$8.8m Fraud Allegation: Why Court Struck out Charges against Deepak, Chandra

After two years of legal intrigues, a Lagos High Court sitting in Ikeja, eventually struck out an $8.8m fraud allegation, preferred against two foreign nationals Deepak Khilnani and Sushil Chandra.

The decision of the court was sequel to notice of discontinuance filed by the state Director of Public Prosecutions, DPP, Mrs Titi Shita-Bey, subsequent to a review of the case by the Lagos AG, Adeniji Kazeem.

The state prosecution team, led by the then Director of Public Prosecutions, Mrs. Idowu Alakija (now a serving judge of Lagos High Court), had alleged that Deepak and Chandra sometime in 2008, defrauded a Nigerian company, Green Fuels Ltd of about $8.8m.

According to court papers filed by the defence team, the dispute that prompted the trial, dates back to 2009 when one Ola Rosiji and Anil Ahluwalia who had formed a Company called Green Fuels Limited, approached Mr. Khilnani’s Company to join them in building a CNG gas distribution company.

After protracted negotiations and discussions, Green Fuels was said to have entered into a contract with Mr. Khilnani’s Company Gentec Energy, a UK PLC company to build the plant, train their personnel, and provide technical management support to the business.

Gentec reportedly executed its contract with Green Fuels in full, and created a very successful business in Green Fuels, where it was said that Mr. Khilnani facilitated an inward investment into Green Fuels which enabled it to grow its business, to become the leading company in its field in Nigeria.

The overseas investor, Industrial Energy Africa Limited, also invested and took a 75% investment in the Company providing the necessary capital to establish and grow the business.

After the investment, she Ola Rosiji’s shares were said to be 25% with 75% being held by Industrial Energy. Mr. Ahluwalia was said to have later relinquished his shareholding in the company.

Green Fuels reportedly continued to operate successfully with high profit turn over until 2012, when a management dispute led to a court action instituted by Ola Rosiji and Anil Ahluwalia before a Federal High Court, challenging the shareholding structure of the company.

The duo in the suit number FHC/L/IKJ/ CS/269/2012 were asking the Court for rectification of the Register of Shareholding of GFL in such a way that would give Rosiji, 87% shareholdings in Green Fuels. The matter is presently at the Court of Appeal, Lagos.

In 2014, Green Fuels under the chairmanship of Rosiji again filed another suit before the Federal High Court, Lagos claiming refund from Gentec, for an alleged over invoicing of equipment supplied in pursuance of the agreement of 2008. Green Fuels also asked for damages against Deepak, for breach of his fiduciary duty as a director in GFL. The matter according to the Briton, is also still pending before the Federal High Court, Lagos.

According to the defendants, while these two matters were pending in court, a petition by Rosiji was forwarded to the Nigeria Police, Zone 2 Lagos, to investigate the allegation of over invoicing and forgery against Deepak, in respect of the supply of equipment by Gentec Energy Plc. At the commencement of the investigation, Deepak was interrogated by the Police, in relation to his involvement in the transactions that culminated to the complaint.

The Police team led by ACP Onaade S. Awoniyi (now a DCP), began its investigation in 2014 and after months of examining the company’s records of Green Fuels, invited parties in the matter for Arbitration.

An audit firm, KPMG was also engaged by the Police, to look into the company’s activities. Deepak however, refused to participate in the audit exercise because of a pending ruling before the Federal High Court, Lagos in Suit No. FHC/L/IKJ/269/12, where upon the application of Green Fuels and on the objection of Deepak and Industrial Energy, solely against the nomination of KPMG for the audit.

The court heard arguments and adjourned the matter for ruling, to let it determine the appropriate firm to conduct the forensic audit on Green Fuels. In deference to the pending matter and the ruling before the court, Delloitte had reportedly turned down the request by the Police, to conduct the audit execise.

Consequently, an application to enforce Deepak’s fundamental human rights, was initiated at the High Court of Lagos state.

While this was ongoing, the police hurriedly filed a charge before the Magistrates Court against Deepak and Chandra. However the Magistrate, Mrs. Omotosho, after seeing the information had no option but to adjourn the matter, since there was no proof that the defendants and their lawyers had been duly served with the charges.

The process prompted Deepak's lawyers, Chris Okunowo & Co., to write a petition which prompted the then IGP to set up another investigative team headed by DSP Yusufu Data, and under the supervision of the Commissioner of Police in charge of SFU, Milverton, Lagos.

However, in the same breath, lawyers representing Ola Rosiji petitioned the then Lagos Attorney-General, Mr. Ade Ipaye, asking that the matter before the Magistrate Court be taken over by the State Directorate of Public Prosecutions (DPP).

Notwithstanding the ongoing investigation by the new team appointed by the IGP, the Lagos State Government, took over the matter and subsequently, initiated the $8.8m charges.

However, after a detailed investigation, the IGP’s investigation team issued a report dated May 4th, 2015, asking parties involved in the case, that is, Deepak, Ola Rosiji and Green Fuels Ltd officials, to pursue their civil matter which is already at the Federal High Court, Lagos.

With the report, Deepak's legal team wrote to the then Attorney-General, Ade Ipaye, asking for the review of Deepak's trial insisting that the issues which erroneously led to the charges being filed in the first place, were contractual disputes which parties have already taken to the appropriate civil courts for resolution.

They also pointed out to the DPP, that the allegation of filing a wrong statement at the CAC lacked any basis, on the ground that the Company Secretary of Green Fuels had alleged in its statement to the Police, admitted to filing and making all entries on behalf of the company at the CAC.

Despite the observations by Deepak's legal team, the state prosecuting team continued with the trial. The court on several occasions during the trial, berated the state for shoddy prosecution. The trial judge at some point also threatened to strike out the matter due to the unserious attitude of prosecution.

Believing that the new State Attorney-General, Adeniji Kazeem, would see the apparent waste of the precious time of the Court and the resources of the State, another formal request for another review of the case was forwarded to his office. The State, after a thorough review of the matter, subsequently, filed a Notice of Intention to Discontinue dated June 29, 2017.

However on July 13, 2017, when the court was scheduled to give its ruling on the notice to discontinue the case, some group of lawyers led by one Ola Olayinka, protested before the court, insisting that the matter was of public interest and that the Attorney-General ought not to discontinue such matter, without giving

any reason to the court.

Olayinka argued that since the police and the DPP had investigated the matter, and concluded that the defendants have case to answer, it is surprising that the AG chose to discontinue with the case, without giving reasons.

Responding to the lawyers' argument, the prosecution team led by Akin George, informed the court that the state had filed a notice of discontinuance dated June 29, 2017, after reviewing the charges against the defendants.

He stated that after a thorough review of the case, the Attorney- General is of the view that, there was no concrete evidence to secure the conviction of the defendants.

Following the submission of the state prosecuting lawyer, counsel to the defendants, George Oguntade, SAN, asked the court to strike out the charges against his clients.

Oguntade also urged the court to strike out an earlier arrest warrant issued against his clients.

In a short ruling, Justice Ipaye held that the statutory powers to initiate and discontinue a criminal proceeding in Lagos State, lies with the Attorney General.

"The state represented by the Attorney-General, has the absolute powers to initiate and discontinue a criminal proceeding. It is not for this court to mitigate or investigate the exercise of this legitimate powers. I see no reason why this charge should not be struck out. This charge is hereby struck out".

The judge also struck out the warrant it had earlier issued for the arrest of the two defendants. "An order of arrest made by this court for the arrest of the defendants, dated April 3, 2017, is hereby vacated. This matter is adjourned sine die", she held.