A Federal High Court in Ikoyi, Lagos, has issued a restraining order against Sir Emeka Offor, a prominent Nigerian businessman, alongside three other directors of Kaztec Engineering Limited, preventing them from withdrawing or managing $8.5 million or any other funds in the company’s accounts domiciled in eight commercial banks.
The affected directors include Kester Enwereome, Tochukwu Odukwe, and Monito Barraquias, while Interstate Electrics Limited, a sister company to Kaztec Engineering, and three vessels (MV Ekulo Chinyere, MV Ekulo Spirit, and MV Ekulo Explorer) were also named as co-defendants in the suit.
Court Orders Attachment of Shell Contract Payments
The court also issued an interim attachment order on all payments due from Shell Petroleum Development Company of Nigeria (SPDC) to Kaztec Engineering in relation to the Trans-Niger Pipeline Project from Ogale to TP1. This measure was taken to secure Unity Bank’s claim of N6.1 billion and $133.1 million, with an additional 21% interest.
The presiding judge, Justice Hadiza Shagari, further directed SPDC and the eight banks to file affidavits within seven days disclosing Kaztec Engineering’s account balances and those of Interstate Electrics Limited.
Background of the Dispute
The court action stemmed from an ex parte motion filed by Barrister Oluwafemi Atoyebi (SAN) on behalf of Unity Bank Plc, claiming Kaztec Engineering and Interstate Electrics, along with their directors, owe Unity Bank a combined sum of N6.1 billion and $133.1 million.
According to the bank, the debt originated from multiple loan facilities extended to the defendants, which they have failed to repay despite repeated demands.
Breakdown of Kaztec’s Indebtedness to Unity Bank
1.2014 Contract Facility:
•Loan Amount: N3.4 billion
•Purpose: To execute a contract for Addax Petroleum involving the fabrication and installation of offshore pipelines for the Nigerian National Petroleum Corporation (NNPC).
•Current Outstanding: N5.8 billion.
2.Customs Bonds (2012):
•Issued for importing the company’s vessels:
•N54.3 million, N33.1 million, and N154.7 million.
•Agreements stipulated loan repayment from proceeds of the Addax contract, but the bonds expired in December 2014 without payment.
3.Acquisition of Enugu Disco (2013):
•Kaztec Engineering, through Interstate Electrics Limited, acquired 60% ownership of the Enugu Electricity Distribution Company (Enugu Disco) for $126 million.
•Funds Breakdown:
•Kaztec’s Contribution: $24.5 million.
•Unity Bank Loan: $101.5 million (via a $70 million facility from African Export-Import Bank (AFREXIM) and an additional $31.5 million loan).
The debt owed to Unity Bank remains at N5.6 billion and $133.1 million, including accrued interest, as of October 2016.
Allegations of Fund Diversion
Unity Bank alleged that despite an agreement to domicile proceeds from the Shell/Kaztec contract (valued at N5.3 billion and $50.1 million) with the bank, Kaztec Engineering attempted to divert funds to another bank.
The bank alerted Shell Petroleum about the agreement and argued that the $8.5 million currently due to Kaztec must be secured to offset part of the company’s debt.
Court Decision
Justice Shagari granted the restraining order to prevent the dissipation of funds and directed the plaintiff to provide an undertaking for damages should the court later determine the order was frivolous.
The case was adjourned to February 1, 2017, for further hearing.
Implications for Kaztec Engineering
This legal battle places significant financial strain on Kaztec Engineering and its affiliates, particularly as the company continues its involvement in high-profile projects such as the Trans-Niger Pipeline. The outcome of this case could shape the future of one of Nigeria’s leading indigenous oil and gas service companies.
