Hon. Justice Ijeoma OJukwu of Uyo Federal High Court has given a decision which partly deals with the issue of whether a company acquiring another company also inherits the liability of the company so acquired.
The issue was considered in the case of FRN v. Chrystanctus E. Etteh and 5 ors with Charge No: FHC/UY/42C/12.
With Chrystantus. E. Etteh, Patrick E. Ente, Umana E. Umana, and Francis B. Ekpenyong Oceanic Bank Int’l PLC (now ECO bank Nig. LTD), Micheal Adewole being sued as defendants, the case bothered on the offences of forgery, stealing, uttering among others.
1st-4th defendants were accused of conspiracy to forge, stealing and forging of some documents, representing themselves as Board of Trustees Okopedi Community contrary to the relevant laws.
Michael Adewole, (6th defendant) was charged for failing to verify the identity of Okopedi Communitry and update all relevant information on the customer with the new account 0018997858 and (old account number 0241301010304) as customer of Oceanic Bank International Plc before opening an account for the said Okopedi Community and thereby committed an offence contrary to the Money Laundering Act, 2004; he (Michael) also failed to require for proof of identity and update all relevant information on the customer with the new account 0018997858 and by presenting to Oceanic Bank International Plc, the originals of receipt issued within the previous three months by public utilities, official documents as well as the power of attorney granted or the resolution appointing signatories and thereby committed an offence contrary to the said Act. The Bank was charged with similar count, with all counts totalling twenty in numbers in the charge sheet.
The facts of the case reveal that the Akwa Ibom State Government had invited the Okopedi Community through the Ministry of lands to collect the compensation money paid by the government in respect of the acquisition of their land for the State Airport.
They were instructed to provide an account in that respect. The community concluded that the money be paid into a fixed deposit account with Oceanic Bank in the community’s name and the 1st to 4th defendants and two others appointed as signatories. Subsequently some withdrawals were made on the account worth millions of naira with the 1st to 4th defendants as signatories, even without the express authorization of the community. The prosecution contended that, when the defendants were asked, they apologized and were given a total of six months to pay back the money withdrawn.
When the matter was reported to EFCC, it was discovered that the 1st -3rd had constituted themselves as a board of trustees of the community, when in fact, there was no such board. It was also discovered that the community money was used as collateral for a loan. The defence however noted that the money of the community was invested in a company known as Marvin Investment after there were some issues among the elders of the community about the money; that the money was invested to yield profit for the community though without their authority. It was also alleged that it was the bank that advised them to form a board of trustees to manage the fund of the community.
The court after considering the issues raised by all the parties raised the sole issue for determination: “Whether the prosecution has proved the offences of forgery, uttering, stealing, conspiracy, and failure to require proof of identity and information of customer as it pertains to each respective defendant in view of the charge before the court.”
In the course of arguing the case of the defence, learned counsel for the 5th defendant (Oceanic Bank International Plc) argued that Eco Bank cannot be held liable since the alleged transaction took place before Eco Bank acquired Oceanic Bank. He argued that there is no vicarious liability in criminal matters neither can criminal liability be transferred to Eco Bank Nigeria Limited which is a separate entity.
The court while giving its judgement per Hon. Justice Ijeoma L. Ojukwu held as follows: the only way the acquiring bank can escape liability is where there is a written agreement that only the assets of the company is acquired under the agreement. To ascertain that truism, the asserting party must tender the instrument where the parties agreed to such escape from liability, and there is none before the court.
According to the court, the test of liability is whether the officer or agent, in doing the acts complained of was engaged in exercising corporate powers for the benefit of the corporation while acting in the scope of his employment. The status of that agent or officer is irrelevant. The primary question is whether he has been invested with the performance of the function in the area to which the acts he has performed relate. The court thus held that it does not lie in the mouth of the 5th defendant who has acquired the assets and liabilities of Oceanic bank to pick and choose.
On the offence of forgery, the court after defining the offence and listing its elements, and as well distinguishing the facts of the case in APC v. PDP from the current case, found that the prosecution proved the offence of forgery against the 1st to 3rd defendants in the respective counts of the charge. However, the 4th defendant was held not culpable, having acted only as a rubber stamp, being not present when the 1st to 3rd defendants hatched the idea to fabricate the documents in order to use the money of Okopedi Community to obtain the loan facility. Similar decision was given with respect to the offence of uttering.
On the offence of conspiracy to commit forgery and stealing under counts one and sixteen of the charge, the court held that the prosecution proved the first which is conspiracy to commit forgery, while on the offence of conspiracy to commit the substantial offence of stealing; the court held that the 1st to 4thdefendants are not culpable. According to the court, their focus and what they actually obtained was the loan facility granted them by the 5th defendant. Granted that the community’s fund was used as collateral for the loan, there was no transportation of the community’s fund.
It was the 5th defendant who took over, converted and depleted the funds of the community as interest on the loan, contrary to the orders instruction and mandate of Okopedi group of villages. But since the 5th defendant cannot conspire with itself, it finds the offence of conspiracy to steal unproved. The court held that the 1st to 3rd defendants does not have the mandate to apply the community’s fund neither did they act in the best interest of the community. According to the court, the only deduction is that the 1st to 3rd defendants wanted to make a quick and clandestine profit from the community’s money.
The court therefore sentenced 1st-3rd defendants to 2 yrs imprisonment or an option of N2,000,000 while the 5th defendant was sentenced to pay the sum of N5,000,000 as well as to refund the sum N56,781,682.55k to Okopedi Community.
The court further held that if the 5th defendant fails to pay the judgment sum within the stipulated time, it will attract 10% interest.
09 April, 2018