Tuesday , November 24 2020

N855 Million Fraud: Court Sentence Two Keystone Bank Top Officials, Businessman to Five Years Imprisonment

Justice Kudirat Jose of the Lagos State High Court in Igbosere has convicted and sentenced an Indian  businessman, Ashok Israni and two top officials of Bank PHB (now Keystone Bank), Anayo Nwosu and Olajide Oshodi to five years imprisonment for a N855 million fraud.

Justice Jose also convicted NULEC Industries Limited belonging to Israni and Keystone Bank Limited.

The Economic and Financial Crimes Commission (EFCC) had arraigned the convicts alongside one Sunny Obazee on an amended 15-count charge bordering on conspiracy and obtaining by false pretence to the tune of N855 million.

The defendants, however, pleaded not guilty to the charge preferred against by them by the EFCC, thereby leading to their full trial.

During the course of the trial, the prosecution counsel, Rotimi Jacobs, (SAN) presented witnesses and tendered several documents that were admitted in evidence by the court.

In her judgment, Justice Jose discharged and acquitted the fourth defendant, Obazee.

The Judge, however, convicted and sentenced the first, second and third defendants to five years imprisonment each on counts 1, 3, 4, 7, 9, 10 and 13 of stealing.

The companies were also ordered to pay a fine of N20 million to the Federal Government on counts 1, 10 and 13.

The Jugde also ordered the convicts to restitute the sum of N395 million  to the victim of the fraud.

Read the full judgment here:

IN THE HIGH COURT OF LAGOS STATE IN THE “(IKEJA JUDICIAL DIVISION)

______——-
‘ HOLDEN AT |KEJA

BEFORE THE HONOURABLE JUSTICE K. A. JOSE (MRS) 9th DAY OF DECEMBER 2019

SUIT NO: ID/112C/2012

BETWEEN:

FEDERAL REPUBLIC OF NIGERIA COMPLAINANT AND

1. ANAYO NWOSU

2. ASHOK ISRANI

3. OLAJIDE OSHODI

4. SUNNY OBAEZE

5. NULEC INDUSYRIES LIMITED

6. BANK PHB/KEYSTONE BANK PLC                DEFENDANTS

JUDGMENT

By an amended charge dated 24th June 2019 the Defendants were charged with the following offences:

STATEMENT OF OFFENCE

COUNT 1

Stealing by conversion contrary to Sectlon 390 of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003.

PARTICULARS OF OFFENCE

ANAYO NWOSU, ASHOK ISRANI, OLAJIDE OSHODI, SUNNY OBAZEE, BANK PHB PLC/KEYSTONE BANK LTD and NULEC INDUSTRIES LIMITED between July 14th and 31st July 2008 In Lagos within the jurisdiction of this honourable Court did fraudulently convert to your own use, the sum of N285,000,000.00 (Two Hundred and Eighty Five Million Naira) being the property of Dozzy Oil and Gas Ltd and Treasure Much Ltd when you credited the account of Nulec with the said sum to defray its debt owed to Bank PHB Plc and to utliise the balance as against paying the sum into the private placement account of Nulec which sum was to be used as payment for the purchase of shares of Nulec Industries Limited under a private placement.

STATEMENT OF OFFENCE COUNT 2 4

Stealing by conversion contrary to Section 390 of the Crlminal code, Cap C17 Vol. 2 Laws of

Lagos State 2003.

PARTICULARS OF OFFENCE ‘

ANAYO NWOSU, ASHOK ISRANI, . OLAJIDE OSHODI, SUNNY OBAZEE, BANK PHB PLC/KEYSFONE BANK LTD and NULEC |NDUSTRIES LIMITED between July 14m and 31″ July 2008 in Lagos within the Jurisdiction of this honourable Court did fraudulently convert to your own use, the sum of N145,000,000.00 (One Hundred and Forty Five Million Nalra) being the property of Dozzy oil and Gas Ltd and Treasure Much Ltd when you transferred the said sum Into the account of Nulec with Guaranty Trust Bank as against paying the sum into the private placement account of Nulec which sum was to be used as payment for the purchase of shares of Nulec Industries Limited under a private placement.

STATEMENT OF OFFENCE COUNT 3

Stealing by conversion contrary to Sectlon 390 of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003.

PARTICULARS OF OFFENCE

ANAYO NWOSU and OLAJIDE OSHODI between June and September 2008 in Lagos within the jurisdiction of this honourable Court did fraudulently convert to your own use, the sum of N110,000,000.00 (One Hundred and Ten Million Naira) being the property of Dozzy Oil and Gas Ltd and Treasure Much Ltd when the said sum was paid into the account of Drillcom Investement W/A Limited as premium charge of N1.10 per share in respect of 100 million shares aside the original N235 per share being payment for the purchase of shares of Nulec industries Limited under a private placement.

STATEMENT OF OFFENCE COUNT 4 .

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ‘

PARTICULARS OF OFFENCE;

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being a director of Nulec Industries Limited between June and September 2008 within the jurisdiction of this Court with Intent to Induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel chukwudazie to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein you stated in a material particular at page 8 thereof that the company would take the necessary steps to list the shares on the floor of the Nigerian Stock Exchange immediately after the private placement has been concluded but which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 5

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ‘

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being a director of Nulec industries Limited between June and September 2008 within the Jurisdiction of this Court with intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein you omitted to state in a material particular at page 7 thereof that an amount more than 31.41% or N415,000,000.00 (Four Hundred and Fifteen Million Naira) of the proceeds would be used for loan repayment but you stated that the said published amount or percentage thereof was to be used only for loan repayment, and which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 6

Publishing a false statement contrary to Section 436(b) of the Crlminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ’

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being a director of Nulec Industries Limited between June and September 2008 within the jurisdiction of this Court with intent to Induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozle to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein you omitted to state in a material particular at page 7 thereof that an amount more than 1.8% or N25,000,000. (Twenty Five Million Naira) of the proceeds would be used for local supply payment but you stated that the said published amount or percentage thereof was to be used only for local supply payment, and which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 7

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ‘

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being a director of Nulec industries Limited between June and September 2008 within the jurisdiction of this Court with Intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Danlel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement to wit: a private Placement memorandum wherein you omitted to state in a material particular at page 7 thereof that an amount more than 24.21% or N320,000,000.00 (Three Hundred and Twenty Million Naira) of the proceeds would be used for foreign supply payment but you stated that the said published amount or percentage thereof was to be used only for foreign supply payment, and which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 8

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ‘ ‘

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being a director of Nulec industries Limited between June and September 2008 within the jurisdiction of this Court with intent to Induce Dozzy Oil and Gas Ltd, Treasure Much Limlted and Sir Danlel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein you omitted to state in a material particular at page 7 thereof that an amount more than 6.2% or N82,000,000. (Eighty Two Million Naira) of the proceeds would not be held in reserve but you stated that the said published amount or percentage thereof was to be held in reserve; and which Statement Is to your knowledge false.

STATEMENT OF OFFENCE COUNT 8

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003.

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK lSRANl being a director of Nulec industries Limited between June and September 2008 within the jurlsdlction of this Court with intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozle to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum which In a material particular is to your knowledge false by omitting to state In the private placement memorandum that 9.6% or N104,000,000.00 (One Hundred and Four Naira) of the proceeds would be used for new purchases and miscellaneous but which statement is to your knowledge is false.

STATEMENT OF OFFENCE COUNT 10

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003.

PARTICULARS OF OFFENCE

ANAYO NWOSU, ASHOK ISRANI, OLAJIDE OSHODI, SUNNY OBAZEE, BANK PHB PLC/KEYSTONE BANK LTD and NULEC INDUSTRIES LIMITED being promoters, directors and/or officers of Nulec Industries Limited’s shares subscription by private placement between June and September 2008 within the Jurisdiction of this Court with intent to Induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein you stated in a material particular at page 8 thereof that the private placement is underwritten on a standby basis but which statement is to your knowledge false. ‘

STATEMENT OF OFFENCE COUNT 11

Publishing a false statement contrary to Section 436(b) of the Crimlnal Code, Cap C17 Vol. 2 Laws of Lagos State 2003.

PARTICULARS OF OFFENCE

NULEC INDUSTRIES LIMITED and ASHOK ISRANI being promoters and director of Nulec Industries Limited’s shares subscription by private placement between June and September 2008 within the jurisdiction of this Court with intent to induce Dozzy Oil and Gas Ltd, TreasureIMuch Limited and Sir Daniel Chukwudozle to buy the shares of Nulec lndustles Limited published a written statement to wit: a private placement memorandum wherein you omitted to state in a material particular at page 7 thereof that an amount more than N480,000,000.00 (Four Hundred and Eighty; Million Nalra) representing 36.31% of the proceeds would not be used for the product line expansion but you stated that the said published amount or percentage thereof was to be used only for product line expansion, and which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 12

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003. ‘

PARTICULARS OF OFFENCE

NULEC INDUSTRlES LIMITED and ASHOK ISRANI being promoters and director of Nulec industries Limited’s shares subscription by private placement between June and September 2008 within the jurisdiction of this Court with intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozle to buy the shares of Nulec lndusties Limited published a written statement to wit: a private placement memorandum wherein you stated in a material particular at page 13 thereof that the purpose of the offer was to add new production facilities for electric kettles, food blenders, free standing cookers and fans and which productions were expected to commence in October 2008 for small appliances and November 2008 for cookers but which statement Is to your knowledge false.

STATEMENT OF OFFENCE COUNT 13

Publishing a false statement contrary to Section 436(b) of the Criminal code, Cap C17 Vol. 2 Laws of Lagos State 2003..

PARTICULARS OF OFFENCE

ANAYO NWOSU (officer of Bank PHB), ASHOK ISRANI, OLAJIDE OSHODl(officer of Bank PHB), SUNNY OBAZEE(officer of Bank PHB), BANK PHB PLC/KEYSTONE BANK LTD and NULEC INDUSTRIES LIMITED being promoters, directors and/or officers of Nulec Industries Limited’s shares subscription by private placement between June and September 2008 within the Jurisdiction of this Court with intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement. to wit: a private placement memorandum wherein you omitted to state in a material particular at page 39 thereof that the loan of N130,000,000.00 (One Hundred and Thirty Million) owed by Nulec Industries to Bank PHB would not be repaid from the business cash flow of Nulec Industries Limited but you stated that the said published loan thereof was to be repaid from the business cash flows of Nulec Industries Limited, and which statement is to your knowledge false.

STATEMENT OF OFFENCE COUNT 14

Conspiracy to obtain money by false pretence contrary to Section 8(a) and punishable under“ Section 1(3) of the Advance Fee Fraud and Other Fraud Related Offences Act of 2006.

PARTICULARS OF DEFENCE

ANAYO NWOSU, ASHOK ISRANI, OLAJIDE OSHODI, SUNNY OBAZEE, BANK PHB PLC/KEYSTONE BANK LTD and ‘Nulec INDUSTRIES LIMITED sometime In 2008 in Lagos within the jurisdiction of this honourable Court conspired to commit an offence by obtaining the sum of N855,000,000.00 (Eight Hundred and Fifty Five Million Naira) from Dozzy Oil and Gas Ltd and Sir Daniel Chukwudozie on the false pretence that Nulec Industries Limited was in active profit making, manufacturing and trading activities thereby purporting same to be payment for the purchase of shares of Nulec industries Limited under a private placement.

STATEMENT OF OFFENCE COUNT 15

Obtaining money by false pretence contrary to Section 1(3) of the Advance Fee Fraud and Other Fraud Related Offences Act of 2006.

