New Twist in Ecobank, Honeywell Debt Saga

A new twist has emanated from the ongoing legal battle over the interpretation of the judgement of the Supreme Court, which resolved the dispute between Honeywell Flour Mills Plc and two of its subsidiaries with Ecobank Plc over a non-performing loan granted by the bank, writes Wale Igbintade

For more than eight years, Honeywell and its sister firms, Anchorage Leisures Limited and Siloam Global Limited, have been locked in a N5.5 billion debt dispute with Ecobank Plc. While Honeywell, Anchorage and Siloam claimed to have paid N3.5 billion as final payment for the debt, Ecobank insisted the firms were still indebted to it. 

Keen observers of the issues had thought that the issue had been laid to rest, having journeyed through the hierarchy of courts up to the Supreme Court. They are of the view that following the principle of the unchangeability of Supreme Court’s decision, parties would abide by the pronouncement of the apex court. But the contrary is the case, as parties involved in the matter have different interpretations and understanding of the judgment. 

While the counsel to Ecobank Plc, Mr. Kunle Ogunba (SAN), argued that the binding decision of the Supreme Court, found that as of January 17, 2014, the sum of N3,1116,731,061.07 remains to be paid, counsel to Otudeko and Honeywell Group, Chief Wole Olanipekun (SAN), is of the view that at no time did the court award the amount or any judgment sum (as debt owed) at all in favour of Ecobank. 

Specifically, following the acquisition of a majority equity stake in FBN Holdings by the Managing Director of Honeywell Group Limited, Dr. Obafemi Otudeko, Ecobank through its lawyer, Kunle Ogunba (SAN) in a letter addressed to FBN Holdings Plc, called on the bank to stay action and not accord any rights to the acquired shares. It alleged that the share purchase was a ploy by Otudeko to frustrate a Supreme Court judgment in the bank’s favour.

The letter stated that the court had in its judgment delivered on January 27, 2023, in Appeal No SC/CV/210/2021 affirmed the indebtedness of several companies related to Otudeko and ordered the companies to pay their indebtedness to the bank. It stated that the total indebtedness was calculated at N13.51 billion as of January 31, 2023.

Ecobank further alleged that Barbican Capital, which acquired 13.3 per cent or 4.77 billion shares in FBN Holdings, was “hurriedly incorporated after the judgment of the Supreme Court, specifically on the 9th day of March 2023, as part of active steps by Otudeko to divert his personal funds and assets, and those of the debtor companies away from paying the judgment sum.” 

The bank alleged that Otudeko, who has a beneficial interest in the companies, personally guaranteed the loans in question.

“Consequent upon the foregoing crystalised facts, it is beyond doubt that the actions being taken by Dr. Oba Otudeko are targeted at diverting his assets and that of the Honeywell Group of companies through the said Barbican Capital Limited, in order to frustrate the enforcement of the judgment of the Supreme Court against him and the Honeywell companies, towards recovering his/their undisputed indebtedness to our client’’, the bank alleged.

But, in a swift response, Wole Olanipekun & Co, asked FBN Holdings to disregard the petition by Ecobank’s lawyers, demanding a rejection of 4.7 billion shares purchased by the entrepreneur.

In a letter, the law firm dismissed the claims by Ecobank that there was a Supreme Court judgment backing its stance that Otudeko was owing it N13.5 billion. According to the letter, no order of the court had “awarded same or any judgment sum (as debt owed) at all in favour of Ecobank as a liability from our clients or any of the Honeywell companies.”

The letter read in part, “The sum of N13.51bn (thirteen billion, five hundred and seven million, fifty-two thousand, four hundred and seventeen naira, ninety-nine kobo) stated in Ecobank’s letter is/was not contained in the Supreme Court decision or any extant court decision in Nigeria or elsewhere.”

To further compound the dispute, Nigerians were shocked last Tuesday when Justice Muhammad Lima ordered Ecobank Plc to pay Honeywell Flour Mills Plc a whopping N72 billion over illegal ex-parte order obtained by the bank against the group’s assets. Some are wondering if the High Court can determine a case already settled by the Supreme Court.

The court held that the plaintiff (Honeywell Flour Mills) was denied the use of funds in his account based on the ex parte order granted in favour of the defendant.

Dissatisfied, Ecobank in its Notice of Appeal filed by its lawyer, Ogunba, urged the court to stay execution of the judgment pending the hearing and final determination of the appeal lodged against the said judgment pending at the Court of Appeal, Lagos Judicial Division. 

