Faced with an impervious culture of corruption, the Nigerian State has continued to suffer from notorious exploitations and unfair business transactions in the public and the private sectors.
These sharp practices, according to reports, also threaten Foreign Direct Investment flow and the opportunity for job creation for the teeming unemployed youths.
While allegations of unethical business practices are a common place, the allegations of sharp practices against a Nigerian maritime company, named Lagos Deep Offshore Logistics Base (LADOL), are weighty enough to sabotage the country on many fronts, and cause an unimaginable economic damage.
Part of the damage, according to investigations, include the loss of over 3,000 jobs, should it succeed in evicting from its yard, its estranged partner, Samsung Heavy Industries Nigeria Limited (SHIN).
At a time when the obnoxious statistics on poverty and unemployment are continually rising and joblessness has been largely linked to insecurity in the country, analysts contend that the government can’t afford to allow thousands of jobs to perish and several thousands more dependants to add to the country’s unenviable poverty data.
Amid renewed controversies over LADOL’s unilateral review of the shares and ownership structures in a joint venture for the construction of the $3.3 billion Total project, the Egina FPSO (first of its kind in Africa, that sailed to the oilfield in August, 2018), a petition was addressed to the Department of State Security (DSS) by SHIN, accusing the Nigerian company of massive tax manipulation, evasion of the Single Treasury Account (TSA) and fraudulent ownership arrangement.
At the center of this unfair unilateral action by LADOL was the belief that it could use its high up connections in the Aso Rock villa which were not there in 2014, when an out-of-court settlement was reached, to now arm-twist and force SHIN to renege on the agreement that gave the later a 70 percent of the SHI MCI FZE, a 100% debt guarantee from SHIN’s parent company, Samsung Heavy Industries (SHI) Korea.
The SHI MCI FZE is a special purpose vehicle formed for the partnership in which MCI FZE of LADOL owned 30, while SHI with 70 percent is a representation of SHIN.
LADOL and its sister companies have been involved in tax evasion. Our investigations reveal that, LADOL itself does not have a Tax Identification Number and it is not registered with any of the inland revenue services. This means that the company has not been paying taxes.
The multi billion dollar companies’ Tax evasion and the circumvention of the TSA are weighty crimes under the Nigerian law and punishable with serious penalties.
But while the DSS are still foot-dragging over the release of the report of its investigation into the allegations against LADOL, investigations revealed that the logistic company was culpable of financial and economic crimes.
Records obtained from the Tax Office show that LADOL itself, as a group of companies has no verifiable tax records in Nigeria, and neither does its main subsidiary, the Global Resource Management.
The only one of its subsidiaries with a tax record is the MCI FZE Yard Development Limited, and alarmingly, its tax remittances are insignificant compared to its gross earnings in millions of dollars.
And while LADOL portrays itself as indigenous firm, its ownership structure appears to be shrouded in secrecy. A majority of LADOL’s shares are evidently held in a tax haven owned by a British Virgin Island’s entity, Sable Offshore Investment Limited, and this calls for further investigation by security agencies.
Investigation also revealed that LADOL appeared to have connived with the Nigeria Export Processing Free Zone Authority (NEPFZA) for the payment of $33 million as 1% FOB charge on the value of Egina FPSO UNIT meant for the federal government into a private account, thereby circumventing the TSA.
SHIN had alleged that in March 2018, the zone manager of LADOL free zone and affiliate of LADOL, Global Resource Management Free Zone Company (GRMFZC), issued an invoice to SHI-MCI that the money be paid into the private account of GRMFZC, as against the policy and directive of the Nigerian government.
Sources close to the development said that such a humongous amount of money, about 12 billion naira, evading TSA and the federal government purse could fittingly amount to an economic sabotage, which deserved a thorough investigation.
Analysts contend that the country in its bid to generate more revenues from different sources cannot afford such a financial rip-off either from a private firm or public institution.
While the State appears to be vacillating in taking a decisive action over the petition against LADOL, including the DSS turning in its report on time, the implication of this could be very huge on Foreign Direct Investment (FDI) flow into the country.
For instance, the value of FDI in Nigeria had declined by 43 percent to $2 billion in 2018, due to a dispute between the government and South African telecom giant MTN over repatriated profits, a report by the United Nations had revealed.
The fear in business circles is that if this controversy persists unresolved, Nigeria risks being at a loggerheads with South Korea and this may cause an unhealthy business relationship in the nearest possible future.
This concern could be inferred from the statement credited to South Korean Ambassador to Nigeria, In-tae Lee, when he sought the intervention of former Minister of Industry, Trade and Investment, Okechukwu Enelamah over the feud.
Lee had said: “Korean companies that are eager to invest in Nigeria are watching the dispute closely and it is in the best interest of both countries to get this behind us.”
Although Nigeria is a sovereign nation, but FDI often flows from multinational corporations in developed countries to less-developed countries, especially the third world nations. A further mismanagement of this dispute and the inaction of government could discourage other interests from foreign partners and inhibit the growth of FDI.
Although the federal government through the Minister had assured the Koreans: “We will work with you, Samsung, Ladol, NEPZA and all the parties involved to resolve this amicably. We have an excellent relationship with South Korea and we will like to continue that,” but unfortunately, the disagreement was not resolved before Minister’s term elapsed.
Analysts contend that it is in the public interest that this matter is judiciously addressed and the money lost to unpaid taxes and the evasion of the TSA be recovered and paid into the Federation account.
Pressure is being mounted on the government to apply appropriate sanctions, while Advocacy is on to ensure that copies of every big business agreement, partnerships, joint ventures and Memorandum of Understanding are made available to the Corporate Affairs Commission and other concerned government agencies.
Ishola Abiola is an Independent Investigative reporter.
_____
Follow us on Twitter at @thesignalng
Copyright 2019 SIGNAL. Permission to use portions of this article is granted provided appropriate credits are given to www.signalng.com and other relevant source.
