CORAM

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Abubakar Mahmud Talba Justice of the Court of Appeal

Abdullahi Muhammad Liman Justice of the Court of Appeal

Victoria Toochukwu Nwoye Justice of the Court of Appeal

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PARTIES

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STERLING BANK PLC

APPELLANTS 

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ECONOMIC AND FINANCIAL CRIMES COMMISSION

RESPONDENTS 

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AREA(S) OF LAW

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CONSTITUTIONAL LAW, BANKING LAW, ADMINISTRATIVE LAW, CRIMINAL LAW AND PROCEDURE, EVIDENCE, PRACTICE AND PROCEDURE, APPEAL, PROCEEDS OF CRIME, FORFEITURE PROCEEDINGS, CIVIL PROCEDURE, BURDEN OF PROOF, JURISDICTIONAL LAW, ASSET RECOVERY

 

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SUMMARY OF FACTS

This case arose from an application by the Economic and Financial Crimes Commission (EFCC) for preservation and forfeiture orders against Sterling Bank PLC under the Proceeds of Crime (Recovery and Management) Act, 2022. The EFCC filed a motion ex-parte on November 27, 2023, before the Federal High Court, Kebbi Judicial Division, seeking to preserve funds totaling N36,433,295.00 and N35,256,844.00 as profits allegedly derived from unlawful activities.

The allegations centered on a scheme involving the Non-Academic Staff Union (NASU) Kware Branch, which was indebted to Sterling Bank. According to the EFCC, NASU collaborated with Sterling Bank to mislead Labana Rice Mills Ltd. and Shenyang Lafeiya Trading Nigeria Ltd. into supplying 6,000 bags of rice under false pretenses. The true intention, allegedly known to Sterling Bank, was to sell the rice and use the proceeds to repay NASU’s debt to the bank. Sterling Bank officials, including the Sokoto Branch Manager and a Relationship Officer, allegedly witnessed the delivery and signed waybills despite being aware of the fraudulent intent.

The Federal High Court granted the initial preservation order on December 1, 2023, and subsequently published notice as required. Sterling Bank filed a counter-affidavit opposing the application, citing an existing suit (SS/CS/34/2023) filed by Shenyang Lafeiya Trading Nigeria Ltd. against the bank in the High Court of Sokoto State. After considering all submissions, the trial court granted a final forfeiture order on July 15, 2024, directing the forfeiture of both the principal sum and alleged profits to the Federal Government through EFCC.

 

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HELD

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1.The appeal was allowed and the judgment of the lower court was set aside.

2.The Court held that while the Federal High Court had territorial jurisdiction to entertain the application under POCA 2022, the trial court erred in granting the forfeiture order.

3.The Court found that the EFCC failed to establish reasonable suspicion that the funds were proceeds of unlawful activity, as required under the Proceeds of Crime (Recovery and Management) Act, 2022.

4.The Court declared that Sterling Bank’s deduction of loan repayment from NASU’s account did not constitute unlawful activity, and the bank’s failure to disclose NASU’s indebtedness to rice suppliers did not amount to an unlawful act.

5.The motion on notice for forfeiture was dismissed as bereft of merit.

6.Sterling Bank was awarded costs of N250,000 in the lower court and N500,000 in the Court of Appeal.

 

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ISSUES

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1.Whether the Federal High Court, Birnin Kebbi, had territorial jurisdiction to entertain the suit when the cause of action arose in Sokoto State?

2.Whether the learned trial Judge was right in granting an order of final forfeiture of the preserved funds to the Federal Government of Nigeria, and whether the respondent established by credible and unchallenged evidence that the sum of N35,256,844.00 represented profits realized by the appellant from the said preserved funds?

 

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RATIONES DECIDENDI

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PROLIFERATION OF ISSUES – CONSEQUENCE OF FORMULATING MORE THAN ONE ISSUE FROM A GROUND OF APPEAL:

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“The rule on proliferation, pancis verbis, prohibits an appellant or cross appellant from formulating more than one issue from a ground of appeal. A ground of appeal, must not under any guise be split to raise two issues, where two issues are framed from one ground of appeal, the issues ought to be discountenanced or struck out as incompetent.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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REPLY BRIEF – PROPER FUNCTION AND LIMITATIONS:

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“Let me reiterate it for the umpteenth time that a reply brief is not meant to rehash the argument in the appellant brief, ingeniously provide authorities which were available on the principles argued in the aforesaid brief or improve the argument. Such practice runs afoul of the role of a reply brief and such briefs must be outrightly rejected and discountenanced by this Court, moving forward.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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TERRITORIAL JURISDICTION UNDER POCA – CIVIL PROCEEDINGS DISTINGUISHED FROM CRIMINAL PROCEEDINGS

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“From the above referred statutory provisions and by the combined effect of Order 2 Rule 1(2)(b) of the Federal High Court (Civil Procedure) Rules 2019, it is clear that the action leading to this appeal is not a criminal trial but a civil proceeding. It is equally clear that by Section 73(1) of the Proceeds of Crime (Recovery and Management) Act, the National Assembly has conferred on the Federal High Court additional jurisdictional to try offences and hear and determine proceedings arising under the Act.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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TERRITORIAL JURISDICTION IN NON-CONVICTION BASED RECOVERY – SCOPE OF AUTHORITY

