April 1, 2008
Press Release issued by Segun Adeniyi in Abuja today, reads:
The Federal Executive Council presided over by Umaru Musa Yar'Adua today rescinded, on account of non- compliance, the concession agreements between the Federal Government and Global Infrastructure (Nigeria) Limited (GIHL) in respect of the Ajaokuta Steel Company and the National Iron Ore Mining Company.
After considering the report of the Administrative Panel of Inquiry established by the Yar'Adua Administration to review the concession agreements and determine the extent of compliance by both parties, the council agreed with its finding that the agreements "were largely skewed in favour of the concessionaire to the detriment of the Federal Government of Nigeria".
The council also agreed with the panel's conclusion that any benefits that might have accrued to the Government and people of Nigeria from the implementation of the agreements have been thwarted by breaches and "unwholesome" practices by GIHL.
The Administrative panel of Inquiry indicted GIHL for breaches of the concessionary agreements including failure to submit a workable business plan within the specified timeframe, non-payment of concessionary fees as well as the cannibalization and exportation of plants and equipment.
In deciding to rescind the agreements, Government also noted that the purported Share Sales Purchase Agreement (SSPA) between it and GIHL in respect of ASCL is technically not in force because the transfer of shares to the purchase was never effected.
The summary of statutory obligations outstanding against GIHL was put at N350 Million. The panel also discovered that instead of investing external funds on the completion of both projects as expected, GIHL embarked on massive borrowing from local commercial banks, pledging the assets of the Delta Steel Company as collateral.
The panel reported that GIHL currently owes the banks about $192 Million. "The general impression is that GIHL has been diminishing the values of ASCL and NIOMCO to buoy up their fortunes," the panel concluded.
Interim managements will be established by the Federal Government for the Ajaokuta Steel Company and the National Iron Ore Mining Company pending the determination of all issues arising from the rescission of the concession agreements with GIHL.
Furthermore, after reviewing the Economic and Financial Crimes Commission's interim report on the concessionary /sale of ASCL, NIOMCO and the Delta Steel Company, Yar'Adua has ordered the criminal prosecution of indicted officials of the Federal Government and promoters of GIHL for asset stripping.
Also, the Central Bank of Nigeria is to establish amounts of money borrowed by GIHL from Nigerian banks, determine the amounts actually utilized locally and amounts taken out of the country.
The aforementioned actions notwithstanding, the Federal Government wishes to assure all law abiding investors of the safety of their investments in Nigeria. While reaffirming its commitment to due process, transparency and the rule of law, the Yar'Adua Administration will continue to respect the sanctity of all proper and legally-binding agreements.
The Federal Executive Council presided over by Umaru Musa Yar'Adua today rescinded, on account of non- compliance, the concession agreements between the Federal Government and Global Infrastructure (Nigeria) Limited (GIHL) in respect of the Ajaokuta Steel Company and the National Iron Ore Mining Company.
After considering the report of the Administrative Panel of Inquiry established by the Yar'Adua Administration to review the concession agreements and determine the extent of compliance by both parties, the council agreed with its finding that the agreements "were largely skewed in favour of the concessionaire to the detriment of the Federal Government of Nigeria".
The council also agreed with the panel's conclusion that any benefits that might have accrued to the Government and people of Nigeria from the implementation of the agreements have been thwarted by breaches and "unwholesome" practices by GIHL.
The Administrative panel of Inquiry indicted GIHL for breaches of the concessionary agreements including failure to submit a workable business plan within the specified timeframe, non-payment of concessionary fees as well as the cannibalization and exportation of plants and equipment.
In deciding to rescind the agreements, Government also noted that the purported Share Sales Purchase Agreement (SSPA) between it and GIHL in respect of ASCL is technically not in force because the transfer of shares to the purchase was never effected.
The summary of statutory obligations outstanding against GIHL was put at N350 Million. The panel also discovered that instead of investing external funds on the completion of both projects as expected, GIHL embarked on massive borrowing from local commercial banks, pledging the assets of the Delta Steel Company as collateral.
The panel reported that GIHL currently owes the banks about $192 Million. "The general impression is that GIHL has been diminishing the values of ASCL and NIOMCO to buoy up their fortunes," the panel concluded.
Interim managements will be established by the Federal Government for the Ajaokuta Steel Company and the National Iron Ore Mining Company pending the determination of all issues arising from the rescission of the concession agreements with GIHL.
Furthermore, after reviewing the Economic and Financial Crimes Commission's interim report on the concessionary /sale of ASCL, NIOMCO and the Delta Steel Company, Yar'Adua has ordered the criminal prosecution of indicted officials of the Federal Government and promoters of GIHL for asset stripping.
Also, the Central Bank of Nigeria is to establish amounts of money borrowed by GIHL from Nigerian banks, determine the amounts actually utilized locally and amounts taken out of the country.
The aforementioned actions notwithstanding, the Federal Government wishes to assure all law abiding investors of the safety of their investments in Nigeria. While reaffirming its commitment to due process, transparency and the rule of law, the Yar'Adua Administration will continue to respect the sanctity of all proper and legally-binding agreements.
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