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Forex: Elim Motors Ltd battles Ecobank over N2bn loss
Rev. Chukwuemeka Ngubo and his company Elim Motors Nigeria Limited has sued Ecobank for buying US dollars on parallel market
A Federal high court sitting in Lagos has adjourned till 10 December 2018 for report of settlement or trial if amicable settlement fails, the suit instituted by Rev. Chukwuemeka Ngubo and his company Elim Motors Nigeria Limited against Ecobank Nigeria Limited.
Ngubo is suing the bank for allegedly buying US dollars on their behalf at the rate of N475 whilst the Central Bank approved rate was at N300 to one dollar as at the time of purchase.
By wrongfully sourcing foreign exchange from the parallel market, the plaintiffs alleged that Ecobank exposed them to the sum of over N2 billion loss.
By the provision of the Foreign Exchange (monitoring and miscellaneous Provisions ) Act, Cap F34 laws of the Federation of Nigeria 2004, Ecobank ought not to have sourced foreign exchange from the parallel market.
The plaintiffs further averred that, the action of the bank is in flagrant breach of the Central Bank of Nigeria’s extant rules regulating the conduct of foreign exchange transactions in Nigeria which has adversely affected the credit rating and financial credibility of the company to the benefit of the bank.
According to a statement of claim filed before the court , the plaintiffs averred that pursuant to the banker-customer relationship between Ecobank Nigeria limited and Elim Motors Limited, the bank had, in the past granted Elim Motors Limited several credit facilities which the company always repaid as at when due.
The company noted that, it applied for and the bank issued a bank guarantee in the sum of $12 million in favour of Credit Trading Company through Deutche Bank AG London in the sum of $8,750,000.
By the foregoing the plaintiffs aver that, a balance of $3,250,000 was left unutilised. The loan was secured with the following; lien on cash collateral of N200 million being held at the bank’s Treasury Department.
2. Legal mortgage on blocks of lecture hall complex centre in Okota, Isolo, Lagos State valued at N383Million.
3. Legal mortgage on block of lecture hall complex at Elim Modern Student Centre Okota.
4. Stock Hyphenation of one billion naira.
5. Personal guarantee of the Managing Director with a notarised statement of net worth.
6. Promisory note of Elim Motors Limited for the payment of all present and future principal and outstanding balances in the account.
Upon the expiration of the tenor of the bank guarantee, and in honouring the bank guarantee, Ecobank Nigeria Limited unilaterally and wrongly sourced the sum of $8,750,000 it paid to Cedric Trading Company LLC from parallel market rather than from Central Bank of Nigeria by purchasing the foreign exchange at the rate of N475 to one dollar, whilst the Central Bank of Nigeria’s approved rate was at N300 to one US Dollar as at that time.
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By wrongly sourcing foreign exchange from the parallel market, the bank exposed the plaintiff’s company to the sum over N2 billion loss.
Despite the wrongful actions of the bank, the bank is still demanding for the sum of N4, 410,017,358,51 from the plaintiffs as their outstanding indebtedness.
However, the plaintiffs averred that they are not in any way indebted to Ecobank, consequently urged the court to declare that the unilateral purchase of foreign exchange by Ecobank at the parallel market rate rather than at the Central Bank of Nigeria ‘s inter-bank rate is in breach of the Ecobank’s fiduciary duties owed the plaintiffs by Ecobank Nigeria limited.
An order directing CBN to conduct a detailed inquiry into the purchase of foreign exchange by the bank at the parallel market, and if the bank is found to have breached ethical standards in the banking industry, penalize the bank in line with its extant guidelines and monetary policies.
The bank in its statement of defence denied almost all the claims of the plaintiffs instead the bank is contending that the plaintiffs are owing the bank the sum of N4,693,438,781.10 as at 28th of February, 2016.
The bank therefore urged the court to dismiss the claim of the plaintiffs as being frivolous and baseless.
