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Ajaokuta Steel: Mittal, Indian Businessman Gets $500m Bailout in Nigeria



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A company owned by Pramod Mittal, an Indian businessman who was the chairman of Ispat Industries Limited (now JSW Ispat Steel) is reportedly getting almost $500 million after the federal government of Nigeria agreed to pay his company  the sum to settle a contract dispute over a deal that a previous  administration said was tarnished by fraud.

Ajaokuta Steel: Mittal, Indian Businessman Gets $500m Bailout in Nigeria

Source: Bloomberg

Bloomberg reported that Mittal’s firm won a settlement tied to a Soviet-era steel plant that has sucked up more than $7 billion in Nigerian public investment without producing any metal.

Mittal, whose career in the steel industry has been less glittering than Lakshmi Mittal,  his better-known sibling — the tycoon behind the €20 billion ($21.2 billion) ArcelorMittal SA conglomerate —, has a string of abandoned factories and a trail of unpaid debts to his name.

Five years ago, his Isle of Man-registered Global Steel Holdings Ltd., or GSH, was put into liquidation over $167 million owed to Moorgate Industries Ltd., a company spun off from one of the world’s biggest steel traders.

As a UK court weighed Moorgate’s request to declare Pramod personally bankrupt three years ago, the London-based Indian national held out the prospect of a payout from the Nigerian state to clear his debt.

The judge was unconvinced at the time, but the settlement subsequently reached with Nigeria last year now looks like the 67-year-old’s best route out of insolvency.

Still, while payments from the Nigerian government have reached GSH’s liquidators, as of Oct. 4, Moorgate had yet to see any of those funds despite having asked for them, court documents show.

With Pramod’s bankruptcy winding its way through English court rooms, a new Nigerian president has taken office, and last month his steel minister said one of the administration’s top priorities is to finally fire up the furnaces of the massive plant at the heart of the younger Mittal’s $496 million compensation.

The government has justified the agreement with a former unit of Pramod’s GSH, which was announced in September 2022, saying it frees the state to pursue its ambitions for the sprawling 24,000-hectare (92 square mile) site.

The settlement — representing about 1.5% of Nigeria’s foreign reserves — is just the latest twist in the saga of the vast Soviet-built factory complex begun 44 years ago.

The project has sucked up more than $7 billion in public investment and has yet to produce any metal.

The story of the Ajaokuta steel mill on the banks of the Niger River 190 kilometers south of the capital, Abuja, is often cited as emblematic of the corruption, poor governance and incompetence that bedevils the West African nation.

The country’s most notorious white elephant still sparks passionate debate over whether it should be written off or revived.

“Ajaokuta has been a black hole that has gobbled up billions of dollars, enriching multiple generations of politicians and foreign enablers,” said Matthew Page, a former Nigeria expert for US intelligence agencies and now an associate fellow at London-based Chatham House.

“This last failed reboot — and the giant price tag that came with it — is a preview of the next failed re-concessioning attempt. At this point, Ajaokuta’s dilapidated machinery is capable of doing only one thing: making public funds disappear.”

Bloomberg claimed that neither Pramod’s representatives nor the spokespeople for the newly elected President Bola Tinubu and Steel Minister Shuaibu Audu responded to requests for comment.

Abubakar Malami, Nigeria’s attorney general from 2015 to earlier this year, on whose watch the settlement was reached, said last year that the administration of former President Muhammadu Buhari “rescued the steel industry from interminable and complex disputes as well as saving the taxpayer from humongous damages.”

Pramod’s Involvement

Pramod entered into the Ajaokuta picture in 2004, when then President Olusegun Obasanjo awarded GSH a series of contracts, including an arrangement first to manage and later to buy the steel mill.

Shortly after GSH took over the plant, Solgas Energy Ltd., a small US company, sued it in Texas. Solgas claimed that GSH discussed becoming Solgas’ subcontractor on Ajaokuta before breaching a confidentiality accord and bribing Nigerian officials, including one of Obasanjo’s sons, to “steal the concession.”

While the case was thrown out on jurisdictional grounds, in December 2008 a separate arbitration tribunal ordered Nigeria to pay Solgas $15.2 million in damages for the wrongful termination of the contract — while noting the US firm hadn’t provided evidence to support the corruption allegations.

