By EMMA UJAH, Abuja Bureau Chief
RUSAL, the Russian company which bought the controlling shares of the Aluminum Smelter Company of Nigeria, ALSCON, Ikot-Abasri, Akwa-Ibom State, has demanded $502 million (about $78.8 billion) compensation for it to quit the nation’s only aluminum manufacturing company, in line with the Supreme Court order.
A top source at the Presidency told Vanguard that the Russians made the demand as an alternative to their holding on to ALSCON.
The Supreme Court had ruled that the Bureau of Public Enterprises, BPE, gives ALSCON to BFI Group, an American-registered company promoted by a Nigerian, Dr. Reuben Jaja and his team, which originally won the privatisation bid with an offer to pay $410 million for 77. 5 per cent of ALSCON shares in 2004.
RUSAL was disqualified by the BPE from the financial bid process after submitting a conditional bid, in contravention of the bidding guidelines. It eventually, offered $250 million out of which it proposed to pay only $130 million to government and use the balance to dredge the Imo River and other facilities.
The technical committee of the National Council on Privatisation, NCP, then under the Chairmanship of Mr. Akin-Kekere Ekun, disqualified RUSAL at the financial bid opening on June 14, 2004, over its conditional bid.
Angered by the decision of the government of Chief Olusegun Obsanjo to give ALSCON to RUSAL, the original winners of the bid, BFI Group dragged BPE to court to stop the transaction with RUSAL but lost.
Ever since, the Jaja group continued in the legal battle both in Nigeria and the United States where it has its headquarters until it finally got justice at the Nigerian Supreme Court in July, last year.
RUSAL ignores order
As learnt, RUSAL claimed it ignored the Supreme Court judgment on the company’s ownership because it legally owned the multi-billion naira firm but that it was prepared for settlement if properly compensated.
RUSAL’s spokesman and Director of Public and Government Relations, Mr. Albert Dyabin, had told a press conference in Abuja, recently, “RUSAL wishes to confirm that RUSAL is the legal owner of ALSCON. RUSAL’s legal ownership of the plant has not been affected by any litigation.
“No member of the RUSAL group is or has been a respondent in any case affecting the ownership of ALSCON. RUSAL is, however, fully prepared to defend its rights to the smelter, including in legal proceedings.”
RUSAL has dragged the Federal Government before the International Court of Arbitration in London over what the Russians considered a breach of contract over the ALSCON transaction.
The Russians are at the Arbitration Court where they are seeking an order prohibiting the Federal Government from executing the decision of the Supreme Court to its detriment and, alternatively, granting damages in the event that RUSAL should suffer a loss to its ownership of the stake in ALSCON.
Sources revealed that officials of the Ministry of Justice have been briefed on how best to handle the negotiations that may arise from the current development.
However, it was learnt that the $502 million compensation demand by RUSAL was outrageous considering the fact that they have consistently run down the value of ALSCON.
ALSCON was valued at about N129 billion in 2006 but RUSAL was alleged to have brought in a Russian audit firm, ZOA Deloitte and Touche CIS, Moscow which crashed the company’s value to a mere N30.976 billion (about $240 million) the following year, 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 revaluation reserve.
ALSCON’s financial statement indicates that in 2008 the value of the company fell to N25.185 billion; in 2009 it fell to N19.351 billion; in 2010, it went further down to N14.848 billion and by 2011 it came to N14.574 billion. RUSAL claimed to have invested about N24.54 billion (about $ 160 million) in ALSCON since it took over in February 2007.
At a point, the original preferred bidder in the privatisation process, BFI Group of America, insisted that BPE fraudulently sold the company to RUSAL against its own rules and alleged that the government of former President Olusegun Obasanjo had predetermined to sell ALSCON to RUSAL and that it only used the American firm to create a semblance of a genuine privatisation process.
According to the California-based organisation, “RUSAL failed to provide a required $1 million bid bond, thereby failing to comply with government rules for participating in the ALSCON bid process, yet RUSAL was still allowed to bid.
“BFI Group fully complied with the government’s strict bid bond requirements as a contractual precondition for bidding and on national television officially requested a certificate of RUSAL’s compliance. The government denied BFI Group’s repeated requests in this regard. No complying RUSAL bid bond was produced because none exists.
“The government in public announcements steadfastly and overwhelmingly favoured RUSAL despite its non-compliance with bid rules and inferior conditional bid terms, while BFI Group bid unconditionally in accordance with the bidding rules of the Federal Government of Nigeria.
“RUSAL has been consistently favoured by the government over many months, having submitted a conditional bid price of just $5 million with an additional $200 million to be paid over 20 years or by 2025, while BFI Group was coerced by the government to bid against itself to increase its initial bid from $280 million to $410 million.”