Bank of Credit and Commerce International (Overseas) Ltd and Another -v- Akindele; ChD 1999

Chief Akindele agreed in 1985 with ICIC Overseas to invest US$10m in the purchase of 250,000 shares of BCCI Holdings, and to hold the shares for two years. If he wanted to sell the shares after the expiry of two years and up to five years from the date of the agreement, ICIC Overseas undertook to sell the shares at a price which would give him a return of 15% per annum on his investment, compounded annually. In 1988 Chief Akindele decided to terminate the agreement and did so by an agreement (the divestiture agreement) under which he was paid a total of US$ 16.679m. The fraud underlying the 1985 agreement was a fraud being carried on by BCCI, namely the purchase of its own shares through nominees, including ICIC Overseas, financed by “dummy” loans made to the nominees by companies within the BCCI group. In order to disguise from its auditors and regulators that the dummy loans were in fact non-performing, real money had to be raised and raised in such a way as not to create balance sheet liabilities. Offering Chief Akindele the opportunity of investing on the terms of the 1985 agreement achieved that aim. BCCI claimed that Chief Akindele was liable as a constructive trustee both on the grounds of “knowing assistance” and, in relation to the 1988 divestiture payment, on grounds of “knowing receipt”.
Held: the Court applied to both questions the test of whether the defendant had been dishonest by the objective standard.

Court: ChD
Date: 01-Jan-1999
Judges: Carnwath J
References: [1999] BCC 669,
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