Sani Dangote, Brother Of Africa’s Richest Man, In Legal Trouble As Judge Freezes His Accounts

A Federal High Court in Lagos today restrained twenty commercial banks in Nigeria from honoring any checks written by Sani Dangote, a younger brother of Africa's richest man, Aliko Dangote. Also affected by the judge's order are checks written by Mr. Dangote's companies, Dansa Foods Limited and Bulk Pack Services Limited.

The orders were given because Union Bank sued Mr. Dangote and his companies over their alleged failure to repay a debt of about N5 billion despite repeated demands.

Aliko Dangote Justice Okon Abang ruled that the restraining order would be in force until September 11, 2014 to enable him to hear all applications filed in a suit brought by Union Bank against Mr. Dangote.

Justice Abang ordered the banks to file affidavits within five days disclosing details of Mr. Dangote's accounts with them. The affected banks are Access, CITI, Diamond, Ecobank, Enterprise, Fidelity, First Bank, First City Monument Bank (FCMB), Guaranty Trust Bank (GTB), Heritage, Keystone, Mainstreet, Skye Bank, Stanbic IBTC, Standard Chartered Bank, Sterling, United Bank for Africa (UBA), Unity, Wema and Zenith.

Justice Abang also ordered Union Bank to file a commitment to indemnify the defendants in the event that the court ultimately determines that the freezing order ought not to have been made.

“In line with Order 28 Rule 2 of the rules of this court, an interim order is hereby made restraining the banks from allowing the defendants to operative their accounts with them especially honoring withdrawal of funds,” the judge said.

“I think the dictate of justice demands that a preserving order should be made to preserve the res (subject matter) of this suit," Justice Abang added.

In two separate suits against Mr. Dangote and his companies, Union Bank had asked the court to issue an injunction restraining all commercial banks in Nigeria from allowing Mr. Dangote and his firms to withdraw funds from their accounts pending the determination of the suits.

When the matter came up for hearing today, the motion could not be heard as the defendants had filed objections challenging the jurisdiction of the court to entertain the suit. Two of the banks, Diamond and Zenith, appeared before the court on and declared that Mr. Dangote was also indebted to them.

Zenith Bank disclosed that Mr. Dangote was indebted to the bank to the tune of €7 million Euros. Justice Abang stated that he would entertain all the applications in the case on September 11, adding that it was important to preserve the status quo in view of the allegation that the defendants were about to move their funds abroad.

In its lawsuit, Union Bank alleged that, in a bid to evade payment, Mr. Dangote had been making frantic efforts to deplete the funds in the accounts of his companies. The lawsuit also alleged that the defendants had started diverting funds to Dubai in the United Arab Emirates (UAE), Canada, and Switzerland.

In two affidavits sworn to by a Union Bank official, the bank stated that the defendants' failure to pay their huge debt had dealt a blow to the Nigerian economy, a development which the bank claimed necessitated the suits.

The affidavits also stated that the defendants' default on the loan had hampered the bank's ability to extend credit facilities to small scale businesses, adding that such loans to small businesses would have helped boost Nigeria's economy and salvage the country from its present malaise of corruption and under development crisis.

The bank argued that the funds Mr. Dangote and his companies failed to pay would have gone a long way in creating a positive impact on Nigeria's economy.

Court filings reveal that Union Bank granted loans of N5.2 billion to the defendants in September 2008. Court documents show the following breakdown for the loan: N500 million as overdraft; N500 million advert loan; $2.5 million equipment lease; $2.5 million sales and lease back, and $30 million import finance.

Union Bank disclosed that it had already approved a restructuring of the loan after Mr. Dangote and his companies had repeatedly failed to make scheduled payments. The bank's affidavit alleged that, despite the restructuring, Dansa Foods remained indebted to the bank to the tune of N4.003 billion as of November 29, 2012. The bank stated that the loan was later reduced to N3.477 billion, adding that the defendants had failed to pay the debt despite repeated demands by the bank. Mr. Dangote's other firm, Bulk Pack, is indebted to the bank to the tune of N745.145 million, according to the lawsuit