PARTICULARS OF OFFENCE

ANAYO NWOSU, ASHOK ISRANI, OLAJIDE OSHODI, SUNNY OBAZEE, BANK PHB PLC/KEYSTONE BANK LTD and NULEC UNDUSTRIES LIMITED sometime In 2008 in Lagos within the jurisdiction of this honourable Court with Intent to defraud obtained the sum of N855,000,000.00 (Eight Hundred and Fifty Five Mllllon Naira) from Dozzy Oil and Gas Ltd on the false pretence that Nulec Industries Limited was In active profit making, manufacturing and trading activities thereby purporting same to be payment for the purchase of shares of Nulec industries Limited under a private placement.

The Defendants pleaded not guilty to the charges consequent to which the matter went Into trial.

The 1st prosecution witness (PW1) was Chukwuma Orji an operative with the Economic and Financial Crimes Commission (EFCC) who said that his office received a petition from Dozzy Oil and Gas Limited (the complainant) which alleged that the 1st Defendant approached one Chukwudozie Daniei managing director of the complainant and his associates to Invest In ‘the private placement of shares of the 5th Defendant and they so invested. It was alleged that the shares were not listed on the Stock Exchange as promised and that the collection of money for the sale of the shares had been fraudulent.

The complainant also said that it had been misled into investing in the 5th Defendant by the false information given to it by 5th Defendant. The EFCC thereafter wrote the 6th Defendant to request for the private placement proceeds account as well as the operating account of the 5th Defendant and was given the account statements. PW1 said he saw fraudulent manipulation In the account statements and the 1st Defendant was Invited to make a statement. In same he stated that he was the one who invited the complainant to invest in the private placement. He agreed that he gave the complainant the impression that the shares would on completion of the private placement be listed at a higher price than that of the placement.

PW1 said that Investigation showed that the 1st Defendant was the one who moved funds from the complainant’s Zenith Bank account to the account of another company called Treasure Much Limited (Treasure Much) which was also being run by Chukwudozie Daniel. The 1st Defendant was said to have given instructions for the Issuance of a bank draft of N285 Million from the account of Treasure Much and this draft was used to buy shares in the private placement for Daniel Chukwudozie and his associates. PW1 said as at the time of the private placement the 5th Defendant was almost a dead company and was indebted to the 6th Defendant in the sum of N130 Million.

The 1st Defendant who was the account officer to the 5th Defendant packaged the private placement to make sure that the N130 Million owed to the 6th Defendant was paid through the proceeds of the private placement which was to open on 16th July 2008 and close on 31st July 2008.

On 14th July 2008 however, the draft of N285 Million issued by the complainant was paid Into the 5th Defendant’s operating account instead of the private proceeds account which had yet to be opened. PW1 said that the sum of N1.1 Billion was realised from the private placement and from this, the sum of N102 Million was used for expenses. Out of the balance of N970 Million, the sum of N547 Million was wired outside Nigeria whilst the private placement was still ongoing through a company in Switzerland called Risa Enterprises.

From Switzerland the monies were wired back to the UBA domiciliary account of the 2nd Defendant. PW1 said that although the draft of N285 Million paid into the 5th Defendant’s operating account was said by the 5th Defendant to have been paid In error and the transaction reversed, no reversal took place as the money realised at the endi of the private placement was a little bit over N700 Million as against the over N900 Million that should have been realised. He said the monies were also spent during the private placement as opposed to the private placement memorandum which stated that the sums from the private placement would be kept in an interest yielding account until after allotment.

PW1, said the 2nd Defendant was been invited to the EFCC and he accepted violating the purpose of the offer as no money was used for product line expansion.

Investigation also revealed that a company called Drillcom Nigeria Limited operated by the 3rd Defendant undertook to underwrite 100 Million units of shares and for this purpose it received N195 Million from the 5th Defendant. This company was also paid N110 Million as premium on the shares purchased by the complainant and this money was fixed in the 6th Defendant and grew to N36 Million before it was lodged in Skye Bank in an account of which the 3rd Defendant was signatory. PW1 said that the N110 Million was refunded to the complainant whilst the interest of N26 Million that accrued on it was shared amongst top management of the 6th defendant.

PW1 said that when enquiries were made as to why the shares were not listed on the stock exchange it was revealed that this was because the 5th Defendant was unable to provide post private placement audited account to the Securities and Exchange Commission (SEC).

The investigators visited the factory of the 5th Defendant and saw that it was not doing well and did not produce or invest what it claimed in the prospectus. It was also revealed that N104 Million and N23 Million were sent from the 5th Defendant to a relation of the 2nd Defendant called Sasha Israni who was invited for interview and said he would come but never did. PW1 said further that the proceed sums were not invested as stated in the private placement memorandum which had indicated that 6% of the proceeds would be held in reserve whilst 36% would be for product line expansion.

The investigation by EFCC rather revealed that the proceeds were used to pay loans owed by the 5th Defendant. The EFCC also saw that the private placement was not underwritten as indicated in the placement memorandum but it was Drillcom Limited which entered into a memorandum with the 5th Defendant for underwriting of N100 Million units of shares and for this it received N19.5 Million from the 5th Defendant.

Several documents including the petition written by the complainant, the private placement memorandum and statements made by the Defendants were tendered through PW1 and marked as Exhibits P1-P391.

PW1 when cross examined by Counsel to the 1st, 3rd and 4th Defendants agreed that shares were bought during the private placement by Daniel Chukwudozie and his associates but said he did not know the names of Daniel Chukwudozie’s associates who bought share. That all the shares had now been consolidated in the name of the complainant Dozzy Oil and Gas. He agreed that 22 million shares bought in the name of Daniel Chukwudozie which amounted to N62 Million whilst his associates bought 278 Million units of shares valued at N792.3 Million.

He said he did not know if the 1st, 3rd and 4th Defendants were involved in the acquisition of the shares by Chukwudozie or when the shares were acquired by the complainant as this was not part of his investigation. He agreed that the 1st, 3rd and 4th Defendants were not part of the promoters or directors of the 5th Defendant and the private placement memorandum (Exhibit P9) contained a cIause that prospective investors should seek professional advice before Investing. When it was put to him that the 4th Defendant was not involved in the allegations made by the complainant, PW1 stated that the 4th Defendant was the head of the 6th Defendant’s asset management unit which prepared the private placement document. He agreed that from Exhibit P9, N415 Million from the private placement was to be used for debt repayment but said the sums used for debt repayment were higher. He also agreed that the private placement was subscribed by the 4th Defendant and other staff of the 6th Defendant.

He said he was not aware, that before the private placement closed, the 5th Defendant approached the 6th Defendant for a bridging loan of N450 Million which the 3rd Defendant disbursed pending the end of the placement.

When asked about Drlllcom, Pw1 said It was a front company being operated by the 1st and 3rd Defendants though he agreed that neither Defendant was a shareholder in same but the 3rd Defendant told the EFCC that he would take responsibility for the said company. He agreed that Drillcom underwrote 100 million units of shares and that it was for this that it was paid N195 Million as underwriting fee by the complainant. He said the standby underwriter should have been the 6th Defendant and that It was approached by the 5th Defendant after the subscription of shares fell short by N300 million for payment of this sum based on the undetwriting agreement but the 6th defendant did not pay the said N300 Million. He however agreed that no name was mentioned in Exhibit P9 as the underwriter of the placement.

When cross examined by Counsel to the 2nd and 5th Defendants PW1 maintained that the N285 Million paid on behalf of the complainant by Drillcom into the operating account of the 5th Defendant before the private placement opened was did not stay in the placement account although the money was transferred Into the placement account, It was moved back into the operating account immediately by the 6th Defendant. He agreed that the complainant filed a suit in the Federal High Court against the 5th Defendant but said this was not the reason why the shares were not listed on the stock exchange and the non listing was due to failure of the 5th Defendant to meet with the requirements of SEC.

When asked if it was due to the shortfall in the amount realised from the subscription and the 130 Million taken by the 6th Defendant that the 5th Defendant was not able to utilise the amounts earmarked in the private placement, Pw1 said even the little amount realised was not used as stated in the private placement. Pw1 said he knew Sasha Israni was a board member of the 5th Defendant but he did not know if the 5th Defendant borrowed money from him.

When cross examined by the 6th Defendant’s Counsel PW1 said the complainant was advised by the 1st and 3rd defendants on the purchase of the shares but he did not know if it engaged professional advisers. He also did not know if the complainant sought the consent of the 6th Defendant before having the associates of Daniel Chukwudozle transfer their shares to it.

Pw2 was Jatau Nanpon a stockbroker with a company called APT Security and Funds Limited. He testified that the 5th Defendant was a client of his company and approached it in 2008 after completion of its private placement exercise for the purpose of getting its shares Iisted on the Nigerian Stock Exchange (NSE).

His company gave the 5th Defendant the list of documents required for getting the shares listed but it did not get these documents within a reasonable period of times. The application was eventually filed In February 2009 and the NSE commenced the process of going through the documents during which it requested for additional documents.

One of the documents requested for was the full account of the 5th Defendant as at December 2008 whether audited or not but what the 5th Defendant provided was the audited accounts for nine months, which ended in September 2008. The NSE thereafter granted provisional approval for the listing.

The process of registering with the Securities and Exchange Commission (SEC) then commenced but the 5th Defendant did not provide the required documentation one of which was audited accounts up till 2009.

The NSE sent several reminders from 2009 to 2011 by which time there was a need to submit the audited accounts for 2010. A  final reminder was sent by SEC which stated that if the 5th Defendant could not comply with the requirements the entire process would be aborted and would have to start afresh. PW2’s employer thereafter received a letter In which it was informed that the 5th Defendant did hot have a managing director and had just appointed one in 2011 and that once he came on board it would supply the audited account for 2009 and 2010. The 5th Defendant however did not send any audited accounts and PW2 said he assumed that the SEC would have aborted the process because of what was stated In the last reminder. When asked what the audited accounts had to do with the private placement,‘ PW2 said that it was a document that would reflect how the placement proceeds was disbursed. He said the final approval of SEC was not obtained with the audited account of 2008 as what was used was the management account of September 2008 on which it gave approval in principle and that all outstanding documents including the audited accounts for 2008 were expected to be presented before listing.

When cross examined by Counsel to the 1st, 3rd and 4th Defendants he said his company was appointed by the 5th Defendant for the listing of the shares and that such listings usually took between 2-4 months to get approval. He did not know if the 1st, 3rd and 5th Defendants had any listing role after the private placement exercise.

Under cross examination by Counsel to the 2nd, and 5th Defendants PW2 said that approval in principle was granted by SEC for the listing of the shares but before same could be listed the 5th Defendant would have to submit all the documents required. He agreed that NSE officials visited the factory of the 5th Defendant and that a dead company could not get approval. He said that he wrote asking for the audited accounts but he did not have the letter before the Court, however several letters were written by SEC asking for the accounts.

He said he was not aware of a petition written by the complainant against the 5th Defendant or that an action was filed by the complainants. A letter written by SEC to the 5th Defendant was at this stage tendered through PW2 and marked as Exhibit P395.

When cross examined by the 6th Defendant’s Counsel, PW2 said he did not know the 6th Defendant and the 6th Defendant was not responsible for the audited accounts which had not been provided.

 

The 3rd witness PW3 was Azukaego Ezemakam an employee of Guaranty Trust Bank Plc. (GTBank).

This witness testified that the 5th Defendant maintained an account with her bank. Between July and August 2008 GTBank received the sum of N145 Million from the 6th Defendant into the 5th Defendant’s account and these monies were used to revalidate bills for collection. Pw3 said bills for collection meant that the customer was putting up a request to purchase foreign funds and remit same to its supplier whose name in this case was Risa Enterprises and the revalidation was to revive previous approvals that had been given for purchase of such foreign currency. She referred to some Form Ms which were due for payment between 2005 and 2006. Further sums of N60 Million and N69 Million were received from the 6th Defendant into the 5th Defendant’s account also used to make payments on bills for collection. She said that prior to the inflows from the 6th Defendant the account had not been in a good state as the 5th Defendant was indebted to the bank and that after the inflows were received, same were used to pay for the expired bills and the 5th Defendant remained indebted to his bank. A letter written by GTBank was admitted through PW3 and admitted as Exhibit P398. ‘PW3 said that from another document being Exhibit P396 there was a transfer of N20,275,000 by the 5th Defendant to Sasha lsrani.

