First Bank of Nigeria (FirstBank) has accused General Hydrocarbons Limited (GHL), owned by Nduka Obaigbena of fund diversion and refusal to follow sound corporate governance and transparency in the execution of $225 million loan granted to the company.
In a public statement issued yesterday, the bank confirmed that it extended several credit facilities to GHL for the development of some Oil Mining Lease assets.
The bank accused GHL of taking crude from the Floating Production Storage and Offloading (FPSO) vessel and diverting the proceeds.
“The bank had no choice as a secured lender, under these circumstances of continued breaches, non-payment of due obligations and attempts to shield the bank away from agreed security and repayment sources, than to approach the court for legal remedies, to preserve assets, recover the diverted proceeds, prevent reoccurrences and safeguard FirstBank’s interest,” FirstBank said.
According to FirstBank, the facilities are backed by very robust loan agreements executed by the parties in which the obligations of the parties are clearly defined and the security arrangement clearly spelt out.
“While FirstBank has diligently performed its obligations under the loan agreements, at the root of the present dispute is FirstBank’s demand for good governance and transparency in the transaction, which GHL rejected,” it said.
“Upon FirstBank’s realization of breaches on the part of GHL including diversion of proceeds, FirstBank requested that an independent operator mutually acceptable to both parties be appointed in line with the terms of the agreement, to operate the financed asset in a transparent manner that will bring greater visibility to the project, protect the interest of, and bring value to all stakeholders,” the statement added.
“Not only did GHL roundly reject this reasonable and fair request, rather GHL insisted that FirstBank avails it with more funding. GHL refused to execute the terms of offer stipulated by the Bank for the availment of additional funding but rather proceeded to commence needless Arbitral proceedings,” it stated.
According to the bank, GHL issued a notice to initiate arbitration and has no substantive claim pending at the Federal High Court.
“GHL approached the Federal High Court solely to seek preservative orders pending arbitration. Some of the preservative orders sought by GHL were granted while others were denied,” it said.
FirstBank, claimed it was the only party that filed a substantive claim against GHL at the Federal High Court and the subject matter of FirstBank ‘s claim is not identical with the dispute GHL submitted to arbitration because FirstBank’s claim is in respect of subsequent credit facilities granted to GHL and the offer letters and finance documents pertaining to the subsequent transactions clearly state that the disputes arising from the subsequent facilities are to be resolved by a court of competent jurisdiction in Nigeria and not by arbitration.
The bank therefore denied that it abused the process of the court.
“It is clear to us that the courts do not support or protect illegalities and breaches of contracts,” the bank said.
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