Law & Policy, Music Business

Was it Ethical for Jude Okoye, as President & CEO of Square Records, to Sign JTON Records’ Cynthia Morgan to his Personal Label?

We are all abreast of the news that P-Square signed an artist formerly with JTON Records, owned by Joy Tongo, to their label Northside Music Inc. However, upon the news breaking, Nigerian bloggers began wondering if Cynthia Morgan would suffer the same fate as May D. This must have disturbed Jude Okoye, part of the P-Square Square records company, because he took the time to announce through Linda Ikeji and Thenetng.net that Ms. Morgan was signed to his own personal label called Northside Music Inc. rather than Square Records.

When I saw that emphasis which came with a little bit of “una no no book,” tone to it, I felt it ought to be discussed because, in my view, the public and fans are right in their perception, rather than the other way around.

First, for the benefit of persons who do not know Jude Okoye, Jude Okoye is the eldest brother of Paul and Peter Okoye (twins). The twins make up the band called ‘P-Square.’ On the continent, they are megastars. In Europe (UK and France especially), they have gained and made some solid strides among music lovers. In the US, among the African diaspora, they are also a huge hit. In terms of America, as of last year, they linked up with Rick Ross and did a remix to one of their songs that was just dope and just a few weeks ago, Jermaine Jackson gave a shoutout to the duo for the great tribute they paid to the late Michael Jackson. In short, they are very good.

However, P-Square also has a third wheel and integral part of their team. His name is Jude Okoye, a man that thought to even start the band and has managed the duo to success. Jude is the President and CEO of Square records. Presumably and there is no evidence to refute this, Jude also holds shares/stocks in Square records. There has been no formal appraisal, at least one made to the public, of the value of the company. Nevetherless, given their catalog of music, their music distribution deal with Universal Music Group (June 2012), real estate investments, mansions, jet lifestyle et al., it can be fair to say the value of the company is well within, at least, more than US $1million, if not more.

So, that’s the background of this trio. Now, let’s get back to Jude Okoye, our central focus for this article.

Jude Okoye as an officer and President of Square records, as you all know or should know, has certain obligations, under Nigerian Company (Business) Law which run very parallel to Corporate or Business law in many of the states here in the USA.

What are these obligations?

First, understand that Square Records is NOT Peter or Paul or even Jude Okoye. I explained this concept during the D’Banj v Don Jazzy Mo’Hits debacle and again during the Obi Asika v. Olisa Adibua debacle. The corporation itself is a separate entity from its owners/shareholders. For Company/Business Law purposes, we treat the business as a separate “person” or human being.

Second, Jude as an officer of Square Records owes square records the following duties, among others:
a) an undivided and unqualified loyalty;
b)a good faith duty and degree of care as the average person in a similar position;
c) Jude cannot profit personally at the expense of Square Records, and he cannot allow his private interest to conflict with that of Square Records. He acts in the corporation’s behalf and cannot engage in transactions where he is an interested director/shareholder, or in situations where he usurps/steals the company’s opportunity.

Let’s talk about usurping a corporate opportunity.What does that mean?

a) If Square Records can financially undertake a transaction that Jude wants, guess what? It goes to Square records.
b) If Square Records has an interest or reasonable expectation of interest in a transaction and it will give an advantage to Square Records, and Jude wants it, guess what? It goes to Square Records.
c) If the transaction is logically related to the kind of business Square records runs and Jude wants it, guess what?  It goes to Square Records and it is not relevant sef that Square Records says “no, you keep it.”

Now let’s apply some of these basic legal principles to the facts here.

1. Jude Okoye is President and CEO for Square Records. He is also President and CEO of Northside Music Records.
2. Cynthia Morgan a seemingly strong artist shows up through JTON Records at Jude’s door. Who should get Cynthia?

The obvious answer is Square Records. Why? Well Jude has a fiduciary duty and undivided loyalty to Square Records. Also, there is a clear conflict of interest. Jude runs Square Records and Jude an officer/director/shareholder is busy trying to run a music label side by side with Square Records. He is competing with Square Records and taking the opportunity the label would and should have for himself.

