- Advertisement -
A Federal High Court in Lagos has issued a restraining order against First Bank of Nigeria (FBN) Holdings regarding its dealings with assets of General Hydrocarbons Limited (GHL). The court also directed that no actions be taken to enforce any security or agreements tied to GHL’s operations of Oil Mining Lease (OML) 120.
The court order, meant to preserve the status quo pending arbitration proceedings, comes amid allegations of breach of contract and mounting shareholder dissatisfaction with the bank’s leadership under its Chairman, Femi Otedola.
Court Order and Allegations
The restraining order prevents First Bank and its agents from taking steps to enforce agreements or seize assets related to GHL’s oil exploration and development of OML 120.
Advertisement
Violation of Court Order
Despite the restraining order, First Bank reportedly obtained a separate injunction to freeze GHL’s accounts and assets worth $225.8 million in commercial banks across Nigeria. This has prompted GHL to file contempt proceedings against the bank, Otedola, and other directors, including Managing Director Olusegun Alebiosu.
GHL alleges that First Bank’s actions are an attempt to frustrate its operations and seize its bona fide assets, contrary to the signed memorandum of understanding (MOU) between the two parties.
GHL’s Claims Against First Bank
GHL has accused First Bank of breaching its contractual obligations, causing severe financial losses, and undermining the company’s operations.
Key allegations include:
- Failure to Fund Operations: Delayed disbursement of $25 million for drilling operations, resulting in standby costs of $500,000 per day for the Blackford Dolphin rig.
- Non-Payment of Staff and Operational Costs: First Bank allegedly neglected to cover salaries and expenses, despite contractual obligations.
- Exposure to Penalties: GHL claims it faced over $15 million in penalties due to First Bank’s failure to pay for a TotalEnergies farm-out agreement.
GHL is now suing First Bank for $1 billion in damages over the alleged breach of contract.
Shareholder Discontent with Otedola
The restraining order and legal disputes come as shareholders of First Bank Holdings intensify their opposition to the leadership of Femi Otedola.
Calls for Leadership Change
A group of shareholders representing 10% of the company’s shares has formally requested an Extraordinary General Meeting (EGM) to:
- Remove Femi Otedola as Chairman.
- Replace other directors, including Deputy CEO Julius B. Omodayo-Owotuga.
- Limit the bank’s capital raise of ₦350 billion to a rights issue, rather than a private placement.
Concerns Over Private Placement
Shareholders, including Barbican Capital Limited and Norsworthy Investment Limited, have expressed strong objections to the proposed private placement, arguing that it bypasses existing shareholders and risks consolidating control in Otedola’s hands.
Broader Implications
The ongoing legal and shareholder disputes raise questions about governance and transparency at First Bank Holdings. GHL alleges that First Bank used its relationship with the oil firm to avoid a ₦302 billion loan loss provision, ultimately boosting its profitability but failing to honor its commitments.
Potential Arrest of Otedola
Otedola, along with other executives, faces potential arrest for contempt of court over alleged violations of the restraining order.
Next Steps
As the legal battles and shareholder dissent unfold, both First Bank and GHL are preparing for arbitration and further court hearings. The upcoming EGM will likely determine the future leadership and direction of Nigeria’s oldest financial institution.
With accusations of contract breaches, financial mismanagement, and governance lapses, the stakes are high for First Bank, its shareholders, and its leadership. The outcome of these proceedings will significantly impact the bank’s reputation and operations in the coming months.
