True Position on Investment in Nigeria and challenges faced from LADOL

Our Company, Samsung Heavy Industries Nigeria Limited (“SHIN”) a Nigerian subsidiary of the Korean Ship Building Company – Samsung Heavy Industries Inc. Korea (“SHI”), on behalf of ourselves, SHI and our joint venture subsidiary, SHI-MCI FZE (“SHI-MCI”), collectively “SAMSUNG”, express our immeasurable gratitude to the Government and the People of Nigeria for the opportunity to operate in the country to date.

Our attention has been drawn to the press release by LADOL Group on 17 August, 2020 followed by the publication sponsored by LADOL Group in some daily papers and online media titled – “LADOL Response to Article – Titled: FG Deserves Full Value from Its Land at Tarkwa Bay – Bala Usman” Published in The Daily Trust of 5th August 2020 Written By Eugene Agha”.

Whilst at the onset, the publication seems to be a direct attack on the person and professional competence of the Managing director of NPA, upon further reading it becomes obvious that the publication is indeed a smear campaign against our company – SHIN, which LADOL refers to as a foreign company despite the fact that we are a duly incorporated Nigerian company.

SAMSUNG is as much as a stakeholder in Nigeria as any other indigenous Nigerian company considering its volume of investment and scale of its business activities including number of local employees in Nigeria. Samsung’s contribution to the Nigeria economy can be seen in the establishment of one of the most advanced Fabrication and Integration Facilities in West Africa set up at Tarkwa Bay (“SHI-MCI Yard” or “Facility”) and its successful delivery of EGINA FPSO Project.

A comparison of LADOL’s statements against the facts of the matter will clearly reveal that LADOL Group’s publication is a complete falsehood calculated to mislead the general public and to incite the Government against our company all in the bid to annex SAMSUNG’s investment in Tarkwa Bay. As part of the bid to usurp our investment, LADOL Group in the said publication totally denied our investment and joint ownership of the SHI-MCI Yard, going ahead to lay claim to the asset. It further went ahead to take full credit for our success in winning and delivering the EGINA FSPO EPC Project, when in essence LADOL Group had no direct contribution to the award and/or the delivery of the EGINA FPSO Project other than being the sub-lessor, an exorbitant service provider and a shareholder to SHI-MCI.

For clarity, SHIN was the sole EPC contractor of the EGINA FPSO Project and the JV of SAMSUNG and LADOL (in which MCI an affiliate of the LADOL Group is a 30% minority shareholder), was just one of the many in-country subcontractors to SHIN.

Our specific reaction to the falsehood and fallacies contained in the publication is as follows:

Lawfulness of NPA’s Termination of LADOL’s Lease and LADOL Shortchange of NPA

  1. The insinuation that the laudable effort by the NPA in granting a direct lease to SAMSUNG of the parcel of the land on which our investment is situated at Tarkwa Bay, is a misplaced act, is farfetched, as such a decision could not have been taken without sufficient and adequate considerations for the fundamental issues of the SAMSUNG/LADOL dispute. This was done in a bid to put a stop to the deliberate efforts of the LADOL Group which has oppressed and frustrated SAMSUNG’s investment and operation.
  2. We believe that NPA was within its statutory right as the Head Lessor to terminate the Lease given to LADOL Group due to the clear breach of the terms of the Head-Lease by GRML, based on its failure to disclose/obtain the consent of NPA to the 2013 Sublease with SAMSUNG, as conveyed in NPA’s termination letter to LADOL Group.
  3. LADOL did shortchange the Government by collecting an exorbitant rent which it failed to disclose to the NPA in violation of its Head Lease obligation with NPA. SAMSUNG paid the sum of $45 Million (@ approximately N300 exchange rate in 2014 = N5 Billion Naira) as five years rent for the use of the 11.2 hectares Yard land it sub-leased from the LADOL Group. A simple comparison of what our company has paid to LADOL Group for the use of the 11.2 hectares with the sum of N880 Million that LADOL Group allegedly paid to NPA for the use of 80 hectares for two years clearly establishes the truth as to who is shortchanging the Government. If the rent was within its negotiation business right, it would not have been reluctant to disclose it to the FGN violating its contractual obligation as the Lessee stipulated in the Head Lease with the Landlord (NPA).
  4. Despite LADOL’s assertion, the validity of the Lease termination and the consequent alleged FGN directive are matters currently in court, as a result of which the alleged directives do not have any legal validity, not being the appropriate constitutional forum for the determination of these matters. In the meantime, SAMSUNG remains the lawful Lessee and occupier of the land with a preservation order of the Court granted in its favor.

