status quo without giving the defendant (Union Bank) enough opportunity to even appear in court or be represented by counsel.

The petitioner argued that the judge committed a travesty of justice when he held that the contract for the credit facility in a foreign denominated currency between the bank and the company was illegal.
It said that the judge somersaulted in law when he held that the outstanding indebtedness of the company be converted to naira at the prevailing exchange rate of N158 to a dollar, being the prevailing rate at the time the credit facility was availed to the company in March, 2011.

The bank claimed that the judge also miscarried justice when he deliberately misinterpreted the Central Bank of Nigeria’s (CBN) circular of April 17, 2015 by averring that the bank was prohibited from granting the credit facilities to the respondent in U.S. dollars or receiving the repayment in dollars.
It stated further that Justice Buba cleverly and deliberately misinterpreted the law by holding that the bank granting the credit facility to the respondent in U.S. dollars and demanding same, was prohibited under the CBN Act.

The judge was also accused of holding that an upward review of the interest rate did not form part of the agreement between the parties to the loan.
The bank referred to the agreement via a letter dated June 28, 2016 where the debtor admitted that payment should be in U.S. dollars.
The bank claimed that this averment was not controverted and wondered why Justice Buba still looked the other way.

For the petitioner, Justice Buba’s orders ran contrary to the settled position of law, pointing out that the judge, in effect, was re-writing the law to suit a particular interest, which Union Bank said was a miscarriage of justice.
It claimed that the order to maintain the status quo preceded the release of the copies of an earlier judgment.

Also, following the order of receivership granted by Justice Aikawa, Mr. Kenneth Ufere on behalf of Union Bank, accused the debtor of initiating moves to have the processes transferred to Justice Buba.
THISDAY gathered that the case file was withdrawn on the order of the acting Chief Judge of the Federal High Court and first domiciled in the Office of the Deputy Chief Registrar of the Federal High Court, Lagos, and later transferred to Justice Buba’s court.

The bank argued that Justice Buba and the debtor were colluding to ensure that the bank never recovers its money, alleging further that the judge had turned himself to a contractor by providing succour for the debtor.

When contacted, a Churchgate official, who preferred to remain unnamed, but was conversant with the loan facility obtained by First Continental Properties and the attendant lawsuits, dismissed the allegation in the petition, saying that Union Bank actually got judgment in its favour on February 28, 2018 but was dissatisfied with the judgment and had gone on appeal.

He accused Aribisala of egging Union Bank into writing the petition and also disputed the sum of $81,941,230.80, which the bank had said was owed it after the inclusion of interest and penalties for defaulting on the loan.

“It is their lawyer who is causing this. He went and got an ex parte order without allowing us a chance to present our case in the matter. It was on that basis that the judge ruled that the status quo should remain,” he explained.

According to the company source, First Continental Properties was also dissatisfied with the judgment by Justice Buba and had gone on appeal and wondered why Union Bank, which got judgment in its favour had resorted to such underhand tactics.
He promised to make available all the documents and court decisions to THISDAY, adding that it was imperative that the company’s name is not sullied with the petition.

“As you know, the Churchgate Group has been in Nigeria for 50 years and we have maintained a good reputation. We will make all the documents available so that no one will ruin out hard-earned reputation,” he said.
Efforts, however, to reach Justice Buba on the petition proved abortive as his phone was switched off. A text message sent to his number was also unanswered.