ANALYSIS FOR MONDAY
Bayo Akinloye
The Chairman of Seplat Energy Company, Dr. A.B.C. Orjiako is in the news once more for the wrong reasons. However, this time around, it is for a familiar reason – his indebtedness to one of Nigeria’s commercial banks.
Seplat recently disclosed that it had received an order from a Federal High Court sitting in Lagos, that prevents it from transacting any form of business with the assets of Orjiako and some other entities.
The notification on the matter titled: “Interim Orders of Mareva Injunctions granted in the court action by Zenith Bank PLC against Shebah Exploration & Production Company Limited and Others,” was posted on the Nigerian Exchange Group (NGX) website.
It read: “Seplat Energy has been made aware of the ex parte Interim Orders of Mareva Injunctions which were granted by the Federal High Court sitting in Lagos, Nigeria in a court action instituted by Zenith Bank PLC against Shebah Exploration & Production Company Limited and 8 others, with an additional 29 cited parties.
“The Interim Orders give an administrative mandate to Seplat Energy Plc and others not to deal with the assets of (or transfer funds to) Shebah Exploration & Production Company Limited, Shebah Petroleum Development Company Limited and Dr. A.B.C. Orjiako. The order has no impact on the operations of Seplat Energy. We understand the injunction relates to loans made by Zenith Bank Plc to Shebah Exploration & Production Company Limited in 2014.”
As a result of the development, Neimeth International Pharmaceuticals Plc, where Orjiako is the company Chairman on Friday notified investors on the NGX and other stakeholders that it would adhere to the directive of the court not to deal on the assets of its embattled chairman nor transfer funds to him and other parties listed in the suit.
Apparently, the uncertainty around the situation might have prompted the immediate resignation of Mr. Xavier Rolet, an Independent Non-Executive Director from Seplat. Rolet, according to a statement on the NGX, “decided to step down from the Board of Seplat Energy effective 11th November 2021 for personal reasons.”
Presently, this is the second financial institution that has dragged the Seplat Chairman to court over this matter. The first was Access Bank and the legal tussle is still ongoing.
From all indication, Orjiako appears to be gaining notoriety as a bad borrower and analysts have stressed the need for commercial banks across the world and the Central Bank of Nigeria to reassess if he still possesses what bankers call the Five C’s of credit (character, capacity, capital, collateral, and conditions).
Some industry watchers have disclosed that the habit of some of Nigeria’s so called billionaires moving from one bank to another, collecting loans without any intention of paying back was a major factor that almost led to the collapse of some financial institutions, before the intervention by the Sanusi Lamido-led Central Bank of Nigeria several years back.
Indeed, huge non-performing loans (NPLs) erodes confidence and threatens the continuous existence of a financial institution. That is why recalcitrant debtors such as Orjiako, who are in the habit of moving from one bank to another, with a deliberate plan not to repay, must be prevented from destroying the financial system.
Just like Access Bank, it was gathered that Zenith Bank has vowed to take every step within the armbit of law to recover this huge amount of debt.
Access Bank is presently in a legal tussle with Orjiako, Seplat as a company; Cardinal Drilling Nigeria Limited, another company associated with the businessman, and Kalu Nwosu, Managing Director of Cardinal Drilling Nigeria Limited, over an indebtedness put at $85.8 million.
On December 2, 2020, the head office of Seplat, a listed company on the NGX and the London Stock Exchange (LSE) was seal up following a court order which permitted a receiver/manager, Messrs Kunle Ogunba & Co to enforce an ex parte motion requesting that Access Bank take over the oil and gas company’s head office, due to the Cardinal Drilling Nigeria loan taken from Diamond Bank.
In its letter to the NSE, the oil and gas company had explained that Seplat was not a shareholder in Cardinal Drilling Company and therefore was not liable for its debt obligations.
It was gathered that in 2012, Cardinal Drilling Services Limited applied for and obtained a credit facility from Diamond Bank to buy CDS Rigs 101, 201, 202 and 203.
The loan was secured by a fixed and floating Debenture over Cardinal’s assets and the Cardinal Rigs were allegedly used to provide drilling services to Seplat.
It was also gathered that CDS 101 and 201 were used to execute Seplat’s 2019 work programme and all four rigs were allegedly critical to Seplat’s future drilling plans and to shareholder returns by way of improved revenues and possible dividends. But Cardinal Drilling was unable to service the facility, prompting Access Bank to approach the court to enforce its rights.
Seplat in the letter to the NGX had described Cardinal Drilling as a third party providing it with drilling services.
“We understand that Cardinal Drilling has outstanding loan obligations to Access Bank. However, Seplat is neither a shareholder in Cardinal Drilling, nor has outstanding loan obligations or guarantees to Access Bank and did not at any time make any commitments or guarantees in respect of Cardinal Drilling’s loan obligations to Access Bank.
