Obasanjo, Gusau, Imoke, six others behind ALSCON privatisation imbroglio

Photo: businessnews.com.ng
Photo: businessnews.com.ng

The ALSCON controversy cannot be explained without mentioning the nine names

Till date, the attempt by the Bureau for Public Enterprises, BPE, to privatize the Federal Government’s equity in the $3.2billion Aluminium Smelter Company of Nigeria, ALSCON, in Ikot Abasi, Akwa Ibom state, faltered for a record five times since 2001.

With the Supreme Court order last July for the plant to be retrieved from UC RUSAL and handed over to BFIGroup, the Nigerian-American firm declared preferred bidder in 2004 by the National Council on Privatisation, NCP, there are some powerful names behind the ‘fraud’ that culminated in the privatisation process being stalled for more than 11 years.

Julius Bala

He was the Director General of BPE when the NCP invited bids for ALSCON, after the initial failed effort in July 2002 by the Federal Ministry of Power and Steel to negotiate with Glencore of Switzerland and BHP/Bilton of Australia to take over the plant.

The call for Expression of Interest, EOI, had yielded responses from Glencore of Switzerland; RUSAL (Bratsk) Aluminium of Russia; ALCOA Incorporated of America; Ferrostaal AG of Germany and ALCAN of Canada.

At the end, only RUSAL and Ferrostaal survived the screening to submit technical and financial bid proposals, with RUSAL later emerging the lone bidder after Ferrostaal had withdrawn.

BFIG later joined the fray after its President, Reuben Jaja, was invited by then President, Olusegun Obasanjo, to show interest in acquiring the plant.

Mr. Bala was one of the 21 key signatories to the resolution reached at the end of a pre-bid Technical Bids Conference held on May 20, 2004, which was attended by officials of BPE, NCP, BFIG and RUSAL.

Some of the major resolutions at the conference included that whoever emerged the preferred bidder at the end of the commercial bids exercise would undertake the dredging of the Imo River, with the assistance of the BPE, as well as takeover of the sales/gas purchase agreement between Nigerian Gas Company, NGC and ALSCON.

The conference also resolved that bidders should deposit an unconditional $1million bid bond from a bank domiciled in London, with a correspondent bank in Nigeria, duly notarized on or before June 4, 2004.

Also, the eventual winner would pay 10 per cent of the bid price within 15 working days of signing the share purchase agreement, SPA, and outstanding 90 per cent within 90 calendar days.

Mr. Bala not only superintended over the June 14, 2004 financial bids opening exercise, he witnessed the disqualification of RUSAL by the NCP for violating the stipulated guidelines and issued the June 17, 2004 letter conveying NCP’s confirmation of BFIG as the winner and preferred bidder.

BFIG had noted the alteration to the payment schedule contained in Bala’s letter, which stipulated that the deadline for the payment of 10 per cent of the bid price was within 15 days from the receipt of the letter of notification to the bid winner, rather than 15 working days of the signing the SPA.

Despite BFIG’s protests vide June 28 and July 6 correspondences to BPE, Mr. Bala ignored them till July 9 when the bid process was aborted without the SPA being signed. Curiously, Mr. Bala was the same person who signed the letter disqualifying the company, ostensibly for failing to meet the payment deadline.

Liyel Imoke

He was the Minister of Power & Steel, whose office supervised ALSCON.

Mr. Imoke not only announced government’s decision to disqualify BFIG, he was also the head of a committee, composing BPE and NCP representatives, which the President directed to be constituted to carry out fresh negotiations with RUSAL, earlier disqualified for violating the terms of the process, to take-over the plant on a willing-buyer willing-seller basis.

In spite of the House of Representatives resolution at the end of a public hearing in 2005 over the crisis that followed the disqualification of BFIG, Mr. Imoke, current Cross River State Governor, and his committee ignored the lawmakers stance that the presidency should hands off the transaction and allow due process to prevail.

During the negotiations, RUSAL gave several conditions that jettisoned Federal Government’s interest in the transaction in favour of the shadowy interest of some privileged persons in the corridors of government.

