The offence of fraud by abuse of position of trust is contained in Sections 434 and 435 of the Criminal Code Act, 2004. It relates to circumstances where a person commits fraud by dishonestly abusing his position. This is demonstrated in a recent conviction of a businessman, Kenneth Amadi, writes Wale Igbintade
The act of fraud by abuse of position can take place in several ways. It could be by gaining financial benefits through manipulation of the accounts or accessing monies through other channels that one has access to by way of being a company director or in other capacities.
Recently, Justice Ambrose Lewis-Allagoa of the Federal High Court sitting in Lagos convicted, and sentenced a businessman, Kenneth Amadi to 18 months imprisonment for N2.9 billion fraud. The money belonged to his former employee, Eunisell Limited.
The decision of the court was sequel to a five-count charge filed by the Attorney General of the Federation (AGF) against Amadi and his company, IDID Nigeria Limited. They were accused of allegedly obtaining N2.9billion from A-Z Petroleum Limited and AMMASCO International Limited under false pretence and with the intent to defraud. Specifically, Amadi was alleged to have forged invoices and waybills, as well as suppression of data concerning financial transfers to Eunisell “with intent to confer economic benefits” on himself.
However, the defendant pleaded not guilty to all the count.
The trial commenced on October 15, 2021, with the government calling Ikenga as Prosecution Witness 1 (PW1). Ikenga in his testimony stated that he was the Managing Director of Eunisell Limited, a firm that specializes in importation and distribution of chemicals, which are used to manufacture lubricants, like engine oil used in cars and oil and gas, to manufacture drinks and also used in the food industry. He stated that he had been in business for 25 years and that his company was incorporated in 1993.
According to him, Amadi was his employee, who was hired in 2000, adding that the defendant started as a Salesman in 2000 after his mandatory NYSC, grew to become an Assistant Manager and was promoted to a General Manager and in 2012 was made Eunisell’s CEO.
He further informed the court that customers make payment for goods purchased directly into the company’s account and Eunisell’s customers included Shell, Total, ExxonMobil, Cando, A-Z Petroleum, Conoil, etc.
Ikenga testified that Amadi’s responsibilities as CEO included growing the company, day-to-day operation of the company, promoting the company and its products to the customer and also serving as an account manager for big customers.
He told the court that Amadi left Eunisell on October 28, 2016, as CEO following an enquiry by one of Eunisell’s foreign suppliers and partner Lubrizol which manufactures lubricant used in manufacturing engine oils and other types of lubricant used in vehicles. He said Lubrizol wrote to Amadi and copied him (Ikenga) in July and told the defendant that their competitor called Oronite had appointed a distributor in Nigeria and they wanted him to find out about this local distributor called A.B.D. Energy Solutions Ltd.
Ikenga said Amadi did not get back to them with the information and gave no reason for that. PWI stated that he then asked his lawyers to find out from the Corporate Affairs Commission (CAC) the particulars of the company so that he could furnish the foreign firm with the information.
According to PWI, the search from the CAC revealed that his CEO, Amadi was the owner, shareholder, promoter and director of A.H.D. Energy Solutions Limited.
According to PWI, upon the defendant leaving, an audit was carried out to reconcile the account of the big companies he was managing. Ikenga stated that the audit revealed that payments that had been coming into PWI’s Company bank account were from the 1st and 2nd defendants. PWI said he wrote to the bank on why the payment coming into his company’s account did not have a narrative or details of the buyers. The bank (Diamond Bank now Access) wrote back to PW1’s company, giving the details of the payer, who were Amadi and IDID.
“On further search at the Corporate Affairs Commission, it was revealed that the 2nd defendant (IDID Nigeria Limited) was owned by the 1st defendant and his wife being both directors and shareholders.”
“PWI said he reported to the police and the police investigation revealed that the 1st defendant was receiving PW1’s company payment from A-Z Petroleum and Ammasco International for the goods that PWI’s company sold to them.
“PW1 said the company sent goods to A-Z Petroleum and Ammasco International via waybill and the company gave the defendant the invoices to send to them, of which the 1st defendant would give the customers his own bank account and retain the money paid into it for a while before remitting it. PW1 said that the defendant’s duty as Chief Executive officer did not empower him to pay this money into his account as he has no mandate to do so.”
Ikenga testified that he wrote to his bankers because the payment was coming without details of the payer and it was discovered that the persons paying money into the bank account were Amadi and IDID who received the money from his two main customers A-Z. Petroleum and Ammasco International, totalling over N2.9billion.
