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Why Debtors Must Pay Their Debts



Access Bank



By Louis Achi

According to the Latin mime writer Publilius Syrus, incidentally a contemporary of Roman statesman and lawyer Cicero, “A small debt produces a debtor; a large one, an enemy.”

Syrus’ tart observation fundamentally captures the extant relationship between Access Bank Plc. and Cardinal Drilling Services Ltd., a sister entity to Seplat Petroleum Development Company Plc – over a $200 million, plus interest and penalties debt recovery dispute. It is indisputably adversarial.

Interestingly, Mr A.B.C Orjiako, the Chairman of Seplat, is not denying he company owes the huge debt. Instead he is saying it is not Seplat that owing the debt but another of his company, Cardinal Drilling Services Ltd, even though he is the alter ego of both companies and the funds were deployed for the benefit of Seplat Petroleum Development Company.

Orjiako’s company’s reluctance to pay up its debt is symptomatic of an emerging character portrait of Nigerian businesses.

A clear pattern of behaviour that nearly doomed the financial system some years ago and in danger of repeating itself if not decisively nipped in the bud. Why CEOs of banks are usually held to account by the regulator for running down their banks through bad loans, serial debtors are usually left off the hook to move freely to proceed to another bank to once again wreak havoc on the system using different companies.

Maybe it’s time to find a way to also sanction such bad debtors by preventing them from accessing credit from the financial system again until they first clear all outstanding obligations. Naming and shaming them is not enough. Asset seizure another option to consider.

Non-Performing Loans (NPLs) are defined as borrowed money for which the debtors have not made scheduled payments (principal or interest) for at least 90 days. NPLs are a burden for both the lender and borrower. They trap valuable collateral for borrowers and make it more difficult for them to obtain needed funds for investment.

For lenders, the cost covers time for debt recovery and the need to make greater loan provisioning, which reduces profitability and capital resources for lending.

Looking at the big picture, the identification of determinants of Non-Performing Loans (NPLs) and their consequences on the macro-economy is definitely necessary for comparatively small open economies in the global village, such as Nigeria, where banks are the key source of finance for business activities in the critical sectors.

It could be recalled that after its formal merger with mid-tier rival Diamond Bank Plc., in April 2019, following due regulatory approval, Access Bank Plc. acquired all the assets and liabilities of the defunct banking entity. This positioned Access Bank to pursue recovery of all outstanding debts including the $85.8 million owed it by Cardinal Drilling Ltd., a subsidiary entity of Seplat Petroleum Development Company Plc. which chairman is billionaire business mogul, Dr. ABC Orjiakor.

This legitimate move by Access Bank to recover the outstanding $85.8 million owed by Cardinal Drilling Services Ltd. (Seplat’s sister company), in effect, has spawned all shades of seemingly adroit maneuvering by the upstream exploration and production entity which has distanced itself from its sister entity, Cardinal Drilling Ltd and ultimately is denying responsibility for the loan.

Since Access Bank had engaged the services of Ogunba law firm, Kunle Ogunba & Associates as the counsel/receiver/manager to recover the loan obtained by Cardinal Drilling Services Limited, from Diamond Bank (now Access Bank) on behalf of Seplat Petroleum Development Company, the upstream petroleum behemoth has seemingly made adroit moves to thwart the loan recovery. This is at the heart of the festering dispute.

First, Seplat specifically denied it benefitted from the loan obtained by Cardinal Drilling Ltd. Secondly, the petroleum company targeted Kunle Ogunba (SAN), Access Bank’s counsel/receiver/manager and petitioned the Legal Practitioners Privileges Committee (LPPC) and the Legal Practitioners Disciplinary Committee of the Nigerian Bar Association (NBA) to sanction a Senior Advocate of Nigeria, Mr. Kunle Ogunba, for alleged gross misconduct and unethical practices contrary to the Rules of Professional Conduct for Legal Practitioners 2007.

In the petition to the LPPC, which was equally copied to the Nigerian Bar Association (NBA) President, the company accused Ogunba of violating Rules 1, 15, 24, 30 and 32 of the Rules of Professional Conduct 2007 and urged sanctions against the senior advocate in line with paragraph 55 of the Rules of Professional Conduct.

