Ecobank demands rejection of Otudeko’s First Bank comeback over N13.5bn debt

Ecobank Nigeria Limited has demanded the rejection of the recent acquisition of FBN Holdings shares by an entity associated with Oba Otudeko, an erstwhile chairman of the banking group, over an alleged unsettled debt of N13.5 billion.

In a letter to FBN Holdings, Kunle Ogunba, lawyer of Ecobank, accused Otudeko of “diverting his assets and that of the Honeywell Group of Companies through the said Barbican Capital Limited, in order to frustrate the enforcement of the judgment of the Supreme Court against him and the Honeywell companies, towards recovering his/their undisputed indebtedness to our client”.

The development comes after Otudeko staged a comeback with his 13.3 percent stake in FBNH after snapping up 4.7 billion shares through Barbican Capital, an affiliate of Honeywell Group, last Thursday in an N87.8 billion deal.

“We, therefore, demand that you respectfully reject the approval/consent/registration/ratification {howsoever described or in whatsoever manner of the shares bought by the said Barbican Capital Limited held via the afforested entities, as proceeding with such approval/registration will be tantamount to assisting in the diversion of funds/assets meant for the payment of the debt which has been affirmed by the Supreme Court,” Ecobank’s lawyer said in a letter dated July 7, 2023.

“We also hereby demand that you avail us details of the status of the said transaction within the ensuing seven days, noting that as a responsible corporate entity, you are not expected to take any action which may be tantamount and/or construed to encouraging the subversion and/or violation of the extant judgment of the Supreme Court which undisputed mandated the Honeywell companies to pay their outstanding indebtedness {same debt personally guaranteed by the alter ego of the Honeywell Companies {Dr. Oba Otudeko} to Ecobank Nigeria Limited,” he added.

Last January, the Supreme Court upheld an earlier judgment of the Court of Appeal against Honeywell Flour Mills Plc and two other firms in dispute with Ecobank over an unsettled debt of N5.5 billion.

In the lead judgment, Justice Emmanuel Agim resolved two out of the three issues identified for determination in favour of the appellants and one in favour of the respondent.

Justice Agim faulted the Court of Appeal for holding that the appellants lacked locus standi to have instituted the suit at the Federal High Court in Lagos.

He also held that the Court of Appeal was wrong to have held that the trial court lacked jurisdiction to have heard Honeywell’s case.

Honeywell, Anchorage and Siloam had on August 6, 2015 sued Ecobank at the Federal High Court in Lagos over repayment of the N5.5 billion debt.

The companies urged the trial court to declare that “having paid the sum of N3.5 billion in cumulative settlement of their total outstanding indebtedness” (of N5.5b) to Ecobank, “they owned no further debt obligation” to Ecobank “arising from their banker-customer relationships.”

They also urged the court to hold that Ecobank “was obligated to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”

The three firms, according to The Nigeria Lawyer, prayed to the court to compel Ecobank to “update” their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria.”

Responding, Ecobank argued that an agreement was reached between it and the three firms on July 22, 2013, “for a definite settlement of N3.5 billion to be paid in terms of N500m immediately and the balance of N3 billion before the exit of the CBN examiners from” Ecobank’s offices.

Ecobank argued that the repayment agreement period was for six months as it rejected Honeywell’s and its sister companies’ request to “pay the balance over a one-and-half-year period in three equal half-yearly instalments.”

The bank contended, among others, that the debt repayment agreement “lapsed in August 2013.”