World Bank’s IFC, OPEC Fund drag Ghanaian firm to London court

Business News of Friday, 5 May 2017

Source: thefinderonline.com

2017-05-05

International Finance Corporation IFCInternational Finance Corporation

International Finance Corporation (IFC), the private lending arm of the World Bank Group, has dragged indigenous Ghanaian company Quantum Oil Terminals Limited to a London High Court to restrain the Ghanaian company

from litigating against IFC and OPEC Fund for International Development (OFID) in any court in Ghana in relation to a law suit against IFC and OFID.

The IFC secured an ex parte injunction in a London High Court preventing the case of alleged breach of contract against them to be heard in the High Court in Ghana.

Consequently, the Commercial High Court 1, presided over by His Lordship Justice Samuel Asiedu, adjourned the case to Tuesday, May 23, 2017, to enable IFC and Quantum Oil Terminals deal with the orders in the London court.

Quantum Oil Terminals sued IFC and the OPEC Fund for International Development for damages totaling $41.3million ($41,319,123) as damages for alleged breach of contract.

Quantum Oil lawyers to go to London Court

The Finder learnt after the court proceedings that the lawyers for Quantum Oil will have to appear in London High Court on May 19, 2017, to argue that majority of the agreements signed by the parties are subject to the jurisdiction of the courts in Ghana while only three were subject to arbitration in London.

According to our source, it was agreed that the in case of any dispute in the two main loan agreements, it would be resolved through arbitration in London.

The source was quick to add that Quantum agreed to arbitration with the view that IFC and OFID would disburse the loan on time for Quantum Oil Terminals to be in business and could treat such arbitration as part of operation expenses

According to the source, it was agreed that the remaining six agreements covering guarantees and securities would be resolved in Ghanaian courts.

The source was of the view that the London judge was misled to believe that all the eight agreements were to be dealt with in London hence granting an injunction which now binds Quantum from seeking any redress in any Ghanaian court.

The source explained that since the loan was not disbursed, it would be very difficult for Quantum Oil Terminals to pursue the case in London since that would be very unbearably expensive for Quantum.

Legal analysts The Finder spoke with indicate that by Ghana laws, the fact that the parties agree to arbitration in London does not mean the case cannot be dealt with in Ghana absolutely.

They noted that for convenience purposes and a way of reducing cost; the parties can agree that all the alleged breaches in all the eight contracts should be resolved in Ghanaian court.

According to them, both IFC and OFID have offices in Ghana with lawyers but Quantum Oil does not have any office in London, and therefore, it makes sense to resolve the issues in Ghana.

But, IFC and OPEC Fund disagree.

Details of law suit

Quantum Oil alleged that the IFC, deceived them into coming to the table with the promise of board approval for a loan facility to complete their tank farm within 6 months and subsequent loan disbursement within a year of engagement, leading Quantum Oil to close all other funding doors it was already pursuing before it was approached by the IFC.

It said what followed was four years of constant engagement with the IFC in the form of calls, emails, document requests etc during which time Quantum Oil was made to spend over $2million in fees and other payments to the IFC and other costs in relation to the promised $16 million loan facility.

It added that after satisfying all the requirements for the disbursement of the loan, IFC in a move inconsistent with international practice, strangely refused to disburse, leaving the 75% completed tank farm project in a state of limbo.

Quantum Oil further alleges that the IFC proceeded to discriminated against it by not disbursing as, among other things, it could not provide any substantive reason for that decision.

According to Quantum Oil, this was against the advice of multiple internal reviews of the loan facility.

It said contrary to international practice and IFC’s own transparency rules, IFC took another strange decision by refusing to share the report of the industry expert with Quantum Oil, mainly because it did not support their decision not to disburse.

The company alleges that having taken a decision not to disburse, IFC fraudulently invoiced it for portfolio supervision fees that are payable yearly and are only due a year after the facility has been disbursed.

To make an already bad situation worse for Quantum Oil, the company said IFC is still holding unto the Quantum Oil’s multiple securities used to guarantee the loan, claiming non-payment of the fraudulently issued invoice, an amount of less than $100,000, knowing very well the effect and huge cost to Quantum Oil of doing so.

It questioned portfolio supervision fees of $100,000 which could not have been due since the loan had not been disbursed.

Quantum Oil alleged that this action has been designed by the IFC culminated to make it difficult for them to raise the needed funding from other sources to complete their tank farm facility still standing uncompleted when it should have been completed and in operation more than 2 years ago.

Quantum Oil said the $41.3 million includes fees and charges paid directly paid to IFC and OPEC Fund, fees and charges paid to various consultants at the direction of IFC and OPEC Fund and statutory fees paid by plaintiff to create charges for the benefit of IFC and OPEC Fund.

Quantum Oil said rather than assisting it to develop and grow its business, IFC and OPEC Fund rather worsened and reduced Quantum Oil’s business fortunes and prospects and in the process, rendered Quantum Oil poorer than before.

It is seeking $4,200,000 being cost of escalation in the project due to delay occasioned by defendants, $681,050 being fees and charges paid by plaintiff directly to the defendants, $331,015 being various consultancy defendants directed plaintiffs to pay and $9,645,582 being lost interest income on funds spent by plaintiff on the project prior to defendants’ breach.

In addition, Quantum Oil seeks $2,430,808 as additional interest cost to be incurred by plaintiff on the project due to defendant’s breach to disburse the loan thus causing delay in the execution of the project, $17,520,882, being lost business revenue to its associated trading company as a result of defendants’ breach and $6,509,786 being lost margins to Cardinal Petroleum Limited directly attributable to delay in the project resulting from failure to disburse the loan by defendants.

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