Pramod Mittal Has Only $272m of Nigeria’s $446m Ajaokuta Settlement Payment

Pramod Mittal Has Only $272m of Nigeria’s $446m Ajaokuta Settlement Payment

Only $272 million of the $446 million Ajaokuta Steel contract dispute settlement payment made by the Nigerian government this year to Indian billionaire, Pramod Mittal’s Global Steel Holdings (GSH), has so far been transferred to GSH.

Nigeria’s then Information Minister, Lai Mohammed, had disclosed that the Nigerian government paid $446 million to GSH’s local unit in multiple instalments under the settlement.

The Buhari government agreed to pay GHS the money to settle a contract dispute over a deal that a previous administration said was tarnished by fraud.

The government has justified the agreement with a former unit of Pramod’s GSH, which was announced in September 2022, saying it frees the state to pursue its ambitions for the sprawling steel site.

But Bloomberg reported yesterday that the law firm hired by the Nigerian subsidiary for the mediation only made six transfers from these funds to GSH’s account, totaling $272 million between October 2022 and February 2023, quoting reports filed by the company’s liquidators.

“The law firm, King & Spalding LLP, declined to comment on the rest of the money,” reported Bloomberg.

Bloomberg also reported that the payment by Nigeria helped Pramod’s Isle of Man-registered GSH, escape liquidation this year, over $167 million owed to Moorgate Industries Ltd., a company spun off from one of the world’s biggest steel traders.

It reported: “As a UK court weighed Moorgate’s request to declare Pramod personally bankrupt three years ago, the London-based Indian national held out the prospect of a payout from the Nigerian state to clear his debt. The judge was unconvinced at the time, but the settlement subsequently reached with Nigeria last year now looks like the 67-year-old’s best route out of insolvency.

“Still, while payments from the Nigerian government have reached GSH’s liquidators, as of Oct. 4, Moorgate had yet to see any of those funds despite having asked for them, court documents show.”

Abubakar Malami, Nigeria’s attorney general from 2015 to earlier this year, on whose watch the settlement was reached, said last year that the administration of former President Muhammadu Buhari “rescued the steel industry from interminable and complex disputes as well as saving the taxpayer from humongous damages.”

Pramod entered into the Ajaokuta picture in 2004, when then President Olusegun Obasanjo awarded GSH a series of contracts, including an arrangement first to manage and later to buy the steel mill.

Shortly after GSH took over the plant, Solgas Energy Ltd., a small US company, sued it in Texas. Solgas claimed that GSH discussed becoming Solgas’ subcontractor on Ajaokuta before breaching a confidentiality accord and bribing Nigerian officials, including one of Obasanjo’s sons, to “steal the concession.”

While the case was thrown out on jurisdictional grounds, in December 2008 a separate arbitration tribunal ordered Nigeria to pay Solgas $15.2 million in damages for the wrongful termination of the contract — while noting the US firm hadn’t provided evidence to support the corruption allegations.

By then, Umaru Yar’Adua had taken over as Nigeria’s president, and he canceled GSH’s contracts after a panel that his steel development minister set up said the concessions were rife with irregularities. GSH’s claim it had invested $200 million was “a ruse,” the inspectors said.

Rather, the company had used its Nigerian assets to borrow more than $192 million from local banks — funds they “strongly” suspected had been dispatched abroad, they said.

The panel’s full report — never made public but seen by Bloomberg — said rescuing Ajaokuta was beyond the “financial, technical and experiential capabilities” of GSH, which instead had been “systematically cannibalizing, vandalizing and moving valuable equipment” out of the factory.

GSH and its Nigerian unit initiated arbitration proceedings against the government and later entered mediation, which produced last year’s settlement.

Pramod had signed two earlier agreements with the Nigerian government – in 2014 and 2016 – that would have seen his firm retain the right to manage an idled state-owned iron ore mining company but receive no payout.

“I threatened them with criminal proceedings for tax evasion, in addition to other criminal infractions that they had clearly committed,” Mohammed Adoke, a former attorney general who had reached the first of these accords, wrote in his memoir titled “Burden of Service.” “To amicably resolve the issue, I insisted that Global Steel should relinquish (Ajaokuta) for free without any form of compensation.”

Adoke’s successor, Malami, who was the attorney general when the half-a-billion-dollar settlement was struck, modified the terms of the deal to take back the mining firm and award a payment. Malami didn’t respond to a request for comment.

Even before finalizing the Ajaokuta windfall, Pramod had suggested using the money to pay down the Moorgate debt.

In June 2020, as Moorgate sought his bankruptcy, he told Judge Catherine Burton that GSH’s liquidators had failed to account for the “very real prospects of a payment” from Nigeria. He said his Abuja-registered subsidiary would settle the obligation to Moorgate “out of whatever money it receives from the mediation,” according to the decision issued by Burton, who — unpersuaded — ruled in favor of the creditor.”

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