By Sola Olusoji
The publication on THISDAY Business page on Monday did not provide a fair analysis of the legal tussle between Access Bank and Seplat Petroleum over the loan to Cardinal Drilling Services Limited. It was a job done for Access Bank.
THISDAY should, in the spirit of fairness, also allow this other side of this dispute. There have been persistent concerns that the ongoing legal battle is no longer about debt recovery. This concern is borne out of what many observers see as a campaign of calumny against Seplat and its Chairman, Dr. ABC Orjiako.
This manifests, among others in wild claims that the surgeon-turned business tycoon owes Access Bank Plc some millions of dollars, which, instructively, keeps changing with each writer.
Obviously, the entire campaign of lies is built on a quicksand of the strange lawsuit, which Access Bank instituted against Seplat, leading to the ex parte orders, interlocutory and Mareva injunctions secured by Access Bank at the Federal High Court Lagos in November 2020. The injunctions were however suspended by the Court of Appeal in January 2020.
Meanwhile, the fact, as has been widely reported in the media, remains that Cardinal Drilling obtained credit facilities from Diamond Bank (now Access Bank) to procure four drilling rigs (CDS Rigs 101, 201, 202, and 203) between 2012 and 2014.
The loan was secured with Deeds of Fixed Debenture tied to Cardinal Drilling’s assets, namely the four specific rigs. But rather than face Cardinal Drilling when the company could not liquidate the outstanding loan of about $85.8 Million, Access Bank sued Seplat (that was not a party to the loan) as First Defendant, Cardinal Drilling (its real debtor) as Second Defendant, Orjiako (that was not also a party to the loan) as Third Defendant, and Kalu Nwosu (former MD of Cardinal Drilling) as the Fourth Defendant in clear violation of well-established principles in law.
To push the perfidy through, Access Bank, through their lawyers, deposed to an Affidavit that: Cardinal Drilling is a sister-company of Seplat; Seplat employed Cardinal as a veritable vehicle, smokescreen, and shell company “in furtherance of the purchase of drilling rigs for their sole benefit, but has refused to liquidate the outstanding indebtedness”; Cardinal transferred the loans disbursed to it to Seplat; Cardinal is a sister-company of Seplat; the said loan was secured with Floating and Fixed Debentures; and Orjiako is the promoter and alter ego of Seplat.
They further averred that, “Unless the Defendants are restrained together with other Directors of the First and Second Defendants (Seplat and Cardinal, respectively), they would strip the assets of the Defendants and dispose them…”; and that unless the Defendants and Directors of both companies are also restrained, “they would place the assets of the Defendants (Seplat and Cardinal Drilling) beyond the reach of this Court and the Receiver/Manager (Kunle Ogunba)”
However, as court documents and reports emerging from the courts clearly show, Seplat and Orjiako were never parties to the loan and did not guarantee it. Cardinal Drilling never transferred any part of the loans to the oil company as claimed by Access Bank (without any supporting documents). Also, the rigs were used to execute drilling jobs for other firms, including the government-owned Nigerian Petroleum Development Ltd, a subsidiary of Nigeria National Petroleum Company (NNPC). Furthermore, Cardinal Drilling obtained the loan with Fixed Debentures, not Fixed and Floating Debentures as falsely claimed by Access Bank and their lawyer. Therefore, in the event of debt recovery, a Fixed Debenture legally confines Access Bank to the four Cardinal Drilling’s assets they were charged to.
Based on these, analysts aver that evidently, none of Access Bank’s claims makes Seplat or Orjiako liable for the loan in question because there absolutely not privy to contract between Access Bank and Dr. Orjiako or Seplat for which any court action or debt recovery enforcement could be pursued against them.
It is an established principle in law that only a party, which directly obtained a credit facility or a party, which guaranteed a loan in writing, is liable to the loaner for a debt.
Also, only a party that is liable for a bank debt in law or in equity can be sued. Thus, they are of the view that to apply for an injunction against the assets of a party that is not liable for a bank debt, as Access Bank had done, is an aberration unknown to Nigerian laws in the first place.
“What is even more bizarre is that while Cardinal Drilling has not denied indebtedness to Access Bank, Access Bank and its lawyer and media campaigners are insisting that it is Seplat and Orjiako, not Cardinal, that owe them”, a legal practitioner, who has been following the development quipped.
Many who have followed Seplat’s track record of dedication to highest ethical standards and its blossoming business also think it is absurd to imagine that Seplat’s assets, including five Oil Mining Licences (OML), which are not only immovable assets, but are also producing crude oil on a daily basis could easily be moved out of the reach of the court.
