Displeased by the manner in which its bankers, the United Bank For Africa Plc (UBA) allegedly breached the N1.6bilion Agricultural loan facility under the Commercial Agricultural Credit Scheme, CACS, from the Central Bank of Nigeria CBN, Food Concepts Plc, has asked a Lagos High Court for several restraining orders and injunctions against the Bank as well as general damages.
The company said it was shocked at the bank’s publication of its name as a chronic debtor, even though the facility would not expire until next year.
The publication also specifically named industrialist, Chief Oladele Fajemirokun, former Chairman of the Board, who has since last year resigned as its director/Chairman.
In a suit filed by Mrs. Omohafe Opara of Rickey Tarfa and Co, the company is asking the court to issue (i) a perpetual injunction restraining the bank or its agents from attaching any of their assets; (ii) restraining the bank from making further malicious publication against them in the national newspapers; (iii) preventing the bank or its agents from any form of liquidation or receivership and (iv) directing the Bank to render account of the N1.6billion loan facility.
The company further sought the court’s order directing UBA to render account of N1.6billion agricultural loan under consideration; an order compelling the bank to reconcile the accounts of Food Concepts as relates to the CACS.
The genesis of the matter is that Food Concepts Plc, a leading integrated food company that employs over 1,600 staff in its Quick Service Restaurants, Bakeries and Poultry farming operations applied to the Bank for an Agric loan under the CACS loan facility provided by the Central Bank of Nigeria (CBN) to develop a Greenfield Poultry Farm in Abeokuta as a backward integration initiative under the name of Free Range Farms Limited. The facility was specifically utilized to finance the poultry farm development. Food Concepts and Chicken Republic were not in any way encumbered by the Facility.
It was the contention of the claimants that UBA granted the application by a letter dated September 8 2009 and the claimant vide a resolution by its Board of Directors authorized the acceptance of the loan. The Company pledged specific assets as security for the loan (including but not limited to the farm assets). As such, the company’s exposure is limited to the specified assets pledged.
However, the claimants at several times backed with written documents complained that there were severe delays in the disbursement process of the loan. Specifically, Food Concepts Plc discovered irregularities in their accounts with UBA which necessitated a call for reconciliation of the accounts. The haphazard way in which the bank handled the working of the loan significantly affected the project, which ultimately jeopardized the outcome of the entire project.
The claimants secured the commitment of another bank (First City Monument Bank) to refinance the loan with the knowledge and involvement of the CBN. Notwithstanding, UBA went to court to file a winding up petition. Despite the winding up petition, the bank still went ahead to enter into a Memorandum of Understanding (MOU) with the claimants and FCMB in full liquidation of the outstanding reconciled debt.
Another example of breach of the loan agreement levied against the bank by the claimants, was the threat of the bank to publish their names ‘’as a delinquent account in three national Newspapers in line with the directive of CBN’’, a threat which was eventually carried out.
The publication, the claimants averred ‘’was not only unwarranted but a blatant falsehood. The publication by the bank has led to damage to its credibility and reputation”.
The court has therefore been invited to not only order UBA to pay N1billion as general damages to them, but also to award costs of the action in favour of Food Concepts assessed at N10million.