The investments and securities tribunal sitting in Abuja has ruled that the operations of Agropartnerships, an agritech crowdfunding platform, are illegal in Nigeria.
The court also ordered that the bank accounts of Agropartnerships, Farmforte, Osazuwa Osayi, and Osayimwense Uyi — “used for unlawful capital market operation” — should be frozen.
The five-member panel of the tribunal led by Abubakar Ahmad, the chairperson, delivered the decision on June 8.
Other members of the tribunal are Nosa Osemwengie, Jude Udunmi, Albert Otesile, and Emeka Madubuike.
BACKGROUND
In the early days of 2022, some investors took to social media to lament how some Nigerian agritech crowdfunding platforms were delaying the payment of returns of their investments.
In January 2022, Agropartnerships, an investment platform powered by Farmforte Limited, appealed to investors to be patient over such delays.
“Several factors including global supply chain challenges and processing machinery breakdowns have contributed to our operational downtimes,” the firm had said.
In February 2022, the firm said it had designed specific payout timelines to settle investors, adding that the COVID-19 pandemic affected its business operations.
Osayimwense Uyi, co-chief executive officer of Agropartnerships, spoke in a video posted on the company’s official Instagram page.
In March 2022, the agritech crowdfunding platform said payouts will resume in July 2022.
Some days later, the Securities and Exchange Commission (SEC) sealed the premises of Agropartnerships and Farmforte for allegedly engaging in illegal investment activities.
The apex capital market regulator accused the companies of carrying out capital market activities without a licence.
THE COURT CASE
Displeased by the operations of Agropartnerships, Farmforte, and other platforms, SEC approached the investments and securities tribunal with a suit seeking to declare the activities of the platforms illegal in Nigeria.
In the suit, the capital market regulator prayed the tribunal to freeze the bank accounts of the defendants and subsequently distribute the funds therein to members of the public who deposited them.
The defendants in the suit are divided into two sets.
The first set is; Farmforte Agro & Allied Solutions, Palmhub Agro-development, Freshforte Retail Services, Forest Capital Limited, Veritas Vision International, Agropartnerships Technology Limited, Cropuscle Investments Limited, Cropuscle Healthcare Limited, Kayvees Ventures, Kayvee Nigeria, Castore Agency Services, Travelforte Services, Agvo Services, Farmforte Ventures, O & B foods, Osazuwa Osayi, Osayimwense Uyi, and Mutiu Adebowale, who are 1st to 18th defendants, respectively.
The second set of defendants are; Access Bank, Ecobank, Fidelity Bank, First Bank, Guaranty Trust Bank, Keystone Bank, Polaris Bank, Providus Bank, Stanbic Bank, Standard Chartered Bank, Sterling Bank, United Bank for Africa, Wema Bank, and Zenith Bank.
Interested parties in the suit are Obironke Adegbulugbe, Paul Okunaiya, Sarah Chidebelu-Eze, Abimbola Odedeyi, Micheal Olowokere, and Esther Olabisi Olowokere.
The suit was initially filed on February 28, 2022, and amended on January 20, 2023.
During the hearing of the suit, SEC argued that the first set of defendants operated an “unregistered collective investment scheme by calling for deposits from unsuspecting members of the public with a promise of guaranteed returns”.
The regulator told the tribunal that members of the public deposited funds in the bank accounts operated by the first set of defendants in the purview of the second set of defendants.
SEC said the first set of defendants had “no clear business model or investment plan” to support the claim they made to unsuspecting members of the public.
The regulator presented Onuoha Onuoha, a police officer, and the six other interested parties, as witnesses.
During proceedings, the first set of defendants — 1st, 2nd, 5th, 6th, 7th, and 18 — did not call any witness to give oral evidence as the statements on oath were put on evidence.
In a joint final written address by the first set of defendants, they argued that the tribunal did not have the “jurisdictional competence” to adjudicate over the matter and that it is not empowered to make final orders of forfeiture.
They also argued that the evidence provided by SEC did not sufficiently prove the case in the suit.
THE COURT RULING
In the certified true copies of the judgment seen by TheCable, the tribunal held that it has the jurisdiction to hear and determine the case as legally backed by sections 284 and 294 of the Investments and Securities Act (ISA) 2007.
“A cursory look at the claims of the claimant against the background of the subject matter and personal jurisdiction of the tribunal discussed above lead to no any other conclusion than that the claims border on capital market activities and as such this tribunal has the exclusive jurisdiction to bear and determine them,” the tribunal said.
“It is therefore our considered opinion that this tribunal has the subject matter jurisdiction to entertain this suit contrary to the submission of the first set of the defendants.”
The tribunal also ruled that the funds discovered in the bank accounts of the first set of defendants should be moved to an interest-yielding escrow account for eventual distribution to interested parties in the case.
“Consequently, it is ordered as follows: the claimant (SEC) to seal up all business premises of the 1st, 6th, 16th, and 17th defendants anywhere found in Nigeria for engaging in unlawful capital market operation,” the tribunal ruled.
“First, 6th, 16th, and 17th defendants to render accounts of their activities since inception till the date of judgment, particularly in respect of the running of Farmforte Agro and Allied Solutions Ltd (the 1st defendant) and Agropartnerships Technology Limited (the 6th defendant) to the claimant.
“All assets traceable to the 1st, 6th, 16th, and 17th defendants wherever found in Nigeria or outside Nigeria to be forfeited and taken over by the claimant for the satisfaction of the claims of the investors.
“First and 6th defendants to pay a penalty of N500,000 each. Sixteenth and 17th to pay a penalty of N100,000 each, in line with section 67(2) of investments and securities act, 2007.”