By then, Umaru Yar’Adua had taken over as Nigeria’s president, and he canceled GSH’s contracts after a panel that his steel development minister set up said the concessions were rife with irregularities. GSH’s claim it had invested $200 million was “a ruse,” the inspectors said.

Rather, the company had used its Nigerian assets to borrow more than $192 million from local banks — funds they “strongly” suspected had been dispatched abroad, they said.

The panel’s full report — never made public but seen by Bloomberg — said rescuing Ajaokuta was beyond the “financial, technical and experiential capabilities” of GSH, which instead had been “systematically cannibalizing, vandalizing and moving valuable equipment” out of the factory.

GSH and its Nigerian unit initiated arbitration proceedings against the government and later entered mediation, which produced last year’s settlement.

Pramod had signed two earlier agreements with the Nigerian government – in 2014 and 2016 – that would have seen his firm retain the right to manage an idled state-owned iron ore mining company but receive no payout.

“I threatened them with criminal proceedings for tax evasion, in addition to other criminal infractions that they had clearly committed,” Mohammed Adoke, a former attorney general who had reached the first of these accords, wrote in his memoir titled “Burden of Service.” “To amicably resolve the issue, I insisted that Global Steel should relinquish (Ajaokuta) for free without any form of compensation.”

Adoke’s successor, Malami, who was the attorney general when the half-a-billion-dollar settlement was struck, modified the terms of the deal to take back the mining firm and award a payment. Malami didn’t respond to a request for comment.

Moorgate’s Case

Even before finalizing the Ajaokuta windfall, Pramod had suggested using the money to pay down the Moorgate debt. In June 2020, as Moorgate sought his bankruptcy, he told Judge Catherine Burton that GSH’s liquidators had failed to account for the “very real prospects of a payment” from Nigeria. He said his Abuja-registered subsidiary would settle the obligation to Moorgate “out of whatever money it receives from the mediation,” according to the decision issued by Burton, who — unpersuaded — ruled in favor of the creditor.

Pramod also tried another way to skirt bankruptcy — using an individual voluntary arrangement, or IVA. He proposed repaying less than £5 million out of £2.5 billion  ($3.1 billion) —  or 0.2% of what a handful of companies and individuals said they were owed by the businessman.

Moorgate countered that “friendly creditors” who approved this meager offer were either associated with Pramod or relying on loan agreements that were “not true or contemporaneous documents.” A UK judge revoked the IVA last November, expressing “serious doubts” about the authenticity of the paperwork. In the IVA, Pramod said he was worth £117,000, claiming he didn’t control GSH. The family’s London mansion is held through an offshore company whose directors were senior managers at GSH.

Contrary to Pramod’s argument, the court determined he controlled the British Virgin Islands-registered company that owned GSH through his influence over a family trust, with an Isle of Man judge similarly describing him as that firm’s “driving force.”

Pramod made other apparent attempts to distance himself from the group and its subsidiaries. Since April 2021, GSH’s Nigerian unit — the settlement’s beneficiary — has been owned by a Mauritian entity named Luminous Star Ltd., classified as defunct for a decade and with a director who was formerly a GSH employee. While Pramod ceased to be a director of the Nigerian firm in late 2020, his son sits on the board.

In January, Nigeria’s then Information Minister Lai Mohammed said the government had paid $446 million to GSH’s local unit in multiple instalments under the settlement. The law firm hired by the Nigerian subsidiary for the mediation made six transfers from these funds to GSH’s account, totaling £219 million ($272 million) between October 2022 and February 2023, according to reports filed by the company’s liquidators. The law firm, King & Spalding LLP, declined to comment on the rest of the money.

In December and again in March, Moorgate asked to be paid out of funds recovered by GSH’s liquidators, according to a court decision issued last month in the Isle of Man. The liquidators, who estimate that only £40 million is available for creditors once GSH’s potential tax liability and additional costs are taken into consideration, are yet to comply with the request, the judge said on Oct. 4, ruling that Moorgate is entitled to receive part-satisfaction of the debt. Moorgate and GSH’s liquidators declined to comment.

Emulating Lakshmi

Like his brother Lakshmi, who built the world’s second-largest steel producer after splitting from the family business in the mid-1990s and embarking on a legendary deal-making spree, Pramod’s efforts also hinged on international acquisitions. As Lakshmi, the UK’s sixth-richest person, entered the wealth stratosphere, his brother sought to emulate him.