We saw a situation like this in the M.I Loopy v. M.I Chocolate City case and I asked the same question there. M.I ultimately said he was no longer an officer for Chocolate City (CC). He is a Loopy man, he runs Loopy and has his music dealings in the capacity of an artist with CC. Anything to the contrary would create major issues for all down the line.

Now, even though there is a conflict, can Jude sign Cynthia to his personal label? Sure. So long as he can show the deal was fair and reasonable, or he disclosed it to the twins and they agreed and approved the deal, among other things. Again Nigerian company law and the corporations laws in the USA lay out all of these factors which parallel each other.

Assuming, which is most likely the case that Jude, the eldest brother, told his young brothers and business partners about the Cynthia  Morgan deal and they approved, is he out of the clear on the conflict? No. Beyond a duty of care and loyalty imposed on him under these facts by the law, there are a few other things to look at:

1. Siblings Working Together: In my experience representing clients, especially in business litigation matters, the worse kinds of battles are those involving family. EVERYONE NEVER believes they will have a falling out with their siblings, cousins, mom, dad etc. because it’s blood, it’s family.

There is a presumption that they know you so well and you them. It ain’t true, really. Money, managing money, and doing business together brings all kinds of personalities/character out of people you never knew possible, even if they are family.

Jude has been clear he is stretched thin in so many interviews, I lost count. He micro manages on so many levels and the result so far seems to be working very well for Square Records. Nevertheless, taking on this new talent under a different label, his personal label, would create an inherent and inevitable conflict and will result in two things: a) Cynthia ultimately being neglected; or b) Jude using Square Records resources, people and management for Northside Music and getting the books mixed up.

This is because it just is humanly tough to try to be very disciplined managing two competing businesses in the exact same category of which you are the President of both companies. It is very tough.

2. The Artist View: If you are the artist, you gotta think hard on what sense it makes signing with Northside Music Records. under these circumstances. Yes, your music will most likely be played on the radio, yes you have the name of Jude Okoye of “P-Square” to give you that cloak of protection but as an artist, what does that mean when it comes to your career at the present moment, and what lies ahead.

If Square Records has a distribution deal with Universal Music Group, why are you with Northside Music Records? What happens to your career when P-Square is preparing to put out music, touring etc. and your oga has to be there? Granted you have a manager but still.

3. For the Manager: More facts have emerged that Joy Tongo has traded her “ownership,” for lack of a better word of Cynthia Morgan under JTON Records to take on an artist-manager role in Nigeria. I think, as stated in a prior article, this is not a bad move. However, with the rate artists are losing both their managers and labels, I wonder what happens when Cynthia Morgan wants to go a different direction i.e. move on with Jude but replace Tongo? The talent that should have been signed with Square Records/Northside music i.e. Retta packed her bags in March of this year, allegedly. Who is to say that won’t happen with Cynthia? Does Tongo then lose out such a big talent and what is her recourse?

AML people, industry, I’d like to know your thoughts on the dual seemingly conflicting role Jude is playing. Kini big deal, if at all? Please rub minds and help elevate mine.

Cheers,
Uduak

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AFRICA MUSIC LAW™ (AML) is a pioneering music business and entertainment law blog and podcast show by Fashion and Entertainment Lawyer Ms. Uduak Oduok empowering the African artist and Africa's rapidly evolving entertainment industry through brilliant music business and entertainment law commentary and analysis, industry news, and exclusive interviews.

Credited for several firsts in the fashion and entertainment industry, Ms. Uduak is also a Partner and Co-Founder of Ebitu Law Group, P.C. where she handles her law firm’s intellectual property law, media, business, fashion, and entertainment law practice areas. She has litigated a wide variety of cases in California courts and handled a variety of entertainment deals for clients in the USA, Africa, and Asia.

Her work and contributions to the creative industry have been recognized by numerous organizations including the National Bar Association, The American University School of Law and featured in prestigious legal publications in the USA including ABA Journal and The California Lawyer Magazine. She is also an Adjunct Professor at the prestigious Academy of Arts University in San Francisco.
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