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Nigeria Charges Dana Group and its Chief Executive With Billion-Naira Fraud


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Nigerian authorities have filed criminal charges against Dana Group PLC, a multi-million dollar Nigerian conglomerate that operates across a number of diverse sectors including aviation, pharmaceuticals, automobile sales and processed foods. A subsidiary Dana Steel Limited and Dana Group’s Chief Executive Jacky Hathiramani are also named in the indictment.

In a criminal complaint filed by the Federal Ministry of Justice in July, and seen by Lagos Times newspaper, the government accused Mr Jacky Hathiramani, the Indian-born Nigerian chief executive of issuing several dud Ecobank PLC cheques to an account for investors in the company’s N4.5 billion Fixed Rate Secured Bond, which matured on April 1, 2019.

The prosecutors alleged that in contravention of Nigeria’s extant criminal laws, Dana Group, its subsidiary Dana Steel and its chief executive Jacky Hathiramani, now said to be at large, issued thirty-four dud Ecobank cheques to the Dana Bond Series II Payment Account, between February 14, 2018 and March 30, 2018 with the intent to deceive the beneficiaries of the said account. The alleged offence is contrary to Section 1 (1) of the Dishonoured Cheques Offences Act Chapter D 11, Volume 5 of the Laws of the Federation of Nigeria.

The 16 per cent coupon bond which had a face value of N1,000, was rated by Global Credit Rating and had an ISIN of NGDNB2019S03. Dunn Loren Merrifield, owned by Sonnie Ayere, the former head of the Nigeria Mortgage Refinancing Company (NMRC) and director of the Nigeria Mortgage Guarantee Company (NMGC) acted as the lead issuing house and book runner.

Jacky Hathiramani is the scion of the Hathiramani family which arrived in Nigeria several years ago and built a large conglomerate including the domestic airline Dana Air. The Dana Group deals in a wide spectrum of businesses, from cars – it is a distributor of Kia models – to pharmaceuticals. His father Ramesh Hathiramani was on the board of Wema Bank, one of Nigeria’s oldest financial institutions. Dana Group and Mr Hathiramani did not respond to several emails seeking comment.

The company’s ability to raise billions from the bond market at a time when it was clearly under serious financial strain, has stunned analysts and investors alike. Prior to the company’s second bond issue, Sterling Bank PLC, a local bank with considerable Indian interests had won several court judgements affirming that the Dana Group had failed to repay several facilities granted by the bank. In an emailed response to the Lagos Times, Sterling Bank’s chief executive Abubakar Suleiman, said that the bank had reached an out-of-court settlement with the Dana Group over its loan dispute.

In May 2018, Guaranty Trust Bank, Nigeria’s largest bank by market capitalization also sued the Dana Group in Lagos over the company’s inability to repay the sum of nine hundred and eighteen million, one hundred and thirty-three thousand, four hundred and twenty-two naira, seventy-six kobo (N918, 133, 422.76) which the bank claimed was the outstanding sum due after various loan and overdraft facilities. Guaranty Trust Bank did not respond to enquiries from the Lagos Times seeking to know the status of the loan dispute.

An investigation by the Lagos Times showed that Dana Group’s prospectus had been deleted from the websites of the major exchanges operating in the country in a clear violation of capital market transparency guidelines. The Nigerian Stock Exchange and the FMDQ OTC did not have any record of the bond prospectus leading to suspicion that there had been an concerted effort to cover up the finer details of the bond issuance. Oscar Onyema, the chief executive of the Nigerian Stock Exchange and Bola Onadele the head of the FMDQ, did not respond to emailed questions seeking information.

Ecobank PLC, the pan-African lender which issued the cheques in question, declined to provide details of the transaction that led to the government’s criminal complaint. In an emailed response to a query from the Lagos Times, Ecobank PLC’s Company Secretary and Chief Legal Counsel Kenneth Okere said that the pan-African institution was constrained by its confidentiality obligations as a bank from providing this newspaper with customer-related information.