Under cross examination PW3 said she did not know if it was the 1st, 3rd and 4th Defendants that effected the transfers of money from the 6th Defendant to GTBank. She said there was nothing wrong with the transactions on the bills for collection and that same were usually done when the payment on such bills expired and the customer would apply through his bank to the CBN for revalidation. PW3 said she did not see from the records any payment made by Sasha lsrani to the 5th Defendant’s account.

PW4 was Amaka Ukachukwu an employee of United Bank for Africa (UBA). She said that the 5th Defendant maintained a dollar and Naira account with her bank. In respect of the dollar account, there were several Inflows of dollar amounts from Risa Enterprises and payments to persons who Included one Ume Vashi Isran and Vashi ‘Dejanni. As regards the Naira account, there were inflows of a total sum of N143,018226.04 from the 6th Defendant into the 5th Defendant’s account with her bank. From the account the 5th Defendant then made payment of tax in favour of Lagos State Government as well as payments for bills for Form M (bills for collection). PW4 said the account was later frozen based on instruction from the EFCC.

When cross examined PW4 said the transactions did not involve the 1st, 3rd and 4th Defendants. She did not know the source of the funds that came from the 6th Defendant but all the payments on the bills for collection were made to Risa Enterprises.

PW5 was Adewale Adekunle an employee of‘Skye Bank Plc. He also testified about Inflows totaling N125 Million Into the 5th Defendant’s account from the 6th Defendant. Out of this sums about N30 million was used for liquidation of debt on the account, whilst about N65 Million purchase dollars for bills for collectiop on behalf of the 3rd Defendant and the rest withdrawn In cash by the 5th Defendant.

PW6 was Adefemi Kolawole an employee of First City Monument Bank (FCMB) Plc. He testified as to the Inflow of a total sum of N59,100,000.00 from the 6th Defendant into the 5th Defendants account. Out of this N44 Million was used for purchase of dollars for settlement of bills for collection and the rest used for the payment of the 5th Defendant’s loan to FCMB.

PW7 was Dairo Oluwakemi an employee of Access Bank Plc. His testimony was also on inflow of N23,500,000.00 from bank PHB to the 5th Defendants account which was used to purchased dollars and same remitted to Risa Enterprises.

PW8 was Hector Oghobahafe a bank employee with Skye Bank Plc. He said that on 2nd October 2008 the sum of N134 Million was received into the account of Drillcom Limited from the 6th Defendant out of which the sum of N110 Million was paid out to the complainant. Another N10 Million was given value in the name of Kaiushe Resources Limlted whilst the remaining money was placed in fixed deposit and later paid out in tranches.

When cross examined PW8 said he did not know if the 1st, 3rd and 4th Defendants were directors of Drillcom and he did not know the signatories to the account. He also did not know the 2nd and 5th defendants and he agreed that the 6th Defendant did not benefit from the inflow or outflow from the account.

Pw9 was Nkoye Egonu an employee of Diamond Bank Plc. She testified as to the account of the 5th Defendant which had previously been in debit and how the sum of N79,600,000.00 was on 11th August 2008 received from the 6th Defendant into same. The said sum reversed the indebtedness on the account and the rest of the amount in the account now in credit was used to make bids for the purchase of dollars on behaif of the 5th Defendant which were paid to Risa Enterprises.

On 9th September 2008 another payment of N65 Million was received from the 6th Defendant and this sum along with other payments made into the account put the 5th Defendant’s account with Diamond Bank account which had gone into debit after the purchase of the dollars back into a credit position.

PW10 was Usman zakari an operative of the EFCC who also testified on investigations done by the EFCC. He said a cheque of N285 Million was released by the complainant for the purchase of shares of the 5th Defendant’s in the private placement. That Prior to this the 6th Defendant was indebted to the 5th Defendant in the sum of N130 Million and two days before the commencement of the private placement the cheque of N285 Million was credited into the 5th Defendant’s account with the 6th Defendant. When this was done the indebtedness of the 5th Defendant was erased. On the same day the 5th Defendant wrote that the payment should be reversed stating that the crediting of its account was done in error as there was a private placement account into which the money should have been paid. The 5th Defendant however also Instructed the 6th Defendant to issue a cheque in the sum of N19,500,000.00 to Drillcom. He said that before the reversal of the N285 Milllon payment, there were series of debits to the tune of the N130 Million and the transfers to FCMB, Skye Bank, Diamond Bank thus the N285 Million payment was not reversed. PW10 said that all the transfers were done after the letter of reversal was written.

PW10 said that Drillcom in which he said the 3rd Defendant, his younger sister and her husband had Interest. He said there was a memorandum of understanding (MOU) between the 5th Defendant and Drillcom in which it was agreed that a flat fee of 7% of the underwritten sum would be paid to Drillcom. When the MOU was shown to the 3rd Defendant he agreed he would refund the sum of N19,500,000.00 but he failed to do that. PW10 said that Drillcom was not featured in the private placement memorandum and what the public saw was the 6th Defendant as the standby underwriter.

Under cross examination PW10 said that he did not know whether the SEC regulated private placements but the 6th Defendant’s job in the placement would end after the proceed funds had been paid to the 5th Defendant and the shares allotted. He agreed that Daniel Chukwudozie only bought twenty two million units of shares worth N62 Million and brought other persons who subscribed to additional shares worth N792 Million. He agreed that it was after allotment that the complainant acquired the shares from the other persons and became the owner of same. He agreed that this was a secondary transactlon to the initial private placement and he did not know the other persons that bought shares and sold same to the complainant.

He agreed that by Exhibit P5 the persons with responsibility for the private placement memorandum were the directors of the 5th Defendant and not the other Defendants. He said he was not aware that the 4th Defendant was not involved in the private placement and was only charged because an argument ensued when he went to the EFCC to explain the private placement exercise. When asked if there was anything wrong with the 5th Defendant using the funds after allotment PW10 said there was no allotment. When cross-examined further PW10 agreed that all subscribers were meant to study Exhibit P9 before investing. He said he was not aware if the 5th Defendant had been able to hold its annual general meeting but he agreed that no name was listed on Exhibit P9 as underwriter.

PW11 was Daniel Chukwudozie the chairman of the complainant. He said he knew the 1st Defendant through his wife as the 1st Defendant’s wife and his wife were childhood friends and that the 1st Defendant’s wife was also his account offlcer ln Zenith Bank. The 3rd Defendant was brought to his ofhce by the 1st Defendant when they came to introduce the 5th Defendant’s private placement to him. They told him that the 5th Defendant was doing well and its shares would be listed on the Stock Exchange within a month at the rate of N5 per share. He was told that he could purchase 200 million units of shares at N2.85 per share whilst he would need to pay a premium of N1.10 on an additional 100 mllllon unlts. PW11 said though he was informed that some of the private placement proceeds would be used to pay part of the loans owed by the 5th Defendant, he was not informed that the 5th Defendant was lndebted to the 6th Defendant. He was however told that the shares were underwritten by the 6th Defendant. PW11 said he thereafter Invested a total sum of N855 Million to buy 300 million units of shares in the private placement and also paid addltlonal sum of N110 Million for the premium on a 100 million units of shares. He said he was told that the N110 million was for premium but it was later that he found that the premium was meant for the 1st and 3rd Defendants.

The total sum invested was transferred to the 6th Defendant by the 1st Defendant’s wife as the 1st Defendant told her he had concluded with PW11. PW11 said that though he was shocked at this, he later signed cheques to cover the movement of money which he did. After the money had been transferred to the 6th Defendant, the 1st and 3rd Defendants brought Exhibit P9 to him. The shares were however not listed within a month as promised and PW11 said he started putting pressure on the 1st Defendant who said he would talk to the 2nd Defendant. The 2nd Defendant then told him that he would get some people to buy back the shares but he did not see the 2nd Defendant again until after the matter was reported to the EFCC.

PW11 said he tried to go, to the 5th Defendant’s factory in Sagamu but the 1st and 2nd Defendants asked him not to go as the shares would soon be listed. When nothing happened, he engaged a consultant ‘who told him that he should have checked before buying the shares but he did not do so because he thought he was dealing with people that ‘he knew and that their bank was warehousing the funds of the private placement as well as underwriting same. He eventually contacted the 5th Defendant’s lawyer who agreed that they could go to the factory, whilst on the way he was called back to come for a meeting at the 5th Defendant’s ljora office but he said they were already on the way. When he got to the factory, he saw the manager who told him that not much was going on in the factory and he was not allowed to inspect the factory and was just looking at old machines from outside. PW11 said he then employed people to investigate and he got somebody to go to SEC where he was informed that the 5th Defendant had been asked to bring the required documents but had not done so, therefore SEC could not list the shares. He however still continued waiting since the 5th Defendant had said it wanted to import machines and he felt that if it was in business, then he could recoup his investment In 2011 he learnt that the 5th Defendant was to hold its annual general meeting (AGM) in Lokoja and this was being done without notifying him.

He therefore called his lawyer to go to court to get an injunction to stop the AGM. PW11 said he was still waiting to be invited to a meeting by the 5th Defendant but nothing had been done.

He said he wrote a petition to the EFCC that the 5th and 6th Defendants had connived to defraud him. In the course of investigation the EFCC took all the parties to the 5th Defendant’s factory site and it was seen that nothing was working and that the factory had closed down about four or five years before.

 

When asked in whose name the 300 Million units of shares had been purchased, PW11 said that he had wanted to bring in people to buy the shares but because of the short time and pressure, the 1st Defendant took his (PW11’s) wife to the 6th Defendant to provide a name and several names were written including his wife’s name and names of people he did not know.

However the whole responsibility was on him thus he asked that the shares be _ moved to the name of the complainant.

He said he did not employ another person to verify what he was told by the 1st and 3rd Defendants because he relied on them and if what they had told him was true the business would still have been viable. He said it was not true that he had previously purchased shares through the 1st Defendant and that the only shares that he had ever purchased through him was that of the 6th Defendant.

PW11 agreed under cross examination that he met the 4th Defendant at the EFCC office. He agreed that 22 million units of shares were bought in his name whilst the rest were bought in other names but said all the shares were bought during the private placement with his money. He said it was when he was asking for refund of his money that share certificates were issued by the 5th Defendant and that the complainant had no choice than to take over the shares since its money was involved.

He agreed that he had a lot of professionals working for him but said the 1st and 3rd Defendants did not give him the chance to conduct due diligence on the 5th Defendant’s private placement. He however agreed that he was given Exhibit P9 before the shares were purchased. When cross examined by Counsel to the 2nd and 5th Defendants, PW11 said that the suit he filed to obtain injunction against the 5th Defendant had been struck out. When cross examined by Counsel to the ‘5th Defendant PW11 maintained that it was the complainant that transferred money to the Treasure Much account in the 6th Defendant with which the shares were bought.

The last prosecution witness (PW12) was Omudya Dafinone a chartered accountant who said he was engaged as a report accountant for the private placement of the 5th Defendant’s shares. In the course of this assignment, he audited its financial statements for years 2003 to 2007 and also reviewed the profit forecast together with the assumption to the profit forecast for years 2008-2011. The materials made available to him were the financial report and the profit forecast that had been done by the management. He said he made projection for increased profit from N2,449,566.00 in 2006 and N5,386,585.00 in 2007 to N98 Million in 2008 and N291 Million in 2009. This profit forecast was based on the assumption that after the private placement, the money injected into the 5th Defendant would have been used to buy new machinery and reduce its indebtedness. He said that the forecast could not happen if proper utilization; of the funds was not done and that the job of management was to utilise the funds in the manner specified in their record for the best interest of the shareholders.

