Top First Bank directors linked to N99bn loan
By Kingsley Ighomwenghian Finance Editor, Lagos

Despite claims by First Bank that its N99 billion loan to Seawolf Oilfield Services is performing, indications emerged on Wednesday to the contrary.



http://odili.net/news/source/2010/jan/21/403.html


New details also surfaced, including the fact that Seawolf, reportedly floated in April 2007, got the initial $150 million facility in 2008.

A source told Daily Independent that the loan may have been insider related.

Hassan Oye-Odukale, a shareholder and Director of the bank, is Chairman of Seawolf.

It was also learnt that Lamido Sanusi, Central Bank of Nigeria (CBN) Governor, who was then Executive Director, Risk Management of First Bank, before becoming Group Managing Director (GMD), signed off on the deal in his appraisal.

The collateral was the rigs with which the facility was to be purchased, against banking practice.

A source said the loan was initially veiled as part of the bank’s equity contribution under the Small and Medium scale Enterprise initiative of the CBN.

The fund was moved from the bank through First Funds Limited, its investment arm.

But the company denied these charges on Wednesday, insisting that the loan followed due process.

Speaking on telephone, Celine Loader, First Bank Chief Marketing Officer, said the loan is performing. She also said there was nothing wrong in a “company founded in 2007 being given such facility a year after.”

“I have told you that the business is generating enough revenue and there is enough cash flow from its operations to service the loan.”

Asked why First Bank drafted an Executive Director, Oladele Oyelola, to Seawolf as Vice Chairman, she riposted, “He is not there as Vice Chairman. But even at that, there is nothing wrong in First Bank seconding its management staff to companies where it has investments.”

She however could not answer how many of the rigs are in the country and what was used as collateral for the loan.

But despite claims that the loan was properly appraised, according to the source, Seawolf, whose Managing Director (MD) and Chief Executive Officer (CEO) is Uwamu Adolor, is not known to have made any equity contribution.

With the facility, one rig said to be fairly used, was acquired and is now in Nigeria. Two others – Seawolf Oritsetimeyin and Seawolf Onome – are still being expected.

Neither the company nor its management team is known to have a “proven track record” in the drilling and oil services business.

Nevertheless, it is expected to compete against household names of European and American origin, like Germany’s Schlumberger, which is best known for rig and dredging business, Oceaneering, Transocean, Baker & Hughes, Lone Star International, among others.

Daily Independent also learnt that some former members of staff who have since left the bank and who were involved in the overdraft facility, have been invited to face the bank’s disciplinary committee.

In response to a text message, Sanusi wrote: “I have told you to go and ask (First Bank) any questions on Seawolf.

“Also, Seawolf has equity of $150 million, and it has shareholders. The loan is secured and it is performing. I supported it as Chief Risk Officer, it is documented. It went to exco (the bank’s executive committee), board credit committee and the full board. I also was reporting to a CEO.

“If you are looking for something, I am afraid you have to find it elsewhere. I am too busy running the CBN to be replying questions on an account in a bank that was approved even before I became MD.

“As you probably know, I am not bothered by what anyone publishes. I have only replied because you have had the courtesy to ask me. Kindly check your facts and dates with First Bank.

“The company owns oil rigs. The rigs are the collateral. The rigs are under contract to oil companies and payments are being made.”

First Bank would, however, not name Seawolf’s clients to whom the rigs have been contracted, as Loader only insisted that “your source of information is not correct.”

Discerning observers have, therefore, raised posers on the deal and the involvement of the various parties, including Sanusi, noting that at the point of granting the facility, there was no collateral – since the rigs, including those being expected, are the collateral.

A source wondered: “Supposing, that in the process of transporting the rigs to Nigeria, something awkward happens to the ship, what will then be the collateral?”

The source queried whether the process of granting the loan is in conformity with the risk assessment process of the 116-year-old First Bank.

“What was so special about a one-year old company that it gets loan of $150 million? The bank also has to say who the customers of Seawolf are to warrant the assurance that the loan is performing to calm stakeholders’ nerves.”

The board of First Bank in 2001 fired its GMD, Bernard Longe, over the non-refundable $131.7 million loan granted to the Bode Akindele-led Institutional Investment (London) Limited, for the purchase of the Nigerian Telecommunications Limited (NITEL).

The issue, which came to be known as the ill-fated IILL deal, was to enable the company purchase 51 per cent equity of NITEL.

The money was lost then because the bank did not follow its rules for granting such loans.

The amount represented the first phase, or 10 per cent deposit, after which it was to pay the total $1.185 billion balance within 90 days.

However, IILL failed to raise the amount from the international market.

Concern Mounts over Sanusi’s New Move against Bank CEOs
By Davidson Iriekpen, 01.21.2010
Thursday, January 21, 2010

The latest move by the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, against the chief executives of some banks is raising dust in the banking industry.

http://odili.net/news/source/2010/jan/21/200.html



There are strong insinuations of personal vendetta and fears that the move may further destabilise the economy as well as questions on the legality of the new policy.

The CBN board had on Monday unfolded a new policy pegging the tenure of bank CEOs at a maximum of 10 years – [size=14pt]a move that will effectively enforce the retirement of the Managing Director, Zenith Bank Plc, Mr. Jim Ovia; Group Managing Director, United Bank for Africa Plc, Mr. Tony Elumelu; and his counterpart at Skye Bank Plc, Mr. Akinsola Akinfemiwa.[/size]

The banking watchdog said all bank CEOs who would have served for 10 years by July 2010 shall cease to function in that capacity and shall hand over to their successors, and that where a bank is a product of a merger, acquisition or takeover or any other form of combination, the 10 years shall include the pre and post combination service years of a CEO, provided the bank, which he served as a CEO was part of the new banks that emerged after the combination.

