First Bank Tackles Nduka Obaigbena over Soured Loan Deal

First Bank Tackles Nduka Obaigbena over Soured Loan Deal

First Bank of Nigeria Limited has explained its side of the story over busted deal entailing series of credit facilities with Nduka Obaigbena’ General Hydrocarbon Limited. The oldest listed financial institution valued at N1.024 trillion in the stock market latest reaction revealed a decision not to give up its pursuit for debt recovery in a busted sweetheart deal.

The Federal High Court sitting in Lagos restrained commercial banks in Nigeria from releasing or dealing with all monies and assets up to $225.8 million due to Obaigbena from any account maintained by him.

First Bank had filed a debt-recovery suit against Mr Obaigbena and his family members, including Efe Damilola Obaigbena and Olabisi Eka Obaigbena, saying they used their oil servicing firm General Hydrocarbons Limited to assume debt of about $718 million.

At least $225 million had been frozen in bank accounts run by the Obaigbenas as part of the order, which was issued by Justice Deinde Dipeolu in suit FHC/L/CS/2378/2024. The judge also said all banks licensed to do business in Nigeria should immediately seize all financial transactions to the Obaigbenas and laundry of businesses linked to them.

In the January 9, 2025, letter from their lawyers, Abiodun Layonu & Co., the Obaigbenas argued that First Bank was trying to force them to take responsibility for up to $718 million in delinquent loans against Atlantic Energy.

The lawyers warned First Bank of “grave legal implications” for going to another judge to obtain the Mareva order when a separate federal judge already had a previous injunction prohibiting any actions against the Obaigbenas over the dispute.

The lawyers cited a December 12, 2024, judgement by Justice Lewis Allagoa of the Lagos Division of the Federal High Court, which “unequivocally and emphatically restrained First Bank from taking any steps whatsoever to enforce any security, receivables, instrument, financial documents, or assets of our clients pending the hearing and determination of the ongoing arbitration proceeding between our client and the FBN.”

In an official statement, FBN said, “Our attention has been drawn to recent media reports regarding a commercial transaction between First Bank of Nigeria Limited and General Hydrocarbons Limited (GHL) that is currently a subject of litigation.

“As a responsible and law-abiding corporate citizen of Nigeria with utmost respect for the courts, FirstBank will not be able to offer comments on issues which are pending for determination by the courts, as such issues are subjudice.

“However, we are constrained to issue the following clarifications to correct the sponsored but false narratives on the matter presented in some of the media publications”. The lender said there is a subsisting commercial transaction between FirstBank as lender, and GHL as borrower, where FirstBank extended several credit facilities to GHL for the development of some Oil Mining Lease assets.

‘These 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. 

FirstBank said having diligently performed its obligations under the loan agreements, at the root of the present dispute is its demand for good governance and transparency in the transaction, which GHL rejected.

“Upon First Bank’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.

“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.

“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”.

FirstBank said it is the only party that filed a substantive claim against GHL at the Federal High Court and the subject matter of its claim is not identical with the dispute GHL submitted to arbitration.

The official statement said First Bank’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.

Consequently, it is incorrect to assert that FirstBank abused the process of the court, the statement reads.  FBN said GHL off-took crude from the Floating Production Storage and Offloading (FPSO) vessel and diverted the proceeds.

The Bank said 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.

The move was informed as part of an efforts to preserve assets, recover the diverted proceeds, prevent reoccurrences and safeguard its interest. “It is clear to us that the courts do not support or protect illegalities and breaches of contracts”, the statement reads.

Obaigbena claimed its company’s oil mining lease secured under ex-President Muhammadu Buhari saved FBN from declaring huge loss. Navy Intercepts Boat Laden with 100,000 litres of Stolen Crude Oil in Ondo