After decades of deadlock, the federal government on Monday took a major step to revitalize the steel sector as it signed a renegotiated concession agreement with Global Steel Holdings Ltd (GSHL) for the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe. By the new agreement, Ajaokuta Steel Complex has now reverted to the government, effectively freeing the entity from all contractual encumbrances that had left it uncompleted and non-functional for decades, while GSHL retains NIOMCO. The new agreement, which followed four years of mediation, was signed at a ceremony presided by Vice President, Yemi Osinbajo. Solid Minerals Development Minister, Kayode Fayemi, signed on behalf of the government, while Chairman of GSHL, Prammod Mittal signed on behalf of the company.
But beyond the euphoria and high expectations about industrial growth and massive job opportunities, few would imagine that the Nigerian people have once again been shortchanged. For after all is said and done, the Ajaokuta steel saga is a tragedy of immense proportion that the nation has endured for many years. The fact that President Buhari decided to sweep the past of the Ajaokuta steel saga under the carpet is a dreadful mistake. That past is connected to one of the most wicked acts ever perpetrated against this nation by Kebbi Governor, Abubakar Atiku Bagudu – the debt-buy-back fraud.
The confidential files obtained exclusively by Huhuonline, disclose previously unknown dealings between Bagudu and the offshore companies that used funds provided by the Nigerian government, to buy and then resell Nigeria’s debt from the failed Ajaokuta steel company. Nigeria lost over $350 million to Bagudu and his cohorts in the scam, which has been described as the crime of the century against the Nigerian people. This is the story.
The Nigerian Steel Development Authority was created in 1971 to serve as a catalyst for the development of the country’s steel and iron ore deposits. In 1979, it entered into an agreement with Tiajpromexport (TPE), a Russian company, to construct a steel plant in Nigeria for five billion Deutsch Marks (DM); and the entity known as the Ajaokuta Steel Company was born. According to the cache of documents obtained exclusively by Huhuonline, the Nigerian government agreed to give TPE debt instruments guaranteeing payment of2 billion DM to finance part of the construction. Amid allegations of bribery, kickbacks and over-inflation of the contract, Mohammed Buhari, who overthrew the Shehu Shagari government in 1983, suspended payment on the debt after TPE refused to renegotiate the contract. TPE, in turn, stopped work on the steel plant, and Nigeria defaulted on the outstanding debt.
In 1996, after 13 years, TPE decided to cut its losses, and sell the debt in the open market, for a fraction of its worth. Bagudu learned from his bankers at ANZ (London), about TPE’s interest in selling the 1.6 billion DM debt for just 350 million DM. He then approached Muhammed Abacha, who sold the deal to his father. Gen. Abacha directed then Finance Minister Chief Anthony Ani to sign an agreement with Bagudu, providing assurances that the government of Nigeria would buy back the debt from Bagudu if one of his companies, (in this case Mecosta) purchased the debt from TPE. Bagudu then orchestrated a series of transactions through which Mecosta received money in escrow from Nigeria, used that money to purchase the debt through a Liberian brokerage company, identified in the documents as Parnar Shipping Corporation (Parnar), and then sold the debt back to Nigeria for almost three times the cost.
According to the leaked files, on September 30, 1996, Bagudu arranged for TPE to sell DM 1.6 billion of its Nigerian debt instruments to Parnar for 350 million DM. That same day, Parnar resold the same debt to Bagudu’s company, Mecosta, for 486 million DM. Mecosta immediately marked up the price again and sold it back to Nigeria for 972 million DM, which the Nigerian government paid in two installments of 486 million DM. The records show that the CBN, at the instructions of Chief Anthony Ani transferred 486 million DM to an escrow account held in the name of Parnar and Mecosta at ANZ (London), 481 million DM of which was then used by Mecosta to pay Parnar for the debt.
The records also show that on April 15, 1997, Ani ordered CBN to wire the balance 486 million DM in two tranches of $141,253,333 (243 million DM) each, into and out of a correspondent account at
Citibank (New York) to Goldman Sachs in Zurich, Switzerland, for credit to the Mecosta account, but the funds were diverted and instead deposited into accounts held in the names of Eagle Alliance and Morgan Procurement. The second transfer in the same amount came a week later on April 22, 1997.
The noose begins to tighten
The shady transactions raised a red flag leading officials at Goldman Sachs to inform Bagudu and Mohammed Abacha that the bank was ending their relationship over concerns about the source of the money in the accounts held by Eagle Alliance and Morgan Procurement. As a result, Bagudu transferred $202.3 million in cash and securities from the Eagle Alliance accounts at Goldman Sachs in Zurich to a Mecosta account at Banque Baring Brothers, in Geneva, and moved another $90 million in cash and securities from the Morgan Procurement accounts to a Mecosta account at Credit Agricole Indosuez in London. However, after officials at Banque Baring Brothers discovered that Bagudu had falsely claimed the money deposited came from the oil and gas industry, the bank terminated its relationship with Mecosta over false representations made by Bagudu.
Bagudu then approached DBIL bank in the Bailiwick of Jersey and presented fake documents showing the Mecosta funds as the proceeds of oil, construction, and energy trading, when in fact the funds were the proceeds of theft and corruption. DBIL officials approved the request to open an account in the name of Mecosta. But when the account was opened on April 3, 1998, bank documents show Bagudu changed the name on the account from Mecosta to another one of his offshore companies; Doraville Properties Corporation, and then transferred $137.1 million in proceeds of the debt buy-back scam from the Mecosta account at Banque Baring Brothers into the new Doraville account.
Overall, the Nigerian people lost 622 million DM ($354,024,071) from the deal after the government paid 972 million DM for the TPE debt, whose selling price on the open market was 350 million DM; nearly two-thirds less than Nigeria ultimately paid for the debt. Only in Nigeria can such a monstrous theft of public funds occur and the perpetrators are free, and hold authority positions from where to continue the pillage. Buhari’s war against corruption will stand or fall on how he handles Bagudu.
After General Abacha’s sudden and unexpected death, Muhammed Abacha used the Doraville account as part of his plea bargain, transferring $115 million in the account to the government of Nigeria, leaving only $1,000 balance. This $1,000 was later comingled with funds from the purchase and sale of Nigerian Par Bonds which was the other fraud Bagudu perpetrated against the Nigerian people. That story is next.