SHIN’s Investment in Free Zone

  1. The funds for the SHI-MCI Yard ($270 Million) had been financed based on the 50% debt and 50% equity investment scheme which was mutually agreed and duly signed by each MD of SHIN and MCI (a subsidiary of LADOL Group) in the Shareholders Agreement, where the guarantee for the debt financing was solely borne by SAMSUNG’s financial capability and credit level. Even LADOL (MCI)’s 30% equity in SHI-MCI was carried by SAMSUNG as the majority part of the well-known amount of the Sub-Lease fee ($45 Million).
  2. Neither Total nor NNPC paid for the development of the SHI-MCI Yard under the EGINA FPSO Contract. The fact that the Yard development was solely borne out of SAMSUNG’s private investment has been confirmed through a series of Government investigations that was instigated by LADOL, from the Senate enquiry, to the DSS and even NCDMB, all of whom found no ground in LADOL’s assertion. (Total and DSS letters enclosed).
  3. LADOL is not the Federal Government of Nigeria and while its assertions that the Yard is an investment of the Government remains false and is a dangerous thought causing expropriation of foreign investor’s asset, what LADOL asserts is certainly preposterous as it in essence amounts to appropriating national assets for private individual gains. In essence LADOL is claiming that the Facility is a gift of the Federal Government to LADOL.

Development of the Swamp Land Transforming into State of Art Facilities

  1. SHIN got award of the EGINA FPSO as the sole EPC contractor on the strength of its technical expertise and the commercial viability of its tender including its comprehensive NC execution plan in terms of detail engineering, procurement, project management and in-country fabrication & integration, subcontracting such works to dozens of Nigerian indigenous and/or registered companies including SHI-MCI. Prior to SAMSUNG’s thoughtful selection of the planned site for its huge investment, the LADOL Free Zone was partly developed but mostly undeveloped medium scale (compared to ONNE, LEKKI FZE, etc) logistics base only. As LADOL acknowledged in the publication, the land it leased from NPA was a disused swamp land. SAMSUNG’s investment in the Zone and technological expertise turned the Zone into a hub for fabrication and integration works in West Africa.
  2. The LADOL Group, its shareholders and Jadesimi family received tremendous financial benefit from SAMSUNG’s decision to invest in the yard. The benefits, even excluding the extremely high Sub-Lease fee ($45 Million), amounts to more than $100 Million especially for the services rendered in the Free Zone on an exclusive basis to SAMSUNG, at an exorbitant rate. LADOL Group also benefited from owning 30% shares in SHI-MCI, the cost of which shares at $40.5 Million was solely paid for by SAMSUNG through the unjustifiably inflated Sub-Lease fee for the aforesaid 11.2 hectares. SAMSUNG also gifted LADOL Group $2.7 Million to establish a technical training school for Nigerians (SANTA), which LADOL did not establish yet in spite of collecting the money from SAMSUNG in 2017.

FOB claim by Ladol Group

  1. In April 2018, LADOL made a demand for one percent of the Total EGINA FPSO contract price as a “FOB charge”, which is a purported levy of about $33million. SHIN challenged this request for levy payment as unlawful, bad faith and contrary to the tax regulation, charges and levies exemption offered by the free-zone in accordance with NEPZ Act and applicable regulation.

