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PETROCAM DRAGS UNION BANK TO COURT OVER ALLEGED BREACH OF CONTRACT
Nigeria’s Top financial institution, Union Bank Plc, has been slammed with a court suit of N6,754,918,533.71 by a multinational Oil company, Petrocam Trading Nigeria Limited, over an
alleged negligence and breach of contract. In a statement of claim filed before a Lagos high court on behalf
of the Petrocam company by a Lagos lawyer Barrister Gboyega Oyewole
SAN, it was alleged that the company and Union bank in the course of
ordinary business, enter into joint venture agreement with marketers to
jointly collaborate in opening letter of credit confirmation lines for
the importation of Petroleum products from foreign sellers of the
product. The joint venture accounts are domicile with the bank.
alleged negligence and breach of contract. In a statement of claim filed before a Lagos high court on behalf
of the Petrocam company by a Lagos lawyer Barrister Gboyega Oyewole
SAN, it was alleged that the company and Union bank in the course of
ordinary business, enter into joint venture agreement with marketers to
jointly collaborate in opening letter of credit confirmation lines for
the importation of Petroleum products from foreign sellers of the
product. The joint venture accounts are domicile with the bank.
In executing the letter of credit confirmation lines, the bank is expected to use the Naira sum in the account in bidding and purchasing foreign exchange (FOREX ) for liquidation of mature letters of credit.
Sometimes in 2014, the company approached the bank for an import
finance facility line of $45million in its favour to finance the
importation of Petroleum products,upon securing the finance facility,
various letters of credit were raised to utilize the Dollar facility,
the import finance facility was later increased to $100Million. The letters of credit were to be paid back with sales proceeds and
subsidy reimbursement. Bank Guarantee were provided as security for the
sale proceeds.
finance facility line of $45million in its favour to finance the
importation of Petroleum products,upon securing the finance facility,
various letters of credit were raised to utilize the Dollar facility,
the import finance facility was later increased to $100Million. The letters of credit were to be paid back with sales proceeds and
subsidy reimbursement. Bank Guarantee were provided as security for the
sale proceeds.
However the bank was alleged to have failed, neglected and refused
to perform its duty as an agent between the company and Central Bank of
Nigeria and as a bank to secure foreign exchange for the liquidation of
matured letters of credit as at when due, the bank rather than make
bids on behalf of the company within the period of 2014/2015 in the
first quarter of the transaction when the letter of instructions were
given by the company was only able to purchase forex to liquidate these
mature letters of credits within the period of 2016/2017,whereas 90% of
the transactions were done in 2014/2015 when Dollar was at the rate of
N155-N160 per Dollar. However,the company failed to bid on these
transactions until when foreign exchange has moved to N288-N320 per
Dollar.
to perform its duty as an agent between the company and Central Bank of
Nigeria and as a bank to secure foreign exchange for the liquidation of
matured letters of credit as at when due, the bank rather than make
bids on behalf of the company within the period of 2014/2015 in the
first quarter of the transaction when the letter of instructions were
given by the company was only able to purchase forex to liquidate these
mature letters of credits within the period of 2016/2017,whereas 90% of
the transactions were done in 2014/2015 when Dollar was at the rate of
N155-N160 per Dollar. However,the company failed to bid on these
transactions until when foreign exchange has moved to N288-N320 per
Dollar.
The company avers further that over N4billion was domicile with the
bank in the joint venture account as at February, 2015 and over,
2.4billion in Petrocam current account for purchase of foreign exchange
to liquidate these matured letters of credit but the bank was only able
to secure bid for $21,625,935.30 within the period of 90 days when they
were expected to liquidate the full value of $76,369,569.30 which
exposed the company to heavy losses as a result of the failure to bid as
at when due by the bank within the transaction cycle.
bank in the joint venture account as at February, 2015 and over,
2.4billion in Petrocam current account for purchase of foreign exchange
to liquidate these matured letters of credit but the bank was only able
to secure bid for $21,625,935.30 within the period of 90 days when they
were expected to liquidate the full value of $76,369,569.30 which
exposed the company to heavy losses as a result of the failure to bid as
at when due by the bank within the transaction cycle.
By reason of the several acts of gross negligence and breach of the
banker customer relationship subsisting between the company and the
bank, the company joint venture account maintained with the bank for the
funding of trade facility has been unlawfully debited with a total sum
in excess of N6,704,918,533.71. The company also averred that the various exorbitant charges made
on the company’s account by the bank was revealed by the report of the
independent consultant engaged by the company.
banker customer relationship subsisting between the company and the
bank, the company joint venture account maintained with the bank for the
funding of trade facility has been unlawfully debited with a total sum
in excess of N6,704,918,533.71. The company also averred that the various exorbitant charges made
on the company’s account by the bank was revealed by the report of the
independent consultant engaged by the company.
Wherefore the company claims against the defendant are as follows:
A declaration that the bank’s breach of its duty and obligation
under the subsisting banker /customer relationship between the company
and the bank as a result of the bank’s failure in handling the company
‘s trading facility in accordance with the agreement and understanding
between the parties, banking regulation, best practises, customs, and
banking convention resulted in unlawful debits and exorbitant interest
charges on the company’s current account domicile with the bank.
under the subsisting banker /customer relationship between the company
and the bank as a result of the bank’s failure in handling the company
‘s trading facility in accordance with the agreement and understanding
between the parties, banking regulation, best practises, customs, and
banking convention resulted in unlawful debits and exorbitant interest
charges on the company’s current account domicile with the bank.
An order directing Union bank to credit or reverse the wrongful
debit on the company’s current account maintained with the bank for the
funding of the letter of credit totaling the sum of N6,704,918,533.71
arising from the bank’s breach of its duty to the company,interest on
the said sum of N6,704,918,533.71 at the rate of 22%per annum being the
prevailing interest rate from commencement of this suit to the date of
judgment, and thereafter 7%interest from the date judgment is given
till the final liquidation of the judgment sum.
N50million as general damages in favour of the Petrocam company. Union bank did not file any defence to this suit, rather it has
filed another suit against Petrocam Trading company limited and its
managing Director Mr Patrick Ilo before a Federal high court in Lagos
claiming the sum of N10,062,643,928.72 and $5,247,693.82 plus interest
at the rate of 27% per annum N20million as cost of instituting the said legal action against Petrocam Trading company and its Managing Director.
filed another suit against Petrocam Trading company limited and its
managing Director Mr Patrick Ilo before a Federal high court in Lagos
claiming the sum of N10,062,643,928.72 and $5,247,693.82 plus interest
at the rate of 27% per annum N20million as cost of instituting the said legal action against Petrocam Trading company and its Managing Director.
Meanwhile, Petrocam company and its Managing Director has filed
preliminary objection against the suit, drawing the attention of the
court to their own pending suit against the bank at a Lagos high court
preliminary objection against the suit, drawing the attention of the
court to their own pending suit against the bank at a Lagos high court