Afriland First Group, the Swiss holding company founded by Cameroonian billionaire Paul Fokam, has filed a request for arbitration with the International Centre for Settlement of Investment Disputes (ICSID) against the Democratic Republic of the Congo (DRC).
The arbitration request aims to challenge the appointment of a provisional management committee at Afriland First Bank CD, the banking group’s subsidiary in the DRC.
Fokam, the majority shareholder in Afriland First Group, has enlisted the services of the international business law firm White & Case, based in the United States, to assist in this process. The exact claims of the plaintiff have not been disclosed, but it is evident that the banking group accuses the Congolese government of attempting to expropriate its subsidiary, in which it holds more than 95 percent of the shares.
The dispute began on June 20, 2022, when Central Bank of Congo (BCC) Governor Malangu Kabedi Mbuyi announced the appointment of a provisional board of directors at Afriland First Bank CD. This committee, composed of seven individuals, was tasked with preparing a recovery plan for the bank within a 180-day period. However, the board of directors of Afriland First Bank rejected this decision and demanded its outright cancelation, viewing it as an expropriation attempt.
Despite this demand, the provisional management committee remains in place, and the majority shareholders of Afriland First Bank CD have opted to pursue legal action locally to assert their rights. The case is pending judgment.
It is worth noting that a BCC report dated June 31, 2021 indicated that the bank was in a financially comfortable position, with estimated equity of $48.5 million.
Shareholders contend that the terms of collaboration between the BCC and Afriland First Bank CD were established as early as September 2021, raising questions about the decision to place the bank under provisional administration.
However, the Congolese government asserts its intention to prevent Afriland First Bank CD from bankruptcy, which could pose a risk to the country’s banking system. To address the crisis facing the bank, the government has announced an imminent disbursement of 100 billion Congolese francs (approximately $50 million) as collateral to the BCC. This financial support is expected to enable the bank to normalize its banking operations.
Afriland First Bank was founded by Fokam in Cameroon in 1987 under the name “Caisse Commune d’Epargne et d’Investissement.” Its first branch was opened and became operational on July 1, 1988. Today, it operates subsidiaries in the DRC, Equatorial Guinea, Guinea, Liberia, South Sudan, Sao Tome and Príncipe, Uganda and Zambia.
Fokam is one of the richest men in Africa, with a fortune estimated at over $1 billion.