Six presidents, one scandal – How regulatory failure, witch-hunt drowned £2.5 billion oil refinery investment in Nigeria (part 1)

By Joshua Olufemi and Aderemi Ojekunle

More than 26 years later, Nigeria’s faulty financial system is yet to uncover what happened to the Petrol Union refinery deal. The botched investment deal is now intertwined despite the Supreme Court verdict – one on the alleged forgery case of Petrol Union directors and the others and another CBN’s legal institution on interest accumulation.

“As far back as 1994, our intention was to ensure there is an indigenous refinery in Nigeria. We had the needed cash, technical knowhow and partners ready to deliver three refineries for Nigeria, one at the heart of Lekki in Lagos,” Prince Kingsley Okpala said.

He later told Dataphyte that it was the thought of his late father, Prince Isaac Okpala after he and others facilitated a £2.5 billion investment deal and lodged the cheque at a Union Bank Plc branch in Lagos.

Other associates include Abayomi Kukoyi, Prince Chidi Okpalaeze, and Prince Emmanuel Okpalaeze.

Today, Alhaji Aliko Dangote (through Dangote Petroleum Refinery and Petrochemicals) is manning a 650,000 barrels per day (BPD) integrated refinery project on the axis.

By 2010, Prince Kingsley further narrated how his father, Prince Kingsley Okpala was poisoned at an Abuja hotel and never recovered from complications despite the family’s efforts to save his life.

“After several death threats and intimidation from unknown sources, he was poisoned at a hotel in Abuja. I was still in school back then.

“We had no money to fly him abroad for medical treatment so he did not survive the poison,” Prince Kingsley explained.

Fast forward to 2020, associates in the Petro Union Oil & Gas Company Limited are currently facing double troubles with the Nigerian Authorities – the Central Bank of Nigeria and the Economic and Financial Crimes Commission (EFCC).

So, what went wrong?

Despite reaching the Supreme Court of Nigeria and landing a verdict in favour of Petro Union Oil & Gas, the EFCC proceeded to court, questioning the veracity of the highest court holding still, the viability of the £2.5 billion cheque paid to Union Bank 9 years before the agency itself was formed. The Union bank would later allegedly join forces with EFCC to smear the judgments of Justice Ukaego Peter-Odili of the Supreme Court of Nigeria on December 16th, 2019 at the Federal High Court in Ikoyi.

The bank regulator, in its own case, accepted its fate following the Supreme Court judgment but would contest the interest rates sanction pronounced.

The move is a slap on President Muhammadu Buhari’s commitment to “ease of doing business.”

The Deal:

If the deal had gone smoothly without regulatory hurdles, Nigeria would have today boasted of an export-oriented petroleum refinery and petrochemical plant in Lagos. It would have helped save billions of dollars and ensure the overall development of the country and its petroleum industry.

The implications have caused the country more than $8 billion in debt in subsidy payments. Also, currently, the country, and indeed Africa, await Dangote’s refinery to help the continent refine its ‘rogue’ crude oil.

The Issue:

In 1994, the late Prince Okpala got the approval from the Department for Petroleum Resources to construct and operate a refinery in Nigeria. The letter of approval was dated April 11, 1994 and had guidelines for Petro Union to construct the refinery as requested.

Image 1: DPR’s Approval to Petro Union in 1994

Upon receipt, the company through its Chairman further approached the Federal Ministry of Finance seeking approval to obtain a foreign credit. With the Finance Ministry granting the application, the company Petrol Union and Oil Gas Limited brought in a Barclays Bank cheque worth £2,556,000,000.00 for payment into the account of Gladstone Kukoyi and Associates. It was for the construction of three refineries and a petrochemical complex in Nigeria.

It was in the early hours of the 3rd day of June 1994 that Mr Abayomi Kukoyi of Gladstone Kukoyi Associates – an accounting firm – said he walked into the Broad Street branch of Union bank located at No. 131 Broad Street in Lagos Island. This was later confirmed by documents obtained by Dataphyte. Documents and court papers also confirmed the cheque was lodged at the Union Bank Plc for onward conversion into local currency and regulatory approvals.

First drama began days after when the Accountant (Kukoyi) received a call from the bank manager raising several issues concerning cheque.

And ping! there was radio silence. It was for 1.2.3… 11 years.

While the silence lasted, General Abacha, the then military head of state, had died mysteriously thanks to apple. General Abdulsalam had assumed office and handed over to another General – Major General Obasanjo (rtd.) but now as a civilian President.

In-between, various correspondences from the Minister of Finance confirmed to the Central Bank of Nigeria and Union Bank of Nigeria that the transaction was legal and had its nod. The then CBN was led by Prof Chukwuma Soludo.

Yes, the Finance Ministry, under Mrs Nenadi Esther Usman, confirmed the Petrol Union Limited’s transaction and the said financial flow was clean and cleared, per the Ministry correspondences between CBN, Accountant General, and Petrol Union.

The new sheriff, Mr Olusegun Obasanjo had launched an anti-corruption campaign and instituted the Economic and Financial Crimes Commission (EFCC). This was in 2003. The whole world and even Mr Okpala believed no criminal or illicit organisation would escape the eagle’s eye of the then Nuhu Ribadu-led Commission.

By this time, the troubles turned Millenium

In 2005, over ten years after the back and forth exchange of files, records, and correspondences, Petrol Union petitioned the Economic and Financial Crimes (EFCC) against the Union Bank of Nigeria. The Chairman of the EFCC wrote an official letter advising both parties to maintain the status-quo pending investigation.

