First Bank Shareholders Seek Removal of Femi Otedola Over Alleged Fraud

A group of shareholders at First Bank of Nigeria Holdings Plc. (FBN Holdings) has called for the removal of Femi Otedola as chairman, citing allegations of fraud, corporate governance concerns, and a lack of transparency. Representing approximately 10% of the company’s shareholders, the group has formally demanded an Extraordinary General Meeting (EGM) within 21 days, as stipulated by Section 215 (1) of the Companies and Allied Matters Act (CAMA). This high-profile case has captured the attention of Nigeria’s financial community, raising critical questions about the balance of power, transparency, and governance within one of the nation’s oldest financial institutions.

Allegations Against Femi Otedola

The shareholders have leveled serious accusations against Femi Otedola, claiming he fraudulently acquired the chairmanship of FBN Holdings. They allege that Otedola leveraged his influence, with the backing of Godwin Emefiele, the former Central Bank of Nigeria (CBN) Governor, and Adesola Adeduntan, the former CEO of First Bank, to secure his current role.

Key Accusations:

1. Improper Clearance:
   Otedola allegedly assumed the position of chairman without obtaining the necessary clearance from the State Security Service (SSS) or the Economic and Financial Crimes Commission (EFCC). These clearances are typically required to ensure that individuals in sensitive financial roles meet regulatory and ethical standards.
2. Control Over Key Executives:
   Once he became chairman, Otedola is accused of orchestrating the removal of key executives, including former Chairman Tunde Hassan-Odukale and others who opposed his leadership style.
3. Corporate Governance Concerns:
   The group of shareholders fears that a proposed ₦360 billion private placement of shares will give Otedola absolute control over the bank, effectively turning it into his “private estate.”

These allegations have heightened tensions within the bank and have led to mounting concerns about Otedola’s leadership.

Stakeholders’ Concerns

The dissenting shareholders have expressed doubts about Otedola’s suitability to lead FBN Holdings, citing historical and recent issues that question his credibility and intentions.

1. History of Non-Performing Loans (NPLs):

Shareholders argue that Otedola may struggle to pass the “fit and proper” test required of individuals in top financial roles. They point to his history with non-performing loans at banks that were eventually sold to the Asset Management Corporation of Nigeria (AMCON).

AMCON was established to recover bad debts from banks and other financial institutions, and Otedola’s prior involvement with NPLs has raised questions about his financial management practices.

2. Afreximbank Loan Controversy:

Stakeholders have also raised concerns about a recent $45–50 million loan granted by the African Export-Import Bank (Afreximbank) to Otedola. Critics allege that the loan is part of a broader strategy to consolidate his control over FBN Holdings during the proposed private placement.

3. Proposed Private Placement of Shares:

The shareholders strongly oppose the planned ₦360 billion private placement, arguing that it lacks transparency and primarily serves Otedola’s interests. They are advocating for the share placement to be conducted through a rights issue or public offering instead, to ensure fairness and accountability.

The lack of transparency in the share placement process has amplified fears that Otedola’s leadership could undermine corporate governance principles at FBN Holdings.

Organizational Shake-Up Under Otedola

Since assuming leadership, Femi Otedola has overseen significant restructuring efforts within First Bank. These changes have been controversial, with critics arguing that they have concentrated power within his inner circle.

Key Developments:

1. Layoffs of Senior Staff:
   In 2024, over 100 senior staff members were laid off as part of a broader corporate restructuring initiative. While the move was positioned as an effort to reposition the bank for future growth, it has been criticized as a tactic to consolidate Otedola’s control.
2. New Leadership Appointment:
   In June 2024, the bank confirmed Olusegun Alebiosu as its new Managing Director and Chief Executive Officer (CEO). Though this move was framed as a step toward strengthening the bank’s leadership, dissenting shareholders see it as another example of Otedola placing loyalists in key positions.
3. Corporate Governance Concerns:
   These organizational changes have raised red flags among stakeholders, who fear that Otedola’s leadership style could undermine the bank’s commitment to fair corporate practices.