For good measure, Seplat also accused Ogunba of obtaining ex parte orders which facilitated the seizure of No. 16A Temple Road, Ikoyi Lagos, housing Seplat’s corporate headquarters, with “patently false” claims, adding that he deliberately misled the court and failed to adduce any documents to support the claims. But significantly, this move is not the beef of the disputations.

But significantly, documents obtained from the court revealed the processes filed by Access Bank showed the plaintiff provided proof that Seplat benefitted from the loan. It was shown that after Cardinal Drilling obtained the loan and disbursed it, the company passed the obligation on to Seplat. According to the documents, Seplat used its subsidiary firm, Cardinal Drilling to obtain the loan from Access Bank, adding it utilised the loan obtained by Cardinal Drilling from the bank.

For instance, Access Bank disclosed that when Cardinal Drilling got a tranche of $30million, in less than 24 hours, it transferred the money to Seplat, stating that each time Cardinal Drilling was trying to repay the loan, Seplat would have to transfer funds to it for onward transfer to the bank.

More, even the company’s statement of account exhibited in court showed movement of funds and whose accounts were debited and credited. The bank has details of Seplat transferring funds into Cardinal Drilling’s account, which in turn would transfer same to Diamond Bank (Access Bank) as loan repayment. Cut to the bone, Seplat is the real debtor, which was why the bank and its lawyers joined Seplat in the debt recovery suit and obtained and executed the order against it, which is now a subject of appeal.

It could also be recalled that Justice Aikawa, despite objections by Seplat’s lawyers, held: “In my view, all these issues touch the substance of the case and should therefore be reserved for substantive trial. An attempt to delve into any of them at this stage has the potential and danger of determining substantive issues at this interlocutory stage, a tendency which has been frowned upon by the appellate courts. There is no evidence of suppression of any material facts by the plaintiff in this application.”

Clearly, beyond Seplat’s insistence that being joined as a debtor by Access Bank lacks merit and its resort to NBA’s LPPC and LPDC, seeking to unhorse Ogunba and undermine the effort of Access Bank in seeking to recover legacy debts following its acquisition of Diamond Bank, the substantive matter, according to the consensus of legal pundits, remains intact.

Unfortunately, the emerging perception now is that rather than the principal promoter of both Seplat and Cardinal Drilling who happens to be Mr A.B.C Orjiako repaying the loan or awaiting the outcome of its appeal on the matter, it is pushing to tarnish the image of Ogunba and intimidate him by generating petitions against him in a scheme to discourage him as Access Bank-appointed receiver-manager.

Also apparent is the fact that the petitioner has also embarked on media warfare to paint Ogunba in a bad light and pressure the LPPC and the NBA to sanction him. Many view this moves as fundamentally diversionary.
The question is why is Orjiako dragging or trying to distance himself from the debt? Why is he unwilling to pay up? When the going was good with Cardinal Drilling did he distance himself from the company?
Dr. Orjiakor has always presented the image of a gentleman to the public, he may do well to live up to that image by paying his debt.
Deploying corporate filibustering or subterfuge to frustrate the debt recovery will negatively impact the critical banking sector and defeat the essence of granting such facilities to aid business growth. For Access Bank, the lender in this instance, it is a costly project. The cost covers time for debt recovery and the need to make greater loan provisioning, which reduces profitability and capital resources for lending.

It could also be regretfully recalled that defunct Diamond Bank Plc., an iconic bank comparable to Eastern Nigeria’s African Continental Bank (ACB), went under because of the recalcitrance of borrowers like Orjiako’s Cardinal Drilling Services Ltd, Shebah E&P and others who simply failed to live up to the repayment obligations. Defunct Diamond Bank considerably aided many businessmen from the South-East. This particular debt was part of the huge debt overhang that defunct Diamond Bank.Today, for that region, it is a collective loss. Many of the businessmen from that region simply took advantage Pascal Dozie’s generosity and willingness to assist people of his region to grow their businesses. They borrowed from his bank without repaying to the point it collapsed.

It is highly unconscionable to borrow depositors’ money from the bank, to ostensibly enhance business growth but only to conceive strategies to evade repayment on the terms agreed.

But a fact that many don’t know is that Access Bank Plc that acquired Diamond Bank takes no prisoners. It is a strict, disciplined organisation and top industry player and has deployed all requisite legal means to recover what is due to it. In this case, the controlling shareholder of Cardinal Drilling Ltd must pay up.


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