ALSCON: How BPE continues to defy Supreme Court order

ALSCON Plant
ALSCON Plant

The Bureau of Public Enterprises (BPE) has announced the Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi, in Akwa Ibom State will soon recommence normal operations.

The Director-General, Alex Okoh, said in a statement sent to the media on February 2, that the privatisation agency was consulting to resolve critical issues to facilitate the reopening.

“The Bureau has requested the Federal Government to consider and approve the categorisation of ALSCON under a strategic industry to enable it to buy gas at a concessionary price as opposed to the commercial price to enable the core investor in the company – DHL/RUSAL recommence production and operate profitably,” Mr Okoh said.

The DG recalled the signing of Addendum No. 2 to the Share Purchase Agreement (SPA) between the Ministry of Mines & Steel Development and Dayson Holdings Limited/RUSAL on January 17, 2018.

Following the agreement, he said the ‘new core investor’ submitted a road map detailing issues requiring urgent resolution before the commencement of operations, including the issues of gas price and supply.

“Upon the resolution of the gas price and supply issues, a new agreement will be signed in line with current realities. It will also take into consideration the trend internationally to allow ALSCON to remain competitive in the global aluminium products market,” he stated.

BPE Ignores appeal court ruling

Regardless, PREMIUM TIMES investigations reveal BPE’s plan appear to have ignored the implications of the latest ruling of the Appeal Court in Abuja.

Operations at the $3.2 billion smelter have stalled for almost 15 years since it was privatised in June 2004 due to the lingering ownership crisis.

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On January 11, the Appeal Court presided over by Abdu Aboki, for the umpteenth time ordered BPE to obey the rule of law and enforce the July 6, 2012, judgment of the Supreme Court on ALSCON ownership debacle.

The ruling was delivered more than a month before February 2 when BPE unveiled its plan to recommence operations at ALSCON.

PREMIUM TIMES obtained a copy of the judgment in Abuja on Wednesday.

The case No. CA/A/637/2014 was filed on December 19, 2014, by Dayson Holdings Limited (DHL), the Nigerian special purpose vehicle used by UC RUSAL to participate in the bid for ALSCON in 2004.

The application sought a review of the September 30, 2014 ruling by the Appeal Court and a restraining order against BPE’s attempt to enforce the July 6, 2012, order of the Supreme Court.

The Supreme Court order followed several legal battles by BFIG to reclaim its award after BPE’s unilateral cancellation of its declaration by National Council on Privatisation (NCP) as the winner of the June 2004 bid for ALSCON.

Following the order, BPE not only refused to obey and enforce it, but it also encouraged UC RUSAL to go to the Appeal Court for a review.

In the January 11, 2019 ruling, Justice Aboki upheld the Supreme Court verdict and again ordered full enforcement by BPE.

Specifically, the judge directed BPE to “provide the mutual agreed Share Purchase Agreement (Exhibit BPE1) for execution by the parties.”

The agreement, he said, would “enable BFIG to pay the agreed 10 per cent of $410 million (about $41 million) within 15 working days from the date of the execution of the Share Purchase Agreement by the agreement dated May 20, 2004.”

The balance of 90 per cent of the bid price, Mr Aboki said, “shall be paid within 90 calendar days as ordered by the Supreme Court.”

The judge said the ruling sets aside the judgment in Suit No FHC/ABJ/CS/901/2013 of September 30, 2014, delivered by Justice Ashada Abdu-Kafarati of the Federal High Court, Abuja.

In the 2014 judgment, the judge had ordered BPE to accept 10 per cent of the purchase price, or $41 million, to be paid within 15 working days of the enforcement order, or not later than October 24, 2014.

Also, the judgment directed the balance of $369million be paid as per the audited financial statement by KPMG as at the date of the judgment.

In the court’s view, the payment deadlines have to be reviewed to accommodate current realities, considering the legal battles, which rendered them outdated.

Why the court set aside the 2014 judgment

According to analysts, the latest court ruling conveys far-reaching implications which BPE appears to have ignored.

Those familiar with the ALSCON crisis told PREMIUM TIMES on Thursday the latest Appeal Court ruling effectively nullifies all existing agreements purportedly entered between BPE and any individual or group concerning the ownership of ALSCON.

They say the ruling legally restores the ALSCON transaction to its July 6, 2012: the status of when the Supreme Court handed its final ruling, which ordered BPE to enforce the right of the winner of the bid for ALSCON in 2004.

The analysts cited the 2006 agreement signed between BPE and UC RUSAL, which transferred the management of ALSCON to the Russians.

Besides, on Sunday, January 21, 2018, BPE, supported by the then Minister of Mines & Steel Development, Kayode Fayemi, signed another controversial “renewed Share Purchase Agreement, SPA” with the Russians.

Details of the terms of the new agreement were not disclosed.

But, Mr Fayemi said it involved the complete takeover of ALSCON by Dayson Holdings Limited/RUSAL as the core investor, with the Federal Government retaining only 20 per cent equity.

