First Bank accuses General Hydrocarbons of diverting funds, evading payment
First Bank of Nigeria Limited has declared that its ongoing legal battle with General Hydrocarbons Limited (GHL) is in response to alleged diversion of funds and visible moves by the borrower to evade payments.
In a circular to shareholders to explain its own side of the widely reported dispute, the bank stated that GHL rejected parts of the terms of borrowing including demand for good governance and transparency in the transaction.
The bank stated that the matter is still sub-judice and that the statement would be limited to areas that are safe for public discourse.
Part of the statement is presented below.
“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.
“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.
“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.
“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 is 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.
“Consequently, it is incorrect to assert that FirstBank abused the process of the court.
“GHL off-took crude from the Floating Production Storage and Offloading (FPSO) vessel and diverted 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. It is clear to us that the courts do not support or protect illegalities and breaches of contracts.
FirstBank has a long and very rich history of supporting and providing for the financial needs of its customers over its more than 130 years of unbroken existence. FirstBank remains committed to ensuring that it continues to support legitimate business aspirations of its teeming customers. At the same time, FirstBank is committed to the building of a strong credit culture where borrowers pay their debts when they borrow and will always take appropriate steps, within the ambit of the law, to resist attempts by borrowers to repudiate their repayment obligations.
“We wish to assure FirstBank’s numerous customers, stakeholders and the general public that FirstBank remains solid, calm, steadfast and unflinching in its resolve to continue to provide first-class services to its teeming customers within and outside the country.”
