UC RUSAL has brazenly disobeyed Nigeria’s legal system to the chagrin of Nigerians.
Ordinarily, by now, there should be more than enough reasons for the Federal Government to be very concerned about the brazen lawlessness and fraud by UC RUSAL, the Russian firm keeping its stranglehold on the Aluminium Smelter Company of Nigeria, ALSCON, in Ikot Abasi, Akwa Ibom State.
If there was any lingering reason why the Russian firm should not be made to relinquish its grip on the $3.2billion plant long ago, the Supreme Court buried all that in its landmark ruling of July 6, 2012.
Since June 20, 2004, the company was disqualified from the bid for ALSCON after it violated the guidelines spelt out by the National Council on Privatisation, NCP. The American-Nigerian firm, BFIGroup Corporation was declared the preferred bidder. But the annulment of the win and reinstatement of UC RUSAL plant in controversial circumstances by the Bureau for Public Enterprises, BPE, resulted in a long legal battle.
Supreme Court specific orders
However, after about eight years, the apex court in a unanimous ruling by five Justices, issued an order of specific performance directing BPE to ensure the immediate retrieval of the plant from UC RUSAL, and handed over to the authentic winner.
The privatization agency was ordered specifically to facilitate the process of transferring the ownership of the plant to BFIGroup b providing a mutually agreed share purchase agreement, SPA, for execution by the parties.
The ruling also gave an order of perpetual injunction restraining BPE from inviting any further bidding for the sale and acquisition of ALSCON in violation of the existing contract with BFIG.
“Any extraneous body, including RUSAL, which buys the subject of litigation, does so at its own risk,” the apex court had said it its ruling.
Russians defy Supreme Court
Curiously, more than six months since the orders were issued, UC RUSAL, in a brazen display of utter disrespect to the highest court in the land, has not only held firmly its unlawful claim to the ownership of the plant, it has continued to defy the country’s legal authority by contesting the decision sacking it.
Shortly after the ruling, UC RUSAL’s Managing Director, Anatoliy Polovov, had in a statement to ALSCON employees, dismissed it as not binding on the Russians.
“Neither the United Company RUSAL, nor ALSCON are parties to this lawsuit,” Mr Polovov said. “The ruling of Nigeria’s Supreme Court neither changes, nor can change the owner of ALSCON. ALSCON remains part of UC RUSAL and RUSAL’s plans to develop and transform the plant.
RUSAL as a good faith purchaser of ALSCON is ready to protect its ownership even through litigation in the International Arbitration Court in London.”
The company has since made good its threat to drag the Federal Government before the IAC seeking an order prohibiting the execution of the Supreme Court decision to its detriment, and alternatively, demanding over $500 million as damages should UC RUSAL suffer a loss to its ownership of the stake in ALSCON.
A planned visit by the NCP and other stakeholders to ALSCON to conduct an assessment of the plant and ascertain its current state pursuant to the apex court’s order was aborted at the last minute two weeks ago following the Russian’s refusal to commit to providing security and other logistics for the visit.
At a media briefing last Friday in Abuja, Mr. Polovov restated UC RUSAL’s resolve to protect its status as “the legal owner of ALSCON”, pointing out that it is “fully prepared to defend its rights to the smelter, including legal proceedings.” Fraudulent asset devaluation
Ideally, if the Federal Government was up to its responsibility, there is no reason why the Russians should have remained at ALSCON for so long after the Supreme Court had ordered its exit. Their intransigent attitude could easily be traceable to the unholy collaboration by some privileged Nigerians, who use them as front to appropriate the national asset to themselves.
Recent PREMIUM TIMES investigations at the Corporate Affairs Commission, CAC, Abuja had uncovered a monumental fraud by the Russians bordering on criminality that the government should not gloss over.
Between 2006 and 2011, the certified true copy of the summary of the company’s financial statement obtained by this newspaper revealed a deliberate and consistent devaluation of ALSCON’s asset base by about 90 per cent.
Prior to the bid for the plant in 2004, ALSCON’s net asset base stood at about N127.14 billion, according to the government-ordered audit conducted by the financial consultancy firm of PriceWaterHouseCoopers Limited.
After the bid, even at the height of the crisis that attended the controversial handling of the sale by BPE, the company asset base merely declined marginally to N126.4 billion in 2005, before rising to its peak of about N129.93 billion as at December 31, 2006.
Prior to BPE’s formal handing over of ALSCON to UC RUSAL in February 2007, ZAO Deloitte and Touche CIS of Moscow, was brought in by the Russians in January 2007 with a special mandate to audit and devalue the company’s assets.
Ten months after the takeover of the plant by UC RUSAL, the company’s asset base as at December 31, 2007 declined astronomically by about 76.17 per cent, from N129.93 billion to N30.98 billion, and by about 18.69 per cent to N25.19 billion as at December 31, 2008, according to the report of the audit conducted by KPG Professional Services .