PW12 agreed under cross examination that his company was engaged to work for the 5th Defendant. He said he did not test if all the things that had been stated in his report for the 5th Defendant was true as it was not possible to test everything and he only carried out sample tests but he attended the board meeting at the Stock Exchange after the private placement and as at that time he stood by his report. He said that in writing the report, his job was not to do due diligence which would have entailed more Investigation. He agreed that sometimes projected profits do not always come out as planned.

Upon conclusion of the prosecution’s case all the Defendants made no case submissions which were dismissed by the Court and after this the 1st to 5th Defendants led evidence whilst the 6th Defendant rested its case on that of the prosecution.

The 1st Defendant was the 1st defence witness (DW1). He testified that he got to know PW11 through his wife and that although he tried to make PW11 open an account with the 6th Defendant, PW11 refused saying that he was interested in private placements which DW1 could bring to his attention anytime he saw a good one. Consequent to this DW1 introduced the public offer of shares by the 6th Defendant to PW11 and that of another company called Duhl Prima. In July 2008 the 5th Defendant which was one of the 6th Defendant’s customers wanted to raise funds by private placement so DW1 introduced same to PW11. He went with the 3rd Defendant who was his boss at work to meet PW11. Exhibit P9 was given to PW11 who said he wanted full allotment of the shares he was applying for and the 3rd Defendant told him that he knew a company that could arrange for him to get 100 million units of shares on preferential allotment based on a premium of N1.10 per share. The offer was to open on 16th July 2008 but on 14th July, PW11 gave DW1 and the 3rd Defendant instructions to debit Treasure Much Limited’s account and signed a cheque to this effect. Drafts of N285 Million and N110 Million were raised from the cheque for the purchase of the shares and for payment of premium to Drillcom respectively.

 

DW1 said the draft of N285 Million was paid into the 5th Defendant’s account on 14th July two days before the offer opened. After the payment, sixteen forms were taken to PW11’s wife and the shares were allotted and DW1 delivered the certificates. Said share certificates were admitted and marked as Exhibits D6 (1-16). DW1 said the only person he dealt with was PW11 and that the persons in whose names the certificates were issued included PW11’s wife and children, other names borne by PW11 and his children whilst others were in the names of persons he did not know. DW1 said he got to know all these when he was arrested by EFCC and PW11 claimed that he had been forced to acquire the shares of his associates but he was unable to produce the said associates at the EFCC. After delivery of the share certificates, PW11 called him and asked if he could help to recover his money because SEC had made a rule that shares could only be listed at the price upon which they were issued and also asked that he talk to Drillcom to return the premium paid to lt. DW1 said he did not sell shares to the complainant and he was not involved In the consolidation of the shares to the name of the complainant. He was aware that several other persons Including the staff of the 6th Defendant purchased the 5th Defendant’s shares none of whom got a refund of their money. With respect to the N285 Million payment which was alleged to have been used to liquidate the 5th Defendant’s Indebtedness, DW1 said that this was not the case as the 5th Defendant had an overdraft with the bank which was still operating at the time the cheque was paid in. He said that the N285 Million was the proceeds of a preferential allotment of 100 million units of shares which predated the commencement of the offer. He said that the major drawdown allowed by the 6th Defendant was the sum of N145 Million transferred to GTBank and that the facility which had been granted in January 2008 before the private placement commenced was for a 12 month tenor and continued running. He identified the entries on the account as including the debit of N285 Million based on the 5th Defendant’s letter that the sum be moved to the private placement account. There was however another letter from the 5th Defendant that the money should be moved back to the operations account for‘its use which instruction was complied with by the 6th Defendant. Out of the N285 Million, N145 Million was transferred to GTBank on 17th July, N5,490,494.2k used by the 6th Defendant on same day to pay for mature bills for collection. He also identified other withdrawals by the 5th Defendant as including N2.8 Million on 31st July, N4 Million on 7th August, N28,300,000.00, N74,740,000.00, N73,750,000.00, N79,600,000.00, N60,800,000.00 and N23,500,00Q.00.

DW1 said all other proceeds of the private placement were paid into the private placement account including further sums paid for shares by PW11 and his associates. DW1 said the N285 Million was payment for the preferential allotment of 100 mllllon units of shares and the additional shares PW11 and his associates bought amounting to 200 Milllon units were not preferentially allotted. He said that in 2008 the allotment of shares of private companies was not regulated by NSE or SEC so the 6th defendant saw the preferential allotment as being a private arrangement between the subscribers and the 5th defendant and on the strength of writing to the bank with the names of the allottees, the 6th Defendant did not object to the utilization of the funds. He said further that in a private placement, the company did not need to wait until the end of the offer period before allotting shares. He said that the cheque of N395 Million issued by Treasure Much which Instructed the 6th Defendant to raise two drafts of N285 Mllllon and N110 Mlllion In favour of the 5th Defendant and Drillcom respectively were properly issued and slgned by the complainant. on 8th September 2008 the amount standing as balance In the private placement account in the sum of N748,000,603.68 was transferred to the 5th Defendant’s operatlons account. DW1 said it was not true that he spent out of the private proceeds amount or that the 5th Defendant was a dead company at the time of the placement as it was operational and several members of the 6th Defendant’s staff Invested in the private placement. When cross examined by the 2nd and 5th Defendants’ Counsel, DW1 agreed that It was the 6th Defendant that prepared Exhibit P9 but said he could not confirm if it was meant to monitor the money and see that it was spent for the purpose stated in Exhibit P9. He agreed that the 5th Defendant protested vide a letter after the N285 Mllllon was pald into its current account that same should have been paid into the private placement account. He agreed that the payment was made by Drillcom and that he was the one who collected the cheque and handed over same to the 3rd Defendant who gave it to Drlllcom. He said there was an agreement (Exhibit P413) on the preferential allotment which was between Drillcom and the 5th Defendant on one hand and Drillcom and the complainant on the other hand. He then agreed that in all private placements the funds must be placed in the placement account. He said it was not stated on Exhibit PS that the 6th Defendant was the underwriter of the shares. He sald all the payments made by the 6th Defendant were in accordance with the purpose of the private placement. He said the 5th Defendant was no longer indebted to the 6th Defendant and that its overdraft had expired. When asked If N130 Million was debited from the account, DW1 sald it was not debited but when funds are pald into an account, the account would adjust itself to remove any debit on same. When cross examined by the 6th Defendant’s Counsel DW1 said that there was nothing he told the complainant which was not in Exhibit P9 and at the time he handed over Exhiblt P9 one Mr Williams a chartered accountant was with PW11. He agreed that the 6th Defendant was not involved in the negotiations between Drlllcom and the 5th Defendant or Drillcom and the complainant.

Under cross examination by Counsel to the prosecution, DW1 agreed that out of the N978 Million realised from the private placement the sum of N855 Million was invested from the Treasure Much account of the complainant and that he also knew that the money paid into Treasure Much came from Dozzy Oil and Gas’s account. He agreed that the loan of N130 Million owed to the 6th Defendant was paid after the end of the placement. He agreed that the complainant was not a party to the memorandum of understanding between DrIllcom and the 5th Defendant. He said that apart from PW11 there was no complaint from other subscribers about the non listing of the 5th defendant’s shares after the allotment. He agreed that he did not mention in his statements to the EFCC that the reason PW11 reported to the EFCC was due to non refund of his money. He agreed further that the account of the 5th Defendant had been dormant as at 10th January 2007 before It was reactivated and it was after this that the loan facility of N130 Million was granted to it by the 6th Defendant.

DW1 agreed that the debit balance of the 5th Defendant as at 30th June 2008 was N131, 144,460.63k and when the cheque of N285 Million was paid in on 14th July the account balance became N153,855,539.37 credit. He agreed that four other cheques were issued on 15th July by the 5th Defendant and transactions were also done by the 5th Defendant on the account. He said the N285 Million payment was reversed on 16th July but the payments from the account between 14th and 16th July were not reversed and that the N285 Million was paid back into the account on the same day after the reversal. He said that on 15th October 2008 the sum of N19,950,000 was issued in the name of Drillcom but disagreed that said money was shared by him and other management staff of the 6th Defendant. He agreed that there was nothing on exhibit P9 that spoke about preferential allotment of shares. He agreed that by Exhibit P9 the time for the 6th Defendant to release the proceeds from the share placement to the 5th defendant was 22nd August 2008. He said the proceeds were not paid until 8th September when the 6th Defendant paid the N748 Million proceeds to the 5th Defendant and on said date, the 5th Defendant was indebted to the 6th Defendant in the sum of N545,801,547.22 and when the proceeds were paid into its account its balance became N202,199,026.64 credit. Dw1 said he could hot remember if he had attended a meeting with the 5th Defendant prior to the private placement or if the ’5th Defendant wrote expressing its displeasure that the 5th Defendant did not take up the remaining shares as underwriter.

DW2 was the 3rd Defendant. He ‘said got to know about the 5th Defendant’s private placement when it invited proposals on same from several banks and the 6th Defendant won the bid for said placement. He said when PW11 was marketed on the private placement he said he wanted guaranteed allotment. DW2 said he then told PW11 that he was a member/financlal controller of an investment club called Drillcom and that he could ask Drillcom to enter into negotiation with Nulec to buy the shares for PW11 for which would have to pay him a commission of N1.10 per share for his efforts and PW11 agreed to this. DW2 said he told the 2nd Defendant that he had a potential preferential deal for 100 million units of shares and the 2nd Defendant agreed to pay him a fee of N19.5 Million and an MOU to this effect was signed between Drillcom and the 5th Defendant.

By the end of 2008, share prices were falling and SEC also made a policy that shares could only be sold at the last price at which same were sold. It was at this point that DW2 got a call from DW1 that PW11 was not happy that he might be making a loss. DW2 agreed to speak to other members of Drillcom and a refund of the N100 Million was made. PW11 then said he wanted the money paid for the shares back and a meeting was arranged with the 5th Defendant’s officers. The 5th Defendant offered to buy out PW11 over a period of three years but he insisted on having his money back or that he should be made a director of the 5th Defendant. DW2 said he was invited to the EFCC and when the matter was explained the EFCC asked them to go and resolve it among themselves. At another invitation by the EFCC he learnt that PW11 said he bought shares worth N855 Million which he was not aware of. He however offered to make a refund of the N195 Million paid to Drillcom by the 5th Defendant. He said that although he earlier said the N195 Million was shared with other staff of the 6th Defendant, the ‘1st and 3rd Defendants were not among those who shared same. DW2 agreed that the cheques for N285 Million and N110 Million were handed over to Drillcom officials and that after the N285 Million was paid into the 5th Defendant’s account on 14th July it wrote that same should be ttansferred into the private placement account when same opened on 16th July. He agreed that the N285 Million was later moved back to the 5th Defendant’s operational account based on the 5‘h Defendant’s written instruction vide Exhibit P414 In view of the fact that the preferential allotment had been concluded and the 5th Defendant now free to spend the money. He said that the money had only been moved into the private placement account so it could be captured as part of the total proceeds of the private placement. Under cross examination by the 2nd and 5th Defendant’s Counsel, DW2 said he was not the 5th Defendant’s account officer same was one Wahab Fagbo. He said the 5th defendant was a going concern and that the 6th Defendant was the financial adviser and Issuing house for the private placement. He disagreed that part of the N235 Million was used to pay the N130 Million indebtedness of the 5th Defendant but said same was used at the end of the placement to pay what the 5th Defendant was owing. He said that the 5th Defendant did not know that the sums invested by PW11 came from Treasure Much account but It knew about the investors once N285 Million was paid to it and it allotted shares. When cross examined by Counsel to the 6th Defendant, DW2 said he visited the office of the 5th Defendant in June or July 2008 in relation to the private placement. He said no payment was made by the 6th Defendant without the consent. of the 5th Defendant. Under cross examinatlon by the prosecution Counsel, DW2 agreed that there was no provision in Exhibit P9 for proceeds of the private placement to be pald to the 2nd Defendant before 22nd August 2008. He also agreed that it was on 8th September 2008 that the proceeds in the sum of about N748 Million were remitted to the 5th Defendant’s account. He said the account was already In debit of N548 Million and said payment wiped out the debit leaving a credit balance of over N202 Million. He agreed that by Exhibits D8 and D9, the 6th Defendant agreed to be standby underwriter to the private placement.