Part of the conditions by RUSAL was that ALSCON could be restarted and completed within two years of take over if the Federal Government accepted to give the plant at the cost of $130 million, plus $20 million in operating capital, and another $25 million in ancillary infrastructure and social costs, with alumina supplies from its concession in Guinea.

The Mr. Imoke led committee facilitated the SPA with RUSAL signed on February 3, 2006, which saddled on the government huge costs in subsidies covering more than $160 million for Imo River dredging and another $200 million for gas supplies to power the plant’s operations.

The agreement gave RUSAL the concession of paying the $130 million it offered for the plant, to be disbursed in two installments with two stringent conditions.

First, $50 million be paid within five working days after all legal titles, licenses, permits, land ownerships, and 16 percent of ALSCON’s equity have been lodged by the Federal Government in a London escrow, while the balance $200 million be paid within 20 days after the completion of the dredging of the Imo River by a contractor to be nominated by RUSAL.

The second condition was that a 20-year gas price moratorium be granted by the Federal Government, with an annual gas subsidy of $11.69 million.

Irene Chigbue

Apart from being the Director General of BPE that succeeded Julius Bala, Ms. Chigbue was also a member of the Mr. Imoke led Committee. Despite witnessing the exercise that led to the emergence of BFIG as the preferred bidder for ALSCON on June 20, 2004, Ms. Chigbue was a key defence witness in the case instituted by the American firm against BPE over the annulment of its winning.

Her presentations at the Federal High Court, Abuja, reportedly contributed significantly to the miscarriage of justice by Justice Stephen Adah, who dismissed BFIG’s application contesting its controversial disqualification on the ground that the company had no valid contract with the Federal Government over the ownership of ALSCON.

In justifying the disqualification of BFIG as winner of the 2004 bid, Ms. Chigbue said during the signing of the renegotiated SPA with RUSAL on February 3, 2006 that the process had to be aborted because it was scandalized.

Ms. Chigbue had personally handed over ALSCON to RUSAL in a formal re-commissioning of the plant on February 22, 2008. At the event, RUSAL acting managing director, Andrei Partyansky, had announced plans to inject about $150 million funding to restart operation at the plant before the end of the year.

Recent findings by PREMIUM TIMES showed that Ms. Chigbue, who also represented the Federal Government on the Board of ALSCON till she left office, was part of the management that saw the company’s total asset base being devalued by the RUSAL by about 90 per cent, from N129.9 billion as at the end of 2006 to N30.98 billion. This was according to the summary of the company’s financial statement prepared by PriceWaterHouseCoopers Limited.

Olusegun Obasanjo

He was Nigeria’s President when ALSCON was being privatized as part of a cardinal policy of his administration.

Following NCP’s several failed efforts to attract credible investors to show interest in ALSCON, Mr. Obasanjo was the one who, during one of his state visits to the U.S. after his election, urged Rueben Jaja, BFIGroup President and son of King Jaja of Opobo, to come home and invest in some of the companies slated for privatization.

After completing due diligence on ALSCON facilities, BFIG, based on intelligence reports that Mr. Obasanjo had already made up his mind to hand over the plant to RUSAL reportedly approached the President for clarifications.

Mr. Obasanjo’s assurances to the contrary encouraged BFIG to go ahead to deposit the required $1 million mandatory bond to conclude the submission of its bid for ALSCON.

However, on being briefed on the emergence of BFIG as the preferred bidder on June 14, 2004 against his hitherto undeclared interest, Mr. Obasanjo reportedly summoned BPE immediately to ensure that the result did not stand.

Two weeks after the annulment of BFIG’s win by BPE, Mr. Obasanjo, was in Uyo on a state visit to Akwa Ibom, when he made his preference for RUSAL categorically clear on the issue.

In an answer to a reporter’s question during a state banquet, Mr. Obasanjo said though he invited the leader of the BFIG to Nigeria to invest, he did not believe the company’s technical experience or track record of performance in the aluminium industry in the world measured that of RUSAL.

When his attention was drawn to RUSAL’s disqualification for violating stipulated bid guidelines, Mr. Obasanjo blamed it on BPE’s incompetence, saying that the case would not have arisen if the screening was right, as “they were asking for certain conditions others considered unimportant.”