Calls for Transparency

The dissenting shareholders are urging FBN Holdings to prioritize transparency and accountability in its decision-making processes.

Key Demands:

1. Alternative Approaches to Share Placement:
   Rather than proceeding with the controversial ₦360 billion private placement, the shareholders are advocating for a rights issue or public offering. These methods would allow all shareholders to participate in the equity raise, ensuring fairness and adherence to corporate governance principles.
2. Regulatory Oversight:
   Shareholders are calling on regulatory bodies, including the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC), to closely monitor the ongoing developments at FBN Holdings.
3. Independent Investigation:
   To address the allegations against Otedola, shareholders are pushing for an independent investigation into his acquisition of shares and his suitability as chairman.

By demanding these measures, the shareholders hope to restore confidence in FBN Holdings and protect the interests of all stakeholders.

Legal and Corporate Implications

The call for Otedola’s removal has significant legal and corporate implications for FBN Holdings and Nigeria’s financial sector as a whole.

1. Extraordinary General Meeting (EGM):

The shareholders’ demand for an EGM within 21 days sets the stage for a critical showdown. If the meeting proceeds, it could determine the future of Otedola’s chairmanship and the bank’s governance framework.

2. Potential Leadership Change:

A successful vote to remove Otedola could lead to a major leadership shake-up at FBN Holdings. This would have ripple effects across the bank’s operations and its standing in the financial sector.

3. Reputational Risks:

The ongoing controversy has already drawn public and media attention, potentially affecting the bank’s reputation and investor confidence.

4. Precedent for Corporate Governance:

This case could set a precedent for how corporate governance disputes are handled in Nigeria. It underscores the importance of accountability, transparency, and adherence to regulatory standards in maintaining trust within the financial industry.

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Broader Implications for Nigeria’s Financial Sector

The allegations against Femi Otedola and the unfolding events at FBN Holdings have broader implications for Nigeria’s financial sector:

1. Corporate Governance Standards:
   The case highlights the need for stricter enforcement of corporate governance principles. Regulatory bodies must ensure that leaders of financial institutions meet the highest ethical and professional standards.
2. Shareholder Activism:
   The dissenting shareholders’ actions demonstrate the growing influence of shareholder activism in Nigeria. This trend could encourage other stakeholders to hold corporate leaders accountable for their actions.
3. Investor Confidence:
   As one of Nigeria’s leading financial institutions, any instability at FBN Holdings could impact investor confidence in the country’s banking sector.
4. Regulatory Oversight:
   The case underscores the critical role of regulatory bodies in monitoring and addressing potential governance issues within financial institutions.

The Road Ahead

The call for Femi Otedola’s removal as chairman of FBN Holdings reflects growing dissatisfaction among shareholders with the bank’s leadership and governance practices. The upcoming Extraordinary General Meeting (EGM) represents a pivotal moment in the bank’s history, with the potential to reshape its leadership and corporate direction.

Key Questions to Watch:

1. Will the dissenting shareholders succeed in removing Otedola as chairman?
2. How will the regulatory bodies respond to the allegations and the proposed private placement?
3. What impact will the ongoing controversy have on FBN Holdings’ reputation and operations?

As the situation unfolds, stakeholders and industry observers will be closely monitoring the outcome of the EGM and its implications for Nigeria’s financial sector.

Conclusion

The allegations against Femi Otedola and the push for his removal as chairman of FBN Holdings have brought corporate governance issues to the forefront. The case serves as a reminder of the critical importance of transparency, accountability, and stakeholder engagement in maintaining trust within financial institutions.

Whether the dissenting shareholders’ efforts succeed or not, the unfolding events are likely to have lasting implications for FBN Holdings and Nigeria’s broader financial landscape. This saga represents a defining moment in the ongoing evolution of corporate governance in the country.