When re-examined DW2 said that the 5th Defendant did not allot preferential shares, but allotted ordinary shares on preferential basis. The 4th Defendant was the third defence witness (0W3). He said he did not play any role in packaging the private placement memorandum but led other officials in making a pitch for the 6th defendant to be appointed as issuing house for the private placement. When the offer of shares closed, same was not fully subscribed and the lssue of underwriting came up with the 5th Defendant asking the 6th Defendant to take up the non subscribed shares. He then had to come in to explain that from the documents available, the 6th Defendant did not underwrite the offer as no underwriting agreement was executed. DW3 said he was also one of the subscribers of the shares as he bought two milllon units and that after the offer he went on vacation. It was when he came back that he learnt that the 1st and 3rd Defendants had been arrested by the EFCC and he was asked by the 6th Defendant to go and explain the whole process to the EFCC. PW11 did not however take kindly to his explanations and shortly after this he was asked to make statements by EFCC officials who did not give him the opportunity to write freely but were asking him questions and if they did not like the answers he gave they would not allow him to write same down. In his statement he mentioned that it was one Emeka Obiareri that handled the transaction and was made to give an undertaking to produce the said Emeka. DW3 said he had never met PW11 until when he got to the EFCC.

Under cross examination DW3 agreed that he and other officials of the 6th Defendant attended a meeting with the one Mr Monty the then managing director of the 5th Defendant. He agreed that the 2nd Defendant was not present at the said meeting and it was there that terms of the private placement were agreed upon. He agreed that he and Emeka signed a letter In which the 6th defendant agreed to take up several roles Including issuing house and standby underwriter but said same was subject to internal approval by the 6th Defendant. He stated that no underwriting agreement was ever executed but agreed that the 6th Defendant had responsibility for the sums in the proceeds account until same were handed over to the 5th Defendant.

When cross examined by Counsel to the 6th Defendant, he restated that no underwriting agreement was signed.

Under cross examinatlon by the prosecution Counsel DW3 agreed that it was not stated that the agreement for the 6th Defendant to be underwriter was subject to formal agreement. He agreed that other roles that the 6th Defendant accepted to play in the placement were also not covered with separate agreements. He said that he filed a fundamental rights suit against the EFCC and the complainant which was later withdrawn.

The last defence witness was the 2nd Defendant (DW4). He testified that the 5th Defendant was a company involved in sales and production of electrical appliances and goods. He said that he had held several positions in same and was its managing director between 1984 and 2007. In 2007 the 5th Defendant decided to raise capital via private placement of shares to offset its debts and it approached the 6th Defendant to be the issuing house for said placement. Meetings were held with the 6th Defendant’s officials who included the 1st, 3rd and 4th Defendants as well as Emeka Obiareri at which the roles of issuing house, receiving bank and‘ standby underwriter were agreed to be played by the 6th Defendant and the fees to be paid to it also agreed. DW4 said the role of underwriter meant that the 6th Defendant was take up any shares remaining in case the shares in the private placement were not fully subscribed. 0n 14th July prior to the opening of the private placement, the 5th Defendant noticed that the sum of N285 Million was paid into its current account and it immediately notified the 6th Defendant of this error and that same should be paid into the private placement proceeds account.

DW4 testified further that Exhibit P9 was prepared by the 6th Defendant and the share price of N2.85‘per share was arrived at based on the value of the shares. The purpose of the private placement was to increase shareholders funds for product line expansion, debt reduction and toi create working capital. The amount stated on Exhibit P9 for payment of loans was N415 illion even though the 5th Defendant owed banks around N500 Million but because it wanted to work with the 6th Defendant, it had to pay off the other banks. The amount owed to local suppliers was close to N40 Million whilst what was owed to foreign suppliers was around N500 Million. DW4 said though amount stated on Exhibit P9 for payment of loans? was N415 Million the total amount indicated in a later page of Exhibit P9 for payment of debts was N979,685 259,00. He said that at the upon conclusion of the private placement exercise, the 5th Defendant was not able to realise the projections or purpose of the private placement due to shortfall in the proceeds as the 6th Defendant did not take up the unsubscribed shares which amounted to 25% of the shares thus there was a shortfall of about N350 Million. The 5th Defendant was also indebted to the 6th Defendant but was told that its credit line had been suspended. At the end of the private placement, the 6th Defendant transferred the money realised to the 5th defendant’s current account and it started to use the money in the account untll same came to zero. DW4 said the loan payment projected in the private placement was N450 Million but the total amount paid from same was N409 Million. He said the amount paid for local supplles was N28 Million whilst that of forelgn supplies was N320 Million though what the 5th Defendant had projected was N495 Million. He sald that what was projected as payments to local and foreign suppllers was less than the amount actually of debts owed by the 5th defendant because the plan had been that the rest of the debts would be paid In the normal course of buslness. DW4 said the projections for product line expanslon and reserve could not be realised due to shortfall in the underwriting which meant that no money was available to do the said things. He said It was not true that false statements were made in Exhlblt P9 as the figures were carefully studied by the reporting accountant and the 5th Defendant was optimistic that the private placement would be fully subscribed. He stated that all the foreign suppllers were paid based on the fact that goods had earlier been supplied but the Form Ms had expired because of nonpayment at the right time. However the papers order and were revalidated by the banks and the CBN. He sald that the 5th Defendant is not a dead company and had many employees and bank statements showing that It was ongoing. DW4 said he first got to know PW11 when he saw his name on the list of names submitted by Drillcom and PW11 was among the persons to whom shares were allotted after payment of N285 Million by DrIllcom. When the 5th Defendant noticed the payment of N285 Million into its current account, It immetiiately wrote the 6th Defendant to complain about the error and the said sum was credited to the private placement on 16th July 2008 when the private placement commenced. In the course of the placement‘ the shares were marketed and sold and a final list of Investors was sent to the 5th Defendant by the 6th Defendant. The 6th Defendant then pald the proceeds of the shares less its charges into the 5th Defendant’s operational account. He said there were about 330 subscribers and the total amount realised from the’ placement was 1,074,000,000.00.

After the allotment, DW4 said he received a call in November 2008 from DW1 saying that PW11 was anxious about the status of his investment and the listing of the shares on the Stock Exchange so a meeting was arranged with PW11 at which he was shown all the efforts being made by the 5th defendant with respect to the listing. PW11 however said that his associates who invested were pressurizing him to collect their money back but the 5th Defendant said it could not buy the shares back. The 5th Defendant later received a letter from solicitors to PW11 asking that the shares bought by PW11 and his associates be consolidated into the name of the complainant. It replied that this could not be done until after the Stock Exchange had accepted the application for listing and when the said approval was obtained the shares were changed to the name of the complainant. It was at this point that the 5th Defendant realised that the total value of shares bought by the persons associated with PW11 was 200 million units worth N855 Million which was 20% of the shares of the 5th Defendant. After the private placement, the 5th Defendant commenced the process of listing its shares but it could not receive SEC approval due to the suit filed by the complainant which prevented it from holding its annual general meeting. He explained that payment of N25 Million made to his nephew Sasha israni as narrated In the evidence of PW1 was due to the fact that his nephew borrowed the 5th Defendant money prior to the private placement. He maintained that the 5th Defendant spent N104 Million from its cash flow on purchasing materials for its factory in Sagamu and other expenses like travel costs and salaries. He said the shortfall in the share subscription which should have been underwritten by the 6th Defendant was N350.4 Million and that the 5th Defendant wrote to protest about this. The 5th Defendant was unable to embark on the new product line expansion that had been stated in Exhibit P9 due to the failure of the 6th Defendant to underwrite the remaining shares together with the fact that the’ 6th Defendant took the N130 Million that was owed to it from the private placement proceeds. He said that apart from the suit which stopped the AGM of the 5th Defendant, the EFCC also got a court order freezing all the atcounts of the 5th Defendant ,which order was still in place. He said the 5th Defendant presehtly had little or no activity due to this case which started in 2012.

Under cross examination by Counsel to the 1st, 3rd and 4th Defendants, DW4 said he met the

1st and 3rd Defendant several times before the private placement and met the 4th Defendant twice when he was told that the 6th Defendant refused to underwrite the shares. He said the 5th Defendant however dealt principally with Emeka Obiareri. When cross examined by Counsel to the 6th Defendant DW4 agreed that immediately payment was made for the N285 Milllon shares, same were allotted and the funds for the shares became the 5th Defendant’s property. He agreed that the funds were moved back from the allotment account to the 5th defendant’s account based on the 5th Defendant’s request. He also agreed that no name of underwriter was stated on Exhibit P9 though it was written on same that the shares were underwritten.

Under cross examination by the prosecution Counsel, DW4 said he was one of the founders of the 5th Defendant and was its managing director until 1984 when he left for Switzerland but still remained on its board and when he came back to Nigeria, he became the chairman of the 5th Defendant in 2008. He agreed that the private placement closed in August 2008 but the listing of the shares had not been done up till August 2012 when PW11 got the Court order stopplng the AGM. He agreed that the 5th Defendant did not submit its 2009 annual report but said it was the 2012 order that made It unable to submit the 2009 report. He agreed that Exhibit P394E and F were reminders written in 2010 and 2011 by SEC asking for the 2009 audited account but same was -not submitted up till the time the order of injunction was made. He agreed that the amounts paid as loans from the shares proceeds were higher than the estimated figures in Exhibit P9. He agreed that based on Exhibit P9 It was not out of the place for PW11 to believe the shares were underwritten. He agreed that the 6th Defendant recouped the loans it had granted the 5th Defendant after the placement proceeds were paid into the 5th defendant’s account and that after this it stopped operation of the 5th Defendant’s loan facility. He agreed that the account of the 5th Defendant was dormant from 2005 till it was reactivated in January 2007 when it applied for and got N130 million overdraft which was the amount by which the account was In deblt as at the beginning of the private placement. He agreed that further loans were granted during the placement exercise such that as at the date the proceeds of the placement were paid into its account It had debit balance of N545 million and when the proceeds were paid the said debit balance was deducted by the 6th Defendant leaving a credit balance of N202 million. He agreed that the remaining sum of N202 million was used to pay bank debts less 18 million. He said he did not meet the representatives of Drillcom though he knew the 3rd Defendant and that the N285 million was deposited into the 5th Defendant’s account by Drillcom. He also agreed that the said payment made the account which was In debit of N131 Mlllion to go into credit and that after this several payments were made on the instruction of the 5th Defendant. He agreed that when the 5th Defendant protested that the N285 Milllon should have been paid into the proceeds account the current account was debited by the N285 Million but said amount was credited back immediately and there was no reversal of the expenditure that had been made on the account. He agreed that the shares paid for with the N285 Million were part of the private placement and that all the information In Exhibit E9 except for the first page came from the 5th Defendant. He agreed that it was stated on Exhibit P9 that he was the CEO of the 5th Defendant. He agreed that foreign suppliers were paid N495 million as opposed to the projected 320 million. He agreed that the response of the 5th defendant to letters by SEC asking for its audited accounts was that the delay was caused because the 5th Defendant did not have a managing director. He agreed that all the sums paid to foreign suppliers were wired out during the period of the private placement and that more than 90% of same was paid to Risa Enterprises. He agreed that Risa Enterprises after these payments sent some money back to the 5th Defendant but said same had nothing to do with the private placement.