It also said any person who has served as CEO for the maximum tenure in a bank shall not qualify for an appointment in that bank or its subsidiary until after a period of three years of his exit as CEO.

But there is already a legal question mark on the retroactive nature of the policy as lawyers who spoke to THISDAY last night said it is illegal to backdate a new policy to 10 years.

“Our laws in Nigeria are against retroactive implementation. Any policy that is not consistent with our laws is null and void. There is no democracy in the world where you introduce a policy and apply it retroactively,” a lawyer who did not want to be named told THISDAY.

He said what Sanusi is trying to do is equal to what military dictators usually do, adding: “Remember when the Gen. Buhari/Idiagbon regime arrested two cocaine pushers in 1984 and then went to promulgate a decree to make it a capital offence? The decree was backdated to when the offence was committed and the two convicts, Bartholomew Owoh and Lawal Ojulope, were executed by firing squad. That is exactly what Sanusi is re-enacting in a democratic setting.”

An insider in one of the banks told THISDAY that Sanusi was on a personal vendetta mission which he is carefully implementing.
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The source said: “The fact that the policy was backdated was intended to catch only two persons – Ovia and Elumelu. Akinfemiwa is an unintended victim.”[/size]
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He alleged that Elumelu was targeted because after the merger of Standard Trust Bank and UBA in 2005, Sanusi, who was then a Deputy General Manager at UBA, was overlooked by Elumelu in favour of Victor Osadolor in the appointment of new Executive Directors.[/size]

“In anger, Sanusi resigned and joined First Bank. When (Professor Chukwuma) Soludo’s tenure was up last year, Elumelu was not well disposed to the appointment of Sanusi. One of the banks targeted by Sanusi in the removal of CEOs last August was UBA, but Elumelu escaped by the skin of his teeth. He had to go abroad to source funds to buy back some of the bad debts of the bank to survive. He might have survived then but Sanusi has devised another strategy.”

Sanusi told THISDAY last night that he was not going to comment on the allegations.

An official of CBN however described the claims as frivolous. “If Sanusi had remained at UBA and had been promoted ED, he would still be an ED today. He left for First Bank, became an ED and later CEO. What else could he ask God for?” the official asked.

The effects of Sanusi’s actions on the banking system are still being debated as the sack of nine bank CEOs last year and the publication of the names of debtors are believed to have heated up the economy and led to a credit squeeze that is yet to subside.

His actions have also been described by critics as causing a serious crisis of confidence in the economy, but he has always said they were in the best interest of the banking sector for the sake of corporate governance and sound risk management.

Some lawyers believe Sanusi has acted correctly in backdating the policy. Chief Ajibola Aribisala (SAN) said the directive was not an Act of Parliament but was meant to checkmate insider abuse and enhance corporate governance in the banking sector.

Commenting on the recent exposé of frauds running into billions of naira, Aribisala argued that there was nowhere in the world where a rot of such magnitude could take place if not in Nigeria.

He stated that though most of the bank CEOs were the owners of the banks, the situation changed when they metamorphosed into public limited liability companies.

On his part, former President of the Nigerian Bar Association (NBA), Mr. Olisa Agbakoba (SAN), said though the directive of the CBN governor was challengeable and debatable, he has the right to lay down some policy directive that would enhance corporate governance.

“The policy is a welcome development because it will help improve corporate governance badly needed in the country. It is a policy that you cannot stay in office forever,” he said.

Toeing Agbakoba’s line of argument, Mr. Tayo Oyetibo (SAN) described the policy as a welcome development and wondered why a man would remain in office for more than 10 years.

He argued that if the President of the country would occupy office for a maximum of eight years, why would any other person stay in office beyond that, saying that staying in office for long as chief executive could lead to abuse.

Dr. Konyin Ajayi (SAN) and Mr Kunle Ogunba both said the directive was in order.

Sanusi is, however, being accused of poor sequencing of the reforms as he has not allowed one action to "bed down" before introducing another one, thereby putting the sector in permanent instability.

He is also accused of removing CEOs without "due cause" when he could have gone through the shareholders to achieve the same result.

"To create a policy and remove the CEO suddenly is contrary to our laws because Sanusi has not established any wrongdoing against them," a retired banker told THISDAY, arguing also that the number of years a CEO spends is immaterial as long as there is stability.

"Paul Ogwumah of Union Bank and S.O. Asabia of First Bank both stayed more than 10 years as CEOs and that brought stability to their banks. It was never an issue. Even many of the recently removed CEOs had spent less than five years. So Sanusi is missing the point completely," he said.

He said that is the point Sanusi is failing to address because "there is yet no link between length of tenure and misdemeanour, If you must punish, punish based on infractions, not on the perceived sins of others. Every should be judge on its own merit."

The source said: “The fact that the policy was backdated was intended to catch only two persons – Ovia and Elumelu. Akinfemiwa is an unintended victim.”

He alleged that Elumelu was targeted because after the merger of Standard Trust Bank and UBA in 2005, Sanusi, who was then a Deputy General Manager at UBA, was overlooked by Elumelu in favour of Victor Osadolor in the appointment of new Executive Directors.

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Now I know that Sanusi is out for personal vendetta at the detriment of thousands of Nigerian bank workers. Pathetic.[/size]

WHERE DO WE THINK NIGERIAN IS GOING NOW . SO YOU MEAN SANUSI IS OUT FOR VENGEANCE

where do we think nigeria is going to now. so, you mean sanusi is out for vengeance

The press ought to have given a follow-up of this report.