Home BUSINESS Forex deals: Firm drags CBN to court, accuses officials of bribery

Forex deals: Firm drags CBN to court, accuses officials of bribery

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A tomato processing company, Erisco Foods Limited, situated in Oregun Lagos, Nigeria has dragged the Central Bank of Nigeria before a Federal High Court in Lagos in suit no: FHC/L/CS/402/17 claiming N20 billion as general damages in consequence of illegal, wrongful, unlawful and unconstitutional conduct by the apex bank denying the company to purchase the United States dollars equivalent from the CBN because of its refusal to offer gratifications to officials of the bank.

Joined as second defendant in the suit is Stanbic IBTC bank.

The claimant explained that it heeded the Federal Government of Nigeria offer under the CBN Commercial Agriculture Credit Scheme CACS, by which the FGN gives financial support to Nigerian manufacturers in the agricultural sector by way of loans/credit facilities at interest rates not exceeding 9% per annum and also granting FX to them at the CBN official rates. Erisco further claim that under the scheme, it enjoyed a facility of N500million through its bankers, Stanbic IBTC Bank, and it generated employment opportunities as it additionally employed hundreds of Nigerians.

In the normal course of its business and need for expansion, the plaintiff  avers that funding from its own sources on 16th June, 2015 paid USD$460,000.00 to its foreign suppliers (Messrs Urumqi High Tech Development Zone Elite Trading Co. Ltd.) in China (being 50% of the total cost) for importation of tomato concentrate, the major raw material for its operations. The balance sum of USD$460,000.00 was to be paid by the company (Erisco) to the supplier before the supplier would ship the imported tomato concentrate to the plaintiff in Nigeria.

The tomato firm however, claimed that before it could pay the foreign suppliers the balance of USD$460,000.00, the CBN on 23rd June, 2015 by a circular banned 41 listed items as items that will no longer be valid for foreign exchange (“FX”). In otherwords, importer of the 41 listed items in the said circular of 23rd June, 2015 will have to independently source for FX to pay for such goods as the CBN will no longer sell FX for the importation of such goods at the official exchange rate of the Naira to the US Dollars. And amongst the 41 listed items was “tomatoes/tomato paste.

By this ban, Erisco avers that it could no longer access or obtain FX from the CBN through its bankers (STANBIC IBTC) for the purpose of its tomato business, particularly the importation of tomato concentrates which is the major raw material for its tomato processing lines.

Erisco disclosed that it was shocked and surprised at the action of the CBN in banning access to FX at the official exchange rate for the importation of tomato concentrate, the major raw material of the plaintiff’s tomato processing business as the CBN was fully aware of and had infact, approved and disbursed funds to them under the CACS scheme for setting up of additional four tomato processing lines which uses only imported tomato concentrate as its major raw material and by which hundreds of millions of Naira credit facilities are outstanding.

The plaintiff further alleged that in view of the fact that it had prior to 23rdJune, 2015, when the CBN circular dated 23rd June, 2015 took effect, already paid USD$460,000.00 to its foreign suppliers leaving a balance of USD$460,00.00, it applied through its bankers to approve the purchase of the balance sum of USD$460,000.00 at the official exchange rate to enable it fully pay the foreign suppliers for the importation of the already secured tomato concentrate and thereby conclude the already existing and ongoing transaction for the purchase of imported tomato concentrate.

Erisco claims it was surprised to be informed by its banker that all its request foresaid to the CBN to approve the purchase of the balance sum of USD$460,000.00 at the official exchange rate was not approved, and that the CBN’s circular dated 23rd June, 2015 was not retroactive.

The company claim it took effect from 23rd June, 2015 and regulate transactions from 23rd June, 2015 onwards. According to the firm, “it does not regulate prior, ongoing or existing and part performed transactions, only fresh transaction commenced after 23rd June, 2015 that ought to be regulated by the 1stDefendant’s circular dated 23rdJune, 2015.”

Erisco further avers that by its corporate operational philosophy of zero tolerance for corruption, had refused to offer gratifications to officials of the CBN.

Consequently, the officials of the bank resolved that it will be dealt with for refusing to “play ball” as all those who “play ball” purchased their needed FX at the official exchange rate from the CBN not notwithstanding that the items they want to import are amongst the 41 listed items banned from accessing FX at the official exchange rate in the CBN’s circular dated 23rd June, 2015.

Erisco, in its statement of claim listed over 50 companies with newspaper publication attached, that were granted FX by the CBN despite the CBN circular of 23rd June, 2015 thereby claiming that its refusal to offer bribe to officials of the CBN resulted to its action against it.

It is, therefore, urging the court to order the defendants to pay it the sum of N20 billion as special and general damages to assuage the economic misfortune it has suffered.

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