Hill
Al Edwards, Financial Editor
THE NATIONAL Bank of Oman (NBO), of which Aubyn Hill served as chief executive officer, is the subject of a legal complaint by the Al-Shanfari Holding Company.
The Shanfari complaint, filed in Dubai, claims that, in 1996, NBO made overtures to its officials with a view to getting then to take up a stock investment with funds borrowed from the NBO.
Shanfari did so, also using funds from other financial institutions and made significant investments on the Muscat Stock Exchange, including the NBO's own stock.
RESTRUCTURING
Six years later, Mr. Hill, in his capacity as chief executive officer of NBO, undertook the restructuring of its loan portfolio and so transferred a part of that portfolio to a number of banks in the United Arab Emirates. One of those banks was the Abu Dhabi Commercial Bank. It is alleged by Shanfari that as an incentive to complete this deal, the middle eastern banks were given assurances that the NBO would guarantee those loans which included that of Shanfari. That same year, Mr. Hill left NBO to take up an offer made by AIC boss and National Commercial Bank (NCB) chairman Michael Lee Chin to become managing director of the NCB Group.
When the NBO refused to supply paperwork on the loans in question to the Primary Court of Oman, the validity of the process was called into question.
Shanfari's U.S.-based lawyer, Thomas Sjoblom, commenting on this matter through a press release, said: "It is highly suspicious that the National Bank of Oman refuses Shanfari Holding Company access to files on its loans, given the relationship between the two organisations over the years. If there is nothing to hide, then why would this institution which is planning to be part of a major banking merger have the slightest reluctance to provide documentation for which Shanfari makes a reasonable, good faith request? We challenge the legitimacy of various investments with the loan proceeds."
HILL STEPS DOWN
After serving two years, Mr. Hill stepped down as managing director of the NCB Group to become part of the management team responsible for the restructuring of Air Jamaica. A year before he became managing director, NCB posted net profits of $370 million on net interest income of almost $4.5 billion. At the end of its financial year to September 2003, net profits went up six fold to $2.8 billion. Net interest income increased by 50 per cent to $6.7 billion. For the nine-month period to June 30, 2004, the bank's net interest income climbed to $7.5 billion, an increase of $4.2 billion. NCB's revenues in 2004 increased by $4.9 billion, compared to 2003. Mr. Hill is generally acknowledged as having done a good job in turning around the NCB Group and putting it on a sound footing.
John Finigan replaced Aubyn Hill as the chief executive officer of the NBO, but he resigned a few weeks ago as the bank got ensnared in bad corporate loans
STATEMENT OF INCOME
In 2002, the year Mr. Hill left NBO, its statement of income for the year ended December 31, shows net interest income of US$104 million, with provision for credit losses at US$91.7 million. Loans and advances came in at US$1.7 billion.
The following year shows a net interest income of US$75 million, with provision for credit losses leaping to US$183.7 million. Loans and advances declined slightly with the bank registering a figure of US$1.3 billion. The bank racked up a loss that year of US$134.5 million.
(One Omani Riyal (RO) = US$2.62)
The bank 's balance sheet reveals that assets grew by 400 per cent from 243 million riyals in 1991 to 951 million in 2001 when the bank posted a net loss of 7 million riyals.
What is very clear is that Mr. Hill has not been served with a suit at this time. It is a little uncertain why Mr. Hill would still have documentation for a deal made back in 1996 with the loans rescheduled in 2002 and he no longer works at the bank.
Speaking with the Financial Gleaner Mr. Hill said: "I am aware of this story which has been placed on the Internet and, at this point in time, I have no comment to make. But I will say that it is instructive that if I am to be sued, I have yet to be served with a notice to that effect."
A member of Jamaica's financial community speaking under anonymity said: "The timing of this smacks of mischief making to me and I have a good mind who is behind this. If a bank did a deal back in the nineties and Mr. Hill left in 2002, why would he still be expected to have documentation on these loans? Furthermore, why did this company file suit in Dubai and not in Oman where the bank resides? Aubyn Hill is a man of impeccable character, and, unfortunately for his detractors, the mud will not stick."
