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Ecobank Directors At War Over Plan to Sell Assets to Oba Otudeko At Low Price

First Bank Nigeria
Ecobank MD, Jibril Aku
Ecobank MD, Jibril Aku

One of the most senior figures at First Bank, Nigeria’s oldest and largest bank, has been dragged into the boardroom drama unfolding at pan-African lender Ecobank Transnational (ETI), which is under investigation following alleged mismanagement.

Oba Otudeko, chairman of the holding company of First Bank, is one of Nigeria’s richest businessmen and a leading individual shareholder in both banks. He is said by ETI directors to have been involved in a number of proposed deals, including a debt writedown and asset sales, which have contributed to unease among some of the pan-African bank’s shareholders and executives.

The board of ETI will hold another emergency meeting on Friday with directors still split on how to resolve governance concerns at the top of the bank.

Oba Otudeko
Oba Otudeko

Laurence do Rego, ETI’s suspended executive director in charge of finance and risk, flagged the proposed deals in a written response last month to enquiries from Nigeria’s capital markets regulator.

Among Ms do Rego’s allegations was that ETI’s chairman and its chief executive planned to sell non-core assets at “well below the market value”, which she opposed.

ETI owns 16m shares in the Nigerian subsidiary of Bharti Airtel, the Indian telecoms group. These were acquired in 2011 at $101m. According to people familiar with the matter, Mr Otudeko sought a discounted price of $88m to buy these shares, and ETI was considering the offer.

According to bankers in Lagos, Mr Otudeko in February obtained a price of $7.50 per share when selling a personal stake in the telecoms company back to India’s Bharti family. That would value ETI’s stake at about $120m. Some analysts said they could be worth even more.

In an interview with the FT in London, Thierry Tannoh, chief executive of ETI, and Kolapo Lawson, its chairman, denied attempting to sell this and other assets cheaply. ETI’s ownership of the shares was complicated by litigation, they said. Mr Otudeko has claimed historic pre-emptive rights to buy the shares.

“Because of these litigations an asset which in theory we should have been able to sell easily . . . we have difficulty selling it,” Mr Tanoh said, adding: “I have said to the board repeatedly that I don’t want to sell this asset at a loss.”

Other correspondence seen by the FT shows Mr Otudeko’s Honeywell conglomerate has pressed Ecobank Nigeria into approving a $12.5m writedown of its debts to the bank.

ETI inherited the Honeywell debts worth $35m overall, when it bought Oceanic Bank, one of the largest banks that went under during Nigeria’s 2009 banking and stock market crash.

In a separate move, First Bank lent money in July to a company for a former director at the Nigerian bank to buy property from Mr Lawson’s family real estate company. The proceeds of the sale were used to repay a loan owed to ETI. Mr Lawson said there was no connection between the deal and Mr Otudeko.

Mr Otudeko declined to comment on the details but said the business relationship his companies have with ETI are “at arms length and on terms commonly available in the industry”.

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