How Rusal crippled ALSCON with dubious N22billion loan

The Russian firm which should inject life into ALSCON is turning out to fritter its resources.

When workers at the Aluminum Smelter Company of Nigeria, ALSCON, Ikot Abasi, Akwa Ibom State, staged a grounding sit-in at the troubled firm last week, the action rekindled concerns about the lingering ownership tussle that has crippled operations at the facility for years.

The staffers, supported by youths in the host communities, were protesting the recent decision of UC RUSAL, the Russian firm claiming ownership of the company, to sack 475 of the 700-strong workforce after shutting down production and closing the plant indefinitely.

RUSAL blamed the decisions on constraints of inadequate gas supply, and epileptic power supply to sustain normal operations, giving the urgent resolution of these issues as condition for immediate restoration of normal business at the plant.

But PREMIUM TIMES’ findings show far more serious trouble

involving a financial bankruptcy ALSCON has been steered into by UC RUSAL, which has managed to conceal a serial fraud in its books for more than six years since buying the plant from Bureau of Public Enterprises in controversial circumstances in 2006.

BPE handed over ALSCON and sold 77.5 per cent of the Federal Government shareholding in the company to the Russians after it cancelled in controversial circumstances the contract with BFIGroup, the Nigerian-American consortium that emerged the preferred bidder in 2004.

Prior to the bid for ALSCON, the financial statement prepared by PriceWaterHouseCoopers Limited and filed at the Corporate Affairs Commission showed that the company’s total asset base as at December 2004 was N127.14billion; N126.4billion in 2005 andN129.9billion, or $1.13billion when UC RUSAL took over in 2006.

But within a year of taking over, UC RUSAL devalued ALSCON’s total asset base by almost 80 percent to N30.98billion by December 2007; N25.19billion in 2008; N19.35billion in 2009; N14.85billion in 2010, and N14.5billion in 2011.

Further, review of the financial statement, reveals that Dayson Holding Limited, the firm that fronted as the buyer of the company, had saddled on ALSCON huge short-term loans liabilities, which grew from N17.5billion in December 2010 to a total of about N21.35billion by end of the year.

The loan agreement imposes an obligation on ALSCON to pay interest on the outstanding amount at the rate of 2 per cent per annum in the event of failure to fully repay at maturity date.

Dayson is a shadowy incorporation in Cayman Island existing under the Commonwealth Trust Limited, a private blind Trust incorporated in Tortola, British Virgins Island, with links to some powerful Nigerian elites and political office holders, including former President Olusegun Obasanjo.

Contrary to BPE claims about ALSCON’s sound financial health, indications are that the company has been tottering under the weight of a N21.35billion loan granted by Dayson Holding, which far exceeds both the value of the company’s assets as at December 2011 (N14.57million) and the $130.2million UC RUSAL actually paid for the shares.

It remains unclear what the loans were used for, as there are no records in the company’s financial document to show otherwise.

But, followers of the UC RUSAL/ALSCON crisis are worried how the Russians have managed to run down the company into such financial mess when BPE, which has the constitutional responsibility to protect the federal government’s interest, remains on the board of ALSCON.

BPE’s spokesman, Joe Anichebe, said the privatization agency may not be aware of the loan by Dayson Holding to UC RUSAL, describing any such arrangement as an internal business matter that may not be to BPE’s knowledge, adding “it is normal for a parent company to give an internal loan to support the operations of one of its affiliates.”

Though Dayson Holding Limited offered $250million for 77.5 per cent shares in ALSCON, it actually paid $130.2million on February 22, 2007 after the federal government granted it $120million credit facility for the dredging of Imo River.

However, details from a document made available to PREMIUM TIMES, revealed that the credit facility granted by the government for the dredging of Imo River channel may have also disappeared, while huge payments have already been disbursed ostensibly for the dredging that is yet to commence.

As part of the concessions approved by former President Olusegun Obasanjo during negotiations for the handing over of ALSCON to Dayson Holding, the BPE had engaged GEMS International NV in June 2005 to carry out a bathymetric pre-dredging survey of Imo River at a total cost of $189,000.