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“The reason is not farfetched- the agreement for supply of 6000 bags of rice was entered in both Kebbi State and Sokoto State. The petitioner to the respondent also wrote to the appellant’s branch office in Kebbi State to confirm the transaction. It follows that the respondent in a non-conviction base recovery is not limited to the place where the unlawful activities or representation of instrumentality of unlawful activity or unclaimed properties are, they are empowered under this relevant law to trace such properties even up to third parties to whom the properties have passed.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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REASONABLE SUSPICION – REQUIREMENT FOR PRESERVATION AND FORFEITURE ORDERS

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“I think in my judgment, the words operative in the above section are ‘reasonably suspected’ and such properties must be derived from unlawful activities or represent instrumentality of unlawful activity or unclaimed property.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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LOAN RECOVERY – WHEN DEDUCTION FROM CLIENT ACCOUNT DOES NOT CONSTITUTE UNLAWFUL ACTIVITY

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“The appellant’s deduction of a loan from the above-mentioned account cannot, by any stretch of imagination, be deemed as an unlawful activity, neither can the appellant’s failure to inform intended business entities of an outstanding indebtedness of a client amount to an unlawful act.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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BURDEN OF PROOF – REQUIREMENT TO ESTABLISH REASONABLE SUSPICION

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“The application for preservation of property by the respondent in this appeal, in my humble view, disclosed no unlawful activity on the face of it to create a reasonable suspicion to entitle them to such order. Just as the respondent by its own averment clearly stated that NASU has an unpaid loan with the appellant, the respondent has not shown that the loan given to NASU by the appellant is unlawful to make the payment unlawful.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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SPECULATIVE EVIDENCE – INSUFFICIENCY TO SUPPORT FORFEITURE PROCEEDINGS

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“In my view, the entirety of the respondent’s evidence is speculative, unreliable, and wholly bereft of probative value. It is settled law that a finding is said to be speculative where it is founded on conjecture, surmise, and guesswork, and not on cogent facts or concrete evidence.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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REASONABLE SUSPICION – JUDICIAL DUTY TO SCRUTINIZE APPLICATIONS

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“The reasonableness of the suspicion is determined by whether the circumstances suggest the breach of any of the provisions in two statutes listed in Section 17 (1). If the appellant fails to adduce such evidence that show that the suspicion is reasonable, then the application for an order of interim forfeiture must be refused.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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EX-PARTE APPLICATIONS – DUTY OF LOWER COURTS TO PROVIDE REASONING

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“It has become a growing trend for Judges of the lower Courts to grant interim orders of forfeiture under Section 17 of the Advance Fee Fraud Act or the Proceeds of Crime (Recovery and Management) Act without satisfying themselves that there exists, on the face of the application, a reasonable suspicion of unlawful activity. In most cases, the lower Courts, in considering ex parte applications for forfeiture or preservation under an Act of the National Assembly, do not offer any reasoning in their rulings to show their belief that the applicant has met the requirement of reasonable suspicion, as should be robustly manifest. This conduct must be deprecated.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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DEBT RECOVERY – DISTINCTION BETWEEN CIVIL CLAIMS AND CRIMINAL FORFEITURE

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“In my considered view, what is before the Court is, at best, a thinly veiled attempt by the respondent to recover debts allegedly owed by NASU to Shenyang Lafeiya Trading Nigeria Ltd. which in turn is indebted to Labana Rice Mills Ltd. Indeed, it is a matter of record that Shenyang Lafeiya Trading Nigeria Ltd had already instituted an action against the appellant before the High Court of Sokoto in Suit No. SS/34/2023, filed on the 24th of October, 2023, wherein it predicated its claims on a breach of banker-customer relationship and duty of care.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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STATUTORY BURDEN – REQUIREMENT FOR ESTABLISHED REASONABLE SUSPICION

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“The place of burden of proof on the appellant as provided by POCA is in the actual demonstration that the property belongs to it and was acquired in a lawful way is not lost on this Court, but there must be an established reasonable suspicion to activate the law.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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APPELLATE INTERVENTION – WHEN FINDINGS OF FACT ARE PERVERSE

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“I must warn myself that evaluation of evidence and ascribing probative value is that of the trial Court as this Court will not interfere with the findings of fact of the lower Court, except such findings are perverse and occasion a miscarriage of justice.” – Per ABDULLAHI MUHAMMAD LIMAN, J.C.A.

 

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CASES CITED

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STATUTES REFERRED TO

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Constitution of the Federal Republic of Nigeria 1999 (as amended)

Proceeds of Crime (Recovery and Management) Act, 2022

Federal High Court Act

Federal High Court (Civil Procedure) Rules 2019

Advance Fee Fraud and Other Fraud Related Offences Act, 2006

Money Laundering (Prevention and Prohibition) Act, 2022

African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act

 

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