“Seplat strongly believes that there is no merit or justification for this action against it and has taken prompt legal action to vacate the court order pursuant to which the building was sealed.
“This action was taken by Access Bank without any prior notice to Seplat, as required under Nigerian law,” it had insisted.
The assets affected by the Mareva order included; 25, Lugard Avenue, Ikoyi, Lagos, 6, Agodogba Avenue, Parkview, Ikoyi, Lagos and the one at 11, Oba Adeyinka Oyekan Street, Ikoyi, Lagos.
Beside Zenith and Access which are presently battling to recover their loans from Orjiako, in 2019, the Assets Management Corporation of Nigeria (AMCON), had through its lawyers had written all commercial and merchant banks in the country, directing them to forthwith, stop Sheba Exploration & Production Company and Orjiako and Allenne Limited from withdrawing monies from their accounts domiciled in all the banks.
In addition, the interim order by the court then, had given the Receiver/Manager the mandate to take over all the assets of Sheba E & P, its subsidiaries and affiliate companies, the personal assets of Orjiakor (including his homes at Parkview Estate, Ikoyi, in London and Maryland in the US), his offices and offices of SEPLAT, a floating, production, storage and offloading (FPSO), as well as the shares of SEPLAT Petroleum and Development Company Plc and Platform Petroleum, pending the determination of the case.
Lexavier Partners Legal Practitioners, solicitors to AMCON, had disclosed this in a letter dated August 16, 2019.
Specifically, on August 15, 2019, Justice T.O. Taiwo, had in a ruling at a Federal High Court, at the Abuja, in an interim order against the defendants and in favour of AMCON, had appointed Francis Chuka Agbu, (SAN), as Receiver/Manager.
Lexavier Partners Legal Practioners, in the letter had stated: “We refer to the above subject matter in which we act as Solicitors to AMCON, which is the plaintiff in the suit.
“We wish to inform you that on Thursday, August 15, 2019, the Federal High Court, holden at the Federal Capital Territory, Abuja, coral, Honourable Justice TO Taiwo, made the attached order against the defendants and in favour of AMCON.
“By the said Order, your bank is mandated to henceforth prevent all further withdrawal(s) of funds and other debit transactions from the defendants’ account (s) domiciled with your bank and also furnish the Receiver/Manager within seven days from the date of this notice, with comprehensive statements in respect of each account.”
It had added: “The said account should be forwarded within the stipulated time to an address at Ikoyi. Please note that the attached order is binding and enforceable against your bank and shall remain so until and unless a subsequent order is made to the contrary.
“Consequently, we expect that your bank will fully comply with the order. Thus, we shall be constrained to initiate contempt proceedings against the bank and every responsible officer of the bank in the event that the terms of this order are flouted or in any way undermined by any action or conduct of the bank or any of its officers.”
Meanwhile, the interim court ruling on the matter had stated that the judge had, “granted judicial protection to Francis Chuka Agbu, (SAN), the Receiver/Manager of the Ist defendant applicant herein vide the Deed of Appointment of Receiver of July 30, 2019, to take possession of and preserve the first defendant, Shebah Exploration and Production Company Limited and all assets and undertaking wherever they may be found, including but not limited to those assets lying and situate at: 10c Lugard Avenue, Ikoyi, Lagos; 25a Lugard Avenue, Ikoyi, Lagos; MT Trinity Spirit, a vessel used as a FPSO facility and located in, around, and or within the first defendant’s Ukpokiti oil field, whether or not under the control of the first defendant and wherever it is, within or outside jurisdiction.”
It had also directed that, “all and any movable and immovable assets of Shebah Exploration and Production Company Limited wherever located, in Nigeria or outside of Nigeria, including the production facilities and all other assets belonging to the first defendant and located in and around the Ukpotiki oil field and to take possession of and inventory of all equipment, machinery and any chosen thereon.”
“That interim order is hereby made directing the Sheriffs of this Honourable Court to liaise with Francis Chuka Agbu, (SAN), as the Receiver of the first Defendant to enter upon the following: The 2nd defendant’s property in Parkview Estate, Ikoyi, Lagos; the 2nd defendant’s property in Maryland, United States of America; the 2nd defendant’s property in London, United Kingdom.
“An interim order directing all the financial institutions listed in the schedule to this motion to disclose to, and or furnish the Receiver with all sums standing to the credit of the defendant in their custody by sending to Francis Chuka Agbu (SAN), as Receiver/Manager, within seven days of receiving this order, a statement showing the outstanding balances of the Defendants.
From the foregoing, there might be need for the Central Bank of Nigeria to wade into the matter and assist these two banks to recover the huge sum given out this entity in order to guarantee soundness of the financial system as well as to engender confidence in the industry.
