• FBN Walks Tight rope
By Abiola Olawale
General Hydrocarbons Limited (GHL), a prominent player in the oil and gas industry, has recorded a groundbreaking victory in its ongoing legal battles with Nigeria’s oldest bank, First Bank of Nigeria (FBN), over claims bordering on alleged unpaid loans amounting to $225.8 million by GHL.
This is as the GHL has obtained a court ruling overturning a previous order in favour of First Bank, freezing GHL assets and, indeed, setting aside an order of Mareva injunction, which previously froze the latter’s assets and those of its directors.
This comes as Justice Dehinde Dipeolu of the Federal High Court in Lagos State, in a ruling on Wednesday, vacated an ex parte mareva injunction that froze the assets of GHL regarding a disputed $225.8m loan debt.
The presiding judge held that the order freezing GHL assets violated an existing order from a court of concurrent jurisdiction.
Justice Dipeolu also said when compared with an earlier order issued by Justice Ambrose Lewis-Allagoa in Suit No. 1953, the Mareva injunction should be set aside.
The court found that First Bank of Nigeria and FBNQuest Ltd had failed to fully disclose Justice Lewis-Allagoa’s order, which made the injunction assailable, incomprehensible, and incompatible with the earlier cited ruling. The court further ruled that FBN evidently failed to disclose that material fact, thereby suppressing facts that misled the Court into granting an order against General Hydrocarbons Ltd.
The judge ruled that in the circumstance, the court has no choice but to order the de-freezing of GHL and its director’s accounts.
This latest development has triggered major concerns in First Bank as stakeholders, shareholders, and industry experts weigh various options for financial experts.
According to a major international accounting and auditing firm, which wishes to remain anonymous at this stage, the massive publicity that these legal battles have generated will impact very negatively on First Bank in its financial report for 2024.
According to the global accounting firm, FBN being a quoted company, and the global community has now been apprised of this raging issue, the rule and protocols require that FBN auditors MUST make full disclosure and provision for the GHL loan as a hazy and disputed debt as required “by banks prudential guidelines and financial reporting standards.” He added:” If that full provision is made for the entire disputed subject matter and the full amount of money in dispute, this will adversely impact the profitability status of FBN and its share price being a quoted company on the Nigeria Stock Exchange.”
It would be recalled that on December 30, 2024, Justice Dipeolu of the Federal High Court Lagos State had initially granted an ex-parte order restricting all commercial banks from releasing or dealing with any assets or monies belonging to General Hydrocarbons Limited, its agents, subsidiaries, or sister companies up to the amount claimed by First Bank.
However, the GHL, through its legal counsel, a Senior Advocate of Nigeria(SAN), Abiodun Layonu, approached the court, challenging the order and arguing for the order to be vacated quickly and speedily.
Layonu argued that First Bank’s suit, which led to the court giving the asset-freezing order, represents an abuse of the court process, and should accordingly be vacated.
He had also maintained that the bank failed to disclose an earlier order granted by Justice Ambrose Lewis-Allagoa which restrained the bank from taking further action to recover the loan until the parties subjected themselves to arbitration.
Layonu asked the court to dismiss the Mareva Injunction, arguing that the court was misled into granting it, asserting that the same has caused grave financial harm to GHL.
In a counter-argument, First Bank, through its counsel, also a Senior Advocate of Nigeria,(SAN) Victor Ogude, opposed the move and asked Justice Dipeolu to uphold his order freezing the assets of GHL.
This comes amidst escalating disputes, arguments, and counterarguments between General Hydrocarbons Limited (GHL) and First Bank.
The dispute centres around a loan or series of credit facilities purportedly extended by First Bank to GHL for the development of Oil Mining Lease (OML) assets.
The relationship was formalized through a Subrogation Agreement in May 2021, where First Bank was to fund GHL’s exploration and development activities in exchange for a share of the profits from oil proceeds.
GHL denied the claims by FBN, saying First Bank failed to meet its funding obligations under the agreement, which has led to operational setbacks, including the loss of significant equipment like the Blackford Dolphin drill ship.
The development also comes amidst an ongoing struggle and war for control over First Bank Holdings Plc between Chairman Femi Otedola and billionaire business mogul and one of Nigeria’s most legendary investors, Oba Otudeko.
This also comes days after it was reported that Oba Otudeko was, in fact, leading concerned shareholders of First Bank of Nigeria Holdings Plc (FBN Holdings) to initiate a move to trigger a shake-up in the leadership of the company’s Board in a bid to oust Otedola as chairman.
It was gathered that the shareholders of First Bank Holdings Plc are still currently pushing for an extraordinary general meeting (EGM) to accomplish that goal.
The New Diplomat’s checks reveal that most stakeholders declared that the demand for the EGM is in line with section 2615 (1) of CAMA, in which case they have 21 days to call the EGM.
It was gathered that the key focus of the upcoming meeting is to discuss and explore likely ways for the possible removal of Femi Otedola from his position as chairman, along with the potential removal of one Julius B. Omodayo-Owotuga from his role as a non-executive director.
The stakeholders explained that the demand for the EGM comes amidst concerns over governance and control issues within the bank.
They added that the call for this EGM is to address allegations that Otedola has exerted too much control over the bank since he emerged as Chairman, facilitated by the immediate past governor of Central Bank Governor (CBN), Godwin Emefiele, who is facing several corruption charges.
Critics among the shareholders have expressed concerns over corporate governance and ethical issues, fearing that with a proposed N360 billion private placement, Otedola could gain very strong control over the financial institution, a move that could trigger conflict of interest and corporate governance concerns.
It would be recalled that this situation is reflective of a broader power struggle within First Bank, where the battle for control and, indeed, war among major and critical shareholders has been fierce.
Recall that Oba Otudeko, a matured and distinguished investment guru had initiated a legal action against FBN Holdings, seeking a court order to compel the financial institution to recognise his investment vehicle, Barbican Capital, as the largest shareholder in the bank. If he succeeds, this would effectively block Otedola from gaining recognition as the largest single shareholder in First Bank Holdings.
Otudeko, in the lawsuit (no. FHC/L/CS/1172/24), maintains that Barbican Capital owns a 15.01 per cent stake amounting to 5.38 billion units.
However, the bank insists that Otedola, who holds a 9.41 per cent share, is the largest shareholder.
