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15.12.2023 Featured FG Silently Pays $496m Compensation to Indian Firm GIHL Despite Decade-Old Probe

Published 15th Dec, 2023

By Joseph Adeiye

The National Assembly has called for investigations into a $496 million compensation Nigeria paid to Global Infrastructure Holding Limited (GIHL), an Indian company the federal government cancelled a concession agreement with.

GIHL received $496 million after it took the Nigerian government to court over a breach of contractual agreement.

Reports have, however, portrayed the GIHL issue as a shocking revelation for the senators on the National Assembly Joint Committee on Steel Development who heard Abubakar Audu, the Minister of Steel Development, defend his 2024 budget.

FIJ has found that the federal government made no investigation into Global Infrastructure Holding Limited, as it paid billions to the company despite a litany of complaints about fraud in the company as far back as 2016.

READ ALSO: After Gulping $10b in 43 Years, Ajaokuta Steel Is Still ‘Almost Ready’

NIGERIA’S DEAL WITH GLOBAL INFRASTRUCTURE HOLDING LTD

The Nigerian government recognises the iron and steel industry as indispensable aspects of national industrialisation. At the start of Nigeria’s fourth republic, President Olusegun Obasanjo planned to privatise Ajaokuta Steel and other steel companies. Obasanjo gave Messrs SOLGAS Energy, an American company, control of Ajaokuta in 2003 but terminated the 10-year concession contract for its poor performance in 2004.

Reports claim that GIHL took control of the National Iron Ore Mining Company in Itakpe, Kogi State, in 2016, but GIHL actually got a contract similar to SOLGAS Energy’s from Obasanjo around 2005.

What happened in 2016 was a repossession of the Itakpe mining company with permission from the federal government.

“The Obasanjo regime decided against putting more money into the plant and sought to concession it under its privatisation programme. Global Infrastructure (Nigeria) Ltd (GINL), an Indian company owned by Pramod Mittal, one of the famous Mittal brothers whose separate companies had global acquisitions and operations in steel production, was given a ten-year concession in 2004 for the Ajaokuta steel complex,” a research paper published with the Lagos Business School in 2016 stated.

“This was converted to 60 percent equity in May 2007, shortly before the exit of the Obasanjo government. GINL also won the concession for the Delta Steel Company for which it paid $30 million. The problem was that BUA Group, a local company which was initially chosen as preferred bidder with an offer variously put at $20.5-31 million and an eighty percent stake in the concession, continued to agitate for the Delta Steel concession and soon various materials appeared in the newspapers alleging that the entire concession to GNIL was steeped in underhand deals that robbed the nation through undervalued transactions.

“The new Yar Adua government established a five-man probe panel in October 2007 and cancelled the concession agreement in June 2008. It alleged that GNIL had failed to meet performance targets and to pay concession fees while indulging in asset stripping. GNIL proceeded to international arbitration over the matter. Nigeria had closed down a functioning Ajaokuta Steel Company in 2007 on the grounds of a faulty privatisation process but was still paying thousands of staff in a then largely moribund facility in 2013, whilst it attended to a costly international arbitration.”

GIHL is the same company as Global Infrastructure (Nigeria) Ltd (GINL) mentioned in the Lagos Business School paper.

Audu told the National Assembly Joint Committee on Steel Development on Thursday that GIHL failed to do the right thing after its agreement with the federal government.

“The firm was supposed to be producing iron ore and transferring it to Ajaokuta for steel development but it was busy exporting the commodity,” he said.

“Before the exit of the last administration, the federal government went through litigation and a settlement was reached. The federal government paid $496m to the Indian firm for breach of agreement.

“Historically, iron ore used to be produced in Itakpe. They have a lot of staff that were producing iron ore. Some of the production lines in Ajaokuta were also working. We are still paying the staff there because the agreement has been terminated.”

READ ALSO: FG to Lose N96m During Railway Workers’ Three-Day Warning Strike

N4.5 BILLION PAY FOR NO WORK

At the same hearing, a claim that the federal government had paid GIHL staff N1.5 billion annually for three years was not denied.

Natasha Akpoti-Uduaghan, a senator from Kogi State, faulted paying N1.5 billion annually to the staff of a company that was in a concession agreement with the government.

“The Indian firm could not perform; they denied Nigerians access to the iron ore company for three years,” Akpoti-Uduaghan said.

“Instead of them being penalised for depriving Nigeria of its social and economic growth, we compensated them further by paying them $469 million.

“This committee would like to see the court papers that penalised Nigeria.”