Following the established devaluation trend, the value of the assets plunged further by 23.18 per cent to N19.35 billion at the end of 2009; another 23.26 per cent to N14.85 billion at December 2010, and marginally by 1.82 percent to N14.58 billion last December 2011.
Cocktail of lies
In an attempt to deny responsibility for its dubious devaluation of ALSCON assets, UC RUSAL spokesman, Albert Dyabin, claimed recently that the drop in the company’s asset took place in January 2007 prior to the takeover of the plant.
According to Mr. Dyabin, “claims that the reduction in the cost of fixed assets (equipment, machines, buildings and facilities) of ALSCON was caused by any activities of RUSAL is totally wrong and in fact, false.”
He, however, failed to say who brought in the audit firm of ZAO Deloitte and Touche CIS of Moscow, Russia to conduct the January 1, 2007 audit when UC RUSAL had already started working in the plant since 2006 prior to the formal take over in 2007.
ZAO Deloitte in a note in the 2008 audit report stated: “Property Plant and Equipment were professionally re-valued as at 1 January 2007 by ZAO Deloitte and Touche CIS of Moscow, Russia on a fair value basis. The new values were incorporated in the books on 1 January 2007.
“The deficit arising on the revaluation was taken to profit and loss account for that year, while the surplus was credited to the fixed assets revaluations reserve. Subsequent additions to fixed assets have been stated at cost.”
If for the sake of argument, UC RUSAL were to be given the benefit of the doubt that it was not responsible for the sudden decline in value of ALSCON’s asset prior to its takeover of the plant in February 2007, who should be held responsible for the criminal pillage subsequently, which follow an established pattern of decline till last December when the value of the plant rocked its bottom?
UC RUSAL denied withdrawing any material assets from the plant. Rather, it claimed to have invested about N24.54 billion (about $160 million) in the development of ALSCON since 2007. If indeed, this is true, it remains to conjecture if such a significant investment into the capital assets of ALSCON in line with its post-privatization plan should result in a loss or appreciation in value of the company’s assets under the control and management of the Russians during the period?
Dubious annual returns filings
Apart from the financial statements indicating a systematic pillage of the plant, further investigations by PREMIUM TIMES have revealed that UC RUSAL made other dubious filings, including annual account returns that contain significant discrepancies that border on criminality, with the objective of shielding the true state of ALSCON from the public.
For instance, figures in the company’s audited financial report filed with the CAC for 2007 and 2008 could not be reconciled with those of its annual returns for the respective years prepared by Benson Gagar & Co, a firm of Chartered Accountants, whose credentials and certification with the Institute of Certified Accountants of Nigeria, ICAN, remain doubtful and questionable.
The filings were on behalf of the directors of ALSCON, consisting Terentyev Andrey (Russian) of ALSCON township, Ikot Abasi, Akwa Ibom state; Christopher Anyanwu, then Director General, BPE, representing the Federal Government on the Board of the company; Chestnoir Serge and Arnautov Alexey, both Russians, of 13/1 Nikoloyamskaya Street, Moscow, Russia.
As part of the annual returns, UC RUSAL indicated that depreciation on fixed assets, including land and building, furniture and fitting, office equipment and motor vehicles were depreciated over their estimated useful lives on a straight line method at the rate of 5 per cent and charged against the result of the operation for the year.
But how a company that thrives on fixed assets managed to record a zero value for both 2007 and 2008 when UC RUSAL took over operations, while current asset (cash and bank balances) was a paltry N150,000 and current liabilities a negative value of N450,000, remains a mystery that should interest stakeholders.
Similarly, net current assets value for the two years remained constant at N2.495billion, while preliminary expenses was N2.269 billion and deferred expenditures N2.042 billion. The company’s total asset was put at N6.81billion, which was also captured as financed share capital N6.81billion and directors’ account.
Though the company’s profit and loss account had a positive balance of N133 million as at December 31, 2006, net losses on revaluation of fixed assets resulted in negative balances of N107.8billion in 2007; N5.79billion for 2008; N5.83 billion for 2009 and N4.50billion for 2010 before and after taxation.
“The deliberate manipulation of the figures in the financial statements and annual returns were, apparently meant to shield the truth and avoid assessment by the relevant tax agencies,” an Abuja-based legal practitioner, Albert Ekundayo, said on Friday.
“Crook multi-nationals and their collaborators should not be allowed to escape the wrath of the country’s law. Refusal to give all thefacts about the true assessment of the state of a company is a criminal liability for whoever takes over the company and contravenes the provisions of the Corporate and Allied Matters Act, CAMA. If nothing is done to bring the Russians to face law, a dangerous precedence would have been set.”
PREMIUM TIMES investigations at the Federal Inland Revenue Services, FIRS, show that UC RUSAL has not remitted any tax to the government from its operations since it took over the plant in 2007 as a public liability company.
Support PREMIUM TIMES' journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
TEXT AD: To advertise here . Call Willie +2347088095401...