First Bank of Nigeria Limited (FirstBank) has addressed recent media reports surrounding a commercial transaction with General Hydrocarbons Limited (GHL), currently a subject of litigation.
In a statement released on Tuesday, the bank clarified that while it cannot comment on matters pending before the courts due to the principle of sub-judice, it is necessary to correct certain inaccuracies presented in some reports.
FirstBank outlined that the dispute stems from a subsisting commercial relationship where the bank extended credit facilities to GHL for the development of Oil Mining Lease assets. These facilities, it stated, were governed by robust loan agreements with clear obligations and security arrangements.
“At the root of the present dispute is FirstBank’s demand for good governance and transparency in the transaction, which GHL rejected,” the bank said.
The statement noted that breaches by GHL, including the diversion of proceeds from the financed assets, prompted FirstBank to request the appointment of an independent operator mutually acceptable to both parties. This request, aimed at ensuring transparency and safeguarding stakeholder interests, was rejected by GHL.
“Rather than comply with this reasonable request, GHL insisted on more funding, refused to execute the terms of offer stipulated by the bank, and proceeded to commence arbitration,” FirstBank added.
FirstBank clarified that while GHL sought preservative orders at the Federal High Court, the bank has filed a substantive claim against GHL regarding subsequent credit facilities.
These facilities, according to FirstBank, explicitly stipulate that disputes are to be resolved by Nigerian courts and not through arbitration.
“It is incorrect to assert that FirstBank abused the process of the court,” the statement read.
The bank alleged that GHL diverted proceeds from crude off-taken from a Floating Production Storage and Offloading (FPSO) vessel, leading to breaches of their agreement. FirstBank emphasized that it sought legal remedies to preserve assets, recover diverted proceeds, and safeguard its interests.
“The courts do not support or protect illegalities and breaches of contracts,” the statement added.
Reaffirming its commitment to supporting legitimate business aspirations, FirstBank emphasized its dedication to fostering a strong credit culture where borrowers meet their repayment obligations.
“FirstBank remains steadfast and unflinching in its resolve to provide first-class services to its customers while ensuring borrowers honor their commitments,” the bank stated.
The statement also expressed gratitude to shareholders for the oversubscription of the Rights Issue of its parent company, First Holdco Plc, during the first phase of its recapitalization exercise.
