Court Adjourns for Adoption of Written Addresses in RCN Networks, GTB Suit

Wale Igbintade

Justice E.O. Ashade of the Lagos High court, sitting in Yaba yesterday adjourned till May 28, 2024 for the adoption of final written addresses in the suit filed by RCN Networks Limited and its Managing Director, Alhaji S I Nuraini Abiola against Guaranty Trust Bank and five others over alleged fraud committed on the document used to secure judgement against the claimants.
At yesterday’s sitting, the claimants’ counsel, Dr. Charles Adeogun-Philips cross-examined a legal officer with the GTB, Nicholas Igwebuike on the alleged discrepancies noticed in the Deed of Assignment, and the Deed of Tripartite Mortgage presented before Justice  Chukwujekwu Aneke of the Federal High Court to secure the judgement.

RCN Networks Limited and Alhaji S I Nuraini Abiola (Claimants) had instituted the Suit against the Defendants alleging that the bank based on the judgement of the court appointed a receiver manager over the  Deed of Tripartite Mortgage, and registered same at the Land Registry Directorate, Alausa  based on the alleged fraudulent documents.

The crux of the matter was as a result of the inability of the claimants to repay the sum of N970,743,041.15 facility given to it by the bank.
As a result of the default on the part of the claimants, GTB approached the Federal High Court, Lagos seeking for an order to enforce it’s rights under the agreement by taking over the security used in securing the facility.
After hearing the banks’ application and the counter claim filed  of RCN Network Limited, Justice Aneke granted the reliefs sought by GTB.
However, dissatisfied with the ruling of the court, NRC filed an appeal at the Court of Appeal.
However while the appeal was still pending, RCN filed the suit at the Lagos High Court alleging that the judgement at the Federal High Court was secured with forged documents.

Meanwhile, in a petition dated 23rd March, 2020 written to the Central Bank of Nigeria by the Managing Director of RCN Networks Ltd, Nuraini Agboola Abiola, the Petitioner said that he maintained a banking relationship with the Respondent for many years.   In the normal course of business activity, the Petitioner applied for and obtained secured loan facilities from Respondent at various times between 2007 and 2009
According to the petitioner the modus operandi of such transactions was that the Petitioner would cause myself to secure such facilities using a range of landed properties owned by myself.

He stated on 16th April 2009, the Respondent GTB granted a line of credit in the sum of Five Hundred and Eight Million Naira (N508,000,000.00) to the Petitioner, in which he submitted the title documents to his Oyinkan Abayomi Drive property to GTB on the basis that the said documents will be perfected in the event that the line of credit facility was utilised.

However, the said Line of Credit facility was never fully utilised.  
In September 2009, the petitioner RCN also had a separate transaction with GTB for the issuance of an Eight Million US Dollar ($8,000,000.00) Letter of Credit for the importation of Harris Military Communication equipment for onward supply to the Nigerian Army.
“In return, I released the title documents to my Banana Island and Osborne Phase II properties to GTB and executed all the Tripartite Legal Mortgage (TLM) documents in favour of GTB.

As part of the conditions prescribed by GTB for the issuance of the said letter of credit facility, the Petitioners were required to execute a 12 page Tripartite Legal Mortgage (TLM) in GTB’s favour.  
“Due to some logistic delays, GTB was unable to issue the Petitioner with the Letter of Credit facility in a timely manner, resulting in the said Letter of Credit remaining unused.   However, rather than return or destroy the signed TLM executed, GTB secretly retained the executed TLM.

“On 18 January 2008, GTB notified me that it had approved a One Billion Naira (N1,000,000,000.00) margin loan for the purchase of shares in Zenith Bank PLC. To this end, GTB disbursed the funds directly to Zenith Bank and took custody of the shares purchased therewith. RCN and I also signed all liquidation documents in particular, an irrevocable Letter of Undertaking to place a lien on the said shares which was necessary to enable GTB to sell the said shares at its discretion.  In addition, as required by the conditions attached to the said loan documentation, we paid the sum of a One Hundred Million Naira (N100,000,000.00) being the equity contribution to cover any loses in the event of a market downturn. (See GTB Letter dated 18 January 2008).

“GTB at best, did not take prudent steps to mitigate its losses and at worst, was reckless and/or completely negligent, having delayed in selling the said shares until the market had experienced a steep decline which therefore resulted in total losses of Three Hundred and Forty-Six Million Naira (N346,000,000.00) in the value of the said shares, from which, it deducted the 100 million Naira equity contribution thereby resulting in a total shortfall to GTB in the amount of Two Hundred and Forty-Six Million Naira (N246,000,000.00). The said shortfall subsequently attracted an interest payment element of Two Hundred and seven Million Naira (N207,000,000.00), bringing the total loss of GTB with respect to this transaction to Four Hundred and Fifty-Three Million Naira (N453,000,000.00).
“Furthermore, the Zenith Bank Public offer having been over-subscribed resulted in the allocation of shares totalling Seven Hundred and Fifty Million Naira (N750,000,000.00) to RCN/AA and not the One Billion Naira (N1,000,000,000.00) initially requested. This therefore left the sum of Two Hundred and Fifty Million Naira (N250,000,000.00) which was thereafter refunded by Zenith Bank PLC.

“Having received the said refund, we immediately forwarded same to GTB via a cheque in the amount of Two Hundred and Fifty Million Naira (N250,000,000.00) with written instructions to the effect that the said refunded amount be paid into their loan account at GTB and be so applied in order to reduce the principal sum of One Billion Naira (N1,000,000,000.00) advanced to it by the GTB.  

“However, instead of doing as requested, GTB applied the said refund to a sub-account and eventually utilised it in servicing the interest which 0 accrued on the margin loan despite that the main account was in credit, thus resulting in excess interest being charged to the margin loan account on a higher outstanding amount. This resulted in the loan balance being artificially high by Two Hundred and Fifty Million Naira (N250,000,000.00) and resulted in an excess interest of Two Hundred and Seven Million Naira (N207,000,000.00) making a total of Four Hundred and Fifty-Seven  Million Naira (N457,000,000.00).  In addition, excess service charge fees of Sixty Million Naira (N60,000,000.00) were also applied to the said account in excess of CBN Regulations. The above stated computation which was derived from data provided by the GTB to RCN’s Auditors during a hastily convened meeting at the GTB HQ after criminal investigations were initiated by the Special Fraud Unit of The Nigeria Police Force into the alleged forgery, explains how GTB PLC arrived at the outstanding loan amount of Nine Hundred and Sixty-Four Million Naira (N964,000,000.00) currently in dispute”.