FirstBank Press Release on General Hydrocarbons Account Freeze

First Bank of Nigeria Limited (FirstBank) has issued a press release addressing its ongoing legal and commercial dispute with General Hydrocarbons Limited (GHL).

The bank explained its reasons for obtaining a court order to freeze GHL’s accounts and initiating court action.

The dispute, which has garnered significant public and media attention, centers around credit facilities extended by FirstBank to GHL for the development of Oil Mining Lease (OML) assets.

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In the statement, FirstBank defended its actions as necessary to safeguard its interests and accused GHL of contractual breaches. The bank emphasized that it had fulfilled its obligations under the loan agreements, while GHL allegedly failed to adhere to the agreed terms.

FirstBank claimed that GHL diverted proceeds from crude oil sales meant to repay the loans. To address these breaches, the bank proposed appointing an independent operator to ensure better oversight of the financed assets. However, this suggestion was met with resistance from GHL.

Backstory

Recently Business Times Newspapers reported that Court Freezes $225 Million in Assets Linked to General Hydrocarbons, FirstBank of Nigeria Limited (FirstBank) gave loans to General Hydrocarbons Limited (GHL) to help them develop oil assets. However, FirstBank claims that GHL didn’t follow the terms of the loan agreement.

The court’s decision follows allegations of unpaid loans totaling $225.8 million, owed to a financial institution.

The statement

“FirstBank has diligently performed its obligations under the robust loan agreements executed with General Hydrocarbons Limited. These agreements clearly define the responsibilities of both parties and include comprehensive security arrangements.

At the root of the present dispute is FirstBank’s demand for good governance and transparency in the transaction. Unfortunately, these demands, aimed at ensuring accountability and protecting stakeholder interests, were outrightly rejected by GHL,” the statement read.

“Upon realizing that there were breaches on the part of GHL, including the diversion of proceeds from crude oil off-takes, FirstBank requested that an independent operator, mutually acceptable to both parties, be appointed. This operator would ensure the financed assets were operated transparently, bringing greater visibility to the project, protecting the interests of stakeholders, and ensuring value creation. GHL, however, refused this reasonable and fair request,” the statement continued.

The bank further claimed that GHL escalated the situation by demanding additional funding without fulfilling its prior obligations.

“Rather than address the legitimate concerns raised by FirstBank, GHL not only rejected the request for transparency but also insisted on the disbursement of more funds. GHL refused to execute the terms stipulated by the bank for the availment of additional funding, instead choosing to initiate arbitral proceedings, which we regard as needless given the circumstances,” the statement added.

FirstBank also criticized what it described as a deliberate media campaign to misrepresent the facts of the dispute.

“We are constrained to issue clarifications to counter the false narratives being propagated in certain media outlets. These narratives, which appear to be sponsored, are misleading and fail to capture the true nature of the dispute. FirstBank remains committed to transparency and fairness, and we will not be swayed by media blackmail aimed at pressuring the bank into compromising its principles,” the statement said.

FirstBank clarified its legal position, stating that its substantive claim at the Federal High Court is distinct from the arbitration initiated by GHL.

“FirstBank is the only party that filed a substantive claim against GHL at the Federal High Court. Our claim pertains to subsequent credit facilities granted to GHL, governed by offer letters and finance documents that explicitly require disputes to be resolved in a court of competent jurisdiction in Nigeria. GHL, on the other hand, approached the Federal High Court solely to seek preservative orders pending arbitration. While some of these orders were granted, others were denied,” the statement explained.

The bank justified its court action as necessary to protect its interests in light of GHL’s alleged breaches.

“As a secured lender, FirstBank had no choice but to approach the court for legal remedies. This was imperative given the continued breaches, non-payment of due obligations, and attempts by GHL to shield the bank from agreed security and repayment sources. These actions were taken to preserve assets, recover diverted funds, prevent further breaches, and safeguard FirstBank’s interests,” the statement concluded.

The outcome of the legal and arbitration proceedings will have significant implications for both parties and may set a precedent for similar cases in the future.

Download the FBN press release statement here