Chinese firm drags Ogun govt to President Buhari over alleged breach of Free Trade Zone contract

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A Chinese firm, Zhongfu International Investment, has petitioned President Muhammadu Buhari over an alleged termination of its contract with the Ogun State government over the latter’s Free Trade Zone.

The petition signed by Jason Han, the company’s Managing Director, accused the state government of chasing away the company despite its investment in the zone situated in Igbesa town, and replacing it with another firm.

‎”I write this letter with sorrow and despair,” Mr. Han wrote in his petition.

“In 2010 my firm, Zhongfu International Investments (Nig.) came to the Ogun Guangdong Free Trade Zone in Ogun State as an investor.

“The Zone was devoid of basic infrastructure for industry. We assisted the then manager China-Africa Investment Co. Ltd to stabilize the Zone by significant cash investment.”

Mr. Han said the project handled by China-Africa Investment failed in 2012, resulting in the state government terminating its appointment with CAI.

“At this stage there were only five operating tenants of which ZIIN was by far the most significant investor. In March 2012, we were called upon to rescue the project as interim managers.

“In September 2013, we were granted a permanent arrangement when we entered into a joint venture agreement (JVA) with the OSG (Ogun State Government) and a Nigerian company.”

‘Breach of agreement’

Mr. Han said in pursuant to the JVA, the company agreed to develop and manage the Zone in return for a 60 percent equity participation, adding that JVA gave them the confidence to invest their monies as a long-term investment.

“After investing over $60 million and the Zone is starting to generate a cashflow, the OSG is attempting to unilaterally terminate our contract, force us to abandon our investment and flee for our lives,” said Mr. Han.

According to Mr. Han, his company embarked on an ambitious drive to get international capital markets to finance infrastructure upgrades in the Zone, seeking an initial estimated $250 million for expansion of roads, electricity, transportation, and housing improvements.

He added that his company also generated hundreds of millions of naira for the Nigerian government, as well as created over 5,000 jobs.

“‎We felt proud when you (Mr. Buhari) visited China in April of this year and we signed an MOU with a prospective tenant for a USD 1 billion pharmaceutical park in the Zone.”

“However, instead of growing our business, our work has stopped, the contracts we had in the pipeline have been suspended, we live in fear of our lives and others have taken over facilities and assets that we invested our own funds in acquiring.”

Mr. Han accused the Ogun government of using state instruments such as the police and the magistrate courts to harass and intimidate his staff.

“The OSG has maintained that our JVA was terminated because they were following instructions in a letter from the Economic and Commercial Section of the Consulate-General of China in Nigeria (the Consulate Letter),” he said.

“The Chinese Government will not disrespect Nigerian law. The Consulate Letter has been misconstrued and overlooks the existence of our contract with the OSG.

“We made every effort to resolve this matter amicably as a contractual dispute but in flagrant disregard of Nigerian law, a gentleman acting on behalf of the OSG went to the Zone with an armed policeman to scare us away and install new individuals as managers of the Zone.”

“They have taken over control of facilities that we built for our own exclusive use, appropriated our property and harassed our staff.

“We have commenced proceedings in the Federal High Court in Abuja. However OSG and the individuals harbouring plans to appropriate our investment are seeking to frustrate our legal action by forcing the recognition of the impostors irrespective of the impending court hearing.”

Ogun govt responds

In its reaction to Mr. Han’s petition, the Ogun State government said there was “no truth whatsoever” to the claims of contractual termination.

Taiwo Adeoluwa, Secretary to the State Government, said the Chinese government had, through a Diplomatic Note 1601 dated March 11, 2016, notified the state that Guangdong New South Group, and not ZIIN were the ones authorized to manage the Ogun Guangdong Free Trade Zone.

“The Chinese Consulate stressed further that to continue to allow Zhongfu International Investments to manage the zone would amount to encouraging and abetting a private company to perpetuate fraud on the government of Guangdong Province, China (the original joint venture partners to Ogun State on the project) and its lawful successors in title, the Guangdong New South Group.”

Mr. Adeoluwa said concerned about the weighty nature of issues raised in the Diplomatic Note, the state government called for explanations from both the New South Group and Zhongfu International Investments.

“The New South Group provided evidence, corroborated by the Chinese Consulate, that they bought 51 per cent of the equity of China Africa Investment Limited, the official representative of the Guangdong Province of China on the Zone and with whom the Ogun State government originally signed a Memorandum of Understanding,” he said.

“By virtue of the lawful equity transfer, they succeeded to ownership and management rights of China Africa in the zone.

“They further contended that the new agreement signed by Zhongfu International Investments with the Ogun State government in 2013, was procured by fraud and criminal misrepresentation for reasons that Zhongfu International Investments Limited, who was merely a tenant on the zone, deliberately concocted lies to mislead the Ogun State government into believing that it was the lawful successor to the equity ownership of China Africa Investment Limited.”

Mr. Adeoluwa further stated that Mr. demonstrated “a rather strange unwillingness” to approach either the Chinese Embassy or Consulate in Nigeria or visit the Guangdong Province, China, to resolve the dispute.

“One would have thought that the Embassy or Consulate, whose basic duty it is to protect the interest of Chinese nationals in Nigeria, is the quick, best and cheap forum to resolve this Chinese on Chinese dispute,” he said.

“But rather than do that, Zhongfu International has chosen the path of peddling lies and cheap blackmail.”

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  • tunde

    If there is a breach of contract,you do not go to the president,you should go to court because he is not arbter in this. case.