Breaking Down the Access, Seplat Debt Debacle

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Oluchi Chibuzor attempts to untangle the raging debtor/creditor case between Seplat Petroleum Development Company, an indigenous oil firm and Access Bank, explaining that a seemingly simple matter is being compounded by one of the parties

It has often been argued that it is not a crime to borrow money from banks to grow businesses, but the problem is refusing to pay back the loan. This is the cruz of the dispute between Seplat Petroleum Development Company and Access Bank. This is because monies given out as loans are depositors’ funds/investments which must not be allowed to go down the drain.

Succinctly put, the meat of the extant case is that Seplat owes Access Bank Plc over $85.8 million and it’s either unwilling to pay or that it is erecting all manners of roadblocks to prolong or make it impossible for the bank to get back its funds.

To be sure, the lending to the oil company, a transaction that was carried out under the chairmanship of Dr Ambrose Orjiako, was done by the defunct Diamond Bank whose assets and liabilities Access Bank inherited in 2019 after its acquisition of the bank.
Before the bubble burst, Diamond Bank was one of the most talked about success stories in the banking sector, but bad debts, like the current one in dispute, saw it gasping for breath until Access Bank came to the rescue by acquiring it.

However, while Orjiako is not disputing that his company owed Diamond Bank and by extension Access Bank after the acquisition, his argument is that it was not Seplat that took the loan directly, even though as documents show, the money was used to the benefit of Seplat.

Emerging Facts

While it is now clear that Cardinal Drilling Services Ltd took the loan and used it to acquire four rigs for Seplat’s benefit, the oil company and its owners have criticised the debt recovery procedures as corporate bullying, a position that has been described as an attempt to whip up undeserved public sentiments.

Specifically, the bank obtained the facility from the defunct bank to purchase the CDS Rigs 101, 201, 202 and 203 and was secured by a fixed and floating debenture over Cardinal’s assets which were used to provide drilling services to Seplat.
For years, after every effort to retrieve the loan estimated at $86 million proved abortive, Access Bank eventually approached the court, claiming that there is an inter-company relationship between Seplat and Cardinal Drilling and that they are jointly promoted by Orjiako.

Also joined in the suit filed by Access Bank was Kalu Nwosu, who reportedly issued a personal guarantee and a statement of personal net worth as security to the facilities availed to Seplat.
Access Bank’s argument is that Seplat solely enjoyed all the benefits of the facilities granted Cardinal Drilling for the promotion and advancement of its businesses, maintaining that the oil company is the real debtor while Cardinal is merely a smokescreen for the obtaining the credit facility.

In December last year, precisely on the 20th, a Federal High Court, authorised a receiver/manager, Messrs Kunle Ogunba & Co, to enforce an ex parte motion requesting that Access Bank Plc takes over Seplat’s corporate headquarters at 16A Temple Road, Ikoyi, Lagos.

The bank further prayed the court to validate the appointment of Kunle Ogunba & Associates as the Receiver/Manager; validate the Receiver/Manager’s authority to take possession of the four Cardinal Rigs and other assets of persons and companies presumably connected to Cardinal drilling; restrain all defendants from disposing or dealing with the assets; and declare that the defendants have no right to enter into, or deal with, any of the assets.

Seplat, thereafter, approached the Court of Appeal which ruled in its favour by ordering the immediate suspension of the injunction and interlocutory injunction that allowed Access Bank the freedom to seal Seplat’s property and control their accounts.
The court also ordered Seplat to execute a bank guarantee with a reputable bank in the country for $20 million.
But what cannot be disputed, according to those in the know, is that Orjiako, along with his international partners jointly have about $45 million equity in Cardinal Drilling Services.

Apart from that, Access Bank insisted that Seplat has consistently disclosed in both its interim and annual reports that Cardinal Drilling is a related party, which significantly contradicts the substance of its denial.

Seplat’s Attack on Access Bank’s Lawyer

While that back and forth was going on, efforts by the lawyer to Access Bank Plc, Mr Adekunle Ogunba (SAN), to discharge his professional duties to the bank riled the defaulting oil company, leading to a petition by Seplat.
The senior lawyer denounced Seplat’s decision to drag him before the Legal Practitioners Privileges Committee (LPPC) and the Legal Practitioners Disciplinary Committee (LPDC) of the Nigerian Bar Association (NBA) for alleged gross misconduct and unethical practices.

Ogunba posited that the so-called petition against him, was meant to create all kinds of roadblocks which would delay the payment of the debt the oil firm owes Access Bank Plc.
Ogunba advised the oil company that rather than embarking on a wild goose chase, it should indeed begin the process of liquidating its huge financial obligation to the bank.

Insisting that the attempted blackmail and intimidation will not work, the senior lawyer noted that he was merely discharging his duties to his client in the court case between the two companies.
“It is obvious that the petition (if any) is an attempt to blackmail me and avoid the payment of huge indebtedness of Seplat to Access Bank Plc and nothing more.