In 2004, Lakshmi’s daughter got married in a lavish ceremony at Versailles, France. Nine years later, the younger Mittal spent £50 million on his daughter’s wedding in Barcelona, according to Moneylife, an Indian media outlet, and Spanish news site Vanitatis.  Pramod’s spokespeople didn’t comment on the figure. Just this year, Pramod’s son got married to his long-term partner in a “multi-million pound ceremony” at a five-star UK hotel, the Daily Mail reported.

Pramod’s steel ambitions took him not only to Nigeria, but also to Bosnia, Bulgaria, Libya, Zimbabwe and the Philippines where his companies ran up nearly a billion dollars in debts. During the mid-2000s expansion, GSH agreed to take a loan of up to $35 million from an offshore company owned by his brother Lakshmi, board meeting minutes show. Neither Lakshmi nor the group he heads “have any business connection to the investments” of Pramod, a spokesperson for ArcelorMittal said by email.

In the Philippines, GSH bought a shuttered steel plant in 2004. Within five years, activity at the facility stopped amid a legal battle, with lenders claiming Pramod’s firm had defaulted and the company accusing the banks and liquidator of reneging on an obligation to clear tax arrears. In Bulgaria, where GSH failed to turn around a communist-era steelmaker, a Sofia court put the company owning the mill into bankruptcy in 2008 after it defaulted on a Є325 million bond.

Authorities in Bosnia-Herzegovina arrested Pramod in July 2019 and charged him in January this year with “heading an organized crime group.” Prosecutors alleged that GSH “illegally appropriated” about $11.5 million from a manufacturer of iron-ore smelting coke that the firm took control of in 2003. In a statement following his detention, GSH said the “complaints are categorically false,” according to Mumbai-based news outlet Global Prime News. Pramod was released on bail shortly after being questioned and has not returned to Bosnia. He and his family have initiated arbitration proceedings against the Bosnian state.

Meanwhile, in Nigeria, the attachment of the country’s leaders to the Ajaokuta plant shows no sign of abating, even though critics including the World Bank have called the facility obsolete. President Tinubu pledged during his election campaign to get the steel mill up and running. His predecessor’s government, which left office in May, congratulated itself not only for liberating Ajaokuta from Pramod’s legal claim but also securing it for a settlement significantly smaller than the $5.3 billion that GSH had apparently demanded.

Just last month, touting the potential of the complex to one day create half a million jobs, Vice President Kashim Shettima said the “Ajaokuta plant can be a game changer for the Nigerian nation.”

Source:  Bloomberg L.P except headlines and add ons





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AfriLabs, Korea-Africa Foundation in Strategic Partnership to Boost African Innovation



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African hubs network AfriLabs has signed a memorandum of understanding (MOU) with the Korea-Africa Foundation for a strategic partnership aimed at driving innovation and economic growth across the continent.

AfriLabs is a network organisation that is committed to driving innovation and entrepreneurship on the continent by bringing together technology hubs, startups, investors, and other key stakeholders in the ecosystem.

Having recently announced the admission of 16 new hubs, AfriLabs now has a network of 478 hubs across 260 cities in 53 African nations.

The Korea-Africa Foundation, meanwhile, aims to serve as a platform for collaboration between the private and public sectors, and to strengthen exchange and cooperation with African countries.

The collaboration between the two aims to bridge the gap between Korean and African startups by leveraging each other’s expertise and resources. This will be achieved through the exchange of insights on youth development, the launch of joint research initiatives, and the fostering of a dynamic ecosystem that cultivates talent and entrepreneurial spirit in both regions.

“At AfriLabs, we are dedicated to unlocking Africa’s full potential and generating wealth through strategic alliances. This partnership with the Korea-Africa Foundation unlocks a treasure trove of opportunities for startups, granting them access to a global network, invaluable resources, and unparalleled industry knowledge.

“Together, we will empower the next generation of African innovators and entrepreneurs, paving the way for sustainable development and a thriving economy,” said Anna Ekeledo, executive director of AfriLabs.

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$750m World Bank Loan:  FG May Reintroduce Telcoms, Gambling Taxes



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Federal government may reintroduce the controversial telecom tax and other fiscal measures to fulfill one of the conditions for The World Bank’s fresh $750 million loan to Nigeria.

$750m World Bank Loan:  FG May Reintroduce Telcoms, Gambling Taxes

Experts have however strongly opposed new taxes, calling them harmful to the sector’s survival and the larger economy.

