ITAL Construct International Limited has sued SIC and Ivory Finance Company for fraud in a new twist to the saga of the three companies.
The suit relates to the credit guarantee bond gone bad issued by SIC for ITAL to secure a short-term loan from Ivory Finance.
Available information to the B&FT shows that, as at Tuesday, the interest and charges on the GH014million credit facility had ballooned to about È»164million since it was granted on April 10, 2013.
ITAL is claiming in its suit filed at an Accra High Court that SIC breached the terms of the guarantee bond by failing to pay the sum of È»19,303,800 to Ivory Finance on the first demand, which caused the company’s liability to parachute to È»91,918,418 as at November 2014.
From ITAL’s position, the money it owes Ivory Finance would have been far less than the amount the finance company is claiming had SIC paid the amount upon first demand.
It claims Ivory Finance also used its legal counsel to unduly put pressure on the directors of ITAL to sign an unconscionable terms of settlement document without the company’s counsel in the matter, and that its counsel was only served with the signed and filed copy of an already prepared and signed document indicating that on or about 20th November 2015 Ivory Finance consented to judgment.
According to ITAL, the consent judgment dated 20th November, 2014 was procured by fraud and that all attempts by Ivory Finance to sit and to review the terms of the consent judgment proved futile, with some personnel of the finance company assuring that it would not move into execution until the review process is done – only for notices of Garnishee proceedings to be served on ITAL Garnishing all of its accounts for the total sum when oral communications (all of which were audio recorded) confirmed that nothing would be done until the consent judgment terms arc amended accordingly.
Additionally, ITAL claims that its attempt to make good its payment was frustrated by a supervening event and pleaded that its ability to repay its debt was dependent on a particular contract which the party involved had failed to honour their part of, and that Ivory Finance was aware of this precursor at the time of entering into the loan facility with the company and thus cannot be heard to demand immediate payment.
ITAL is demanding that the consent judgment should be set aside for a new one to be drawn out in the presence and agreement of all counsels in the matter, and that the involvement of Ivory Finance Company counsel alone in the drawing-up and signing of the consent judgment is not only unconscionable but also tainted with fraud, parties not having equal bargaining power.
Recently, an Accra High Court committed SIC to pay a little over È»19.3million to Ivory Finance within 21 days pending hearing and determination of another alleged fraud suit filed by SIC against Ivory Finance; ITAL Construct; Doris Awo Nkani, the former managing director of SIC; and Kwesi Baidoo and James Kwegyir Agrrey – two directors of ITAL Construct
Already, Ivory Finance has also garnisheed the accounts of SIC; an action SIC has successfully filed a stay of execution on, pending determination of the suit that alleges fraud on the part of Mrs. Nkani, ITAL construct and Ivory Finance.
The credit guarantee bond issue that has been a legal tussle between the three institutions arose when ITAL – a wholly-owned indigenous real estate company – secured a US$200milIion government of Ghana contract to provide 4,120 affordable housing units in all the 10 regions of the country to enable public servants acquire housing accommodation.
The housing project follows an Export Credit Guarantee Department (ECGD) loan agreement between the government of Ghana, Barclays Bank (as coordinating Mandated Lead Arranger) and the British Secretary of State for an amount of US$170million at a rate of 2.25% per annum, as well as a medium-term loan facility from CAL Bank Limited and other local banks for US$30million as co- financing for the buildings’ design and construction.
Each public servant is to pay at least US$37,793 per housing unit, a figure the Ministry of Works and Housing said informed the government to choose ITAL as the most price-competitive bidder to execute the project.
ITAL on securing the contract contacted Ivory Finance, which in turn asked for a credit guarantee bond from an insurance company before it would advance the credit facility to the developer to execute the design and full construction of two- and three-bedroom apartments.
So ITAL approached SIC Insurance for the credit [E guarantee bond, which was granted and issued on the 28th o of March 2013 for a period of six months.
Subsequently, on 10th April 2013, ITAL and Ivory Finance reached a credit f facility agreement with provisions that will yield incremental penalty charges should ITAL default.
The agreement reached indicates that the credit facility attracted an interest of 5.5% per month on the said sum and a penal interest of 8% per month on the outstanding amount until date of final payment.
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