Management of the company are also angry with Stanbic IBTC for aiding a competing brand, Multipro Enterprises Limited, who are franchisees of Kellogs Breakfast Cereals in Nigeria to apply for the same facility after it returned Infinity’s loan back to BoI unjustly.
According to Security Monitor’s investigation, Stanbic IBTC is a financial partner of Infinity Snacks and Beverages Limited, and their relationship was smooth until 2016, when it turned sour following the untidy manner in which the bank handled a loan facility of N864, 420,000, the cereals manufacturing company got from the Bank of Industry (BoI). Infinity Snacks, the manufacturers of Infinity Corn Flakes and Magic Crunch also accused the bank of supporting one of its competitors –Multipro Enterprises Limited, who are franchisees of Kellogs Breakfast Cereals in Nigeria, to access similar facility from the same BoI. As a result of the roles the bank played in frustrating the company, Infinity Snacks and Beverages Limited, had last year through its lawyer, Olumide Sofowora Esq, a Senior Advocate of Nigeria approached the High Court of Lagos State for redress.
In a statement of claim obtained by Security Monitor, the Ijebu Ode, Ogun State based manufacturing company averred that sometime in July 2014, it applied for a loan for its factory expansion from BoI and it received an initial approval for the sum of N934, 029,835 on 19th August 2014.
The company further averred that since one of the conditions for the grant of the facility was the provision of a Bank Guarantee, it immediately notified Stanbic IBTC of the initial approval by email dated August 19, 2014 and requested the bank to start processing the Bank Guarantee. The bank, had in its reply by an email on the same date, was said to have promised to expedite action and ensure that the document was available to the company soonest. By October 26, 2015, when nothing was heard, the company sent another email to the bank, requesting if the bank guarantee would be provided within 48 hours since BoI has communicated its decision to cancel the facility if the bank guarantee was not provided within the said period. Stanbic IBTC was said to have apologized through an email same day and indicated that it would meet the deadline, having reached the approval stage. However, it was not provided until December 1, 2015.
According the company, despite the abnormalities and the fact that the guarantee did not comply with the format earlier provided by BoI, a sum of N864,420,000:00, was eventually disbursed after necessary correction were made, to the bank’s account 9thof May, 2016, but the company was not notified of the receipt of the funds. It was when BOI informed the company of the disbursement of the funds on 17th May, 2016 that the bank in turn promptly confirmed the receipt of the fund. According to the company, they wondered how such amount would hit the account of the bank and it would not be aware of the receipt.
However, the company, through its lawyer, further stated that instead of helping it utilised the money for the importation of machinery for its factory expansion, Stanbic IBTC was said to have continued putting stumbling blocks along the way by tying the said BoI to its loan portfolio granted to Infinity Snacks and Beverages Ltd.
After series of meetings, the company had on June 20, 2016 and June 22, 2016, sent request to the bank to bid for foreign exchange for the purchase of some of the needed machinery for its expansion. The bank was said not to have initially replied and when it did, after persistent requests, it said there was no foreign exchange supply in the market. Infinity Snacks became bothered because of the possibility of BoI recalling the fund. Meanwhile, while this was going on, the company stated that it had started paying interest to BoI.
At the end, the company discovered that the bank’s promises were all a ploy to frustrate it from the BoI facility because apart from bidding foreign exchange for some of its other customers, who applied for foreign exchange during the same period, Stanbic IBTC was in fact supporting one of Infinity Snacks’ competitor –Multipro Enterprise Ltd. who are the franchisee of Kellogs Breakfast Cereals in Nigeria and it turned out that the bank actually applied for the same BOI facility as the one granted to Infinity Snacks on behalf of Multipro. The company also claimed that the bank also bided for and the procured foreign exchange for two other companies who also got the BOI loan at the same period the company did.
Since the issue got to the public place, not a few analysts have commented and blame government for allowing such to happen in the market without any law in place to checkmate such abnormalities. Aside the dealings between the two corporate customers, the insinuation that the bank intentionally frustrated the first company to pave way for a competing brand, has made it attracted torrents of comments from various quarters.
In an interview with Security Monitor on the matter, the President of the Consumer Advocacy Foundation of Nigeria (CAFON), Sola Salako-Ajulo, said the absence of competition law creates such environment where there are no check and balances to enhance ethical dealings among business owners.
“The case of Stanbic vs Infinity is very worrisome because I don’t understand how a bank that supposes to act in the interest of its customers to help their business to grow now treat them with levity. To me, it wouldn’t have been an issue much if the same bank had not turned around to help a competitor to apply for the same loan it returns from company A to BoI on behalf of company B. For God sake, Kellogs, is a foreign brand that is just looking for the way to penetrate the market, now it is being assisted to frustrate a local brand that employs Nigerians, manufacture for Nigerians at friendly price and source for raw materials locally. For a government that is calling for foreign investment and backward integration, to look away when an existing company, owned locally by Indians, is being pushed out of the market, is disturbing. I can tell you, if the company eventually goes under, it will affect a lot of Nigeria and denied them of the ir daily bread. That is why I will urge the National Assembly to rise up to the occasion and passed the anti-competition law. If the law is in already in place, I bet, the companies would have regulated themselves because they would know the consequence. To this end, I can only call on government to investigate the matter carefully and save the troubled company. From what I gathered, Kellogs had initially approached Infinity that they wanted to buy into its business but the latter declined. Now, can we say it has colluded with Stanbic IBTC to muzzle the local manufacturing company,’’ the activist said.
As things are, the two companies are said to be slugging it out with each other. Stakeholders are however said to be looking for ways to resolve the crisis but it has not been confirmed if government has intervened. It is believed in some quarters that if government, either through relevant agencies or national assembly wade into the matter, the issue may be resolved amicably.
