Key Points:
- Otedola accuses Zenith Bank of manipulating accounts, inflating debt, and selling his shares without authorization. He’s filed lawsuits and involved the police.Â
- The Nigerian billionaire claims inflated debt was sold to AMCON after his company acquired it. The bank hasn’t commented publicly.
- Otedola and his companies secured an injunction to prevent further unauthorized transactions by Zenith Bank. The legal battle is ongoing.
Nigerian billionaire Femi Otedola, chairman of leading power generation company Geregu Power and one of Nigeria’s most valuable lenders, First Bank of Nigeria Holdings Plc (FBN Holdings), is embroiled in a legal battle with tier-one lender Zenith Bank led by Jim Ovia. The dispute centers on a controversial debt involving Otedola’s company, Zenon Petroleum & Gas, and other affiliated firms.
Otedola, who ranks among Africa’s billionaires, accuses Zenith Bank of perpetrating banking fraud. He alleges the bank improperly disposed of his shares in the lender, manipulated his companies’ accounts, and fabricated documents to conceal the activity. The businessman has initiated legal action and filed a police complaint with the Force Criminal Investigation Department.
Zenon disputes AMCON debt, claims Zenith inflated amount
The dispute centers on Otedola’s claims of fraudulent accounting by Zenith Bank in calculating liabilities before selling the debt to the Asset Management Corporation of Nigeria (AMCON), a government agency that acquires bad loans. Otedola’s company, Zenon Petroleum & Gas (Zenon), argues that problematic letters of credit, now part of the AMCON debt, were established before their December 2011 acquisition by Otedola.
The company insists it ceased using the account upon the takeover. Furthermore, Zenon alleges that Zenith Bank controversially opened additional letters of credit after the AMCON purchase, a practice a company representative deems unprofessional. Court documents indicate the outstanding balance on Zenon’s account at the time of AMCON’s intervention was N39 billion ($26.2 million). However, Zenon contends Zenith Bank inflated the debt to N49 billion ($32.9 million) before selling it to AMCON for N44.1 billion ($30 million) after negotiations.
Zenith Bank has remained silent on the matter. Otedola confirmed the dispute but declined to elaborate, stating, “We are still trying to resolve it. If that fails, I can give you details.” Separately, a May 20 document suggests Zenith Bank agreed to refund N205 million ($1.4 million) – debited from Zenon’s account through an unauthorized backdraft – with accrued interest.
Other companies file suit against Zenith Bank
Another Otedola-owned company, Seaforce Shipping Company Limited, accused Zenith Bank of fabricating bank statements claiming a N5.9 billion ($4 million) debt as of February 2024. Seaforce presented evidence demonstrating a credit balance in 2018, prompting Zenith Bank to abandon the claim. Seaforce considers this a clear case of fraud.
In March 2024, Zenon, Seaforce, Luzon Oil & Gas, Garment Care Limited, and Otedola himself secured an injunction against Zenith Bank, its securities arm, a registrar firm, and the Central Securities Clearing System. This order restricts the defendants from trading the plaintiffs’ shares or distributing dividends until the court hearing on a pending interlocutory injunction motion.
An insider source alleges Zenith Bank sold Otedola’s 415 million shares in the bank for N4.9 billion ($32.7 million) in December 2010, only to repurchase them a month later for N5.4 billion ($36 million), resulting in a net loss of N142.9 million ($1 million) for Otedola. Similar transactions allegedly occurred on Otedola’s personal account, with a cumulative loss of N205.4 million ($1.37 million). The source claims Zenith Bank acknowledged these unauthorized trades and agreed to reverse the debits and pay accumulated interest.
Femi Otedola: Power player in business and finance
Beyond the current dispute, Femi Otedola is a significant figure in Nigeria’s economic landscape. Geregu Power, under his leadership, achieved record revenue and profit of N50.43 billion ($40.38 million) and N14.46 billion ($11.6 million) in Q1 2024.
Otedola also chairs FBN Holdings, the parent company of Nigeria’s oldest bank, First Bank of Nigeria Plc. Under Otedola’s guidance, FBN Holdings delivered a stellar first quarter in 2024, with profits surging to N208.2 billion ($149.7 million), a 315.8 percent increase year-over-year.
Despite recent currency weakness, Femi Otedola retains his billionaire status with a net worth estimated at $1.4 billion, up from $1.1 billion at the start of the year. This positions him as Nigeria’s fourth-richest individual and the 2,185th globally.
