Honeywell Group Chairman, Dr. Oba Otudeko, is set to face disciplinary actions over a breach of contract in securing a N75 billion loan facility from First Bank of Nigeria Plc.
CBN has given a 48-hour ultimatum to Otudeko’s Honeywell Four Mills to repay the loan to First Bank of Nigeria Plc or face regulatory actions against Otudeko, Honeywell Four Mills and First Bank.
Failure by Otudeko and Honeywell Flour Mills to adhere to this directive could lead to Otudeko losing his company and their assets to the Asset Management Corporation of Nigeria, AMCON.
The Asset Management Corporation of Nigeria was created on the 19th of July 2010. It was established to bring stability and revive the financial system by taking on the job of resolving the problem of Non-Performing Loans (NLPs). The loan facility Honeywell Flour Mills took from First Bank has allegedly been non-performing for years, so they might be getting a visit soon from AMCON.
Honeywell Group released a statement refuting the claims against them that they defaulted in the loan agreement.
According to the statement, “We have serviced all our credit facilities in line with the terms agreed with First Bank and at no point have any of these facilities been non-performing.”

However, CBN retains that First Bank did not perform due diligence involving the loan facility to Otudeko’s Honeywell Flour Mill resulting from bias it has for Otudeko.

They stated in their memo that no legal document was signed and approved which would allow First Bank to claim the collateral if Honeywell defaults in their loan.

Honeywell Group again denies claims that she got any special treatment from First Bank regarding the credit facility. They stated, “Honeywell Group's relationship with First Bank has always been professional, at arm's length and in accordance with all regulatory and industry practices and norms.”
They also stated that every directive from the CBN regarding loans were strictly followed and approved by the apex bank.

Regardless, CBN’s ultimatum still stands. They have also ordered First Bank to divest its interests in Honeywell Flour Mills and Bharti Airtel, within 90 days.

This order by the CBN stems from an ongoing court case between Otudeko’s Honeywell Flour Mills and Ecobank over the same shares he pledged to First Bank. When he was Chairman of Bharti Airtel, he secured a loan from Ecobank in 2013 using his Airtel shares and illegally used the same shares to secure his loan facility from First Bank. Neither Ecobank nor First Bank can move in on the assets.

However, a recent amendment bill passed by the senate allows AMCON to seize, manage, and sell all his (Otudeko’s) properties and assets whether or not those assets were used as collateral when securing the loan deal. He and his company could lose it all.

The events of this loan deal led to the sacking of Ibukun Awosika (Former Chairman of First Bank) and the man himself Dr. Otudeko amongst other board members.

The CBN Governor states that this action was to ensure the financial stability of First Bank, for the protection of her customers and minority shareholders.

Nigeria law is upside down sometimes! CBN should be sanctioning First Bank for improper due diligence when lending to Honeywell, but see how CBN is protecting First Bank!

I'm not on Honeywell's side. First Bank should sue for their money and make them file for bankruptcy if need be. But I hope Honeywell have the balls to fight this in court on procedure alone, if need be. It's the only way to fix our ailing legal process.