ALSCON: UC Rusal ignores Nigeria’s Supreme Court

A Russian stands in front of ALSCON

The aluminium company of Russian oligarch Oleg Deripaska UC Rusal on Tuesday insisted it was still the owner of Nigeria’s aluminium giant ALSCON despite a Nigerian court decision awarding it to the US firm, BFI.

Nigeria’s highest court has stripped UC RUSAL of its ownership of the formerly state-run ALSCON and awarded it to US group BFI which bid most for the company.

“According to our information, last Friday’s ruling of Nigeria’s Supreme court neither does change, nor can change the owner of ALSCON shares belonging to UC RUSAL,” a company spokeswoman said in a statement to AFP.

“ALSCON is currently part of UC RUSAL, the smelter is operating in standard mode.”

BFI had offered a bid of $410 million for a majority stake in Aluminium Smelter Company of Nigeria (ALSCON), but Nigeria’s privatisation agency awarded the firm to RUSAL, which had bid $205 million.

The US group subsequently launched a legal challenge against the June 2004 decision, although it lost its appeals in two lower courts. But the Supreme Court ruled in BFI’s favour.

The UC Rusal spokeswoman argued that the ruling did not affect the Russian company’s ownership of ALSCON as it had been made against Nigeria’s Bureau of Public Enterprises (BPE).

“It’s for the Nigerian government to bear responsibility for such a ruling and it cannot affect RUSAL’s ownership of ALSCON shares,” she added.

A five man panel of the apex court unanimously agreed that there was a binding contract between BFIG and the BPE which should be enforced. The court also issued an order of perpetual injunction restraining BPE from inviting any further bidding for the sale and acquisition of ALSCON and awarded the sum of N50,000.00 cost against BPE.

In the lead judgment delivered by Justice Afolabi Fabiyi, the court held that UC Russal, a Russian firm which is currently running the affairs at ALSCON, should have refrained from buying the company when it was aware that BFIG which was chosen as the preferred bidder before BPE unilaterally frustrated the contract, was already in court challenging BPE’s refusal to consummate the transaction.

The court held that the BPE must be made to appreciate the purport of the doctrine of lis pendens which is aimed at preserving the subject matter of litigation. “Any extraneous body including UC Russal which buys the subject of litigation does so as its own risks.” The court maintained.

UC Russal was the second bidder whose bid sum of $205 million with conditionalities was rejected by BPE but the government agency in charge of the privatization exercise later turned round to UC Russal after accepting BFIG’s offer.

According to the court, the reason given by BPE for abandoning the contract with BFIG was most unjustified and contrary to the agreement of parties and identified the unilateral insertion of an offensive clause that the 10% bid price must be paid within 15 days of the receipt of the letter informing BFIG that it had been selected as the prefer bidder, as the crux of the dispute whereas the initial agreement was that 10% bid price should be paid within 15 working days of signing the Share Purchase Agreement while the remaining outstanding 90 per cent bid price was to be paid within 90 days.

Justice Fabiyi noted that reason given for abrogating the contract does not accord with the stipulations in Exhibit 5 –the pre-bid conference resolutions which expressly provides that payment of the initial 10% of the purchase price shall be made within 15 working days after the signing the Share Purchase Agreement.

The Supreme Court held that BPE had no power to unilaterally change the mode of payment of the 10% of the bid price.

BPE had terminated the contract when BFIG failed to pay 10% of the initial bid price within 15 days of the receipt of its letter, an act which the apex court said is unacceptable and untenable in view of the various documents tendered in court which showed the agreement between the two parties.

The court slammed the Federal High Court and the Court of Appeal for not properly evaluating the documents tendered before them before they dismissed BFIG’s case.

“The lower courts took a very simplistic view of the whole transaction from the angle of a simple contract without bearing in mind that the sale of ALSCON was by way of an auction sale in which each bid is regarded as an offer which if accepted by the auctioneer by the fall of the hammer, creates a binding and enforceable contract.”

The apex court consequently set aside the judgments of the two lower court and issued an order of specific performance which mandated BPE to execute the mutually agreed share purchase agreement with BFIG.

