Allegation Details: Why Court Insists EFCC Should Investigate IGI


By Akin Kuponiyi

A federal high court sitting in Lagos south west Nigeria has dismissed a suit filed before the court by INDUSTRIAL AND GENERAL INSURANCE PLC, (IGI) urging the court to stop the Economic and Financial Crimes Commission (EFCC) from investigating an allegation of public fraud made against the insurance company by five investors.

  The five investors namely, Osom Properties Limited, Royal Decent Limited, Frososom Nigeria Limited, Ilekhuoba Osaretin, and Fando Construction Limited, petitioned EFCC, urging the anti-graft agency to investigate the insurance company for public fraud.
      However, IGI, in its affidavit in support of the suit filed before the court averred that by private placement sometime in 2007  it allotted its shares to the five subscribers  as follows:
*10,000,000 units of shares at N2,000 per share with a face value of N20 million for which certificate number 5416was issued to Osom Properties Limited.
*5,000,0000 units of shares at N2,000 per share with a face value of N10 million for which share certificate number 5687 was issued to Royal Decent Limited.
*10,000,000units of shares atN2,000 per share with a face value of N20,million for which share certificate number 2733 was issued to Frososom Nigeria limited.
*287,500units of shares at 2,000per share with a face value of N575,000.00 for which share certificate number 3093 was issued to Ilekhuoba Osaretin.
*10,000,000units of shares with a face value of N20,000,000 for which certificate number 2620 was issued to Fando Construction Company.
     They all received dividends for the 2007 financial year in 2008 and also received bonus shares awarded by the company in 2008 and 2009.
  IGI went further: “Yet, at the instance of the subscribers, the company was served with invitation letter of EFCC to appear at their Lagos office,and what was clearly a private placement process,and purely civil,turned out to be a source of demand for the company to refund its shareholders with N140 million. Worse still, it became a basis for oppressive and abusive invitations of the company and its officers/employees more than nine times.
      The company was only confronted with allegations of having bought assets with the money of the subscribers while it was part of the business of the company to so invest in real properties to derive some profits.
    The 1st to 3rd defendants are EFCC, Ahmed Ghali, the Zonal Head of EFCC, Lagos Zone, Ronke Idayat Suleiman Team B Lead, Capital Market and Insurance Fraud (CMIF) Unit; and 4th to 8th defendants, are Osom properties Limited, Royal Decent Limited,Frososom Nigeria Limited,Ilekhuoba Osaretin  and Fando Construction Limited.
The allegation was that 4th to 8th defendants were lured to subscribe to the shares of IGI on the condition that the shares bought would be listed on the floor of the Nigeria Stock Exchange not later than 12 months.
Such public fraud was being investigated by the 1st to 3rd defendants with new facts emerging including but not limited to the purchase made by the insurance company of several properties across the country by using the subscribers’ funds.
    On the strength of the petition of the 4th to 8th defendants, the EFCC was investigating the case of public fraud against IGI . The investigation revealed that IGI had engaged in the business of purchasing several properties across the country by using the funds of several subscribers.
   They subscribed to the shares of the company on the express condition that the shares could be listed on the floor of the stock exchange which the company refused or failed to do.
   EFCC argued that it was recording progress in the investigation without infringing on the right of the company whose officers were never detained but merely invited and questioned. EFCC argued further that it has the legal and statutory mandate of investigating economic and financial crimes under sections 6,7,13 and 41of the Economic and Financial Crimes Commission Act 2004, to which the instant matter relates.
     In his judgement, the presiding Judge Tijjani Ringim,said:  “Having gone through the affidavit evidence placed before me and the legal arguments of counsels, I realized that all the questions raised by the plaintiff seem to have stated the obvious position of our law, that EFCC has no power to question purely civil transaction;and
that EFCC cannot purport to act as a mediator and/ or a recovery agent in a purely civil commercial transaction.
   Nevertheless, it also appeared to me that the petition of the 4th to 8th defendants cried for public fraud. This seemed to have been investigated with alerts of use of the subscribers’ funds, by the company to purchase real properties at the expense of their shares not being listed at the floor of the stock Exchange.
   It then dawn on me that if such an allegation of fraud could be investigated and found to be true, EFCC would be justified into committing resources to curb such a seemingly financial crime in the Security Exchange sector.
    I am not oblivious of the position of the law that vests wide powers to the EFCC in matters of investigation and prosecution of economic and financial crimes which include sections 6(b and h) of the EFCC ACT2004.
  In this instant matter, I do not appreciate the infringement or threat of infringement of the company’s fundamental rights beyond being invited by the EFCC such as to conclude the investigation to which progress was being made.
In the light of the above, this application fails and same shall accordingly be dismissed with no order as to cost.”