Sterling Bank Plc together with Petrocam Trading Nigeria Limited have sued Hudson Petroleum Limited over an alleged indebtedness of N2,137,187,341.64.
Hudson Petroleum Limited, incorporated under the Companies and Allied Matters Act (CAMA) to carry on the business of importation, procurement sales, distribution, and marketing of petroleum products is before the Federal High Court sitting in Lagos over an $81.9 million facility granted to it.
Petrocam Trading Nigeria Limited is a customer of the Sterling Bank and in the course of normal banking operations, maintains and operates accounts with the latter, while Hudson Petroleum Limited is an Oil Marketer and in the course of its business, gets allocation from the Federal Government of Nigeria through the office of the Petroleum Products Pricing Regulatory Agency (P.P.P.R.A) for the importation of Premium Motor Spirit (P.M.S).
Premised on the said allocation, Defendant was desirous of raising the financial requirements to actualize the allocations made to it.
According to the statement of claim accompanied by a written statement on oath sworn to by the Account Manager of Petrocam Trading company Taiwo Abiodun filed before the court by a Lagos Attorney, Barrister Gbenga Akinde-Peters, the Defendant then reached out to Petrocam Trading company and requested the latter to finance the importation of petroleum products.
Consequently, Petrocam, due to its Banker/ customer relationship with Sterling Bank, applied to the bank for an enhancement of its existing trade facility to accommodate the transaction of Defendant.
Consequently, by a Memorandum of Acceptance and Board Resolutions made on the 12th of December, 2012 and 23rd of July, 2013 respectively, Petrocam resolved to accept and accept the enhancement sought from the bank on its existing Trade Finance Facility.
Having considered the application of Petrocam, Sterling Bank graciously granted the facility enhancement of United S state Dollar of 50 Million and United State Dollars of 31.9 Million respectively to accommodate the financing of several importation transactions of the Defendant via the Joint Venture transaction between Petrocam and Hudson Company.
Consequently, Defendant at different times applied to the bank for the opening of Form M and establishment of Letters of Credit facilities under the umbrella of Petrocam’s credit line Premised on the application of Defendant and to effect the importation, the bank secured approval from the Central Bank of Nigeria through Form Ms.
As a matter of procedure, the relevant authorities required the bank to confirm the authenticity of the Letters of Credit and consequent upon which the bank confirmed the veracity of the LCs.
The Premium Motor Spirit was eventually delivered to the Defendant’s storage facilities and sold to the public in line with the extant regulation/Directive from PPPRA under the Petroleum Support Fund (PSF) Scheme being regulated products.
Some of the delivery notes after vessel discharge from the Petroleum Products Pricing Regulatory Agency evidencing that the petroleum products were delivered to Defendant’s storage facilities are pleaded and shall be relied upon during trial.
Several times, Petrocam gave several instructions to the bank towards the credit of the collection account for the usage and utilization of Defendant over the transactions.
The Federal Government also undertook certain reconciliation processes toward the settlement of obligations to various oil marketers including the Defendant and this was further confirmed by the resolution of the National Assembly dated 24th July 2018.
However, contrary to the agreement of the parties and the consternation of the Plaintiffs, Defendant went behind the Plaintiffs and gave the Debt Management Office (DMO) a counter instruction to enable the Defendant to divert the funds released by the Federal Government representing Accrued interest among other things over the instant transactions, into an account domiciled with First Bank of Nigeria Plc which is different from the Collection Account; funds which ordinarily ought to have been paid into the Collection Account to reduce the bank’s exposure.
Petrocam was also able to monitor the readiness of the promissory.
Notes and knew when it was issued. When the Promissory Notes were released to Defendant, it took the effort of Plaintiff to stop Defendant from submitting the Promissory Notes to First Bank of Nigeria Plc to get value.
Despite several reconciliation meetings, Defendant continues to perform acts to worsen the position of the collection account maintained with the bank.
The parties met several times to resolve the issues and it was the agreement of the parties that Defendant shall ensure that the Promissory Notes already issued were reissued in favor of the account maintained with Sterling Bank for that purpose and to part liquidate the outstanding indebtedness.
In furtherance to this, Defendant wrote a letter of domiciliation instructing the Debt Management Office (DMO) to correct, reissue, and domicile receivables accruable or due to it, into the Collection Account maintained with the Sterling Bank. This was including the ones that had been wrongly issued to First Bank of Nigeria Plc.
Defendant also wrote a letter to the Debt Management Office (DMO) introducing a representative to whom all correspondence relating to and connected with the request for the correction and re-issuance of Promissory Notes should be directed.