11 COMMENTS

  1. BECAUSE BFI, AN AMERICAN CAN NOT GIVE BRIBE WITHOUT FACING JAIL TERM IN U.S., THE CORRUPT BPE OFFERED THE COMPANY TO LOWER BIDDER RUSSIANS AFTER TAKING BRIBE. CORRUPTION! CORRUPTION!! CORRUPTION!!! THIS CORRUPTION IS KILLING US. BFI WILL OBVIOUSLY OPERATE THIS COMPANY BETTER THAN THE RUSSIANS WITH LITTLE OR NO ROOM FOR CORRUPTION. RUSSIANS ARE KNOWN TO BE ONE OF THE MOST CORRUPT PEOPLE ON EARTH, IN THE SAME LEVEL WITH NIGERIA. THESE PEOPLE AT BPE SHOULD BE INVESTIGATED AND WHOEVER IS FOUND TO HAVE RECEIVED BRIBE OR COMPROMISE THE DUE PROCESS IN THIS CASE SHOULD BE BROUGHT TO JUSTICE.

  2. I am glad about this judgment the Russian should be told that when you heat a ball on the wall it will bounce back to the thrower.
    Afterall an american bought a pharmastical factory during their own Privatisation the buyer invested over $10million in upgrading the factory only for a Russian court to strip him of the ownership saying the factory was wrongly sold to him, the court order that the buying price ($5Million) should be refunded back to him without considering the man’s investiment. The judgment was promptly enforced. Samething should be done in the case of our own ALSCON while those reponsible for the scam should be sent to jail. We still remember that RUSAL did not fulfill its obligations to the community were ALSCON is located not until their staff were kidnaped by the people so as to attarct attention to their plight

  3. Thank God, there are still men of honor in the bench. Let look at this case from layman point of reasoning. You set up a agent to help sell you house and be came back to tell of two offers, 1. 400 2. 200 and they will make deposit of 10% 1. 40 2.20 in fifteen days, how on earth would you sabotage a guy paying double the price by u frustrating him yourself, if u are not mentally sick or a hidden agenda. God help these animal among us. The Russian should just go and claim their money back as they were aware of the illegality in this case and send Russian mafia on the families of the BP enterprise Nigerians. I am sure this is simple chicken job for the oligarcy. A good lesson many more and those of local content, Jimoh, Atiku etc we need our collective. Wealth stolen

  4. The unilateral decision of the BPE to alter the agreement shows that it was a clear case of bribery which should be investigated and culprits brought to book. The Justices shouldn’t have end there,they knew something went wrong and should’ve made bold to say so and invite EFCC to investigate this sabotage. It’s high time the Judiciary partake in this crusade against corruption.

  5. The Russians will be tasking the patience of Nigerians especially the host community if they do not immediately pack their briefcases and leave forthwith. For 8 years these uncaring and arrogant opportunists have destroyed and polluted our air, water and environment through their unwholesome industrial practices. They were given money by the FG to dredge the river niger, they took the money and bluntly refused to execute the job. RUSSIANS GO.

  6. Who is thing called Oleg Deripaska by the way.Oh !!! He think he is above the law or he is above all the Nigerians populace and what has given him the boldness to counter court’s final judgement.It is better for him to and collect the money he used is bribing those who dubiuosely sold ASCON to him.The early he obey & respect the court ode the better for him or else he will find himself to blame.Nigeria is not a Russian colony,even British has little or no say in NIgeria nowadays.For others who criminaly acquired NITEL,Ajaokuta,DSC etc the axe will soon fall on you.It is a pity that you have bought wrong coys,it is like when you gather your money and set it ablaze.Because you have it in your mind that Nigeria is a place where anything goes just because the country is been ruled by criminals who invited you to come & purchase what belong to every Nigerian.

  7. May I say kudus to the supreme court judges for their thoroughness in handling the case. However, the lower court judges should also learn to be thorough so that cases decided by them will not always be revised as this will amount to miscarrage of justice, ineffectiveness and lost of public confidence in their judgements. Care should therefor be taken and wider consultations made before delivering their judgements.

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