BFIG writes BPE

Following the ruling, PREMIUM TIMES learnt counsel to BFIG, Patrick Ikwueto, a Senior Advocate of Nigeria, on January 14, 2019, wrote to the DG of BPE to draw his attention to the consequential orders of the Appeal Court.

In the letter titled: Re: Aluminium Smelter Company of Nigeria Share Purchase Agreement As Per The Judgement Of The Court of Appeal Dated 11 January 2019”, Mr Ikwueto recalled the contents of the final judgment and order of the Supreme Court on July 6, 2012.

The Judgment reads: “I. An Order of specific performance is hereby decreed directing the Defendant/Respondent to provide the mutually agreed Share Purchase Agreement for execution by the parties to enable the Plaintiff/Applicant pay the agreed 10% of the accepted bid price of $410million (i.e. the sum of $41million) within 15 working days from the date of the execution of the Share Purchase Agreement in accordance with the agreement dated May 20, 2004, and the 90% balance bid price shall be paid within 90 calendar days.

“II. An Order for the Defendant/Respondent to accept payment of the 10% of the bid price from the Plaintiff/Applicant within 15 days from the date of signing the Share Purchase Agreement (SPA).

“III. An Order of perpetual injunction restraining the Defendant/Respondent, its servants, agent, privies, management or howsoever called from inviting any further bidding for the sale and acquisition of ALSCON in violation of the contract between the Plaintiff/Applicant and Defendant/Respondent and/or from negotiating to sell, selling, transferring or otherwise handing over the Aluminium Smelter Company of Nigeria (ALSCON) to any person or persons in violation of the contract between the Plaintiff/Appellant and the Defendant/Respondent.”

The copy of the original SPA (Exhibit BPE1) approved by the Supreme Court obtained by PREMIUM TIMES on Thursday is a 15-page document.

It is accompanied by several volumes of annexures covering about 17 different aspects of ALSCON.

Section 19.1 explains that “all the annexures that form part of this agreement shall be construed by the provisions of the Agreement.”

The annexures include a financial statement of ALSCON for the year ended December 31, 2004; ALSCON Post-Acquisition Plan; List of Liabilities of ALSCON; List of Facilities of ALSCON; List of land Plots of ALSCON; List of Compensation Scheme of Employees of ALSCON, and List of Employee Benefit of ALSCON.

The others include List of Intellectual Property of ALSCON; List of Material Contracts of ALSCON; List of Banks of ALSCON; List of Government Authorities of ALSCON of ALSCON; Exhibit No. 1: Natural Gas Sales and Purchase Agreement; Exhibit 3: Federal Republic of Nigeria Officials Gazette, and Exhibit 4: Power of Attorney.

Section 2.1 of the SPA gave the bid payment schedule as 15 working days from June 17, 2004, while the balance of 90 per cent shall be paid on or before 90 working days from June 17, 2004. The date was the original fixture after the bid process in 2004.

The SPA also included the address and BPE’s Citibank domiciliary account No. 0010428009 for the payment of the bid price.

On January 25, Mr Ikwueto, in another letter to BPE, noted all the information that required an update.

He also requested the corrections to be effected, particularly the current information on the signatories and payment schedules, to bring out a clean copy of the SPA.

To enable BFIG to execute the SPA and comply with the subsisting judgment/orders of the Supreme Court and reinforced by the Appeal Court, Mr Ikwueto requested BPE to forward to his client the clean copy of the SPA as directed.

On February 4, 2019, BPE sent a response to BFIG dated January 30, 2019, and signed by its DG.

The letter was accompanied with a reproduced 16-page SPA (not the original approved by the court) without any of the 17 annexures, acknowledged as key parts of the SPA.

Mr Okoh’s letter appeared vague on the exact payment schedule.

Although the letter said, payment of $41 million would be within 15 working days from the date of the execution of the SPA. Mr Okoh did not say when.

In the previous SPA, June 17, 2004, was given as the date for the payment. It also served as the date the payment of the balance of 90 per cent would begin to count.

‘Threat’

Without clarifying the doubt, Mr Okoh went ahead to threaten: “If the Bureau does not receive an executed copy of the mutual agreed Share Purchase Agreement, and payment of the agreed sum of $41 million, representing 10 per cent of the bid price within 15 working days, the Bureau will consider itself as being no longer bound by the agreement.”

He said BPE would equally consider itself not contractually bound to BFIG if the balance of $369million is not paid within 90 calendar days of the payment of $41million.

A review of the document showed some aspects of the document differed substantially from the original SPA beyond the mere alteration of change of name of relevant signatories Mr Okoh spoke about.

For instance, the payment schedule was left as it was in the original document (15 working days from June 17, 2004, and the balance of 90 per cent shall be paid on or before 90 working days from June 17, 2004).

Also, BPE’s domiciliary account details were changed from Citibank account No. 0010428009 at Wall Street, to CBN/BPE account No. 010147-USD-CDACBN-52.