In their quest to obtain the unjustifiable $33million FOB charge, LADOL as a Zone operator engaged in the abuse of their authority. LADOL suspended SHIN’s operating license in July 2018 despite the directive to issue license by NEPZA. LADOL delayed the issuance of export documents and decided to take the EGINA FPSO hostage by imposing a monopoly during the most critical time in the delivery of the EGINA FPSO.  LADOL downplayed the magnitude of the sum of $33million comparing it to the Project cost of $3.3billion, SHIN must emphasize that the FOB charge was invoiced to SHI-MCI, who was just a subcontractor to SHIN under EPC contract and not the recipient of the alleged EGINA FPSO EPC project cost, the levy therefore amounted to over 10% of SHI-MCI overall revenue on Egina Fabrication&Integration work in Nigeria More importantly, such levy as imposed on SHI-MCI a free zone entity, violated/contradicted the tax- exemption benefit legally provided to entities in the free zone.

  1. These illegal actions forced TOTAL, the Nigeria Government partner in the EGINA project to intervene and pay the ransom of $33million to LADOL. Assuming but not conceding that the charge was legally valid, it is worthy to note that such charges, being a payment allegedly collected on behalf of the Government, as directed by President of the Republic of Nigeria, ought to have been paid directly to the Government Treasury Single Account (TSA) and not into LADOL’s Account. Even after the payment of the arbitrary FOB, LADOL attempted several malicious interruptions to TOTAL and SHIN which made our expats and local workers to work all night to meet the critical EGINA sail away in December 2018.
  2. Whilst LADOL claimed to have invested and constructed the SHIN’s Fabrication and integration yard and participated in the construction of the EGINA FPSO, it is very evident to SHIN, the SOLE EPC contractor of Eigina FPSO that LADOL’s only engagement in either matter was to create the biggest hurdles and disruptions to the project schedule and its timely delivery.

In conclusion, we have no doubt that this recent publication with its false assertions is another malicious attempt by LADOL Group to frustrate and smear our company’s image all in its bid to appropriate SAMSUNG’s investment that has transformed/industrialized its Zone and positioned Nigeria as the West African hub for fabrication and integrations works. Moreover, such a hostile behavior and attitude against its foreign investor, may scare the international community, breaking the will to bring Foreign Direct Investment into Nigeria. It was therefore imperative that we clarify the facts to the public, the Government and all relevant stakeholders in order to ensure that a private individual will not hide under the cloak of some alleged government directives on issues that are sub-judice, to fraudulently appropriate a foreign investment and claim false ownership of the asset.

We assure you of our continuous support and commitment to Nigeria.

 

YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE

What I Told Trump About Christian Massacre Allegation ― Buhari
President Muhammadu Buhari, on Tuesday, revealed his response to President Donald Trump over the American leader’s allegation that the Nigerian government was slaughtering Christians, telling him that the problem between cattle testers and farmers was a cultural thing rather than ethnicity or religion…

COMMENTARY: Four Reasons It’s Stupid To Compare Nigeria’s Petrol Prices With Other Countries, By Farooq Kperogi
In trying to justify Buhari’s latest callous hike in the price of petrol (amid a pandemic, no less), Buhari’s supporters increasingly sound like noisome idiots straining hard to be low-grade morons. Here are four reasons it’s stupid to compare Nigeria’s petrol prices with others…

Constitution Review: Middle Belt Congress Seeks Additional 19 States, Abolition Of Local Councils
Ahead of the proposed amendment of the 1999 Constitution by the Senate ad-hoc committee led by Senator Ovie Omo Agege, the Middle Belt Congress has submitted a memorandum to the Committee.
Investigation revealed that the MBC is seeking for the creation of an additional 19 states in the country to make the total number of states to 55…

50 Million Nigerians May Develop Mental Illness, Commit Suicide ― Expert
Contrary to what many people think, a mental health expert, Dr Jibril Abdulmalik has said that 50 million Nigerians stand a risk of developing mental health problems, and some culminating in suicide.
Dr Abdulmalik spoke at a one-day online training on mental health and suicide reportage for media practitioners in commemoration of the World Suicide Prevention Day (WSPD) 2020…

You might also like
Comments

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More