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Buying Up Nigeria
In its attempt to buy ailing Nigerian Telecommunications Limited (NITEL), Trans-national Corporation of Nigeria Plc (Transcorp), faces intense criticisms
By Udo Onyeka
President Olusegun Obasanjo
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Then Trans-national Corporation of Nigeria Plc (Transcorp), was formerly launched on July 21, 2005, many Nigerians welcomed its formation, especially when President Olusegun Obasanjo who favoured the move, told Nigerians that apart from dominating local markets in products and services, the company will also compete favourably with other big firms across the world in order to help the country's economy grow.
As a form of motivation, the president had granted the company approval to build a $250million, 400,000 barrels per day refinery in Lekki Free Port Zone, Lagos State, an oil block to enable it participate actively in the upstream sector of the oil industry, licence to build an independent power plant as well as access to the Federal Government – inspired cassava report so as to facilitate its construction of a cassava processing export facility.
But as events began to unfold, some financial experts and social commentators expressed concerns over certain developments which they alleged amounted to undue favouritism. Their resentment bordered on what they believe is lack of transparency in the selection of the company’s board members and motive and method of its purchase of Federal Government’s assets from the Bureau of Public Enterprises (BPE).
The recent purchase of the Nigerian Telecommunications Limited (NITEL) by Transcorp seemed to have enlarged the ranks of critics and those who see the company an “enemy” of the people.
Among groups that have raised “an eye-brow” against the sale of NITEL to Transcorp include the Advanced Congress of Democrats (ACD), a political party. According to the party’s Media and Publicity Committee chairman, Alhaji Lai Mohammed, “the BPE owe Nigerians detailed explanations on why it sold 75 per cent of NITEL rather than the 51 per cent that it advertised."
In the same vein, the chairman, House of Representatives Committee on Capital Market, Aliu Wadada, equally said that his committee would invite the BPE, NITEL management and Transcorp when the House resumes in August 1, to give explanations concerning the deal.
Similarly, the Governor of Lagos State, Asiwaju Bola Tinubu, has condemned the sale of NITEL by the Federal Government.
Speaking to newsmen at the Murtala Muhammed Airport in Lagos penultimate weekend, Tinubu described the sale as tantamount to the fleecing of a public asset which all stakeholders must resist.
“Who are the purchasers, who are the owners, where is the balance sheet of the company that bought it, where was it established? These are assets held in trust for the people of this country,” he said.
Also, Professor Pat Utomi, a political economist and presidential aspirant in the 2007 election have never minced words in condemning Transcorp. He said the company was a selfish creation that was formed to suck the little growth being recorded in the economy. Utomi: “That is the problem with the Transcorp idea. A few individuals who have access to power are taking away all the gains personally, directly”.
Apart from Utomi, Lanre Adeogun, a renowned financial analyst and stockbroker told The Source that Transcorp as a project was a well planned and arranged plot by a few Nigerians in the corridors of power to divert the common wealth of Nigerians.
“I would not believe that the idea of Transcorp came from the President, Olusegun Obasanjo. This idea was sold to him by these few Nigerians, with the aim of milking dry the little progress this administration has made in reviving the economy of the country.”
But Transcorsp's Vice President on Public Affairs and Communications, Adedayo Ojo, said that the company was formed with good intentions to move the country's economy forward.
"Transcorp was founded as the Nigerian idea of a world-class company to match the multinationals, the big foreign companies, in production of products and services in Nigeria and beyond. It is some people who were not lucky to be part of the pioneer team that are crying foul, Ojo said."
Like Ojo, Nicholas Okoye, Executive Director, Transcorp, told The Source that Transcorp was the equivalent of Chaebol in Korea, which today have turned the economy of that country around. “Transcorp was conceived to operate strictly as an engine of economic growth toward repositioning Nigeria in Africa and indeed the world, by harnessing and deploying the huge resources available to us as a people toward jump-starting the emergence of a new economic order and several new mega-corporations, Okoye stated.”
Chudi Offodili, a social commentator and parliamentarian in his article on Monday, July 10, in The Guardian said that the claim by the board of directors of Transcorp that the moral support and concessions given to it by President Obasanjo was in view of its strategic mission, which is to replicate for Nigeria what the Chaebol did for South Korea, Malaysia, Singapore was deceptive.
Offodili: “The question is what are the characteristics of the Chaebol and what did Chaebol do for the East Asian Tigers, as the countries mentioned above are known?"
Offodili said that "Chaebol is a Korean term for a conglomerate of many companies (not persons as in Transcorp), clustered around one parent company, with the companies holding shares in each other and are often run by one family".
In his analysis, Transcorp of Nigeria was, therefore, not similar to Chaebol of East Asia. Hear him: “At the end of SYGNAMRHEE, the government in South Korea in the 60s, the new military government of General Park Chung Hee, who ruled between 1961 and 1979, created a state-corporate alliance with some enterprises called the Chaebol, which actually existed in Korea in the period before 1961.
“The fact of the existence of these companies before the advent of General Park is important in relation to our own Transcorp which emerged from the blues. No history. No antecedents. It is immaterial that promoters individually have successful businesses.”