Dana has also had a long-running battle with the United Bank for Africa, which had given Dana Motors a loan of US$10,000,000 for the purpose of establishing letters of credit for the importation of raw materials and other trading products. The bank had also provided an additional overdraft facility of N50,000,000.00 to part-finance the Company’s import duties payment. As part of the securities for the said facility granted to Dana Motors Limited, the company in addition to four other companies in the group, executed separate Deeds of Guarantee in favor of the Appellant to be individually and unconditionally liable for the said debt on demand by the Appellant.

In a civil lawsuit, UBA would later claim that Dana’s management fully drew down and utilized the facilities but reneged on the transaction terms and refused to liquidate the outstanding sums due, despite several demands and that as at 4/10/2013, the company’s indebtedness to the bank stood at N1,322,744,216.26 and US$20,539.49 on the Naira and Dollars accounts respectively.

UBA, desirous of recovering its debt from Dana Motors Limited and its five guarantors sought its alternative remedy pursuant to Sections 40(1)(a), 408(d) and 409(a) & (c) of the Companies and Allied Matters Act 2004 and on 10/1/2014, filed six separate winding-up petitions against Dana Motors Limited and each of the five guarantor companies at the Federal High Court of Nigeria sitting in Lagos in the following suits: (i) FHC/L/CP/74/2014 – United Bank For Africa Plc v. Dana Motors Ltd (ii) FHC/L/CP/75/2014 – United Bank For Africa Plc v. Dana Plastics Limited (iii) FHC/L/CP/76/2014 – United Bank For Africa Plc v. Dana Industries Limited (iv) FHC/L/CP/77/2014 – United Bank For Africa Plc v. Ashmina Limited (v) FHC/L/CP/78/2014 United Bank For Africa Plc v. Dana Pharmaceuticals Limited and (vi) FHC/L/CP/79/2014 – United Bank For Africa Plc v. Dana Drugs Limited after which UBA was granted an ex-parte Order to publish its winding-up notice in several newspapers.

Dana won a temporary reprieve when the Federal High Court, Lagos Division in Suit No. FHC/L/CP/76/2014: United Bank for Africa Plc v. Dana Industries Limited delivered its judgement on 9/5/2014 and dismissed UBA’s winding-up petition for being an abuse of court process. However, UBA appealed the judgement at the Appeal Court on May 20, 2014 and after the court accepted the bank’s brief on January 14, 2016, the appellate court’s judges ruled in the bank’s favour and set aside the earlier Federal High Court ruling that had dismissed UBA’s winding-up petition. The dispute between Dana and UBA stirred a lot of media interest just before the conglomerate’s Series 2 bond issuance, raising questions about how Dana was able to secure regulatory approvals for its second bond issuance. An official of UBA who asked not to be named because of the sensitive nature of the enquiry, told Lagos Times that Dana eventually reached an amicable resolution with the bank, however this newspaper could not independently verify this claim.

Nigeria’s scandal-plagued Securities and Exchange Commission, which has been accused of lax supervision of the capital market over the past decade, did not respond to repeated requests for information. Messrs Reginald Karawusa and Mr Ibrahim Boyi, who head the enforcement and corporate services departments did not respond to this newspaper’s questions.

Industry insiders who agreed to speak on the matter of the record, said that there were several red flags indicating that Dana had a shaky financial position and all the companies involved in arranging its bond issuance should have been aware of this. However, the regulators and participating companies appeared to have looked the other way.

Analysts who spoke to the Lagos Times were concerned about the implications of the criminal suit on the capital market as more Nigerian companies have recently turned to the bond market to raise capital. One analyst wondered how Global Credit Ratings Limited (GCR) issued an acceptable rating to the Dana Group given its somewhat shaky financial position prior to the issuance of the bond. The analysts were also puzzled as to how Dunn Loren Merrifield, a company run by industry veteran Sonnie Ayere, could promote a multi-billion naira bond for a company that was obviously facing a cash crunch. Mr Ayere, who also sits on NSE chief executive Oscar Onyema’s eponymous non-profit foundation did not respond to repeated requests for comment from Lagos Times newspaper.

If the government can establish that Dana and Mr Hathiramani engaged in criminal behaviour, it could have far-reaching effects on the rapidly growing bond market which has smaller companies such as Alpha Mead, Eat N Go and Mixta Africa raise millions in capital over the past few years.   

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