When re-examlned a copy of the order made by the Federal High Court was admitted through DW4 and marked as Exhiblt D16.

Under further cross examination by the prosecution DW4 agreed that it was not stated ln Exhibit D16 that a board meeting should not be held by the 5th Defendant though it was stated that parties should maintain the status quo. He agreed that Exhibit P3940) was a letter written by the 5th Defendant to APT Securities and Funds Limited after the order was made and the said letter did not mention the order of injunction as being a reason why the accounts were not ready.

 

Upon conclusion of trial Counsel to all parties flled written addresses which were adopted before the Court. In the addresses, the major lssue identified for determination by Counsel was whether the prosecution had proved the charges agalnst the Defendants beyond reasonable doubt. The Court has carefully looked at the addresses and agrees that indeed

the major issue for determination is whether the prosecution has proved the charges against the Defendants beyond reasonable doubt.

In MUFUTAU BAKARE V. THE STATE (1987) 3 S.C 1 the Supreme Court stated that:

There is no doubt that the burden of proof in a criminal prosecution rests on the prosecution which alleges the Commission of a crime. it is the case of the prosecution who by section 135 of the Evidence Act, Cap.62 that will fail if no evidence at all were given on either side. The standard of proof required is that of proof beyond reasonable doubt See ALONGE V. POLICE (1959) 4 FSC.203. Proof beyond reasonable doubt Is what is required to displace the constitutional presumption of innocence. Thus the question of the standard of proof required for a conviction of an accused person for a crime In respect of which he was charged and being prosecuted is a matter of degree reasonably permissible and sufficient for holding that the accused committed the offence.” Per KARIBI WHYTE, J.S.C (Pp. 28 29, paras. C B)

Here the Defendants have been charged with a series of offences which for convenience will be grouped into three. The first set of offences charge the Defendants with stealing by conversion contrary to Section 390 of Criminal Code of Lagos State 2003, the second charge them with’ publishing false statements contrary to Section 436(b) of the Criminal Code with the final set are the offences of conspiracy to obtain money by false pretence and obtaining by false pretence contrary to the Advance Fee Fraud and Other Fraud Related Offences Act of 2006.

I will start by looking at the offences of stealing. Section 390 provides as follows:

“Any person who steals anything capable of being stolen is guilty of a felony, and is liable, if no other punishment is provided, to imprisonment for three (3) years. Section 382 defines things which are capable of being stolen and it says every inanimate thing which is the property of any person, and which is movable is capable of being stolen.

Section 383 states the physical and mental elements of said offence when it says: a person who fraudulenuy takes anything capable of being stolen, or fraudulently converts to his own use or to the use of any other person anything capable of being stolen is said to steal that thing. ‘

ln AYENl v. STATE (2016) LPELR-40105(SC) the Supreme Court per Kekere Ekun JSC held that “The ingredients of the offence of stealing, which must be proved beyond reasonable doubt are: “(i) The ownership of the thing stolen (ii) That the thing stolen Is capable of being stolen

(iii) The fraudulent taking or conversion.“

See also Adejobl v. The State (2011) 12 NWLR (Pt. 1261) 347 @ 377 C E, Oshinye v. C.0.P. (1960) 5 SC 105: Chlanuga V. the State (2002) 2 NWLR (Ft. 750) 225.” Per KEKERE EKUN, J.S.C. (Pp. 25 26, Paras. F B).

The first count alleges that all the Defendants fraudulently converted to their own use, the sum of N285,000,000.00 (Two Hundred and Eighty Five Million Naira) being the property of Dozzy Oil and Gas Ltd and Treasure Much Ltd when they credited the account of Nulec with the said sum to defray Its debt owed to Bank PHB Plc and to utilise the balance as agalnst paying the sum into the private placement account of Nulec for the purpose of buying shares In the private placement account. 0n the first Ingredient which ls ownershlp of the thing stolen, the evidence led by the prosecution which was not disputed by the Defendants is that the said sums of N285 Million and N110 Million came from the account of Treasure Much Limited one of the companles of which PW11 was CEO or alter ego and that the purpose of said monies was to buy shares in the ‘5th Defendant’s private placement offer of shares as well as to pay premium on 100 million units. It was submitted by the Defendants’ Counsel that it was not shown that the money belonged jointly to Treasure Much and Dozzy Oil and Gas but I do not agree that It has to be shown that the money belonged to the two companies. It is my view that it is sufftcient that it be shown that the money belonged to a person and on this it was shown that that the money emanated from Treasure Much Limited. It was therefore proved that the money belonged to Treasure Much and this in my view shows that the prosecution proved the ownership of the N285 Million. Even if the charge said the money belonged to two persons so long as the evidence showed that same belonged to one person, then this is sufficient to meet the ingredient of stealing which is

ownership of the item alleged to have been stolen.

The second ingredient that it has to be proved that the thing stolen ls capabie of being stolen. On this it is my view that the money fails within the definition of things capable of being stolen as defined in Section 382.

The last and most vital ingredient is whether the taking or conversion of the money was

fraudulent. On this Section 383(2) says “(1) A person is deemed to dishonestly take or convert the property of another if he does so with: (a) intent to permanently deprive the owner of the property; (b) intent to permanently deprive any person who has a special interest in the property; (c) intent to use the property as a pledge or a security; (d) intent to part with the property on a condition as to its return which he may be unable to perform; (é) intent to deal with the property in a’ manner that it cannot be returned in the condition it was in at the time of the taking or conversion; or (f) in the case of money, an intent to use it at his will although he may intend to repay the owner afterward.

(1)The term ”special property” includes any charge or lien upon the thing in question, and any right arising from or dependent upon holding possession of the thing in question, whether by the person entitled to such right or by some other person for his benefit.

{2) The takinig or conversion may be fraudulent, although it is effected without secrecy or concealment.

(3) in the case of conversion, ii: is immaterial whether the thing converted is taken for the purpose of conversion, or whether it is at the time of the conversion in the possession of the person who converts it. it is also immaterial that the person who converts the property is the holder of a power of attorney for the disposition of it, or is otherwise authorised to dispose of the property.

In this case the undisputed evidence is that the N285 Million was meant to have been paid into the private placement proceeds of the 5th defendant. Same was however paid into the operational account of the 5th defendant on 14th July 2008 and the 5th Defendant did write to ask that the money be paid into the proceeds account. Several expenditure were made on the account after the payment of the money but in line with the 5th Defendant’s letter the money was transferred to the placement account on the 16th July when the private placement opened. It would have been okay if the matter had stopped at the transfer of the money to the proceeds account but the 5th Defendant thereafter requested that the N285 Million be moved back to its account and this was acquiesced to by the 6th Defendant who moved same back immediately and said amount never went back into the private placement account. it is clear that the N285 Million when paid into the account was spent on liquidating the indebtedness of N130 Million to the 6th defendant and other Items of expenditure as narrated by the witnesses none of which was reversed when the payment was reversed. A lot was said by Counsel as to whether the expenditure was the N285 million while prosecution arguing that it was this money whilst the Defendants said what was spent was the overdraft funds available to the 5th Defendant. In my view this point is not important. What is Important is that the 5th Defendant asked that the money be moved back to its operational account after having been taken to the private placement account and it has not denied spending or convening same. As agreed to by all the prosecution and the Defendants, this money was part of the private placement proceeds and there was no other offer of shares by the 5th Defendant than the private placement at the relevant time. There was therefore no basis to move the money to the operational account of the 5th Defendant. it was argued by the 1st, 3rd and 4th Defendants’ Counsel that the shares bought with the N285 Milllon were allotted on a preferential basis Immediately and that there was no need to wait till after the placement exercise closed before the money could be spent. This is however against the tenor of Exhibit P9 the private placement memorandum which stipulated that sums raised from the sale of the shares would be kept in the placement account till after allotment after which shares would be issued and ‘monies returned to subscribers in case there was oversubscription. This shows that the money would not belong to the 5th Defendant until after the allotment. The 5th and 6th Defendants who were aware of this condition in Exhibit P9 were therefore wrong In asking that the money be moved to the operational account of the 5th Defendant and the 6th Defendant was wrong in so movlng It. I would note further that other than

the lpse dixit of the 1st, 2nd and 3rd Defendants and the letter written by the 5th Defendant which the Court does not believe as against the overwhelming documentary evidence In Exhibit P9 that only showed a private placement exercise for allotment of ordinary shares there was no evidence before the Court that any preferential allotment was done as the only shares on sale were the shares issued In Exhibit P9 and there was nothing about preferential allotment in said Exhibit. The Defendants also agreed that the shares they were marketing to PW11 were the shares Issued in Exhiblt P9 and not any other shares. Further the certificate of allotments Exhibits D6 (116) were all issued In November 2008 after the private placement had closed thus It is not correct that the shares were allotted during the placement exercise.

In AYENl v. STATE (2011) LPELR-4380(CA) the Court of Appeal talking about fraudulent Intent stated that:

“………..The fraudulent intent ………… lies In the taking or conversion of the property or thing without claim of right made in good faith and with knowledge that the thing taken or converted is the property of another. See CLARK & ANOR V THE STATE (1986) 4 NWLR (PT.34) P381: BABAL:OLA & ORS V THE SFATE (1989) 4 N.W.L.R (P1115) P.2641YONGO & ANOR V C.0.iP (1990) 5 N.W.LR (P1148) P.103 and ALAKE & ANOR v THE STATE (1991) 7 N.w.LR (PT.205) P.567. See also ONIMlSl UKANA (Alias Jaguda) V. G.O.P. BENUE STATE (1995) 9 N.W.L.R (PT.416) P.705 and OKOROJI V. THE STATE (2005) 1 N.C.C. P.279 at P;297.

See also UGWU y. THE STATE (2008) LPELR 8533(CA) where the Court of Appeal stated that: “There is the legal aphorisms that the devil himself knoweth not the intention of man. lntentlon is inferred from overt acts. All the circumstances surrounding the action of the accused person, his entire behaviour and his utterances must be taken Into conslderatlon.” 1

Per ALAGOA, J.C.A.”

In this case by asklng that the money be returned to its account at a time when it was not yet entitled to the money the 5th Defendant and the 6th Defendant which acceded to its request had a fraudulent Intent to deal with the money in a manner inconsistent with the wishes of the owner or what they had told the owner that they would do wlth same. Exhlblt P9 is the document by which the 5th and the 6th Defendants stated how the subscription sums would be dealt with and even though on 2nd August 2008 all the sums raised would be pald to the 5th defendant and thus belong to it, this had not yet been done and the date had not yet arrived before it asked that the N285 Million be moved back to its operational account. I can therefore infer that there was a fraudulent Intent to deprive the owner of same permanently or to deal with the money even if it planned to return same which in this case Its never did as said money was never taken back to the placement account. The 6th Defendant was the issuing house and was fully abreast of the terms of Exhlblt P9. Yet it found it convenient to heed the wrong Instructions of the 5th Defendant. I am therefore of the view that the 6th defendant was part of the wrongful taking or conversion of the N285 Million.

With respect to the 1st and 3rd defendants they were officers of the 6th Defendant and it is clear that they were the hands of the 6th Defendant with which the wrongful acts of conversion was carried out. They in fact Justified the movement of the money in their testimony on the basls that once allotment had been done then the 5th defendant could spend the money. Exhibit P9, as well as the share certificates and other documents tendered however showed that no allotment whether preferential allotment or not had been done. From Exhibits 06(1-16) the allotment of the shares was not done until 6th November 2008 and the 5th Defendant which wrote that lt had already made a resolution for the allotment of the shares never brought such resolution before the Court, so the excuse that they could spend the money after allotment has no basis. In fact the use of the word preferential allotment by the 1st, 2nd and 3rd Defendants when they agreed that there was in fact no other Issue of shares other than the one done by Exhibit P9 and that the shares purchased with the N285 million were part of same would seem to show that these Defendants were only trying to Justify what they knew was wrong. With respect to the 2nd Defendant, he was the alter ego of the 5th Defendant as he was lts chairman and Chief Executive officer at all relevant times and agreed that the 5th Defendant was the one who asked that the money be moved to its account. So he ls as responslble as the 1st, 3rd, 5th and 6th Defendants.