Ojo, however, like Okoye said there was no need for fears on the motives of the company, saying that Transcorp has good intentions. He told The Source that the organisation is strictly a private sector corporation, without an iota of relationship with any tier of government or politician. Nonetheless, the company proudly acknowledges the moral support from the president.
Perhaps, it may be this so-called moral support and many concessions from the government that provoke critics into contending that the group may afterall be a front for some highly placed persons in power.
They argue that Transcorp directors made up of Jim Ovia, managing director of Zenith Bank, Tony Elumelu, managing director, United Bank for Africa, Aliko Dangote, Chairman of Dangote Group of Companies, Femi Otedola, managing director, Zenon Oil and Gas Limited, Festus Odimegwu, former managing director of NB Plc, Tony Ezenna, Chief Executive Officer , Orange Drugs, Afolabi Adeola, chairman and founder of Guaranty Trust Bank, Dr. Ndi Okereke-Onyiuke, Director-General, Nigerian Stock Exchange (NSE) and others were among some business-men that were assembled by President Obasanjo to chart a course for industrialisation in order to attract foreign investors.
The Source was told that the group became close to Obasanjo and were having regular meetings with the president and that it was at one of such meeting that the idea of Transcorp was mooted.
The Source also gathered that a sizeable number of members of the group were part of the group which made a donation of two billion naira to the Obasanjo campaign fund during the 2003 elections under the name, Corporate Nigeria.
It may be difficult, therfore, for Transcorp officials to convince Nigerians that the president, or some senior members of the present administration are not part of the company. Afterall, what do anyone expect people to say for a company whose beginning started in Aso Rock and was on July 21, 2005, formally launched at the presidential villa by Obasanjo himself.
With an array of accomplished businessmen from various backgrounds as directors and an initial working fund touted to be in the region of billions of naira, Transcorp is, in fact, a company primed to acquire any company or project it targets.
The Source's finding revealed that more worrisome to many Nigerians is the safety of shareholders fund left in the hands of directors of the company who are mostly chief executives of some blue chips companies. Indeed, the fear is that they may be nibbling with shareholders funds in their companies in order to promote Transcorp.
Again, Ojo said that none of the director would do such a thing. He said the directors were men and women of integrity who have made their mark in their choice careers. "Of course, I tell you that they are men and women of integrity who would not want to dip their hands into shareholders funds. They know it is unethical," Ojo said.
Also, Ojo denied that the removal of the former managing director of the company, Fola Adeola, was politically motivated.
It was alleged that the removal of Adeola was because of his refusal to promote the ill-fated third term project and his resolve to contest against Obasanjo’s daughter, Iyabo Obasanjo-Bello for the Ogun State Central Senatorial seat in 2007. Adeola, unlike many directors of Transcorps never hid his disgust for the Obasanjo third-term project.
Ironically, Transcorp which had outshined other bidders of NITEL by agreeing to pay $500million in one week and later within 90days balance the remaining $250million could not fulfill the terms of the deal.
It was gathered that BPE, however, raised the 51 per cent it wanted to sell to 75 per cent, when Transcorp came with a foreign technical partner who was given 24 per cent.
Though Transcorp has paid 10 per cent of the total deal, amounting to $75million, it has also called for a renegotiation of the deal. The company rather would want to take 38 per cent while its technical partner takes 37 per cent.
The Source was told that though BPE was taken aback by this development, however both the BPE and Transcorp agree that there was need to move forward. BPE's Director General, Irene Chigbue, tired of carrying NITEL in her portfolio of enterprises to be privatized coupled with several aborted negotiations for the communications firm appear to be favouring the transcorp proposal.
The urgent need to sale NITEL, especially as the firm is currently enmeshed in a precarious situation is further driving the quest. NITEL is now unable to pay its staffers.
On June 3, workers of the company had gone on strike to protest the continued non-payment of their salaries, which they said totalled about five billion naira.
With the situation of NITEL, the National Council on Privatisation which would now look into the NITEL deal may have no choice than to agree with the re-negotiation request of Transcorp. A source at the BPE disclosed that the new terms of payment might be accepted by government for obvious reasons: The first being that any more delay means that the value of NITEL may continue to nose-dive.
Again, the source said that contrary to insinuations, Transcorp were not favoured in the deal against the other contenders.
He said, for instance, that when the federal Government decided to sell 51 per cent share of NITEL in 2001, Investors International London Limited (IILL) came out tops with $1.317billion, beating TELNET and NEWTEL, only for the deal to be cancelled when IILL could not pay the balance.
Also, the second exercise, The Source gathered, Pentascope failed to meet the contract obligations resulting in the cancellation of the deal. Then, the third also collapsed as Orascom Telecom's bid of $256.53million was rejected for allegedly being unacceptably low.
The company commenced operations with an initial capital of N56 billion and plans to raise an additional N66 billion from the capital market some time this year.
It acquired NICON Hilton in October 2005 for $105 million and may have paid $500 million out of the $750 million for which it purchase NITEL from the BPE – the amount being for the 75 per cent stake it is taking in NITEL.
Ojo: “The directors are busy making contacts for money to pursue the projects outlined, I am telling you, they are not sitting down hoping that these money will fall down from heaven.” |
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