Eland International demands US$106 million from NIB
Lawyers for Indian-based firm Eland International are demanding an amount of US$ 105,564,876.72 from the National Investment Bank being outstanding balance plus interest of proceeds accruing from the sale of goods under a Collateral Management Agreement (CMA).
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Eland is making the demand on the back of what it says is a breach of the CMA it entered into with the NIB on November 10, 2001.
A letter by lawyers for Eland International detailing the demands warns that the company would have no option but “take all the next legal and reasonable options available,” to protect its interest if NIB fails to retire the indebtedness.
Among other roles, duties and responsibilities under the CMA, Eland was to:
1. Make arrangements to discount promissory notes issued/guaranteed/avalised by NIB and bear the costs of all interest/discount in the international market and all other allied costs.
2. Ensure that it supplies goods of contracted quantity and quality in a timely manner as per the requirements of the market to be communicated by NIB.
3. Ensure at all times that the agreed value of the goods always exceeds the principal amount guaranteed by NIB to the extent of at least 10% of the guaranteed amount in order to hedge Eland and NIB against any damage to goods in transit, foreign currency fluctuations, etc., and
4. Supply 2% extra bags/packing material for all items and also supply the re-bagging material so that any damage to the goods in transit can be reduced by re-bagging by NIB and Eland Ghana”.
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According to Eland, it proceeded in furtherance of its obligations under the CMA, to remit a one-time collateral management fee of US$109, 600 to NIB on 28th January, 2002 and thereafter, supplied various items and commodities, especially rice but after over 10 years since the CMA was executed and in breach thereof, the bank has only made a part payment of US$33, 161,027.79 out of an escrow account for the goods supplied.
It said the NIB failed or refused to give a fair and truthful account of the sale proceeds of all goods delivered to the warehouse while several demands and reminders to the Bank to repay the outstanding balance have been ignored.
“It is blindingly obvious that your conduct as recounted above amounts to a wilful breach of the terms and conditions of the CMA and is not good enough to hold on to the hard earned money of our client in that manner or at all. To our mind, the foregoing appears to be nothing but undressed injustice.
“Accordingly, we have our client’s instructions to demand and we hereby demand the repayment of the sum of US$ 105,564,876.72(which sum includes interest as at April 30, 2011) pursuant to the said CMA within7 days of your receipt of this letter,” cautioned the letter.