Midwestern Dismisses Allegations It Diverted $20m Investment

More facts have emerged into the lawsuit instituted by Salta Integrated Concept Limited, as the claimant, against the Chief Executive of Midwestern Oil & Gas Limited, Mr. Onajite Paul Okoloko, First City Monument Bank (FCMB), Midwestern, Eroton Exploration and Production Limited and Guaranty Trust Bank Plc (GTBank), as defendants, over allegations that Onajite Okoloko and his firm converted Salta’s investment in Midwestern in a non-related transaction.

Salta, in a writ of summons filed at the High Court, Lagos on March 17, 2017, claimed that it entered into an agreement worth $20 million to acquire 5,000,000 shares of Midwestern to partly finance the Reverse Takeover (RTO) of Mart Resources Inc., Canada.

Salta alleged that contrary to the executed agreement, only 4,702,970 units of the five million shares were issued to Salta by Okoloko.

Salta added that rather than use the $20 million for the said purpose, RTO of Mart Resources, Midwestern diverted the funds paid into FCMB to a consortium that acquired Oil Mining Lease (OML) 18 from Shell Petroleum Development Company, through Eroton Investment.

However, investigations by THISDAY have shown that in December 2012, Salta indeed made an equity investment in Midwestern through the acquisition of shares in it.

According to a company official, who preferred not to be named, Salta effected its share acquisition through the use of a bilateral loan facility obtained from FCMB.

The Midwestern official stated that its board and management were aware that Salta had taken a loan for the acquisition of Midwestern’s shares for the RTO transaction, adding that the said shares were used as security for the loan taken by Salta from FCMB.

He revealed that Midwestern’s only connection in the transaction between the bank and Salta was a domiciliation agreement to pay Salta’s dividends to FCMB, which was met.

“We were aware, as is normal practice in transactions of this nature that FCMB took security over the shares owned by Salta in Midwestern.

“Midwestern’s only connection with the aforementioned transaction is a domiciliation agreement for payment of Salta’s dividends to FCMB which Midwestern complied with,” he said.

The official wondered how the domiciliation agreement to pay Salta’s dividends to FCMB translated to the conversion or diversion of the investment made by Salta for the acquisition of Midwestern shares.

“For clarity sake, Midwestern never converted or diverted funds invested into it for any purposes unrelated to the purposes of the investment,” he said.

He added that his company will fully defend any court action filed against Midwestern in the suit filed by Salta and continues to reserve its legal rights.