Nigerian regulators are silent on the struggle for control of the nation’s oldest bank, First Bank, weeks after two leading shareholders claimed the held the controlling interest in the lender’s parent company.
The Central Bank of Nigeria, the Security and Exchange Commission and the Financial Regulatory Council are keeping the matter under the wraps, refusing to provide updates on the matter and starving investors of vital information they require to make decisions.
FBN Holdings gained 2.5 per cent to close N12.3 on Monday at the Lagos-based Nigerian Exchange Limited, a performance that did not reflect the troubled bank’s difficult weekend when its new managing director, Nnamdi Okonkwo, was detained by the Economic and Financial Crimes Commission.
Details of Mr Okonkwo’s arrest remained sketchy on Monday day night although some sources said he was questioned over his role in the transfer of $153.3 million from the Nigerian National Petroleum Commission in favour of Diezani Alison-Madueke, Nigeria’s former petroleum minister. The banker was managing director of Fidelity Bank at the time.
First Bank Holdings has seen a surprising contest for who takes the prime spot in the league of its dominant shareholders, and analysts blame the bank in part for its handling of the crisis.
A declaration by the billionaire, Femi Otedola, to the Nigerian Exchange Limited (NGX) in October that he had acquired a consolidated holding of 5.07 per cent of the group’s issued share capital formally made him at the time the biggest shareholder of the group.
However, while approvals from regulators including the central bank and the Securities and Exchange Commission were still expected, top shareholders edged by Mr Otedola’s dramatic rise made clear they would not let off control just yet.
Mr Otedola’s arch-rival, Tunde Hassan-Odukale, who currently chairs the holdco, reached out to the Corporate Affairs Commission (CAC) in a last ditch effort to stake a claim of a 5.36 per cent holding in the group, and by so doing, be declared the top shareholder.
“The two largest shareholders are fighting for supremacy. But what we will see is there will be different alignments in terms of faction,” said a source with market knowledge who spoke on condition of anonymity because of the sensitivity of the matter.
“There will be a lot of internal politics in terms of appointing someone as the chairman because we already have a chairman which is the guy that has 5.35 per cent, that’s the Leadway guy. So he won’t want this guy (Otedola) to displace him.”
Intrigues and twists
Mr Hassan-Odukale efforts to make a formal assertion of his “5.36 per cent” raised concerns about its timing as the Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria demands that once there is a share purchase of at least 5 per cent in a company through the secondary market, the central bank must be notified in seven days. That did not happen as neither he nor First Bank reported.
A curious notification from FBN Holdings to the registrar-general of CAC, dated October 18 and seen by PREMIUM TIMES, put the consolidated shares of Mr Hassan-Odukale and his related parties at “5.36 per cent”, with Leadway Pensure PFA contributing 1.05 per cent of that lump figure.
But that notification also raised questions as the shares of a pension fund administrator, which is often managed for investment from a pool of employees’ contributed funds is not expected to be part of a single individual’s investment. If the Leadway Pensure claim is removed, Mr Hassan-Odukale’s shareholding in First Bank stands at 4.31 per cent.
The Nigeria Exchange Limited questioned that move and demanded explanations from First Bank Holdings on why the shareholdings of Mr Hassan-Odukale and his related parties were in two parts of 4.16 per cent and 1.20 per cent respectively. It also asked FBN Holdings to clarify the rationale behind factoring in an equity stake of 1.05 per cent belonging to Leadway Pensure PFA in the 1.20 per cent.
The NGX asked the financial services group to explain what it meant by “cumulative equity stake” and the use of that phrase in relation to Leadway Pensure PFA’s holdings in its earlier notification to the exchange.
In its reaction, FBN Holdings described “cumulative equity stake” as “the summation of all the direct, indirect and ascribed shareholding of Mr. Tunde Hassan-Odukale.” The company also affirmed the 4.16 per cent interest are held directly or indirectly by Mr Hassan-Odukale, identifying the 1.20 per cent as shares ascribed to the holdco’s chair by virtue of his influence and having significant control.
Weeks after, the NGX has not made public whether or not it was satisfied with First Bank Holdings’ explanation, deepening uncertainties in the market.
Spokespersons for both the Nigerian Exchange Group and First Bank Holdings did not return request for comment.
For days, efforts to obtain clarifications from regulators were also unsuccessful.
The spokesperson for the central bank, Osita Nwasinobi, did not respond to inquiries on the matter, while the SEC was unreachable. The Financial Reporting Council too did not respond on Saturday and Monday after requesting a letter be sent requesting information.
The council under the FRC Act 2011 has the mandate to “ensure accuracy and reliability of financial reports and corporate disclosures, pursuant to the various laws and regulations currently in existence in Nigeria”. In the event of inaccurate reporting as the First Bank’s case appears, it can impose sanctions.
Secret Accumulation of Shares
Mr Otedola had been purchasing FBN Holdings shares surreptitiously in portions now summing up to 1.819 billion, using an indirect holding vehicle named Calvados Global Services Limited.
The deftly orchestrated acquisition was conducted in the secondary market and did not draw much attention because it was done in bits until the accumulated shares hit the five per cent threshold, at which point he officially informed the NGX authority as regulation demands.
