LADOL Terminates Agreement with Foreign Partner

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Yemi Osinbajo

Nseobong Okon-Ekong
A few weeks after the Vice President, Professor Yemi Osinbajo (SAN) visited and commended LADOL for recording giant strides in the Egina Floating Production Storage Offloading (FPSO) unit, which was built by Samsung Heavy Industries (SHI), in conjunction with LADOL, LADOL has terminated its agreements with the foreign partner, SHI, due to alleged untoward activities, including contractual and ethical breaches.

The foremost logistics company and operator of the Free Zone within the Apapa Port terminated its partnership with SHI, on the Egina FPSO project, the largest of its kind in sub-Saharan Africa, accusing the Korean company of derailing it through its activities, over a number of years.

LADOL accused SHI of consistently engaging in unacceptable violations of Nigerian laws and regulations, in what can be described as connivance with Nigerian officials.
LADOL also accused SHI of undercutting it by withholding crucial information on their joint operations, in addition to flagrant disregard for the Nigerian workers and industry regulators.

LADOL, according to its Managing Director, Dr. Amy Jadesimi, had refrained from taking action against SHI until now, as it weighed the national interest and avoided any action that could have disrupted the multi-billion dollar Egina FSPO project, which has now been concluded.

In order to seek redress and protect its investment, LADOL has instituted legal proceedings against SHI, by recently filling a suit with number: FHC/L/CS/1459/2018, at the Federal High Court, Lagos.
When Contacted, SHI denied the allegations. A top Nigerian official of the company insisted that, “SHI did not violate the Nigerian content law.” The SHI official also claimed that the company had also filed a lawsuit to challenge LADOL’’s refusal to renew its operating licence.

A catalogue of the illegal activities and practices of the SHI in the country, as raised in the LADOL suit, include violations of the procedures of the Nigerian Customs Service, and those of the Nigerian Immigration; breaches of regulations of the Nigerian Content Development and Monitoring Board (NCDMB) and refusal to remit statutory tariffs to the federal government – despite several demands from the Nigerian Export Processing Zone Authority.

However, in a four-page termination letter issued to the Korean firm by Global Resource Management Limited, a subsidiary of LADOL and dated September 4, which was sighted by THISDAY, the Nigerian company accused SHI of bypassing it to work directly with the Nigerian Ports Authority (NPA); NCDMB and other government regulatory agencies.
It was based on these grounds that LADOL said it has terminated the partnership, alleging that SHI’s actions violate the agreement both companies signed in 2014.

In the suit filed by LADOL, it also accused SHI of habitually breaching Nigerian contract laws by persistently refusing to comply with rules and regulations of the LADOL Free Zone area.
SHI was accused of blatantly repudiating major contractual terms in the agreements signed with the logistics company, and concealed funds provided for in the Head Contract from its local content partner, LADOL.

Moreover, SHI was said to have excluded LADOL from the operations, as a way of refusing to transfer technology, one of the crucial agreements in its contract, whilst demanding huge unconscionable variations from their client (the Total/NNPC Joint Venture), and hence deviations from its obligations to the Nigerian people. All these, SHI carried out, while sponsoring media attacks on notable government agencies and giving the false impression of the country as operating in an environment not conducive to doing business.
A number of civil society groups, such as Nigerian Young Professionals Forum and Connected Development, had alleged that there was contrived process in the award of the Egina FPSO project contract to SHI.

These groups have observed that the award process was not only highly fraudulent but the project itself had involved massive disregard for local content laws, whilst indicating that the project and its variation costs were highly bloated. They therefore called that SHI be sanctioned in view of the local laws that have been violated, alongside the economic sabotage involved in the manner that the Egina FPSO project had been deliberately frustrated.

A letter to President Muhammadu Buhari signed by the two groups reads in part, “As events have unfolded over the years…it is clear that the Samsung Heavy Industries (SHI’s) engineering, procurement and construction of the Egina FPSO has been a sham calculated to massively defraud the Nigerian commonwealth, undermine the extant laws and signal corporate corruption of monumental proportions in the highest corridors.