Specifically, it mandated Union Bank to return the cheque and other documents relating to the transactions. The letter was signed by Ibrahim Lamorde on behalf of the EFCC Chairman at that time.

These activities and others brought the financial transactions to a standstill today with questions as the case is awaiting judgment on interest rate from the Supreme Court of Nigeria and the Federal High Court, Ikoyi, on an alleged fraudulent cheque.

Dataphyte chronicles actors in between the deal in the last 26 years:

The landmark Supreme Court Judgment

By December 16, 2019, the Supreme Court put an end to a long litigation battle by affirming the decision of the Federal High Court Abuja and Appeals Court in Abuja. The apex court also struck out appeals by Union Bank of Nigeria Plc. The Central Bank of Nigeria (CBN) did not appear despite proof of service, according to court papers.

Earlier, in March 2014, a Federal High Court Abuja also answered the prayers of Petrol Union and ordered CBN and UBN to release the cheque. The court had ruled that the conduct of both Union Bank and CBN in holding on to the Petrol Union Oil and Gas Limited’s capital of £2.5 billion is illegal. The court further stated that the conduct was ‘worrisome because it will certainly discourage foreign investors. It, however, advised EFCC to do more and prosecute those found culpable in the case.

Justice Abdul Kafarati-led high court (now Chief Judge of Federal High Court) asked the CBN and UBN to release the cheque and at an interest rate of 15% per annum.

While this was ongoing, Kukoyi and Associate on behalf of its client had also explored alternative dispute resolution by writing to Union Bank Plc for possible out-of-court settlement.

But what happened after all these?

How the hunters became the haunted – Kukoyi Associates, Petrol Union Oil and Gas officials

Dataphyte’s investigation showed Petrol Union and its accountant firm sought various legal instruments and prayers of all courts. The party endured redress until it finally secured victory at the Supreme Court – the apex court in Nigeria.  

Few weeks into January 2020, after the Supreme Court, EFCC arrested officials of the Petrol Union oil and gas limited at the Union Bank Plc boardroom. According to Prince Kingsley, the boardroom meeting which was supposed to discuss post-supreme court judgement turned to be EFCC den. By February 19, 2020, they were arraigned before a Federal High Court in Lagos. In the usual manner, the EFCC, took to social media to announce the case in what seemed like a media trial.

One of the counts preferred against them read: “That you, Petro Union Oil and Gas Company Limited, Prince Isaac Okpala (now deceased), Abayomi Kukoyi, Prince Kingsley Okpala, Prince Chidi Okpalaeze, Prince Emmanuel Okpalaeze and Princess Gladys Okpalaeze (now at large), on or about 29th December 1994, within the jurisdiction of this honourable court, fraudulently procured a Barclays Bank cheque dated 29th December 1994 in the sum of £2,556,000,000.00 (Two Billion, Five Hundred and Fifty- six million Pounds) made payable to Gladstone Kukoyi & Associates, purporting the said cheque to be meant for foreign investment in the construction of three refineries and petrochemical complex in Nigeria, when you knew the said cheque to be false and you thereby committed an offence contrary to Section 1 (2) (a) of the Miscellaneous Offences Act, Laws of the Federation of Nigeria, 1990 and punishable under the same section.”

The Accused Turned Accuser – Union Bank of Nigeria

Findings by Dataphyte revealed that after realising they lost in court, Union Bank Plc swiftly played a fast one by replying to one of the numerous letters sent to it by Kukoyi and Associates calling for dialogue on the matter.

In a letter dated January 17, 2020, almost a month after the Supreme Court verdict, Union Bank Plc finally replied to Kukoyi and Associates, inviting them and its client – Petrol Union for an ‘out-of-court settlement’ talk.

The meeting was summoned by Olu Bayode Esq at the instance of Union Bank Plc at 36 Marina, Lagos, on Wednesday, January 22, 2020. But instead of discussing a way out, the Bank had planned to use EFCC operatives on Kukoyi and others. It paved the way for the ongoing court sitting at a Federal High Court in Lagos.

“We were arrested at Union Bank Plc’s boardroom. Union Bank invited EFCC, saying they have been looking for us over the years.

“How can they do this after the Supreme Court verdict,” Prince Kingsley baffles.

The U-Turner – EFCC

A lower court (Federal High Court) has fixed January 20 and January 22, 2020, to hear the suit of alleged fraudulent cheque and attempted stealing against Kukoyi and Associates and its client. The Head of Media and Publicity of the EFCC, Mr Wilson Uwujaren, declined to comment on the issue when Dataphyte reached out because it is presently before a court.

“You don’t expect me to comment on a case before the court. The court will deliver its judgment on the case, “ Mr Uwajaren said on the phone.

But officials at Petrol Union and Gas Limited alleged that Union Bank colluded with the EFCC to frustrate them and disobey the Supreme Court verdict on the case.

“Why will Union Bank call for negotiation with Kukoyi and Associates and Petrol Union officials at their head office in Marina and use EFCC on another hand to frustrate the matter,” Mr Kingsley quizzed.

The Silent Regulator – Central Bank of Nigeria

Emails sent to CBN were not answered.

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Part Two Trailer: What is going to play out post-supreme court verdict in Petrol Union Oil and Gas limited case? Why is Union Bank and EFCC questioning supreme court judgment? Where is the cheque and what is its value after 26 years? Who will sanction Union Bank Plc executives for the supreme court verdict? CBN or EFCC? What are the positions of the Attorney General of the Federal and President Muhammadu Buhari’s position on the case?