The appellant is also asking for “an order restraining the respondent (Honeywell Flour Mills Plc) whether by itself, its servant(s), agent(s), privies, assigns or any person(s) howsoever called or described, acting under the actual, implied or clear authority of the plaintiff/ respondent, from taking advantage of the judgment or any enforceable/executable orders of this court delivered on 18th July, 2023 in Suit No: FHC/L/CS/1554/2018, pending the hearing and final determination of the appeal lodged against the judgment.”

Ecobank is also seeking for “an order of the court restraining the Deputy Sheriff of the Federal High Court, the bailiff of the court below and those of the Federal and State High Courts, the Nigerian Police Force or any other law enforcement agency from assisting the respondent herein from enforcing or taking advantage of the Judgment or any enforceable/executable orders of the court delivered on 185h July 2023 pending the hearing and determination of the appeal and for such further or other orders as the court may deem fit to make in the circumstance.” 

The appellant in its Notice of Appeal raised fundamental issues of law, stating that if the judgment of this lower court is enforced against it, the decision of the Court of Appeal will be rendered nugatory, and same will annihilate the existence of the applicant and cause panic in the economy. 

The appellant stated that the lower court judge erred in law when he assumed jurisdiction to determine the respondents claim at the lower court and consequently dismissed the appellant’s notice of preliminary objection filed on October 16, 2018 on the sole ground that the respondent’s cause of action for damages borders on banker customer relationship which both the Federal High Court and State High Court share concurrent jurisdiction to entertain. 

“The learned trial judge erred in law when he assumed jurisdiction to determine the respondents claim at the lower court and consequently dismissed the appellant’s notice of preliminary objection filed on 29th March 2023 on the ground that the respondent’s cause of action is not related to the judgment of the Supreme Court in SC CV/210 2021. 

“The learned trial judge erred when he delivered its judgment outside the 90 days prescribed by the provisions of 294 (1) of the Constitution of the Federal Republic of Nigeria and consequently occasioned a miscarriage of justice against the appellant. Consequently, it prayed the court to set aside the judgment delivered on the 18th day of July 2023.”

Also, Ogunba has dragged the law firm of Wole Olanipekun & Co. before the Chief Justice of Nigeria (CJN) and the Body of Benchers. He urged the NJC and the Body of Benchers to probe the law firm’s role in the matter of “Shares belonging to Honeywell Group Limited, Honeywell Flour Mills Plc, Anchorage Limited, Siloam Global Services Limited and Dr. Oba Otudeko in FBN Holdings Plc or in any other entity”.

Ogunba accused Wole Olanipekun & Co of among others, “unprofessionalism/abuse of the final judgment of the Supreme Court” and “Persistent and constant abuse of process of court”.

He stated: “We have just been served copy of a correspondence of the 14th instant from the firm of Wole Olanipekun & Co. in response to ours of the 12th instant as regards the above subject and we are now convinced beyond all previous doubts that the highly esteemed law firm of Wole Olanipekun & Co. will palpably stop at nothing to despoliate the final judgment of the Supreme Court in a dispute that raged for the better part of eight years as would be shown anon particularly in the light of the “fresh action” in suit no. FHC/L/CS/352/2023 it filed at the Federal High Court, in Lagos to palpably re-litigate the same subject matter.

“Clearly, the response of the firm of Wole Olanipekun & Co. has departed from its previous position that the Supreme Court could not have, and, indeed, did not grant an award claim in favour of the bank and has unilaterally codified a phantom unanimity of position that entity and personality who undoubtedly guaranteed the facilities are not parties before the court and that a certain figure was never mentioned when the Supreme Court held that the “Debtor must pay all the debts that have accrued under the loan contract.

“Indeed, if that position is true for all intents and purposes, the question is why the necessity for a “fresh action” on behalf of the judgment debtors necessitating a counter-claim on our part?”

He argued that a careful analysis of the claim as presented in the “fresh action” shows “vividly that the new action at the lower court is a frontal attack on the Supreme Court judgment because while the Supreme Court has previously held (at page 39 of its judgment) that: ‘The respondent being the owner of the money dues as debts from the appellants can decide to waive its right to recover all the debts due to it from each appellant. But it cannot be compelled to waive a contractual right.

“However, by the fresh action filed, the appellants as plaintiff now seek an order that the owner (the bank) can be so compelled contrary to the binding decision of the Supreme Court, the highest Court in the land which found as a matter of fact that as of the 17th day of January, 2014 the sum of N3,1116,731,061.07 remains outstanding which is more than the N2billion the plaintiff admitted as due and owing.”

No doubt the outcome of the dispute would go a long way in addressing the negative trend of non-performing loans in the banking sector. This is because a high level of non-performing loans would reduce the financial performance of commercial banks in the country.