According to Ikenga, based on the letters from the bank, other customers and investigation, the defendant had betrayed their trust, as he used his position and information of PWI’s business to the benefit of Eunisell’s competitors.
The prosecutor also called other witnesses including Eunisell’s Finance Manager Phillip Odekina, who testified, that no one had the right to nominate any account details, other than Eunisell’s, to a customer, except with the approval of the firm’s board of directors.
In his defence, Amadi through his lawyers prayed the court to hold that he had no case to answer. He contended that no document said to be in possession of the prosecutor was tendered to show that he defrauded Eunisell Ltd “of the bogus amount of N2.9billion.’’
He also submitted that the charge was an abuse of court process, adding that PW1 and PW2 gave contradictory testimonies, regarding the auditing of Eunisell’s banking activities.
The defendants also submitted that Ikenga claimed N2.9billion at a time, but later claimed that N103million was unaccounted for. They submitted that based on the evidence of PW1, 2, 3 and 4, “the prosecution’s evidence is replete with contradictions which resulted in the prosecution’s failure to prove its case beyond reasonable doubt.”
Besides, the defendants urged the court to hold that the prosecution failed to prove essential ingredients of the offences beyond a reasonable doubt.
In his judgment, Justice Allagoa agreed with both the prosecution and the defendants in part. He held that the prosecution did not prove counts 1, 2 and 3 beyond reasonable doubt. He however convicted Amadi and his firm of counts 4 and 5.
Justice Allagoa held: “I am in agreement with the submission of counsel for the prosecution in paragraph 9.1. of his final argument that the position of the 1st Defendant occupied as the Chief Executive Officer of Eunisell, that he is in a position of a trustee even if he is not expressly so appointed.
“He owes the company the duty of care to discharge his duties honestly and conscientiously and not to act in a dishonest manner by receiving the company’s invoices but concealing them and instead deciding to transact with the company’s customers via telephone and also without authorisation nominating the account of another company IDID Nigeria Limited owned by himself and his wife as shareholders to the customers to make payments due to his employer Eunisell for goods supplied.
“More particularly, the evidence of the accountant of AMMASCO International is demystifying to the defendant’s case when he testified that since they started doing business with Eunisell represented by Kenneth Amadi, they never saw the invoice of Eunisell Limited, they only received Eunisell’s waybills without invoice while all negotiation about the price of goods supplied was unilaterally negotiated by the 1st Defendant with word of mouth on the telephone.
“The mere act of diverting the proceeds of the sale of Eunisell’s goods (his employers) and as Executive Officer to a company where he is the alter ego different from his employers account constitutes conversion.
“I have therefore come to the conclusion that the 1st defendant and his company IDID Nigeria Limited are guilty as charged in Count four, the prosecution having proved its case beyond reasonable doubt.”
The judge held further that there was evidence that Amadi was an officer of Eunisell, “he had diverted the company’s monies to the account of IDID Nigeria Limited, wherein he was a director. He caused payments meant or due to the company Eunisell to be paid to IDID from where payments due to Eunisell was being paid to Eunisell account with Diamond Access Bank; the payments made to Eunisell’s account had no narratives so that the company will have complete information of the payment. It was only on the query to the bank that the bank now released the narratives of the payments to the company wherein Eunisell now discovered that payments to its accounts were coming from IDID Company whose alter ego was Eunisell Executive Officer.
Therefore, the 1st defendant as an officer of Eunisell omitted or is privy to omitting a material particular from the accounts of Eunisell with Diamond Bark, the 1st defendant and by extension the second defendant have done or committed an offence contrary to Section 435 (2) (C) of the Criminal Code Act, Cap C38 LFN 2004.”
The judge added that there was an obvious “intention to defraud. Consequently, count five is also proved beyond reasonable doubt by the prosecution and the defendant is accordingly guilty as charged.
In his verdict, Justice Allagoa held: “I have heard counsel for the defendant plead allocutus. I have also taken cognisance of the fact that the defendant is a first-time offender and all the other circumstances of the case.
“Ordinarily, the defendant is supposed to serve seven years imprisonment in each of the two-count charges in court four and five, but I have looked at the side of mercy and the defendant is hereby sentenced to 18 months imprisonment in Count four (4) and five (5) respectively. All the sentences run concurrently and there shall be no option of fine. As for the 2nd defendant, I hereby liquidate that company having been found guilty of the offence.
Meanwhile, the defendants have challenged the decision of the court before the Court of Appeal, Lagos Division.