Or that a firm with impeccable local and international reputation in raising and servicing debt; a firm that just raised $260 million, being its obligation towards the $650 million financing for the ANOH Gas Processing Plant (a record 50:50 Joint Venture with the Nigeria Gas Company, a subsidiary of the NNPC); a company worth over $2.8 Billion in assets and about $500 Million in market capitalisation; a company listed on both the London Stock Exchange and Nigeria Stock Exchange since 2014; would strip its assets or play “hide and seek” over a $85.8 Million alleged debt if it truly owes.
These facts and Seplat’s standings as against Access Bank’s bogus claims were well reflected by the Court of Appeal in suspending the injunctions of the lower court.
In suspending the orders of the lower court, the three-man appeal panel specifically held that Access Bank had nothing to lose if Seplat continued to do its business while the litigation lasts. Their Lordships emphatically held that it would be “bad and tragic” to continue to seal the offices of a company that is of such strategic economic import to the nation. Seplat supplies gas to three power plants that are responsible for the 40 per cent of power supply in Nigeria and employs over 400 Nigerians.
“The fear and anxiety expressed by the 1st Respondent (Access Bank) appeared unfounded. It would also not amount to hearing the substantive suit. The Supreme Court has held that where machines and workers would be rendered useless, the court would intervene.
Disruption of business should be considered in the issue of balance of convenience. The court will exercise its discretion in suspending the injunction. Practical approach should be adopted and not do injustice to any of the parties. Where considerable hardship will be done to a party, the court will intervene by suspending the injunction or stay it.
“I found substance in the argument. The injunction restraining the appellant from operating is hereby suspended. Order on its accounts are also lifted pending the determination of the appeal”, Honourable Justice Joseph Ikyegh held in the ruling concurred by the two other Justices.
Meanwhile, not a few informed observers have expressed concern that the media trial of Seplat, particularly Orjiako, is an attempt to force the hand of the judiciary in a matter or obtaining in the court of public opinion what Access Bank is unable to obtain from the court of law- forcing the businessman/Seplat to pay a debt not owed.
For instance, many have wondered the media campaigners’ idea of indebtedness and owning a company is. Does one own a company simply by holding shares or equity in the company? Shouldn’t any serious-minded writer or blogger bent on unmasking the truth on this matter have at least named all the shareholders, ownership structure, including the Directors of Cardinal Drilling Ltd by conducting “Lifting the Corporate Veil.”
That way, the wind blows and the world would then clearly see the fowl’s rump.
Furthermore, as at today, Seplat is still a highly regulated oil firm owned by very many reputable shareholders from all around the world. Many therefore see the attempt to reduce it to a one-man business owned by Orjiako as pure mischief. They believe that while Orjiako deserves accolades for co-founding this flagship indigenous oil and gas firm, it does not make Seplat his personal property.
It is this fixation on Seplat and Orjiako, including suing these non-parties to the loan in question as First and Third Defendants; this insistence on sealing/takeover of a business of Seplat magnitude and import to the economy; and in particular what observers now see as sponsored campaign of calumny against the person of Orjiako that have led many to wonder if Access Bank is truly interested in debt recovery or it is after asset extortion through corporate bullying.
In the discharge of their duties, lawyers in Nigeria are bound by the Rules of Professional Conduct 2007. For instance, Rule 15 (2) provides that a lawyer shall “keep strictly within the law notwithstanding any contrary instruction by his client and, if the client insists on a breach of the law, the lawyer shall withdraw his service.”
A lawyer shall also not knowingly make a false statement of law or fact. Seplat’s petitions to the Legal Practitioners Disciplinary Committee (LPPC) and the Legal Practitioners Disciplinary Committee (LPDC) are clearly predicated on alleged breach of breach of Rules 1, 15, 24, 30 and 32 of the Rules of Professional Conduct 2007 vis-à-vis palpable falsehood, misrepresentation and suppression of facts by the Access Bank’s lawyer to mislead the court.
Lawyers and several analysts also believe it is within Seplat’s rights. They opine that the fact that Ogunba was once stripped of his SAN rank in 2018 before it was later restored makes it even all the more imperative for LPPC and LPDC to look into the matter with dispatch.
Observers and stakeholders in corporate Nigeria believe that the issues at stake hold enormous implications for Nigeria, hence Orjiako and Seplat should never succumb to any cooperate bullying. Importantly, they believe that since the bank has approached the courts, the courts should be allowed to do their adjudication, conclusively.
Olusoji, a public affairs analyst writes from Abuja