How Multichoice got defrauded of N7.9bn by currency exchange broker

How Multichoice got defrauded of N7.9bn by currency exchange broker

Multichoice Nigeria Limited, a company engaged in the provision of satellite television services across Africa, was defrauded of the total sum of N7.9

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Multichoice Nigeria Limited, a company engaged in the provision of satellite television services across Africa, was defrauded of the total sum of N7.9 billion in a controversial foreign currency exchange deal according to court documents.

The botched foreign currency exchange transaction involved Akintunde Giwa, a currency exchange broker; JNFX Limited, a currency exchange firm; Ashay Mervyn, a representative of JNFX, and Frontier Financial Technologies Limited.

Giwa is a currency exchange broker who earns a commission by assisting those looking to buy US dollars with Nigerian Naira. JNFX is a private limited company incorporated in England and engaged in foreign exchange and international money transfer business. Frontier Financial Technologies Limited is a Nigerian company where Mervyn is a director, court documents showed.

The case was brought before Stuart Isaacs, who sat as a Deputy Judge of the High Court, in the Business and Property Courts of England and Wales. The judgment was delivered remotely to the parties’ representatives by e-mail and released to the National Archives on 2 April.

While the claimant, Giwa, was represented by Matthew Bradley and Rumen Cholakov as instructed by Peters & Peters Solicitors LLP, Joseph Wigley (instructed by Cooke, Young & Keidan LLP) appeared on behalf of the first defendant, JNFX Limited.

Mervyn and Frontier Financial Technologies Limited – listed as second and fourth defendants, respectively – had no representatives in the case.

The claim against the third defendant, JNFX Nigeria Limited, was discontinued and the company was excluded from the judgment.

MultiChoice Nigeria had engaged Giwa and his companies for many years to arrange the exchange of Naira for dollars in connection with MultiChoice Nigeria’s business. According to Giwa, he acted on Multichoice Nigeria’s behalf in arranging with JNFX, under 10 Multichoice contracts, for the exchange of Naira into dollars.

In the proceedings at the UK court, MultiChoice Nigeria assigned its claims to Giwa, whose primary dealings with JNFX were conducted with Mr Mervyn, a representative of JNFX “who had ostensible if not actual authority from JNFX to enter into the MultiChoice Contracts.”

Court documents showed that Multichoice Nigeria Limited paid N7.9 billion (N7,914,209.196.50) to Giwa, the currency exchange broker, who in turn made payments to JNFX Limited, a currency exchange firm, under the MultiChoice contracts. Details showed that the satellite service company paid the Naira into the bank accounts of companies controlled by Giwa and were then sent to bank accounts nominated by JNFX through Mr Mervyn in return for dollars to be paid into an account held at Standard Chartered Bank in London in the name of MultiChoice Africa, another company within the MultiChoice group of companies.

However, no dollar payments (amounting to $16.2 million) were received by the company in return, according to Giwa.

From early 2021, court documents show, Mervyn increasingly instructed Giwa to send the Naira to a bank account held at First City Monument Bank in Nigeria in the name of Frontier Limited. Giwa alleged that JNFX and Mervyn failed to pay into the MultiChoice Account the full equivalent dollar sums or to reimburse MultiChoice Nigeria its Naira. A total of N7.9 billion (N7,914,209.196.50) was paid to JNFX under the MultiChoice contracts for which no dollar payments (amounting to $16,230,369) were received in return.

The tenth and last contract, concluded on 8 September 2021, provided for the conversion of N4.9 billion into $10 million but no dollar sum was paid in return for the Naira amount paid.

Meanwhile, the court documents showed that Mervyn and Frontier, a Nigerian company where Mervyn is a director, have not responded to the claims against them and have taken no part in the proceedings.

Interestingly, Mervyn had been declared wanted by the Economic and Financial Crimes Commission (EFCC) in an alleged case of obtaining money under false pretence and fraudulent conversion of funds. The UK court said that his whereabouts are unknown, and a worldwide freezing order (WFO) had earlier been granted against him and Frontier in 2022 but was discontinued in June 2023.

JNFX in its argument stated, among others, that Mr Mervyn lacked actual authority to enter into the Multichoice contract and act as its agent.

In his arguments, Giwa, on whom the burden of proof lies, submitted that JNFX has no realistic prospect of showing that Mervyn is not guilty of deceit and lacked ostensible authority to act as its agent in entering into the MultiChoice contracts and that it is not therefore liable for Mervyn’s deceit. He also argued against the claim that JNFX would not in any event have been obliged to fulfil any of its obligations under the MultiChoice contracts due to the requirement in its standard terms of business which would have governed them that all payments to it must be made to a bank account in the name of JNFX.

JNFX on its part argued that the quantum of Giwa’s claim should be reduced to $8.4 million ($8,429,369) in light of dollar payments made by it for which no credit has been given, adding that his application raises complex issues of fact which need to be the subject of disclosure and evidence at a trial.

Giwa submitted that the defendants have no real prospect of defending the claim and that there is no other compelling reason for a trial. He argued that he is entitled to summary judgment; and that the amended defence discloses no reasonable grounds for defending the claim. JNFX, on its part, submitted that its defence has a real prospect of success, and that summary judgment should therefore be refused.

JNFX argued that the failure of Mervyn to fulfil his intention and execute the exchange contract is not evidence of the falsity of those intentions when made. Based in particular on the evidence of JNFX’s solicitors, the company claimed that it was “perfectly possible” that Mr Mervyn only subsequently got into difficulties related to the depreciation of the Naira against the dollar which resulted in his original intentions not being able to be fulfilled.

The court agreed that the matters presented by Giwa are not themselves evidence of the falsity of Mervyn’s intentions on which the contractual agreements are founded. But when taken together with all the other matters relied on, the court rejected JNFX’s solicitors’ alternative explanation as the more plausible explanation.

Commenting on JNFX’s claim that Mervyn had no actual authority to represent the company, the court dismissed the claim and agreed with Mr Giwa based on the facts that Mr Mervyn corresponded from a JNFX email address, was described in the emails’ signature block as JNFX’s “Head of Global Markets” with the contact and website details of JNFX given, and also described himself as “Head of Emerging Markets”.

“Importantly, it is also clear that Green (JNFX’s managing director) and Eisenberg (of JNFX) were aware from having been copied into or forwarded communications from Mervyn to Giwa and third parties such as MultiChoice and Dubai Islamic Bank of the role being claimed by Mervyn and at no time disclaimed that role or indicated that he lacked the authority to transact the business which he was transacting,” the court ruled.

After reviewing the various arguments and evidence presented by the parties, the court held that Giwa is entitled to summary judgment in respect of his claim of deceit against JNFX and Mr Mervyn in the sum of N7.9 billion (N7,914,209.196.50) together with interest.

It also held that JNFX’s defence be struck out to the extent that it pleads a defence to the claim of deceit, and refused permission to amend JNFX’s defence in so far as the amendments relate to a defence to the claim of deceit.

“The application for summary judgment or to strike out JNFX’s Defence so far as concerns the contractual claim against JNFX is dismissed and that claim shall proceed to trial,” the court held.