First Bank of Nigeria (FBN) finds itself embroiled in a major legal and corporate crisis as new details emerge about its dispute with General Hydrocarbons Limited (GHL) over the funding of Oil Mining Lease (OML) 120. The bank’s chairman faces potential arrest for contempt of court after allegedly violating a Federal High Court order that restricted the bank from enforcing security measures against GHL’s assets.
The situation escalated when FBN reportedly obtained an injunction to freeze GHL’s funds worth $225.8 million across Nigerian banks, despite an existing court order prohibiting such actions. In response, GHL has initiated contempt proceedings against the bank’s leadership, including Chairman Otedola and CEO Olusegun Alebiosu.
The conflict stems from FBN’s alleged failure to fulfill its funding obligations for OML 120’s exploration and development. GHL claims the bank’s delays and non-payment have resulted in substantial losses, including $47 million and 217-man days of operational delays. The oil company has announced plans to sue FBN for $1 billion in damages.
Adding to FBN’s troubles, shareholders holding 10% of the company’s shares have demanded an Extraordinary General Meeting (EGM) to remove Otedola from his position as chairman. Key shareholders, including Barbican Capital Limited and Norsworthy Investment Limited, have also expressed opposition to the bank’s proposed private placement and are pushing for a rights issue instead.
The dispute has revealed deeper issues within First Bank’s operations, with GHL alleging that the bank’s agreement helped FBN avoid a N302 billion loan loss provision, enabling it to declare a profit of N151 billion for the year ending December 2021. GHL has questioned whether FBN entered the agreement in good faith, suggesting the bank may have had no intention of meeting its financial obligations.
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Judith Iyoh writes fashion, lifestyle and real estate investment.