He assured the reporter that he had already issued directives to Mr. Imoke and BPE to work with the NCP to reinstate RUSAL and open discussions with them immediately on how the Russians would take over the plant under a fresh arrangement.

Wikileaks Cables of August 12, 2004 revealed that the night before the June 14, 2004 bid date, Mr. Obasanjo had invited BFIG top representatives, led by Jaja, to a private meeting at the Villa during which he demanded to see the particulars of their bid.

When the BFIGroup’s legal advisor, Thomas Crehan, advised that conceding to the demand would be illegal and could adversely affect the integrity of the process, it was gathered that Obasanjo had retorted, “but the Russians showed me their proposal.”

The then Deputy Senate President, Ibrahim Mantu, who was in attendance, reportedly attempted to intervene on behalf of BFIG, but he was politely advised by the then National Security Adviser, NSA, Aliyu Gusau, and the late Stella Obasanjo to beware, as he was “on the wrong side.”

Wikileaks quoted Mr. Mantu as saying that Stella had offered to “take care of him” if he would switch his support to the Russians.

It is an open secret to close followers of the ALSCON’s chequered bid process that the only reason BFIG was disqualified as winner of the bid was its insistence on not accommodating Gbenga Obasanjo’s interest in the company.

Gbenga, who also connived with Mr. Imoke and the Indian steel firm, Global Infrastructure Holding Limited, GIHL, to edge out Seun Oyefeso from the management contract at Ajaokuta Steel Company, ASC, has allegedly remained Mr. Obasanjo’s representative on the Board of ALSCON.

Aliyu Gusau

He was Mr. Obasanjo’s NSA. Mr. Gusau was in office throughout the period of the ALSCON bid crisis, till he stepped down in June 2006 when he wanted to contest in the 2007 presidential elections.

The search for the real owners of ALSCON may not directly involve RUSAL, but between Mr. Obasanjo and Mr. Gusau, whose relationship dates back to their days in the military.

Both men are said to have links with Dayson Holdings of Cayman Island, “a shadowy SHELL Corporation subsidiary existing under the Commonwealth Trust Limited, a private blind Trust incorporated in Tortola, British Virgins Island, an off-shore tax haven, with John Martin Parker as the sole director, with no overlap of board or management position with RUSAL.

In all documents relating to the ALSCON transaction by the Russians, there is nowhere RUSAL penned its signature as a stakeholder. Rather, it was Dayson Holdings Limited that signed the controversial SPA with BPE on February 3, 2006.

But, Nicholai Nicoshelivy, who signed the agreement on behalf of Dayson Holdings, later testified under oath and submitted written documents during a U.S. court hearing that he had no legal authority to have represented the company in that capacity.

Gusau is one of the few Nigerians mentioned in most transactions involving Dayson Holdings.

Bola Onagoruwa

Until recently when she was removed as Director General of BPE she had carried on from where her predecessors stopped in sustaining the travesty in the ALSCON transaction.

As a member of the Board of ALSCON since assumption of office in August 2010, Ms. Onagoruwa, who was indicted by the Senate adhoc committee on privatization and commercialization for “gross incompetence in the management of BPE”, concealed the state of health of ALSCON under the management of RUSAL since they took over in 2007.

A financial statement prepared by PriceWaterHouseCoopers Limited and filled at the Corporate Affairs Commission, CAC, showed that ALSCON’s total asset base was devalued by RUSAL by about 90 per cent, from N129.9 billion as at the end of 2006 to N30.98 billion by ending of 2007. The current value stands at N14.7billion as at 2011.

Following the Supreme Court ruling on July 6 removing RUSAL from ALSCON, Ms. Onagoruwa failed to give effect to the apex court order six months after it directed BPE to take immediate steps to ensure that the company was transferred to the rightful owner, BFIG, which won the bid in 2004.

A planned trip by a delegation of BPE, NCP and BFIG to assess the current state of the plant preparatory to drafting a fresh SPA, was last October aborted at the last minute following RUSAL’s refusal to guarantee their security.


Other names that should not be left out include Ms. Chigbue’s successor at BPE, Christopher Anyanwu, who was sacked in April 2010 following alleged mismanagement of the bid process for the sale of the national telecom carrier, Nigerian Telecommunications Limited, NITEL.


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