That an external force could cause a big disruption in the top ownership of a corporation as large as FBN Holdings has been a puzzle for the public and an occurrence that has irked other major shareholders.
Mr Otedola, the chairman of Geregu Power Plc and previously that of the defunct Forte Oil (now Ardova), had never been known to be among the top shareholders of FBN Holdings until now.
Before the upset happened, the scramble for the dominant shareholder title had polarised interests across divides on the group’s board, which a leadership upheaval in May brought to light.
Oye Hassan-Odukale, the FBN Holdings chair’s brother, is one of the shareholders with the biggest interests in FBN Holdings, holding 1.03 per cent or 369.8 million shares, the group’s audited financial report for 2020 shows.
PREMIUM TIMES learnt that Mr Otedola has an investment worth $30 million (N12.5 billion at Monday’s exchange rate) in a long-term debt security in FirstBank and is stepping up plans to announce more shares he indirectly holds through other vehicles.
If the terms of that investment make the instrument convertible under certain conditions, it is expected he could opt for a debt-for-equity swap, which will turn the value of the investment into its equivalent in shares in order to raise his stake in FBN Holdings further.
Even if he does not state an intention to go that route, the holdco’s board will likely consider that pulling out an investment that huge in one fell swoop from the capital base of a bank whose bad loan charges in 2016 alone surged 90 per cent to N226 billion figure may be disastrous for the lender.
Most of the entities Mr Hassan-Odukale represents belong to the Leadway group, majority-owned by the Hassan-Odukale family.
According to the group’s financial report for 2020, Oba Otudeko, the recently-toppled FBN Holdings chairman, holds 1.5 per cent stake in the group.
Honeywell Flour, a firm where he is the dominant shareholder, has come under pressure from the Central Bank of Nigeria after being issued a repayment deadline to pay off a non-performing loan facility of N75 billion, which has proven impossible for FirstBank, which lent it, to recover for years.
Flour Mills of Nigeria is in talks with Honeywell Flour for a potential purchase, a report says, and that could boost the latter’s capacity to clear its debt.
Amid the controversy, FBN Holdings set tongues wagging with its appointment of Mr Okonkwo as the new group managing director of FBN Holdings Plc over a week ago.
Mr Okonkwo replaced U.K Eke, whose second term in office terminates on December 31, according to the holdco’s note to the Nigerian Exchange Limited.
Mr Okonkwo’s name made newspaper headlines in 2017 over his alleged role in the movement of $153.3 million from the NNPC in favour of Mrs Alison-Madueke.
In a nine-paragraph affidavit by an EFCC investigator at the time, Moses Awolusi, and filed in support of an ex parte application, the anti-graft agency alleged that sometime in December 2014, Mrs. Allison-Madueke invited Mr Okonkwo to her office wherein they allegedly hatched the plan of how $153,310,000 would be moved from NNPC to Mr. Okonkwo to be saved for the former minister.
Mrs. Allison-Madueke, according to Mr Awolusi, instructed Mr Okonkwo to ensure that the money was “neither credited into any known account nor captured in any transaction platforms” of Fidelity Bank.
He also claimed that Mr. Okonkwo accepted and implemented the deal leading to the movement of $153,310,000 from NNPC to Fidelity Bank, adding further that two former Group Executive Directors of Finance and Account of NNPC, B.O.N. Otti and Stanley Lawson, helped Mrs Alison-Madueke to move the cash from NNPC Abuja to the headquarters of Fidelity Bank in Lagos.
Mr. Awolusi said in a desperate bid to conceal the source of the money, Mr. Okonkwo, upon receiving it, instructed the Country Head of Fidelity Bank, Martin Izuogbe, to take $113,310,000 cash out of the money to the Executive Director, Commercial and Institutional Bank, Sterling Bank Plc, Lanre Adesanya, to keep.
He said the remaining $40 million was taken in cash to the Executive Director, Public Sector Account, First Bank, Dauda Lawal, to keep. The investigator said out of the $113,310,000 handed over to Adesanya, a sum of $108,310,000 was invested in an off balance sheet investment using Sterling Asset Management Trustees Limited.
Although Mrs Madueke still faces charges over the numerous allegations of corruption levelled against her, not so much had been heard of Mr Okonkwo’s case ever since.
Olanrewaju Suraju, chairman of the Human and Environmental Development Agenda (HEDA), told PREMIUM TIMES that Mr Okonkwo’s appointment raised concern about the integrity of the selection process in both government and the private sector in Nigeria.
“I think it is important that our corporate environment and government regulatory agencies provide some sanity in the operations of the business environment,” he said.
The rights activist said that the recent Pandora Papers have shown how Nigerians own properties in the UK and Dubai through illicit means, a development that could not have escaped Nigerian banks. He argued that it was very sad that after some people who benefit from what is considered as proceeds of crime have been convicted by the courts, people suspected to have enabled the process are barely thoroughly investigated.
“It is morally repugnant to appoint such person into a bank as the First Bank of Nigeria Plc,” he said.
Mr Okonkwo remained in EFCC custody for at least three days as of Sunday, a source said, adding that it was unclear when he would be allowed to go home.