Hon. Justice Ijeoma OJukwu of Uyo Federal High Court has
given a decision which partly deals with the issue of whether a
company acquiring another company also inherits the liability of
the company so acquired.
In the case of FRN v. Chrystantus E. Ellien and 5 ors with
Charge No: FHC/UY/42C/12, Chrystantus. E. Etten, Patrick E. Ente,
Umana E. Umana, and Francis B. Ekpenyong Oceanic Bank Int’l PLC
(now ECO bank Nig. LTD), Micheal Adewole were sued as
defendants.
1st-4th defendants were accused of conspiracy to forge, stealing
and forging of some documents, representing themselves as Board of
Trustees Okopedi Community contrary to the relevant laws.
Michael Adewole, (6th defendant) was charged for failing to
verify the identity of Okopedi Communitry and update all relevant
information on the customer with the new account 0018997858 and
(old account number 0241301010304) as customer of Oceanic Bank
International Plc before opening an account for the said Okopedi
Community and thereby committed an offence contrary to the Money
Laundering Act, 2004, he (Michael) also failed to require for proof
of identity and update all relevant information on the customer
with the new account 0018997858 and by presenting to Oceanic Bank
International Plc, the originals of receipt issued within the
previous three months by public utilities, official documents as
well as the power of attorney granted or the resolution appointing
signatories and thereby committed an offence contrary to the said
Act. The Bank was charged with similar count, with all counts
totalling twenty in numbers in the charge sheet.
The facts of the case reveal that the Akwa Ibom State Government
had invited the Okopedi Community through the Ministry of lands to
collect the compensation money paid by the government in respect of
the acquisition of their land for the State Airport.
They were instructed to provide an account in that respect. The
community concluded that the money be paid into a fixed deposit
account with Oceanic Bank in the community’s name and the 1st to
4th defendants and two others appointed as signatories.
Subsequently some withdrawals were made on the account worth
millions of naira with the 1st to 4th defendants as signatories,
even without the express authorization of the community. The
prosecution contended that, when the defendants were asked, they
apologized and were given a total of six months to pay back the
money withdrawn.
When the matter was reported to EFCC, it was discovered that the
1st -3rd had constituted themselves as a board of trustees of the
community, when in fact, there was no such board. It was also
discovered that the community money was used as collateral for a
loan. The defence however noted that the money of the community was
invested in a company known as Marvin Investment after there were
some issues among the elders of the community about the money; that
the money was invested to yield profit for the community though
without their authority. It was also alleged that it was the bank
that advised them to form a board of trustees to manage the fund of
the community.
The court after considering the issues raised by all the parties
raised the sole issue for determination: “Whether the prosecution
has proved the offences of forgery, uttering, stealing, conspiracy,
and failure to require proof of identity and information of
customer as it pertains to each respective defendant in view of the
charge before the court.”
In the course of arguing the case of the defence, learned
counsel for the 5th defendant (Oceanic Bank International Plc)
argued that Eco Bank cannot be held liable since the alleged
transaction took place before Eco Bank acquired Oceanic Bank. He
argued that there is no vicarious liability in criminal matters
neither can criminal liability be transferred to Eco Bank Nigeria
Limited which is a separate entity.
The court while giving its judgement per Hon. Justice Ijeoma L.
Ojukwu held as follows: the only way the acquiring bank can escape
liability is where there is a written agreement that only the
assets of the company is acquired under the agreement. To ascertain
that truism, the asserting party must tender the instrument where
the parties agreed to such escape from liability, and there is none
before the court.
According to the court, the test of liability is whether the
officer or agent, in doing the acts complained of was engaged in
exercising corporate powers for the benefit of the corporation
while acting in the scope of his employment. The status of that
agent or officer is irrelevant. The primary question is whether he
has been invested with the performance of the function in the area
to which the acts he has performed relate. The court thus held that
it does not lie in the mouth of the 5th defendant who has acquired
the assets and liabilities of Oceanic bank to pick and choose.
On the offence of forgery, the court after defining the offence
and listing its elements, and as well distinguishing the facts of
the case in APC v. PDP from the current case, found that the
prosecution proved the offence of forgery against the 1st to 3rd
defendants in the respective counts of the charge. However, the 4th
defendant was held not culpable, having acted only as a rubber
stamp, being not present when the 1st to 3rd defendants hatched the
idea to fabricate the documents in order to use the money of
Okopedi Community to obtain the loan facility. Similar decision was
given with respect to the offence of uttering.
On the offence of conspiracy to commit forgery and stealing
under counts one and sixteen of the charge, the court held that the
prosecution proved the first which is conspiracy to commit forgery,
while on the offence of conspiracy to commit the substantial
offence of stealing; the court held that the 1st to 4thdefendants
are not culpable. According to the court, their focus and what they
actually obtained was the loan facility granted them by the 5th
defendant. Granted that the community’s fund was used as collateral
for the loan, there was no asportation of the community’s fund.
It was the 5th defendant who took over, converted and depleted
the funds of the community as interest on the loan, contrary to the
orders instruction and mandate of Okopedi group of villages. But
since the 5th defendant cannot conspire with itself, it finds the
offence of conspiracy to steal unproved. The court held that the
1st to 3rd defendants does not have the mandate to apply the
community’s fund neither did they act in the best interest of the
community. According to the court, the only deduction is that the
1st to 3rd defendants wanted to make a quick and clandestine profit
from the community’s money.
The court therefore sentenced 1st-3rd defendants to 2 yrs
imprisonment or an option of N2,000,000 while the 5th defendant was
sentenced to pay the sum of N5,000,000 as well as to refund the sum
N56,781,682.55k to Okopedi Community.
The court further held that if the 5th defendant fails to pay
the judgment sum within the stipulated time, it will attract 10%
interest.
