Between Kogi Govt and Dangote Cement

Industry

Last week, the Kogi State Government in a Hollywood stunt fashion shut down the Obajana factory of Dangote Cement over allegations of tax evasion and unresolved ownership, a development which analysts said will be a big disincentive to investment, reports Festus Akanbi

One incident that promises to redefine the public-private partnership arrangement in Nigeria is the ongoing feud between the Kogi State Government and the management of Dangote Cement leading to the drastic and dramatic shutdown of the Obajana Cement factory of the company last Wednesday.

Going by media reports, the Kogi State government is alleging that it was shortchanged by the company in terms of ownership. It also labelled the company as a tax evader, two allegations that the company has vigorously denied. The Management of Dangote Cement Plc in one of its responses to the claims by the Kogi State government, firmly declared that the Obajana Cement plant in Kogi State is owned 100 per cent by it and that the invasion of the plant last Wednesday by armed vigilantes “on the orders of the state government” was illegal.

The climax of the breakdown in communication between the government and the company manifested last week when scores of the state’s vigilante members reportedly stormed the Obajana cement factory, where many of the company’s staff were wounded and the facility shut.

However, THISDAY gathered from a dependable source on Friday that the management of the company has decided to take the matter to court anytime this week.

According to the source, the crisis was fuelled by the refusal of Alhaji Aliko Dangote to succumb to blackmail by the state assembly which had summoned him for an explanation on the share arrangement of the company.

The source explained that a top official of the company sent to meet with the lawmakers was shunned by the state assemblymen who insisted that Alhaji Dangote must come in person.

When asked to respond to the allegation of tax evasion, the source disclosed that the allegation was just a mere smokescreen because the company does not owe any tax to the government.

“The company pays over N1billion as PAYE to the government. We are not owing a kobo and the evidence is there,” the source said.

Dangote Cement: We Own Obajana Cement 100%

In his response to the claims by the state government, Group Managing Director (GMD), Dangote Cement Plc, Michel Puchercos and titled, “Illegal Shutdown of Dangote Cement, Obajana Plant”, declared the firm’s full ownership of the Obajana plant, while berating the attack on the plant.

Puchercos said: “The Management of Dangote Cement Plc. wishes to inform members of the public, especially its customers and other stakeholders of the recent invasion of its Obajana Cement Plant, Kogi State by armed vigilantes on the orders of the state government.

“The vigilantes, led by some officials of the State government were acting on a resolution of the Kogi State House of Assembly on controversial tax claims; claims that the state government had also contradicted when he said the shutdown was due to an alleged invalid acquisition of the company by Dangote Industries Limited.”

He said in the process of forcefully evicting the company’s workers, to enforce the illegal shutdown, the vigilantes shot at 27 of the workers and also destroyed some of the company’s property at the plant.

Puchercos declared: “We have taken steps to get the hoodlums apprehended by the law enforcement agencies, and we will ensure that full legal action is taken against them.

Meanwhile, watchers of the emerging drama have cautioned that the crisis which has obstructed normal business activities of the cement manufacturer, has serious economic consequences unless the matter is quickly resolved.

An Abuja-based member of the Manufacturers Association of Nigeria (MAN), said the crackdown on Dangote Cement will send a wrong signal to potential industrialists not to commit their resources to areas where a smooth operation cannot be guaranteed.

“What the Kogi government is telling us is that private initiatives like the cement firm are not needed,” he stated.

He recalled that a similar drama played out when Dangote Refinery was about to start in Ogun State.

He also recalled that the location had to be shifted from Ogun State to Lagos when the then administration in Ogun State was proving difficult.

In their responses, members of the mining and host communities have condemned the Kogi State Government for what they described as an extrajudicial and unlawful deployment of the vigilantes to cause chaos in the Obajana community.

The spokesman for the Oyo Mining host community, David Oluruntoba, condemned the act, stating the company had established a cordial relationship with the local community.

He said, “They called us to join them. But I told them that the company has not offended us. We just signed a Community Development Agreement (CDA) and the company has been helping us and providing us with jobs. What has the government done for us, nothing? There is no basis to support the government.”

A staff of Dangote Cement, Jibrin Abubakar, said the company’s workers who were shot during the invasion were currently receiving treatment at a medical facility.

Kogi Govt: Acquisition of Obajana Null and Void

However, the Kogi State’s Commissioner for Information, Kingsley Fanwo, insisted that the state’s government has all the relevant documents to prove that the purported acquisition of Obajana by Dangote was null and void.

He said Kogi State indigenes would not be intimidated into forgoing their birth rights to any individual or institution, no matter how highly placed, adding that Governor Yahaya Bello is committed to his inaugural promise that his administration “shall exist for the sole purpose of serving the superseding interests of the people of Kogi State”.

“There is no evidence of consideration paid by Dangote Industries Limited to the Kogi State Government from the alleged transfer of Obajana Cement Company Plc and no dividend was paid to the state from the profits realised from the inception of Dangote Cement Company Plc to date.

“By the assignment of the three certificates of occupancy, the title in Obajana Cement Company Plc, still vests in Kogi State government as the sole owner.”

Speaker of the Kogi State House of Assembly, Matthew Kolawole, noted that the acquisition of the Obajana Cement Company by Dangote was without the resolution of the House of Assembly, which made the process null and void.

“It is clear that you cannot sell a state government property of any form without the resolution of the Kogi State House of Assembly. All the transfer process of the share capital to Dangote from Obajana by the previous administration was without any law backing it by the state House of Assembly,” Kolawole stated.

In his remarks, the governor said he took the bold step in line with his mandate to safeguard the lives and livelihood of the people of Kogi State, including residents, and to ensure their wellbeing.

The governor, however, said the state was open to discussions once the Dangote Group is ready to come clean.

“We received several petitions from the general public over this particular subject matter. In the past five to six years, all efforts to sit with the proprietors of the Dangote Conglomerate failed,” Bello said.

Questions Begging for Answers

Another analyst noted that the transaction took place in 1992 under the guided democracy of General Ibrahim Babangida, saying it took place a few years after the state was created.

“Perhaps the state had problems with proper documentation. But Dangote should have its documentation of purchase,” he stated.

Speaking further about the development, he said, “the question to ask is if the Bureau of Public Enterprises (BPE) also handled the Obajana plant transaction and whether the Kogi State Government had a 10% stake in it.

Other questions, according to him, are (1) Did the KSG give the federal government the power of attorney to sell its 10% on its behalf? (2) If the federal government got that power of attorney, did, it sell its stake and that of the KSG? (3) If both stakes were sold, did the federal government transfer the proceeds of 10% to the KSG?

“The governor did not withdraw the CoO. He only used the state vigilantes to close the company down. Not even policemen. That is dangerous. Imagine what he will use the vigilante for during elections.”

Another respondent who pleaded anonymity said that Yahaya Bello is saying that the state government has searched for evidence of payment and cannot find it.

“A transaction can have evidence of documentation. But what makes it complete is the purchase consideration. If that cannot be found and or was never made, then Dangote is in serious trouble.”

In the event the company goes to court, the analyst believes it’s going to be a straightforward case.

He said, “This is a commercial transaction, not a political one. The way the courts treat commercial transactions is very straightforward. There are no technicalities involved. The laws of contract and conveyancing are pretty straightforward.”