The Universal Merchant Bank (UMB) has landed itself in a legal tussle at the High Court for failure to respect the sanctity of a contract.
The Bank, one of the few Ghanaian ones that survived the massive “cleanup” by the Central Bank has been accused of “hijacking” buses that were imported by a private company with a loan secured from the financial institution.
The buses in question were imported into the country by Kelliot Royal Motors with a $3.393million loan secured from UMB.
Under the loan agreement Kelliot is supposed to import the buses, clear, keep, sell them and use the proceeds from their sales to pay off the loan.
In an interesting twist of events, UMB has contrary to the agreement taken possession of the buses and allegedly refused to release the import documents to Kelliot to enable the company clear the buses.
The buses which are 100 in number are Toyota Hiace buses that are currently being held in custom bonded warehouses on the orders of UMB, in a violation of the credit agreement with Kelliot Royal Motors.
Kelliot Royal Motors only got wind of the arrival of the buses after it received a copy of the import documents from its supplier but is unable to clear them because the original documents are in the custody of the Bank.
Several attempts by Kelliot to get the Bank to respect contract fell on deaf ears forcing the company to turn to the courts.
The decision to go to court according to court documents cited by Radiogoldlive.com is to prevent UMB from transferring the buses to a third party in breach of the contract.
In a response to the charge of breaching the credit facility agreement with Kelliot Royal Motors, UMB claimed it was forced to take possession of the buses because Kelliot “lacked funds” to clear them after they arrived in the country.
The claim of lack of funds is also inconsistent with the credit facility agreement because as part of the conditions, Kelliot was required to prove “Resource Capability”.
The condition of resource capability is to ensure that Kelliot had the capability to meets its obligations under the agreement.
To show its “resource capability” Kelliot at the time of entering the agreement made available the cedi equivalent of $3million dollars as security or collateral; an amount being held by UMB as part of the agreement.
The claim of “lack of funds” to clear the buses has therefore left Kelliot shocked as the UMB has not given Kelliot the relevant documents to enable it clear the buses.
UMB has also claimed it has no intention of handing over the buses to a third party and that it has not refused to release the import documents to Kelliot but admits to directing that the buses be held in customs bonded warehouse.
Lawyers for Kelliot are however challenging these claims on the grounds that only the persons with the requisite documentation can give the order that the buses be held in customs bonded warehouses.
From documents cited by Radiogoldlive.com, it is clear that UMB’s obligations under the agreement was limited to the provision of credit for the importation of the buses once Kelliot shows its “resource capability”, once it does.
It is however unclear why UMB is now being alleged to have taken over the obligations of Kelliot Royal Motors and seeking to cut off the company in an era where the Central Bank is seeking to ensure that banks respect the regulations governing their activities.
More details soon…….
Story by: Sena Nombo/Radiogoldlive.com