Hon. Justice Ijeoma OJukwu of Uyo Federal High Court has
given a decision which partly deals with the issue of whether a
company acquiring another company also inherits the liability of
the company so acquired.
In the case of FRN v. Chrystantus E. Ellien and 5 ors with
Charge No: FHC/UY/42C/12, Chrystantus. E. Etten, Patrick E. Ente,
Umana E. Umana, and Francis B. Ekpenyong Oceanic Bank Int’l PLC
(now ECO bank Nig. LTD), Micheal Adewole were sued as
defendants.
1st-4th defendants were accused of conspiracy to forge, stealing
and forging of some documents, representing themselves as Board of
Trustees Okopedi Community contrary to the relevant laws.
Michael Adewole, (6th defendant) was charged for failing to
verify the identity of Okopedi Communitry and update all relevant
information on the customer with the new account 0018997858 and
(old account number 0241301010304) as customer of Oceanic Bank
International Plc before opening an account for the said Okopedi
Community and thereby committed an offence contrary to the Money
Laundering Act, 2004, he (Michael) also failed to require for proof
of identity and update all relevant information on the customer
with the new account 0018997858 and by presenting to Oceanic Bank
International Plc, the originals of receipt issued within the
previous three months by public utilities, official documents as
well as the power of attorney granted or the resolution appointing
signatories and thereby committed an offence contrary to the said
Act. The Bank was charged with similar count, with all counts
totalling twenty in numbers in the charge sheet.
The facts of the case reveal that the Akwa Ibom State Government
had invited the Okopedi Community through the Ministry of lands to
collect the compensation money paid by the government in respect of
the acquisition of their land for the State Airport.
They were instructed to provide an account in that respect. The
community concluded that the money be paid into a fixed deposit
account with Oceanic Bank in the community’s name and the 1st to
4th defendants and two others appointed as signatories.
Subsequently some withdrawals were made on the account worth
millions of naira with the 1st to 4th defendants as signatories,
even without the express authorization of the community. The
prosecution contended that, when the defendants were asked, they
apologized and were given a total of six months to pay back the
money withdrawn.
When the matter was reported to EFCC, it was discovered that the
1st -3rd had constituted themselves as a board of trustees of the
community, when in fact, there was no such board. It was also
discovered that the community money was used as collateral for a
loan. The defence however noted that the money of the community was
invested in a company known as Marvin Investment after there were
some issues among the elders of the community about the money; that
the money was invested to yield profit for the community though
without their authority. It was also alleged that it was the bank
that advised them to form a board of trustees to manage the fund of
the community.
The court after considering the issues raised by all the parties
raised the sole issue for determination: “Whether the prosecution
has proved the offences of forgery, uttering, stealing, conspiracy,
and failure to require proof of identity and information of
customer as it pertains to each respective defendant in view of the
charge before the court.”
In the course of arguing the case of the defence, learned
counsel for the 5th defendant (Oceanic Bank International Plc)
argued that Eco Bank cannot be held liable since the alleged
transaction took place before Eco Bank acquired Oceanic Bank. He
argued that there is no vicarious liability in criminal matters
neither can criminal liability be transferred to Eco Bank Nigeria
Limited which is a separate entity.
The court while giving its judgement per Hon. Justice Ijeoma L.
Ojukwu held as follows: the only way the acquiring bank can escape
liability is where there is a written agreement that only the
assets of the company is acquired under the agreement. To ascertain
that truism, the asserting party must tender the instrument where
the parties agreed to such escape from liability, and there is none
before the court.
According to the court, the test of liability is whether the
officer or agent, in doing the acts complained of was engaged in
exercising corporate powers for the benefit of the corporation
while acting in the scope of his employment. The status of that
agent or officer is irrelevant. The primary question is whether he
has been invested with the performance of the function in the area
to which the acts he has performed relate. The court thus held that
it does not lie in the mouth of the 5th defendant who has acquired
the assets and liabilities of Oceanic bank to pick and choose.
On the offence of forgery, the court after defining the offence
and listing its elements, and as well distinguishing the facts of
the case in APC v. PDP from the current case, found that the
prosecution proved the offence of forgery against the 1st to 3rd
defendants in the respective counts of the charge. However, the 4th
defendant was held not culpable, having acted only as a rubber
stamp, being not present when the 1st to 3rd defendants hatched the
idea to fabricate the documents in order to use the money of
Okopedi Community to obtain the loan facility. Similar decision was
given with respect to the offence of uttering.
On the offence of conspiracy to commit forgery and stealing
under counts one and sixteen of the charge, the court held that the
prosecution proved the first which is conspiracy to commit forgery,
while on the offence of conspiracy to commit the substantial
offence of stealing; the court held that the 1st to 4thdefendants
are not culpable. According to the court, their focus and what they
actually obtained was the loan facility granted them by the 5th
defendant. Granted that the community’s fund was used as collateral
for the loan, there was no asportation of the community’s fund.
It was the 5th defendant who took over, converted and depleted
the funds of the community as interest on the loan, contrary to the
orders instruction and mandate of Okopedi group of villages. But
since the 5th defendant cannot conspire with itself, it finds the
offence of conspiracy to steal unproved. The court held that the
1st to 3rd defendants does not have the mandate to apply the
community’s fund neither did they act in the best interest of the
community. According to the court, the only deduction is that the
1st to 3rd defendants wanted to make a quick and clandestine profit
from the community’s money.
The court therefore sentenced 1st-3rd defendants to 2 yrs
imprisonment or an option of N2,000,000 while the 5th defendant was
sentenced to pay the sum of N5,000,000 as well as to refund the sum
N56,781,682.55k to Okopedi Community.
The court further held that if the 5th defendant fails to pay
the judgment sum within the stipulated time, it will attract 10%
interest.