Two Banks In Trouble For Granting $583m-Loan To Firm That Defrauded FG

By Layemo O. Layemo
Special Correspondent, Abuja

Abuja, March 5, 2017 (TNE) The First Bank and the Skye Bank are running helter-skelter to find a way out of the mess they have put themselves in after they had granted loosely-secured $583 million loan to Atlantic Energy, The Nigerian Expression (TNE) reported on Sunday, quoting a very reliable source.

Atlantic Energy is owned by oil magnate Jide Omokore, who is alleged to have stolen Nigeria’s crude oil to the tune of $3.5 billion.

In essence, the banks were roped in to the deal to defraud Nigeria by Omokore, reported to be a cohort of Jonathan-era oil Minister Diezani Alison-Madueke, the source said.

The loan was jointly granted to the oil firm by the two banks merely on the strength of the hope that the Jonathan administration would win the 2015 general elections and return to power, thus concealing the anomaly and giving those involved the opportunity to regularise the loan.

”Typical of the impunity that permeated the polity during the Jonathan Administration, the banks gave the loan to Atlantic Energy with very flimsy security, hoping that their money would be secured once the PDP returns to power.

”Unfortunately, the party lost the 2015 general elections that saw the emergence of the All Progressives Congress’ candidate Muhammadu Buhari, who won the election largely on the strength of his vow to tackle corruption.

”Now the banks are badly exposed and they are appealing to the Federal Government to bail them out by helping them to recover their funds from Atlantic Energy.

”I am afraid a government that was elected on an anti-graft platform will be reluctant to give a soft landing to the banks,” the source told TNE on the condition of anonymity,” the source said.

The whole issue dates back to 2012, when a subsidiary of Atlantic Energy (Atlantic Energy Brass Development Limited) entered into a Strategic Alliance Agreement (SAA) deal with the Nigerian Petroleum Development Company (NPDC) on the Brass Assets to undertake NPDC’s 60 per cent cash callobligations.

Under the terms of the SAA, Atlantic Energy was to provide training and financing in respect of JV Cash Call obligations and in return receive crude oil lifting rights equivalent to cost recovery on the assets and its share of oil profit

Atlantic Energy was also expected to pay a signature bonus of $1.3 billion. Although it reneged on the loan repayment to the two banks and the signature bonus, the company was still allowed to commence oil lifting and it is estimated to have lifted in excess of $3.5 billion worth of oil before the contract was revoked.

Although the NPDC in 2014 suspended Atlantic Energy’s lifting rights for its failure to fulfill its obligations under the agreement, the company did not pay any funds in respect of the oil it sold, representing a huge loss to Nigeria.

It also did not repay the loan to the banks despite lifting and selling oil.

”As for the banks, they were given security in terms of the barrels of oil – an unusual agreement.

”With the change of government, and of course the management of the NNPC, the national oil company is maintaining a tough stance against the banks, arguing that the signature bonus, which was supposed to have been partly paid from the loan, was never paid to the Federal Government anyway – hence their (banks’) rights over the assets will not be recognised.

”Indications are that there will be a long-drawn legal battle over the issue, which has once again exposed the recklessness of the PDP administration at the centre while it held sway.

”Had the PDP won the 2015 presidential election, this issue would have been swept under the carpet and it would have been business as usual. I honestly do not think this Federal Government will give its seal of approval to a shoddy deal by rescuing the banks,” the source declared. (TNE)

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