But The World Bank in programme appraisal document, dated May 17, 2024, on the loan disbursement to Nigeria, said that $750 million loan to Nigeria will support the federal government’s policy reforms.

A copy of the plan’s document posted on the World Bank website indicated that the government might reintroduce the excises on telecom services, and EMT levy on electronic money transfers through the Nigerian Banking System among other taxes.

Recall that on June 13, Wale Edun, minister of finance and coordinating minister of the economy, announced the approval of two financial support packages by the World Bank valued at $2.25 billion.

The loan consists of $1.5 billion for Nigeria’s reforms for economic stabilisation to enable transformation (RESET) development policy financing program (DPF) and $750 million for Nigeria’s accelerating resource mobilisation reforms (ARMOR) program-for-results (PforR).

In the programme appraisal document, the World Bank said the ARMOR programme contains revenue policy measures such as raising pro-health taxes on tobacco, and alcohol.

The Bretton Woods institution also said the programme contains the introduction of taxes on online betting and gambling, as well as new excise on telecommunication services.

Experts have however warned that these taxes would have severe consequences for investment and the operational viability of telecom companies.

According to them, higher taxes would hinder digitalization efforts, which are crucial for economic growth.

The proposed tax measures, according to the industry, are not only damaging to the telecom sector but also to the broader economy.



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EFCC, Flutterwave to Establish Cybercrime Centre for Security of Transactions



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Economic and Financial Crimes Commission (EFCC) and Flutterwave, unicorn payments technology company have signed a Memorandum of Understanding (MoU), to establish and a state-of-the-art Cybercrime Research Centre.

EFCC, Flutterwave to Establish Cybercrime Centre for Security of Transactions

Areas of focus of the centre include advanced fraud detection and prevention, policy development, as well as youth empowerment.

The fintech company with fortunes worth over $1bn headquartered in San Francisco with footprints in Nigeria and other African countries said the centre would also provide a “sustainable lifeline to youths across the country”.

To this effect, the Silicon Valley-based company signed a Memorandum of Understanding with the anti-graft agency in Abuja.

Ola Olukoyede, chairman, EFCC; Olugbenga Agboola, founder, Flutterwave; Christopher Gray, director of Federal Bureau of Investigations (FBI); and other senior officials from both the EFCC and the FBI witnessed the signing of the MoU

Specifically, the MoU was signed by Mohammadu Hammajoda, secretary, EFCC and Agboolaof Flutterwave.

Olukoyede said, “This partnership marks a significant leap forward in our efforts to combat financial crimes and ensure a secure financial landscape for Nigerians. The Cybercrime Research Centre will significantly enhance our capabilities to prevent, detect, and prosecute financial crimes.”

On his part, Agboola said, “This initiative underscores our commitment to creating a fraud-free financial ecosystem and leading the charge in safeguarding transactions across Africa.

“We applaud the EFCC’s relentless efforts to combat internet fraud and other illicit activities in the financial sector.”

The Cybercrime Research Centre, to be established at the new EFCC Academy in Abuja, would serve as a hub for advanced research, training, and capacity building in the fight against financial crimes.

Areas of focus of the centre include advanced fraud detection and prevention, collaborative research and policy development, youth empowerment and capacity building, technological advancement and resource enablement, among other key areas.

“Advanced Fraud Detection and Prevention: Developing and implementing cutting-edge technologies to detect and prevent financial fraud. The centre will offer comprehensive training for law enforcement and industry professionals to combat modern financial crimes effectively.

“Collaborative Research and Policy Development: Engaging in joint research initiatives and policy formulation to enhance the understanding and regulation of financial crime. The centre will provide a platform for the exchange of ideas and best practices between the public and private sectors.

“Youth Empowerment and Capacity Building: Providing high-end training and research opportunities for 500 youths, equipping them with the skills needed to navigate and excel in the digital economy.

“Technological Advancement and Resource Enablement: Creating a repository of advanced tools, technologies, and resources to support financial crime investigations, including protocols for addressing emerging threats such as cryptocurrency-related crimes,” the statement concluded.

Birthed in 2016 by Agboola, fondly referred to as GB, Flutterwave, with its corporate headquarters in San Francisco and operational head office in Lagos State, grew within a short time, penetrating the African market with customisable payments applications through its unique Application Programming Interface.



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