By Bassey Udo
Despite the recent announcement by the Bureau of Public Enterprises (BPE) of an interim management team for the Abuja Electricity Distribution Company (AEDC) Plc, the battle for the soul of the electricity distribution company has shifted to the courts.
The core investors in AEDC, CEC Africa Investments Limited and KANN Utility Company Limited, had filed suit No.: FHC/ABJ/CS/1557/2021, seeking to restrain the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami; the Central Bank of Nigeria (CBN) from consenting to the takeover, or interfering with the operations and management of AEDC.
Also joined as co-defendants in the suit filed on December 8, 2021 include the BPE, Ministry of Finance, AEDC board, UBA and United Capital Trustees Limited.
CEC Africa and KANN also sought an order of the court restraining these officials from taking any decision to approve the transfer, forfeiture or reduction, or takeover of their 60 percent shareholding in AEDC in any manner or limit the ability to exercise its full rights over the shares, pending the hearing and determination of the matter.
Following an ex-parte motion filed counsel to KANN, Etigwe Uwa, a senior advocate of Nigeria (SAN), the Federal High Court presided by Justice Inyang Ekwo on December 10, 2021 ordered parties in the dispute to maintain status quo.
Justice Ekwo also ordered BPE, UBA, CBN, and other defendants to be put on notice of the processes filed in the suit within five days of making the order.
However, in spite of the court order, the BPE, on December 10, 2021, went ahead to approve the suspension of the incumbent management of AEDC.
A new five-member interim management team, headed by a one-time Managing Director of the Transmission Company of Nigeria (TCN), Bada Akinwumi, as the Managing Director, was named as replacement till further notice.
Other members of the interim board included Sani Usman as the Chief Business Officer; Babajide Ibironke as Chief Finance Officer; Donald Etim as Chief Marketing Officer, and Femi Zachaeus as Chief Technical Officer.
Barely 48 hours after the announcement by the BPE, United Bank for Africa (UBA) unveiled a new board and interim management of company approved by the privatization agency, with most members loyalists of the Chairman of UBA Group, Tony Elumelu.
Elumelu is also the Chairman of Transcorp Group, operators of Transcorp Power Limited, owners of Ughelli and Afam power plants.
The Chairman of UBA Pensions, a subsidiary of UBA Group, Victor Osadolor, who is a strong ally of the UBA Chairman, was named as Chairman of the new Board. Osadolor is also a non-Executive Director of African Finance Corporation (AFC), and former Deputy Managing Director of UBA.
UBA is the bank behind the loan granted AEDC investors, which triggered the crisis that resulted in the current management takeover following alleged inability by the beneficiaries to service the repayment agreement.
Other members of the new AEDC board include the Director General of BPE, Alex Okoh, who is currently a non-Executive Director of Transcorp Hotels; Sam Adikamkwu, a legal practitioner and former Chief Legal Adviser at UBA; Muyiwa Akinyemi, an accountant and current Group Executive at the UBA, and Atiku Abubakar Tambuwal.
BPE had alleged that the takeover of the management of electricity distribution company by UBA followed a dispute among competing factions of AEDC’s majority shareholder/core investor, namely KANN Utility Company Limited (KANN).
The DG BPE said the dispute, which lingered for some time, eventually spilled over to the management of the company, resulting in the core investors’ inability to meet their service obligations and the terms of its agreements and obligations with its bankers.
“The management’s inability to deliver service to its customers affected its inability to generate enough funding to pay back its loan, leading to the lender, UBA, which provided the loan for the acquisition of majority shares during the privatization exercise in 2013, stepping in to protect the core investor’s 60 percent equity in the company in lieu of the debt,” BPE explained
“The UBA had acted as Mandated Lead Arranger, underwriting the entire facility of $122million, about N20 billion then, for KANN Utilities acquisition of the AEDC,” the agency added.
But there are allegations that the dispute was engineered by some powerful persons in the power sector and other sectors of the economy with the aim of creating an atmosphere that would make the takeover inevitable.
On Monday, December 20, 2021, at the resumed hearing in the case filed by AEDC core investors, Counsel to the BPE, A.U. Mustapha, SAN, said the BPE had challenged the jurisdiction of a Federal High Court, Abuja to hear the suit filed.
Mustapha said a motion on notice No: FHC/ABJ/CS/1557/2021 dated December 17 and filed December 20, was already before the court seeking an order of the court staying proceedings in the suit and referring same to arbitration for settlement.
The lawyer said the application was in view of the contents of the Share Sale Agreement dated February 21, 2013, and the Shareholders’ Agreement dated August 21, 2013, between the parties respectively annexed as Exhibits BPE-1 and BPE-2.
But counsel to KANN, said although the matter was adjourned for the hearing of motion on notice, he informed the court that despite the status quo order of the court, the premises of the AEDC was invaded by agents of the defendants.
“We have filed an application of non-compliance with the status quo order,” he said.
Lawyers to all the defendants, including BPE, said they were not aware of the invasion.
The judge, however, expressed surprise that a court would make an order and parties would choose to do otherwise.
“This is not safe for our system. It is not safe for members of the bar and the judiciary,” he said.
Ekwo, therefore, restated that the status quo order still subsists and must be obeyed.
Responding to the arguments of the defence, Uwa said though the arbitration clause was correct, the matter his clients were pursuing goes beyond the litigation today.
He argued the UBA and United Capital Trustees Limited were not parties to the agreement in the arbitration clause, adding that his clients were suing on a compromise, not on the whole action.
Justice Ekwo, who said he intended to take the motion for stay of proceeding before going to the substantive matter, said: “This will give direction whether this court will continue with the case or not.”
He adjourned the matter until February 16, 2022, for hearing of the motion for stay of execution.
The BPE said its motion on notice was brought in accordance with Section 5 (1) & (2) of the Arbitration and Conciliation Act CAP A18 LFN, 2004, among others.
The agency cited some of the grounds for filing the motion to include that “the plaintiffs, by the suit, were seeking to enforce certain provisions in the Share Sale Agreement and the Shareholders’ Agreement.
“That both agreements provide that all disputes between the parties shall first be referred to Arbitration for settlement.”
Clauses 15 .2 – 15.7 of the Share Sale Agreement provides that parties SHALL submit their disputes to Arbitration for settlement with the place of Arbitration being in London, England.
Again, it states that “Clauses 16.3-16.7 of The Shareholders’ Agreement provide that parties SHALL submit their disputes to Arbitration for settlement with the place of Arbitration being in London, England.”
It stated further that “the alleged disputes herein sought to be litigated upon by the plaintiffs have not been referred to arbitration for an amicable resolution in line with the provisions of the Agreement.
“Section 5 (1) and (2) of the Arbitration Act Cap A18 LFN, 2004 provide that where parties had agreed or contracted to settle their disputes by arbitration and one of them heads straight to court in breach of the agreement, the court is bound to stay proceedings thereof pending resolution or settlement of the matters/disputes by arbitration