As regards the 4‘” Defendant it is my view that the only evidence shown against him was that he was the one In charge of the department that packaged the private placement. It was not shown that he knew about the payment of the N285 Million into the operational account or the movement of same back and forth from the proceeds account back to the operational account. I do not therefore think that the ’charge of stealing has been proved against him beyond reasonable doubt.

Based on the analysis above it is my view that the three ingredients of stealing have been proved against the 1st, 2nd, 3rd, 5th and 6th Defendants. They are therefore found guilty as charged. The charge not having been proved against the 4th Defendant he is discharged and acquitted of count 1.

The 2nd count charges the six Defendants with fraudulently converting the sum of N145 Million which was paid to the 5th Defendant‘s GTBank account from its account with the 6th Defendant. I must agree with the Defendants’ Counsel that this N145 Million was part of the N285 Million since it is alleged that same was part of the sums spent after the N285 Million was paid to the 5th Defendant’s account. I do not therefore think that It is proper to charge the Defendants separately with stealing this sum. The charge ls therefore regarded as not having been proved and all the Defendants are discharged and acquitted of same.

The 3rd count charges the 1st and 3rd Defendants with fraudulently converting to thelr use, the sum .of N110,000,000.00 (One Hundred and Ten Million Nalra) being the property of Dozzy Oil and Gas Ltd and Treasure Much Ltd when the said sum was paid into the account of Drillcom Investment Limited as premium charge of N1.10 per share in respect of 100 million shares aside the original N235 per share. On this I would abide by my earlier finding that the sums of N110 Million and N285 Million were proved to have belonged to Treasure Much and was capable of being stolen. The next question is whether an intention to steal or fraudulently convert same can be inferred. On this the evidence is the sum was paid based on the agreement between the complainants and Drillcom that they would assure PW11 of the allotment of 100 million units of shares If he could pay a premium of N1.10 per share. The demand for premium was however not openly made as PW11 was not informed by the 1st and 3rd Defendants that the 3rd Defendant was the controller of Drillcom and that the said premium was thus being paid to the 3rd Defendant. PW11 was also not told that there was no need for payment of premium as the 5th Defendant’s shares were Indeed on offer and there was nothing in Exhibit P9 that precluded sale of any number of shares to an individual. Furthermore PW11 was not aware that at the same time that the 1st and 3rd Defendants were asking him to pay premium to Drillcom, Drillcom was also negotiating with the 5th Defendant and entered into an agreement to underwrite the said 100 million units of shares for the 5th Defendant for which it would receive N19.5 Million as its fee for said underwriting. Drillcom of which the 3rd Defendant was arrowhead and which was also known to the 1st defendant was therefore in a position where it was making money from both the buyer and the seller of the shares without informing them. I would note that evidence was led that the N110 Million was refunded by Drillcom when the shares of the 5th Defendant were not listed but the issue is not the refund but whether the collection of same in the first place was not with intent to steal. ‘ln my view by collecting money for premium when there was no need for such premium and not disclosing to PW11 that the 3rd Defendant was the controller of Drillcom the 1st and 3rd Defendants evinced an Intention to deprive Treasure Much of its money. Therefore i find them guilty as charged in count 3.

Counts 4-9 and 11 and 12 charge the 2nd and 5th Defendants with publishing false statements contrary to Section 436(b) of the Criminal: Code. Counts 10 and 13 charges all the Defendants with publishing false statements contrary to same Section 436(b) of the Criminal Code. The said Section 436 reads as follows:

(A) Any person who, being a promoter, director, officer, or auditor of a corporation or company, either existing or intended to be formed, makes, circulates or publishes, or concurs in making, circulating or publishing any written statement or account which, in any material particular is to his knowledge false with intent thereby to effect any of the following’purposes. To deceive or to defraud any member, shareholder, or creditor, of the corporation or company, whether a particular person or not;

b. To induce any person, whether a particular person or not, to become a member of, or to entrust or advance any property to, the corporation or company, or to enter into any security for the benefit thereof; is guilty of a felony, and is liable to imprisonment for seven years.

It was submitted by the 2nd and 5th Defendant’s Counsel that the 5th Defendant cannot be liable for this offence because it is a company and it was the person whose shares were being promoted. On whether the 5th Defendant being a company can be charged I would say that anybody including a company can be a promoter but I agree with the 2nd and 5th Defendants Counsel that since the 5th Defendant itself is the person about whom the false statement was allegedly made, then It cannot be charged under Section 436. I therefore hold that the said charges cannot hold water against the 5th Defendant.

As regards the 2nd Defendant the undisputed evidence is that at all material times the 2nd Defendant was a director of the 5th Defendant and was sometimes its chalrman/CEO so counts 4-10 can be brought against him as a director of the 5th Defendant. I will now look at counts 4-10 one by one to see whether or not the prosecution proved same and/or whether the defences raised by the 2nd Defendant can avail hlm.

On count 4 the allegation is that he falsely made a statement on page 8 of Exhibit P9 that the company would take steps to list the shares on the floor of the Nigerian Stock Exchange immediately after the private statement exercise was concluded. In this respect the prosecution led evidence that after the placement exercise ended, the 5th Defendant dld apply for SEC and NSE approval to list but although it got NSE approval It never got SEC approval because It failed to make its audited accounts for years 2008 and 2009 available to the SEC. The prosecution called PW2 an employee of APT Securities and Funds the company engaged by the 5th Defendant to carry out the public listing of the 5th Defendant. He narrated all the efforts made by his company with the NSE and SEC for the listing and the fact that several letter were written by the SEC asking the 5th Defendant for the papers but same were not provided. The 2nd Defendant on his part said it was because of an order of injunctlon obtained by PW11 that the 5th defendant ’did not hold its AGM at which the accounts must be approved before same could be sent to the NSE. It Is my view that the evidence of PM showed that the 5th Defendant failed and or refused to submit the audIted account in spite of reminders by the NSE and the excuse that It was an injunction that made the 5th Defendant unable to provide the accounts does not hold water because the injunction was obtained In 2011 whilst the placement closed In 2008. Nothing stopped the holding of the AGM between 2008 and 2011 yet the accounts were not made available and the shares could not be Iisted up till 2011 when the order of Injunction was made. Exhibits P393 to P395 are the several letters which were exchange between the 5th Defendant, APT Securities and Funds and SEC. All these correspondence were written between 2008 and 2011. From same written by SEC, the 5th Defendant was the one that failed to make the documents requested for available in spite of reminders to do so until a final reminder was written in August 2011. See also Exhibit P3941. I therefore hold that the prosecution has proved count 4 beyond reasonable doubt against the 2nd, Defendant.

Count 5 is that the 2nd and 5th Defendants publlshed a false statement when they omitted to state in a material particular at page 7 of Exhibit P9 thereof that an amount more than 31.41% or N415,000,000.00 (Four Hundred and Fifteen Million Nalra) of the proceeds would be used for loan repayment. In Exhibit P9 It was stated that the amount of the share proceeds to be utilised for loan repayment would be N415 Million being 31.39% of the proceeds. The evidence led however showed that the amount used for loan repayment was In excess of this sum as the 6th Defendant was shown to have received the N131 Million previously owed to it and when the placement ended It also debited the 5th Defendant’s account with the sum of N545,801,577.22 being the Indebtedness of the 5th Defendant to the 6th Defendant at the time the placement exercise ended. These two sums were said to amount N676.946,037.85. The‘ 5th Defendant agreed in his evidence under cross examination that the credit balance of N202 Million that was left from the private proceed sums were further depleted by payments of debts to Diamond Bank, GTBank, Skye Bank, and FCMB. I would however note that the defence of the 2nd Defendant Is that the repayment of the N545,801,577.22 was done unilaterally by the 6th Defendant who was the one that debited the account by said payment without the concurrence or agreement with the 5th Defendant. It was stated that the that 5th Defendant had a credit line which it expected to continue to enjoy but said credit line was abruptly terminated by the 6th Defendant once it received the shares proceeds, in such respect, even though the amounts paid out as loans repayment exceeded what was stated in Exhibit P9, I would not say that the 5th Defendant deliberater published a false statement since the loan repayment of N545,801,577.22 unilaterally debited by the 5th Defendant was made without Its concurrence. I would-therefore hold that count five was not proved against the 2nd and 5th Defendants.

Count 6 charge the 2nd and 5th Defendants with omitting to state that an amount more than 1.8% or N25,000,000.00 (Twenty Five Million Naira) of the proceeds would be used for local supply payment. On this the 2nd and 5th Defendants agreed that 38 Million was spent on local supplies Instead of N25 Million. The Defendants were also said not to have indicated that the said sum was payment for debt and not new supplies. I would however note that Exhibit P9 was clear that the figures stated therein were estimates which may not be strictly adhered to and in this respect I do not think the figure of N38 Million is too far from the N25 Million stated. Count 6 was thus not proved.

Count 7 is that the 2nd and 5th Defendants omitted to state in Exhibit P9 that an amount more than 24.21% or N320,000,000.00 (Three Hundred and Twenty Million Naira) of the proceeds would be used for foreign supply payment. The submission of the prosecution Is that it was not stated that the N320,000,000.00 earmarked for foreign supplies was actually for payment for debts owed on foreign supplies already made and also that the amount spent on said foreign supplies was actually N495 Million as admitted by the 2nd Defendant under cross examination and in one of his statements being Exhibit P28. The prosecution Counsel sited the cases of R VS LORD KYLSANT51932 23 CR App R 83 and R VS BISHIRGIAN 25 CRAPP R 176 in which it was held that omission to state a fact can make a statement to be false. On this I do agree that the failure to state that the sums earmarked for foreign supplies was actually payment for debt already owed on goods supplied is a fraudulent omission. I am of the view that that spending more than earmarked may not be fraudulent as the amounts stated in Exhibit P9 were estimates. Nevertheless having failed to indicate that the payments were for debts I hold that the prosecution has proved count 7 against the 2nd Defendant whilst the 5th Defendant is discharged and acquitted.

Count 8 is that the 2nd and 5th Defendants omltted to state In a material particular at page 7 of Exhibit P9 that an amount more than 6.2% or N82,000,000.0D (Elghty Two Mllllon Nalra) of the proceeds would not be held In reserve. There is no dispute that no amount was held In reserve as stated in Exhlblt P9 excuse of the 2nd Defendant for this is that the 6th Defendant did not underwrite the shares as it had agreed with them thus they had a shortfall of funds. In my view this excuse ls not too farfetched thus I would hold that count 8 was not proved.

Count 9 is that the 2nd and 5th Defendants omitted to state in Exhibit P9 that an amount more than 9.6% or N104,000,000.00 (One Hundred and Four Nalra) of the proceeds would be used for new purchases and miscellaneous. In other words it is alleged that Exhibit P9 did not state that N104 Million would be spent on new purchases and miscellaneous but same was spent by the 2nd and 5th Defendants. The 2nd and 5th Defendants have not denied that said sum was spent on miscellaneous expenses but their Counsel has submitted that these expenses were not a falsehood and were necessary for the day to day running of the 5th Defendant’s business and to undertake expenses which overshot the proceeds. It was also submitted that Exhibit P9 was a mere estimate thus other expenditure not speclflally mentioned could be undertaken.