After the contract was signed on July 11, 2005, BPE had approved and paid out the sum of $63,000 as initial disbursement of the amount was for mobilization and demobilization of the vessel reportedly used for the survey, equipment and personnel.

The documents showed that job completion certificates have since been issued in lieu of various payment invoices to “Autonomous Non-Profit Organization Marine Technologies and Safety of St. Petersburg, Russia”, the company purported to have executed the Imo River dredging contract.

The invoices for a total of N505.05millionn or $4.03million covering the period September 2007 and August 2009 show that payments for N187.2million or $1.382million have already been reconciled against acceptance certificate, while payments for N317.95million, or $2.65million are still awaiting certification.

Copies of the payments/ debt analyses were signed by ANO MTB’s Director General, Yuri Aleksandrovich Frolov; Chief Accountant, Galina Nikolaevna Blokhina; Head of Planning and Budget Department of A3 AJICKOH, Yelena Vitalyevna Baranova, and Deputy Chief Accountant of ALSCON, Matatrhodjayer Alevtin, whose name was inserted with pen.

Mr. Anichebe said though he is aware that the federal government hired a consultant to monitor the exercise, he is not aware a report has been submitted to indicate the dredging job has been completed.

The dredging was to help open up the Imo River channel to make for easy transportation of raw materials to the plant and movement of finished products for export as well as clear the way for marine trade between Akwa Ibom, Imo, Abia and the entire Niger Delta region.

Spokesman of UC RUSAL, Smirnova Tatiyana, could not offer any explanations to the issues raised in findings when our reporter contacted her on Saturday.

“The whole of information you mentioned in request is untrue” Tatiyana said in a response.

“RUSAL on repeated occasions notes that the suspension of operations is a temporary measure, one necessary to avoid completely shutting down of the plant. Smelting operations will resume as soon as the legal uncertainty has been resolved and the continuous power supply has been secured.

“In addition, despite the continuing uncertainty around the plant, ALSCON will continue to generate electricity. During the suspension period, the main efforts of the Company will be focused on securing continuous gas delivery, obtaining judicial determination that RUSAL is the rightful owner of ALSCON, and preparing to restart operations.”

However, President BFIGroup, Reuben Jaja, expressed shock, described the findings as “startling and another reason why BPE officials would go to any length to frustrate any attempt by BFIG to take-over ALSCON as directed by the Supreme Court last year.”

Threatening to invite the Economic and Financial Crimes Commission, EFCC at the appropriate time to investigate the serial fraud that resulted in the bankruptcy of ALSCON between 2006 and 2011, Mr. Jaja said BPE, which sits on the Boards of the company, has a lot of questions to answer why it neglected its constitutional duty to maintain oversight of the company while UC RUSAL accumulated huge loans liabilities.

“What is more annoying is that nobody knows where those monies went,” he said. “It is obvious the monies were not used in upgrading the organisation, otherwise the value of ALSCON should have been growing. It is clear ALSCON is bankrupt and in severe financial difficulties. That explains why production was shutdown recently and workers had to be sacked, since there is no money to pay for salaries, gas, repair the machines and the power generators,” he said.

On allegations that the offer to BFIG to acquire ALSCON was cancelled recently following its refusal to execute the SPA transmitted to it by BPE, Mr. Jaja described such claims as “blatant lies” by BPE to discredit the reputation BFIG to cover its track.

“The truth is that BFIG has since February 13, 2013 executed the mutually agreed SPA provided by BPE and submitted to it with instructions that they execute their part and return a copy accompanied with the details of their accounts for us to BFIG to transfer the initial 10 per cent offer price.

“As of today, they (BPE) have refused to sign the SPA and make the bank details available as requested. That is the basis we (BFIG) have gone to Supreme Court to ask that they be compelled to do so in line with the July 6, 2012 order,” Mr. Jaja said.

Source: http://www.premiumtimesng.com