However, the defendant has taken several steps to frustrate the Debt Management Office (DMO) and has deliberately refused to correct and reissue the Promissory Notes to reflect the name of the Sterling bank without a valid reason, even though the Plaintiffs are entitled to receive the instrument or funds or Promissory Notes or Sovereign Debt Notes due to the Defendant from the Debt Management Office (DMO) and relevant Federal Government Agencies.
Given the Defendant’s failure to perform its obligations, the Sterling Bank has been adversely exposed to the scrutiny of the regulatory authorities in its industry, particularly, the Central Bank of Nigeria due to the failure of the Defendant to perform its obligations under its transactions with Petrocam financed by the bank through the facility granted to Petrocam Company.
Defendant continues to employ all manner of tactics as reality shows that after pretending to be working with the Plaintiffs to ensure that the Promissory Notes are corrected and reissued, it goes behind the Plaintiffs to also scatter the arrangement and in connivance with the Debt Management Office (DMO) has refused to let the Plaintiffs take benefit of the Promissory Notes already due and issued.
It has now come to the attention of the Plaintiffs that the Defendant is also currently making moves to make sure that the remaining Promissory Notes yet to be issued/released by the Debt Management Office (DMO) are diverted.
Meanwhile, the Plaintiffs’ exposure on the transactions as of 31st March 2022 stood at N2, 137, 187, 341.64 obligations of the Defendant particularly its domiciliation instruction/undertaking, the Plaintiffs are entitled to have paid over to the account maintained with Sterling Bank the sum of N2, 137, 187, 341.64 to be paid from all sums due to the Defendant from the subsidy claims, Excess Bank Interest and Foreign Exchange Differentials from the Petroleum Support Fund (PSF) Scheme in form of Sovereign Debt Notes or Promissory Notes.
The Federal Government through the Debt Management Office (DMO) and relevant agencies has concluded arrangements towards making another settlement of obligations/payment of receivables to various oil marketers including the Defendant.
Despite the letters and agreement of the parties mentioned in the preceding paragraphs above, Defendant’s actions now threaten the actualization of receiving the receivables as Defendant is currently making plans and has perfected the plans to divert the Promissory Notes/Sovereign Debt Notes expected to be received from the Debt Management Office (DMO).
The rest of this action is in real and complete danger of being completely dissipated at any moment by the Defendant and unless the court intervenes, the Plaintiffs will be left in the lurch.
The funds utilized to fund the letters of credit for the importation of the Petroleum Products (PMS) were depositors’ funds and it behooves that the debt be liquidated.
The bank has been adequately exposed to the scrutiny of the Central Bank of Nigeria due to the large exposure relating to indebtedness.
Consequently, it will be in the interest of justice if a judgment is entered in favour of the Plaintiffs.
Whereupon the Plaintiff’s claims against the Defendant are as follows.
A declaration that the Plaintiffs have the right to receive in the collection account maintained with the bank, the funds/ instruments due and payable to the Defendant from/issued by the office of Debt Management Office/ Federal Ministry of Finance and any other relevant Government Agency, particularly Sovereign Debt Notes/Promissory Notes; be it subsidy claims or Accrued interests and Foreign Exchange Differentials, paid by the Federal Government to the Defendant to liquidate the bank’s exposure that has emanated through the 2nd Plaintiff’s account, which funds were utilized by the Defendant and as at 31st March 2022 stood at N2, 137, 187, 341.64; in line with the offer letters the Service Agreements made between Defendant and the 2nd Plaintiff, Defendant’s letter of irrevocable undertaking to the bank, the Defendant’s letters to Debt Management Office (D.M.O).
A declaration that the Plaintiffs are entitled to a LIEN on all the sums already paid and due to be paid to the Defendant from the office of the Federal Ministry of Finance/Debt Management Office and any other relevant Government Agency as subsidy claims or Excess Bank interest and Foreign exchange differential in the form of Sovereign Debt Notes or Promissory Notes, to the extent of bank’s exposure that has emanated through the 2nd Plaintiff’s account which was utilized by Defendant to the tune of N2, 137, 187, 341.64 as at 31st March 2022.
A declaration that under and by the offer letters, the Service Agreements made between Defendant and the 2nd Plaintiff, Defendant’s letter of irrevocable undertaking to the bank, the Defendant’s letters to Debt Management Office Defendant is under obligation to ensure that all Sovereign Debt Notes/Promissory Notes, be it subsidy claims or Excess bank interests and Foreign Exchange Differential which are receivables already released or payable to the Defendant by Debt Management Office/Ministry of Finance to the tune of N2, 137, 187, 341.64 are to be domiciled with the bank to liquidate the Defendant’s indebtedness emanating through the 2nd Plaintiff’s account.
The cost of this legal action to the tune of Ten Million Naira interest to the sum stated in the reliefs stated above at 23 per cent per annum from 31st of March 2022 till Judgment and thereafter at 10 per cent per annum until the Judgment sum is fully liquidated.
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