I would agree that there was indeed a failure to state that N104 Million or any sum at all would be spent on miscellaneous expenditure. It is my view that when collecting money from subscribers the 2nd and 5th defendants were aware of the fact that people would only put money In a venture they trust thus they clearly stated how the sums would be utilised. In as much as the said sums were sald to be estimates, the 2nd and 5th Defendants had a duty to try and be faithful to the expenditure they proposed and not go on a jamboree with other people’s money. I am therefore of the view that they made a false publication as to how the money would be spent when they failed to include miscellaneous expenses which they now argue is vital to their business. I would also say that even if the complainant cannot be regarded as one of the persons to whom the publication was made, it is clear from the evidence that the statements in Exhiblt P9 were indeed published to Daniel Chukwudozie who was the person to whom the shares were marketed and who put down funds on behalf of Treasure Much Umited. From the cases of R VS LORD KYLSANT 1932 23 LCR App R 83 and R VS BISHIRGIAN 25 CRAP R 176 in which it was held that omission to state a fact can make a statement to be false, i am of the view that the omission to state that such a large amount of funds would be spent on miscellaneous expenses amounts to making a false statement in Exhibit P9. I therefore find the 2nd Defendant guilty of this count though the 5th Defendant is discharged for the reason stated earlier which is that It is a company and cannot be said to be the one promoting or directing itself.

Count 10 is that all the Defendants being promoters, directors and/or officers of Nulec industries Limited’s shares subscription by private placement between June and September 2008 within the Jurisdiction of this Court with intent to induce Dozzy Oil and Gas Ltd, Treasure Much Limited and Sir Daniel Chukwudozie to buy the shares of Nulec Industries Limited published a written statement to wit: a private placement memorandum wherein they stated in a material particular at page 8 thereof that the private placement was underwritten on a standby basis but which statement was to their knowledge false. On this Exhibit P9 clearly stated that the private placement was underwritten which meant that any shortfall in the share subscription would be taken up by the person who underwrote same. The contention of the 2nd and 5th Defendants is that the underwriting was done by the 6th Defendant and they tendered Exhibits Q7, Q8 and Q9 for this purpose. Exhhlt D7 is the letter by which the 5th Defendant expressed its displeasure for the 6th Defendant for not underwriting the balance of the unsubscribed shares, whilst D8 was the letter by which it appointed the 6th Defendant as underwriter. Exhibit D9 is the letter by which the 6th Defendant accepted to play several roles which included that of underwriter. Based on the above it is my view that the 2nd and 5th defendants cannot be said to have made a false statement when they said the shares were underwritten.

As regards the 6th Defendant however, it agreed to take up the underwriting but knew it was not going to do so, it is therefore my view that in putting its name to Exhibit P9 in which such a statement was made, then it told an untruth or made a false statement that it knew was not true and or did not believe in. It was submitted that the 6th Defendant cannot be regarded as promoter, director, officer, or auditor of the 5th Defendant based on Section 61 of the Companies and Allied Matters Act which says that: “Any person who undertakes to take part In forming a company with reference to a given project and to set Its going and who takes the necessary steps to accomplish that purpose, or who, with regard to a proposed or newly formed company, undertakes a part In raising capital for It, shall prima facie be deemed a promoter of the company”

The key words used in Section 436 however are: “Any person who, being a promoter, director, officer, or auditor of a corporation or cornpany, either existing or Intended to be formed”

Thus the word promoter In Section 436 is not limited to a promoter of a proposed or newly formed company. It applies to someone who is promotIng an existing company and who makes circulates, cIrcuIates or publishes, or concurs In making, circulating or publishing any written statement or account which, in any material particular is to his knowledge false. Here even if the 6th Defendant was not the maker of Exhibit P9 It was part of those who were promoting the sale of the private placement shares and It published or circulated/published Exhibit P9 to PW11. At the time it did this It knew that the shares were not underwritten yet it concurred in Exhibit P9 being put out to PW11.

With respect to the 1st and 3rd Defendants they can also be regarded as promoters of the 5th Defendant for the purpose of marketing the private placement thah they knew was not underwritten but purported to be so. ‘As regards the 4th Defendant I have not been told that he played much of a role in the marketing so I would hold that it was not proved that he was one of those who published the false information as to undererting.

In sum count 10 was proved against the 1st, 3rd and 6th Defendants and they are found guilty of same whilst the 2nd, 4th and 5th Defendants are discharged and acquitted.

Count 11 is that the 2nd and 5th Defendants omitted to state In Exhibit P9 that an amount more than N480,000,000.00 (Four Hundred and Eighty MlIlIon Nalra) representing 36.31% of the proceeds would not be used for the product line expansion. In other words the allegation is that in Exhiblt P9 the Defendants stated that N480 Million would be used for product line expansion but no kobo was used for same. The 2nd and 5th Defendants did not deny that no kobo was spent on product line expansion but said this was because the shares

were not fully subscribed and the 6th Defendant did not underwrite the shares as agreed. I must say that the 2nd and 5th Defendants who could not spend a kobo on product line expansion, found it convenient to use almost the funds realised from the private placement for payment of debts. Nevertheless I would concede that the failure to underwrite may have affected their ability to carry out product line expansion. I would therefore hold that this charge was not proved against them beyond reasonable doubt and they are discharged and acquitted of this count.

For the same reason I will hold that Count 12 which charged them with stating that the purpose of the offer was to add new production facilities for electric kettles, food blenders, free standing cookers and fans was not proved-and they are discharged and acquitted of this count.

Count 13 charged all the Defendants with falsely publishing a written statement In which they omitted to state that the loan of N130,000,000.00 (One Hundred and Thirty Million) owed by Nulec Industries to Bank PHB would not be repaid from the business cash flow of Nulec Industries Limited but stated that the said published loan thereof was to be repaid from the business cash flow of Nulec Industries Limited. On this, I would hold that the evidence showed that indeed the loan of N130 Million had been stated on page 39’ of Exhibit P9 as one to be paid from the business ‘cash flow of the 5th Defendant but it was one of the deductions made when the cheque of N285 Million issued by Treasure Much was paid into the account of the 5th Defendant before the private placement opened. As regards the 1st and 3rd Defendants, it is my view that the 1st and 3rd defendants were the hands and eyes of the 6th Defendant through which the indebtedness was paid though the role played by the 4th Defendant was not shown. The 6th Defendant who made the actual deduction in spite of what was stated in Exhibit P9 can also be regarded having made a false statement. For the 2nd and 5th Defendants the deduction appears to have been made with or without their input. I do therefore think they can be liable for same. I therefore find the 1st, 3rd and 6th Defendants guilty as charged In respect of this count whilst the 2nd, 4th and 5th Defendants are discharged and acquitted.

Count 14 charged all the Defendants wlth conspiracy to obtain the sum of N855,000,000.00 (Eight Hundred and Fifty Five Mllllon Naira) from Dozzy Oil and Gas Ltd and Sir Daniel Chukwudozie on the false pretence that Nulec Industries Limited was in active profit making, manufacturlng and trading activities thereby purporting same to be payment for the purchase of shares of Nulec Industries Limited under a private placement. On this the Court would say that the evidence of the bank officials led by prosecutlon as well as the 2nd and 5th Defendants showed that the 5th Defendant was in business though It may not have been in the healthiest state. Count 14 was therefore not proved beyond reasonable doubt against any of the Defendants.

The final count is count 15 which charged the Defendants wlth obtaining the sum of N855,000,000.00 (Eight Hundred and Fifty Flve Million Naira) from Dozzy Oil and Gas Ltd on the false pretence that Nulec Industries Limited was in active profit making, manufacturing and trading activities. Based on the finding In count 14, I would hold that it was not shown that the 5th Defendant was not In active business, thus Count 15 was also not proved beyond reasonable doubt. In sum the court convicts the Defendants and/or discharges and acquit: them as follows:

1. Count 1: the 1st, 2nd, 3rd, 5th and 6tg Defendants are convicted as charged. 4th Defendant discharged and acquitted.

2. Count 2: all the Defendants are discharged and acquitted of this charge.

3. Count 3: the 1st and 3rd Defendants are convicted as charged.

4. Count 4: the 2nd Defendant is convicted as charged whilst the 5th Defendant is discharged and acquitted. ‘

5. Counts 5 and 6: the 2nd and 5th Defendants are discharged and acquitted.

6. Count 7: the 2nd Defendant ls convicted as charged whilst the 5th Defendant is discharged and acquitted.

7. Count 8: the 2nd and 5th Defendants are discharged and acquitted.

8. Count 9: the 2nd Defendant is convicted as charged whilst the 5th Defendant is discharged and acquitted.

9. Count 10: the 1st, 3rd & 6th Defendants are convicted. The 2nd, 4th & 5th Defendants are discharged and acquitted.

10. Count 11 and 12: the 2nd and 5th Defendants are discharged and acquitted.

11. Count 13: the 1st, 3rd & 6th Defendants are convicted. The 2nd, 4th & 5tj Defendants discharged and acquitted.

12. Count 14 & 15: All the Defendants are discharged and acquitted of thls charge.

I will now listen to allocutus of Counsel before I proceed to sentencing.

Allocutus: by Counsel .

Mr Obi for the 1st and 3rd Defendants: I commend the court for its industry in writing the judgment. For the 1st and 3rd Defendants, it is unfortunate that they found themselves in this position. I pray to the court to temper justice with mercy. They are gentlemen who have attained credible position in their career. The 1st & 3rd Defendants are bankers of note and have never been found wanting. I pray the court be lenient In sentencing the Defendants. They are bread winners and first time offenders. I ask that instead of sentencing them they should be given option of fine.

Miss Akinmuleya for the 2nd and 5th Defendants: On behalf of the 2nd & 5th Defendants, we are thanking the court for the industry put into writing the judgment. We plead with the court to temper justice with mercy. The 2nd Defendant Is a first time offender. He is a foreigner who has been doing business in Nigeria for decades. I urge the court to temper justice with mercy and be lenient in sentencing. I pray that the 2nd Defendant be given an option of fine. There is a civil suit before the Federal High Court on the same matter.

Mr Katung for the 6th Defendant: I thank the court for the well considered judgment. On behalf of the 6th Defendant I pray that the Court be kind on the 6th Defendant whlch is an artificial person run by individuals and as human being mistakes will be made. I pray that the court consider the 6th Defendant as an employer of labour. I pray the court to be lenient In sentencing.

Mr Jacobs (SAN) for the prosecution: I commend the court for its industry and the sound reasonlng of the court. I must say that this is the first Judgment of its kind In this area. I pray for order of restitution.

Court: the Court has listened to the allocutus of Counsel but it must say that this is a very serious matter In which a whole bank was Involved. The Court would therefore say that although there Is need for leniency, there Is also a need to send a message that this kind of behavlor is not right the convicted Defendants are therefore sentenced as follows: .

Count 1: The 1st, 2nd & 3rd Defendants are sentenced to a term of 5 years. The 5th & 6th Defendant are to pay a fine of N20 Million Naira each. They 5th and 6th Defendants are also to restitute Treasure Much Limited the victim of the crime with the sum of N285 Million.

Count 3: 1st & 3rd Defendant: are sentenced to imprisonment for a term of 4 years

Count: 4: the 2nd Defendant Is sentenced to Imprisonment for a term of 5 years.

Count 7: The 2nd Defendant is sentenced to imprisonment for a term of 5 years.

Count 9: The 2nd Defendant is sentenced to imprisonment for a terms of 5 years.

Count 10: The 1st & 3rd Defendants are sentenced to imprisonment for a term of two years.

The 6th Defendant is to pay a fine of N20 Million.

Count 13: 1st & 3rd Defendants are sentenced to imprisonment for a term of two years. The 6th Defendant is to pay a fine of N20 Million Naira.

All of the terms of imprisonment are to run concurrently but the fines are consecutive.

About Bukola Olanrewaju

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