Hudson Petroleum Limited Company has been dragged before a Federal High Court, sitting in Lagos, by the duo of Sterling Bank Plc and Petrocam Trading Nigeria Limited, over an alleged indebtedness of N2,137,187,341.64.
Hudson Petroleum Limited is a private limited liability company incorporated under the provisions of the Companies and Allied Matters Act and carries on the business of importation, procurement, sales, distribution and marketing of petroleum products with its Corporate Head Office at 13 Agoro Odiyan Street, Off Adeola Odeku, Victoria Island, Lagos.
Petrocam Trading Nigeria Limited, PTNL, on the other hand, is a Petroleum Marketing Company and customer of Sterling Bank.
Inline with normal banking operations, the Petrocam maintains and operates accounts with Sterling Bank, while Hudson is an oil marketer, who in the course of its business, gets allocation from the Federal Government, FG, through the office of the Petroleum Products Pricing Regulatory Agency, PPPRA, for the importation of Premium Motor Spirit, PMS, popularly known as petrol.
Based on the said allocation, the defendant (Hudson) was desirous to raise the financial requirements to actualize the allocations awarded to it by the FG.
According to a statement of claim accompanied with a written statement on oath, sworn to by the Account Manager of Petrocam, Mr.Taiwo Abiodun, and filed before the Court by its Counsel, Gbenga Akinde-Peters, the defendant reached out to Petrocam and requested it to finance the importation of the petroleum products.
Consequently, Petrocam inline with its banker and customer relationship with Sterling Bank, applied to the Bank for an enhancement of its existing trade facility to accommodate the transaction of the defendant.
According to a Memorandum of Acceptance and Board Resolutions made on December 12, 2012 and July 23, 2013 respectively, Petrocam was granted and accepted the enhancement sought from Sterling Bank on its existing Trade Finance Facility.
As a result, Sterling Bank granted the facility enhancement of 50Million United States Dollars and 31.9Million United States Dollars respectively to accommodate the financing of several importation transactions of the defendant via a Joint Venture Transaction between Petrocam and Hudson Company.
Inline with the above, the defendant at different times applied to Sterling Bank for the opening of Forms M and established Letters of Credit, LC’s facilities under the umbrella of the Petrocam’s credit line with the Bank.
Premised on the application of the defendant, the Bank subsequently secured approval from the Central Bank of Nigeria through Forms M to effect the defendant’s importation.
As a matter of procedure, the relevant authorities required the Bank to confirm the authenticity and veracity of the Letters of Credit, which the Bank did.
The PMS was eventually delivered to the defendant’s storage facilities and sold to the public inline with extant regulation/ and directive from the PPPRA under the Petroleum Support Fund, PSF, scheme being regulated products.
Some of the delivery notes of vessels’ discharge by the Petroleum Products Pricing Regulatory Agency, evidencing that the products were delivered to the defendant’s storage facilities are pleaded and shall be relied upon during trial.
The Federal Government also undertook certain reconciliation process towards 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 parties’ agreement and surprise of the plaintiffs (Sterling Bank and Petrocam), the defendant went behind them to give the Debt Management Office, DMO, a counter instruction that enable it to divert the funds released by the Federal Government, representing ‘Accrued Interest,’ amongst other things, into an account domiciled with First Bank of Nigeria Plc, which is different from the Collection Account with Sterling Bank.
However, Petrocam was able to monitor the readiness of the Promissory Notes and also aware when it was issued. In fact, when the Promissory Notes were released to the defendant, it took the effort of the plaintiff to stop the defendant from submitting the Promissory Notes to the First Bank of Nigeria Plc to get value.
In spite of the efforts made by the plaintiffs to caution the defendant, it continued to act in violation of the parties’ agreement and consequently worsened the position of the collection account with the Sterling Bank.
However, during one of the meetings, the parties resolved and instructed the defendant to ensure the Promissory Notes already issued were reissued in favour of the account with Sterling Bank for the purpose of the transaction and in order to liquidate the outstanding indebtedness.
To this end, the defendant wrote a letter of domiciliation instructing the DMO to correct, reissue and domicile receivables accruable into the Collection Account with Sterling Bank, including those that have been wrongly issued to First Bank of Nigeria Plc.
The defendant also wrote another letter to the DMO, introducing a representative to whom all correspondences relating to and in connection with the request for correction and reissuance of Promissory Notes should be directed.
Meanwhile, on another note, the defendant was deliberately taking other steps to frustrate and hinder the DMO from correcting and reissuing the Promissory Notes to reflect the name of Sterling Bank without a valid reason.
This was inspite of the fact that the plaintiffs are entitled to receive the instrument or funds or Promissory Notes or Sovereign Debt Notes due to the defendant from the DMO and relevant Federal Government Agencies.
Following the defendant’s failure to perform its obligations, Sterling Bank was adversely exposed to the scrutiny of the regulatory authorities, particularly the Central Bank of Nigeria.
Meanwhile, the plaintiffs’ exposure on the transactions as at 31st March, 2022 stood at N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo)
It follows that going by the obligations of the defendant, particularly its domiciliation instruction/ undertaking, the plaintiffs are entitled through the account with Sterling Bank to the sum of N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo).
This was supposed to have been 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.
Meanwhile, as the Federal Government through the DMO and relevant agencies plans to make fresh settlement of obligations/ payment of receivables to various oil marketers, including the defendant, the defendant’s actions continued to threaten the actualization of receiving the receivables, as it continues perfected plans to divert the Promissory Notes/ Sovereign Debt Notes expected to be received from the DMO.
Consequently, the plaintiffs are hoping that in the interest of justice, if judgment would be entered in their favour, as funds utilized to facilitate the letters of credit for the importation of the Petroleum Products, PMS, were depositors’ funds and it behooves that the debt be liquidated, especially as the Bank has adequately been exposed to the Central Bank of Nigeria scrutiny due to the indebtedness.
However, the plaintiffs claims against the defendant are as follows:
– A declaration that the plaintiffs have the right to receive in the collection account maintained with the sterling 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. This includes subsidy claims or accrued interests and foreign exchange differentials, paid by the Federal Government to the defendant in order 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 (Two Billion, One Hundred and Thirty Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four
Kobo). This is inline with the offer letters, the Service Agreements made between the defendant and the 2nd plaintiff, the defendant’s letter of irrevocable undertaking to the bank, and the defendant’s letters to DMO.
– A declaration that the plaintiffs are entitled to a LIEN on all 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 interests and foreign exchange differential in form of Sovereign Debt Notes or Promissory Notes. This is to the extent of that the bank exposure has emanated through the 2nd Plaintiff’s account which was utilized by the Defendant to the tune of N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo); as at 3 1 st March, 2022.
– A declaration that under and by virtue of the offer letters, the Service Agreements made between the defendant and the 2nd plaintiff, the defendant’s letter of irrevocable undertaking to the bank, the defendant’s letters to DMO, the 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 (Two Billion, One Hundred and Thirty Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo) are to be domiciled with Sterling Bank to liquidate the defendant’s indebtedness emanating through the 2nd plaintiff’s account.
– Cost of this legal action to the tune of N10,000,000 (Ten Million Naira), interest to the sum stated in the reliefs above at 23% per annum from 31st of March 2022 till judgment and thereafter 10% per annum until the judgment sum is fully liquidated.