The Central Bank of Nigeria removed Dr. Otudeko and other board directors of First Bank for their failure to submit to regulatory authority. The major concern of CBN is Honeywell Flour Mill’s collateral for the loan facility collected by Otudeko, Chairman of Honeywell Group. He was the insider lender, while he was board member in FBN Holdings Plc.
Insider lending is when an executive or director of a bank is loaned money from the bank that they work for. It is a process subject to many regulations. Regulations which, allegedly, did not apply to Dr. Otudeko.
The accusation by CBN is that, First Bank gave special treatment to Honeywell Mills and did not carry out the due process required in acquiring a loan facility. They are concerned that First Bank did not perform due diligence in securing the collateral for the loan facility.
Their memo states, “We further noted that in four years, the bank is yet to perfect its lien on the shares of Dr. Oba Otudeko in FBN Holdco which collateralized the restructured credit facilities for Honeywell Flour Mills contrary to the conditions precedent for the restructuring of the company’s credit facility.”
This means that there is no binding document between First Bank and Honeywell Flour Mill filed with CBN that would serve as collateral if Honeywell defaults their loan. There have also been claims that the loan facility, worth N75 billion has been non-performing for over 3 years.
Dr. Otudeko, in 2013, acquired a loan facility worth N5.5 billion from Ecobank for Honeywell and Airtel (both parties are currently in Supreme Court concerning the said loan and a final verdict is yet to be given). It is alleged that the same Airtel shares he used as collateral to acquire this loan from Ecobank are the same ones used in acquiring his loan facility from First Bank.
First bank has an equity position whereas Ecobank has a debt position; therefore none of the banks can move in on the assets.
This is of concern to CBN who have ordered First Bank to divest its interests in Honeywell Flour Mills Group and Bharti Airtel Nigeria Ltd in 90 days.
They’ve also ordered Honeywell Flour Mills to repay the loan it owes FBN in 48 hours, else regulatory measures will be carried out against both them and the bank.

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