Nigeria’s premier financial institution, First Bank of Nigeria Limited, has come on strong with its own version of what transpired in a commercial transaction between it and General Hydrocarbons Limited (GHL) that is currently a subject of litigation.

In a release made available to ADNEWS, the financial powerhouse said, as a responsible and law-abiding corporate citizen of Nigeria with utmost respect for the courts, though it will not be able to offer comments on issues which are pending for determination by the courts, as such issues are sub-judice, is constrained to issue clarifications to correct “the sponsored but false narratives on the matter presented in some of the media publications”.

According to the bank, there is a subsisting commercial transaction between it as lender, and GHL as borrower, where it 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,” the bank explained.

The statement pointed out that 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.”

The bank posited that it is therefore incorrect to assert that it abused the process of the court.

Narrating what further transpired, the bank stated: “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.”

In the light of these developments, the bank, in the release, reassured its numerous publics - customers, stakeholders and the general public – of its resolve to continue to provide first-class services within and outside the country, and appealed to them to remain solid, calm, steadfast and unflinching.

“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,” the bank said.

The bank also thanked shareholders for the indicatively oversubscribed Rights Issue of its parent Company, First Holdco Plc (“FirstHoldco”), in the first round of its capital raise and looked forward to an equally successful final leg of the recapitalization exercise when it is announced by FirstHoldco.