Besides, Clause 9.17 in the new SPA, which bordered on “negotiation of the new conditions of service with the two unions of ALSCON within 12 months of the takeover” did not include the word ALSCON.

Treading beaten path of illegality

BPE appears to be treading a familiar beaten path of illegality in its handling of court-ordered resolution of the crisis.

In 2004, at the end of the privatisation exercise, BPE did not immediately issue BFIG a letter to demand payment of 10 per cent of the bid price.

When it finally did 48 hours later, a portion of the offer letter demanded the payment of 10 per cent of the $410 million, or $41 million, within “15 days of the collection of the letter.”

This differed from “15 working days of signing the share purchase agreement (SPA)” agreed by all parties at the technical bidder’s conference before the bidding exercise.

BFIG rejected the letter, insisting on agreed terms.

But, BPE stuck to its position till the expiration of the June 17, 2004 deadline before disqualifying the Nigerian firm for failing to meet the payment schedule.

Days later, BPE invited UC RUSAL to take over ALSCON on “willing seller-willing buyer” terms.

Again, after the Supreme Court ruling on July 6, 2012, BPE refused to retrieve the plant from UC RUSAL and hand over to BFIG, the winner recognised in the judgment.

On January 29, 2013, BPE, ostensibly obeying the Supreme Court, sent to BFIG an offer letter to “Purchase 77.5 percent shares of the ALUMINIUM SHELTER COMPANY OF NIGERIA, ALSCON”, a non-existent company, instead of ALUMINIUM SMELTER COMPANY OF NIGERIA, ALSCON.

Also, the letter was accompanied by a 16-page SPA, instead of the 58-page SPA sent to BFIG on October 8, 2012, to review and approve.

The execution of the SPA was stalemated, as BFIG rejected it on the ground that it was not interested in acquiring the shares of the ‘ALUMINIUM SHELTER COMPANY OF NIGERIA’.

More than a week later, without BPE sending the corrected version, BFIG, on February 13, 2013, signed the October 8, 2012 SPA sent by BPE.

The document was similar to the one UC RUSAL signed after its negotiation in 2006.

It included annexures of 17 key items, including financial statements, post-acquisition plan, liabilities, assets, gas sales and purchase agreements.

BFIG’s refusal to sign the SPA was used by BPE as a reason to, again, disqualify it, forcing a return to the Supreme Court for an order to compel the BPE to comply with its 2012 order.

Failed attempt to subvert Supreme Court order

Since 2012, BPE made a couple of attempts to subvert the ruling of the Supreme Court.

Former President Olusegun Obasanjo is believed to have sowed and nurtured the seed of the current crisis in ALSCON.

The bidding exercise had already ended on June 14, 2004. UC RUSAL was disqualified for disobeying bid guidelines.

The NCP had declared BFIG winner and the preferred bidder with an offer of $410million. What was left was the formal letter from BPE to the winner.

On learning that, UC RUSAL was disqualified and BFIG declared the winner. Mr Obasanjo criticised the outcome.

“If our screening had been right, that group (BFIG) should have been disqualified,” President Obasanjo told reporters shortly after the bid.

“In the aluminium industry today, there are probably three with the technical know-how. I believe if they (BPE) were doing it correctly, they should not have disqualified them (RUSAL). They were asking for certain conditions others considered unimportant,” he said.

Subsequently, the schedule to present the award letter to BFIG was postponed.

When the letter was issued, the original payment schedule was changed into what was it was earlier.

BFIG’s request for correction of the observed ‘mistake’ was ignored till the deadline expired and the bid was cancelled.

In April 2017, shortly after his appointment as Minister of Mines & Steel Development, Mr Fayemi visited ALSCON. He was received by UC RUSAL’s managing director, Dimitriy Zaviyalov.

During the visit, Mr Fayemi assured the Russians of government’s commitment to “free the complex of any encumbrances”, regardless of the pending Supreme Court rulings.

Later in August 2017, Mr Fayemi invited BFIG Chief Executive, Rueben Jaja, to a meeting.

The DG BPE, Alex Okoh, and other ministry officials were present.

Also present were representatives of Danba & Beltech Exim Limited, led by its Chairman/CEO, Saadina Dantata. They said they were UC RUSAL’s agent.

Their purpose for attending the meeting was to present a proposal to BFIG to accept an offer to relinquish its legal rights to ALSCON on the strength of the Supreme Court ruling of July 6, 2012.

On August 21, 2017, Mr Dantata made an initial offer of $30 million to BFIG on behalf of UC RUSAL, payable over 20 years if it agrees to sign off all settlement agreements to terminate all outstanding legal cases in court about the deal to acquire ALSCON.

When Mr Jaja rejected the initial offer and opted out of further meetings, the group on August 28 resolved to send in absentia, through BPE, an adjusted final offer of $35 million, consisting $20 million initial payment.

The offer was in addition to $10 million spread over 20 years, on the same conditions “in the spirit of an amicable settlement”.

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