“Seplat is better advised to take steps to liquidate its debt rather than attempt to intimidate me, a lawyer merely doing my duties as such. Once again, I reiterate the fact that the petition has not been formally brought to my attention for a formal reaction,” he stated.
He expressed surprise that he was being targeted by the oil firm rather than facing the issues at stake , asking Seplat to focus on the substance of the case, rather than attempting to hound him.

“It is stock in trade of these huge debtors to peddle petitions all around in a bid to avoid the payment of their debts. I was not there when they borrowed the funds and they have obviously targeted my person for the nuisance value rather than take steps to liquidate the debt.
“This particular debt was part of the huge debt overhang that sunk the defunct Diamond Bank and they don’t mind if Access Bank goes under for their sake too,”he noted.

Documents Show Seplat Used Cardinal to Obtain Loan

According to documents filed in court by the bank through its lawyer, Ogunba, it is obvious that Cardinal Drilling is a subsidiary of Seplat.
However, Seplat argued that Access Bank could not hold it liable for a loan obtained by a third party (Cardinal Drilling) and faulted Ogunba’s claim that Seplat employed Cardinal Drilling as a ‘shell company’ for the obtainment of the facility.

But contrary to Seplat’s claim that there was no documentary information exhibited to buttress the claim, findings from the court processes filed by Access Bank showed that the plaintiff provided proof of Seplat benefiting from the loan.
After Cardinal Drilling obtained the loan and disbursed it, the company passed the obligation onto Seplat as as shown in the company’s statement of account, which Access Bank exhibited in court.
The bank has details of Seplat transferring funds into Cardinal Drilling’s account, which in turn would transfer it to Diamond Bank (which was later acquired by Access Bank), as loan repayment.

To the bank, Seplat is the real debtor, which was why the bank and its lawyers joined Seplat in the debt recovery suit, obtained and executed the order against it, which is now a subject of appeal.
Sources close to the bank say rather than Seplat repaying the loan, there is a bid to tarnish the image of Ogunba by writing a petitions against him, insisting that based it is based on a ruling by Justice Aikawa, who, despite objections by Seplat’s lawyers, granted Ogunba’s application.
The petition against Ogunba was written even before the ruling on Seplat’s application to discharge the order made by Justice Aikawa was given.

Seplat’s petition was submitted on December 18, 2020 while Justice Aikawa delivered his ruling on December 24, 2020.
Despite the indigenous oil firm’s insistence that it wasn’t complicit, findings from the court processes filed by Access Bank showed that the plaintiff provided proof of Seplat benefiting from the loan, with Cardinal Drilling passing the obligation to Seplat after obtaining the loan and disbursing it.

The company’s statement of account, which Access Bank exhibited in court, has details of Seplat transferring funds into Cardinal Drilling’s account, which in turn would transfer it to Diamond Bank (which was later acquired by Access Bank), as loan repayment.
Access insists that Seplat is the real debtor, which was why the bank and its lawyers joined Seplat in the debt recovery suit, obtained and executed the order against it.

Access Bank Wants Seplat Lawyers Punished

In furtherance of its efforts, Access Bank Plc has also written the Legal Practitioners’ Privileges Committee (LPPC) and the Legal Practitioners’ Disciplinary Committee (LPDC), demanding the sanctioning of Mr Babajide Koku (SAN) as well as Etigwe Uwa (SAN), both lawyers to Seplat, for alleged professional misconduct in the handling the court case between both companies.

In the petition against Koku and Uwa, the bank stated that both senior lawyers engaged in acts unbecoming of legal practitioners and contravened well established legal principles in bad faith.
In the letters to both bodies, Access bank accused Koku of “Aiding and abetting his client’s engagement in acts contravening well established legal principles and illegalities all in bad faith to prevent his clients from fulfilling their corporate responsibilities.”

The bank further maintained that the senior lawyer “Engaged in acts calculated to deliberately obstruct, delay and ultimately affect the administration of justice.”
It stated that the email written conveying the execution of the order of the Court of Appeal to the bank was replete with fallacies, insisting that notwithstanding the fallacies contained, Koku failed to immediately caution his client, Orjiako to refrain from instructing his company Seplat from making such misleading statements.

“It is pertinent to state that the suspension of the interlocutory injunction was to be secured by a Bank Guarantee issued in favour of the Deputy Chief Registrar of the Court of Appeal in line with the ruling of the Court,” the bank stated

This is why many observers see the dispute between Seplat and Access Bank as completely unnecessary. They believe that the huge amount spent on unwarranted litigations and media should have been used to negotiate the loan.

“Instead of going back and forth, Seplat should come up with a plan to pay back their obligation. You can’t borrow depositors money, and then run to court for protection after failing to pay back. The $20 million deposited with the Chief Registrar of the Court to secure unfreezing of their assets should have been a starting point to paying down that debt instead,” advised a public affairs analyst