Akpoti-Uduaghan said that the termination of the agreement was done in private and without public knowledge, a move that raised suspicion.

Kayode Fayemi, Nigeria’s Minister of Solid Minerals from November 2015 to May 2018, said that Nigeria admitted that it had committed to GIHL and that commitment was between $500 million and $700 million.

“We are not paying any of that. What we are doing in return is giving the Nigerian Iron Ore Mining Company back for the remaining period of the concession,” Fayemi told Channels TV in August 2016.

“It was a ten-year concession. Three years had already been used before the revocation, now there are seven years left.”

FRAUD REPORTS

This week was not the first time Akpoti-Uduaghan expressed suspicion over the GIHL-Nigeria agreement. Before she became an elected senator, Akpoti-Uduaghan was a lawyer who opposed the return of the Ajaokuta steel and iron ore projects to GIHL.

In 2016, Akpoti-Uduaghan published a report of accusations against GIHL. She appeared before the National Assembly in 2018 to complain about the illegality of the GIHL’s operations in Itakpe.

Armed with the court documents of concern, Akpoti-Uduaghan explained that GIHL swindled Nigeria and the federal government ought to have been able to cut ties with the company at the arbitration court in London.

“This is the Inuwa Mogaji Report, duly certified by the Ministry of Solid Minerals. It contains facts and figures, and even pictorial evidence, of the vandalisation that took place [in Itakpe]. I am surprised that Nigeria did not present this before the court in England and said we have no proof,” Akpoti-Uduaghan told the National Assembly.

“How can we have no proof? Why did the solid mineral ministry under Kayode Fayemi choose to concession Itakpe back to the same people who vandalised it because there was no proof? This is the proof.

“I also have the rules of the International Chamber of Commerce. From this report, signed by the ex-attorney general Mohammed Bello Adoke, I could tell here that Nigeria was clearly winning the case. There was really no reason for Nigeria to settle out of court. It states here, in 9.2.3, that ‘claimants (GIHL) had not demonstrated… Claimants have not proved that they would suffer irreparable harm’. All the points here state that the claimants have not demonstrated.

“To our surprise, the attorney general (Adoke) applied for an out-of-court settlement and President Jonathan granted it. The out-of-court settlement brought about the re-concession agreement. The terms of the re-concession agreement stated that Itakpe be given back to Global Infrastructures Nigeria Limited because Nigeria owes them $525 million.

“If you recall, Minister Kayode Fayemi said that it was the court in England that told Nigeria to pay that amount and Nigeria does not have that amount so the only thing Nigeria could do was to give Itakpe back to GIHL.

“I would read from the letter Attorney General Adoke wrote to President Jonathan: ‘Item 6A: In light of the fact that a presidential committee had estimated damages payable to Global (GIHL) $525 million… the agreement of Global to waive…’ This shows that it was a presidential committee and not a court in England.”

READ ALSO: INVESTIGATION: Set Up in 2019, This Restaurant Has Posed as an Engineering Company to Take N367.46m From FG

INVESTIGATION NOW?

Akpoti-Uduaghan told the National Assembly that she would like the legislative chambers to demand the report of that presidential committee to find out how it concluded that Nigeria owed GIHL $525 million in 2018.

Zainab Gimba, the co-chairman of the National Assembly Joint Committee on Steel Development, agreed that the resolution between the federal government and GIHL was shrouded in secrecy.

The committee also stated that it would facilitate a public hearing to probe the concession agreement between Nigeria and GIHL. This probe appears to be rather redundant.

The Inuwa Mogaji Report is the documentation of the results of a probe into the Nigeria-GIHL concession, which is over ten years old.

“As at November 15, 2007, the aggregate borrowings from the Nigerian banks is a little over N24 billion. These borrowings are allegedly secured with the assets of Delta Steel Company. BPE confirmed that there have been no board approvals for any of these borrowings and for the assets of DSC to be used as collateral for ASCL and NIOMCO,” the Inuwa Mogaji Report stated.

“The figure (N24 billion) supplied by the finance director of the GIHL could be more considering the interest of about 14% per annum. One is therefore forced to ask what happened to the funds borrowed.

“On the resumption of GIHL management at the ASCL and NIOMCO, processed iron ore stored at ASCL was carted away to Warri and sold to interested groups overseas.”

The report exposed more wrongdoings on the part of GIHL, concluding that the concession contract was tipped to the detriment of the interests of the Nigerian government.

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Published 15th Dec, 2023

By Joseph Adeiye

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