- Dances With Bears - http://johnhelmer.net -

RUSAL ORDERED TO TRIAL WITH NIGERIAN GOVERNMENT OVER SALE OF NIGERIAN ALUMINIUM SMELTER, BUT $2.8 BILLION DAMAGES CLAIM DELAYED

rusal_batman

By John Helmer, Moscow

United Company Rusal, the Russian aluminium monopoly headed by Oleg Deripaska (image right), has won a fresh round in its battle to keep control of its Nigerian aluminium smelter, and ward off claims from a Nigerian-American group whom it defeated in the privatization of the asset almost a decade ago. For the time being, the Nigerian government, headed by President Goodluck Jonathan (left), will neither support Rusal, nor act against it. The indecisive Jonathan lost majority control of the Nigerian House of Representatives in December, and he faces an uncertain presidential election in a year’s time.

In a ruling of Nigerian High Court Justice Jude Okeke, issued in Abuja on January 27, the Nigerian Government’s Attorney-General and Minister of Justice were ordered to face trial with Rusal in the corruption and damages claim by BFI Group Divino Corporation (BFIG). Rusal had asked the court to join the government to the case. BFIG opposed, arguing that in a separate proceeding the Nigerian courts had already ruled against the government, and in favour of BFIG. According to BFIG’s lawyer in court, Rusal’s move threatened to “open a floodgate for everyone who seeks to interrupt proceedings.”

The judge said the government agencies “are parties in whose absence all issues in controversy in the suit cannot be effectively and completely adjudicated upon. Their presence in the suit is quite necessary for a fair and just determination of the claims or complaints placed before the Court.”

BFIG’s damages claim for $2.8 billion against Rusal had been scheduled to start on October 7 last, following the defeat of Rusal’s application to dismiss the claim outright in June of 2013. But the October trial was halted when Rusal argued that because the Nigerian Government had already agreed to indemnify Rusal for challenges to the smelter privatization in June 2004, the government agencies responsible then – the Bureau of Public Enterprises and the National Council on Privatization — should be joined as defendants with Rusal now.

Judge Okeke has ruled that the National Council is not a juridical body, and that the Bureau of Public Enterprises (BPE) had already been through the courts on the issue. In July of 2012, Nigeria’s Supreme Court, the country’s highest court of appeal, judged that BPE had violated the law and the privatization rules in awarding the Aluminium Smelter Company of Nigeria (ALSCON) to Rusal after rejecting a higher bid from BFIG. That story can be read here [1].

BFIG has been unable to get the Nigerian courts or the Nigerian Government to enforce the July 2012 Supreme Court judgement. BPE refuses to take the smelter from Rusal’s control. The next date in court for a hearing on this issue is March 4.

In parallel, Rusal has been in the London Court of International Arbitration (LCIA) since August 2012 to challenge the rulings of the Nigerian courts, and to decide the contentious issues of the privatization contract afresh. The arbitration panel was appointed in January 2013; one hearing was held the following July to consider preliminary issues, including the Nigerian Government’s challenge to the jurisdiction of the LCIA to rule on a case already decided by the Nigerian courts. The LCIA hasn’t ruled on that point yet. Until it does, the arbitration judges will not consider the facts of the disputed ALSCON privatization.

Rusal has also put pressure on BFIG and its executives in federal US court in Los Angeles, seeking a US court order for disclosure of financial and other business details allegedly in support of the London proceeding. After a hearing last October before US Magistrate Carla Woerhle, an order was issued on December 11, allowing enforcement of Rusal’s subpoenas but restricting what Rusal can request, and what BFIG should disclose. The US judge said she is putting a protective screen around the evidence BFIG aims to present in its Nigerian damages case.

In his January 27 Nigerian High Court ruling, Judge Okeke decided that since BFIG is accusing high government officials of participating illegally and corruptly in the ALSCON privatization, the Attorney-General and the Justice Minister should join Rusal at the defendants’ table. The president at the time of Rusal’s takeover was Army general, Oluṣẹgun Ọbasanjọ.

Rusal restarted the ALSCON smelter in 2008, but production that year was just 9,000 tonnes. In 2009 the output was 11,000 tonnes; in 2010, 18,000 tonnes; in 2011, 15,000 tonnes; in 2012, 22,000 tonnes. Last year output was 2,000 tonnes. Under Rusal management the plant has never reached its design capacity of 193,000 tonnes per annum. For the backfile on the conflict between Rusal and BFIG, read this [2].

In its annual litigation summary Rusal’s financial report for 2012 says [3]: “In January 2013, the Company received a writ of summons and statement of claim filed in the High Court of Justice of the Federal Capital Territory of Nigeria (Abuja) by plaintiff BFIG Group Divino Corporation (“BFIG”) against certain subsidiaries of the Company. It is a claim for damages arising out of the defendants’ alleged tortious interference in the bid process for the sale of the Nigerian government’s majority stake in the Aluminium Smelter Company of Nigeria (“ALSCON”) and alleged loss of BFIG’s earnings resulting from its failed bid for the said stake in ALSCON. BFIG seeks compensatory damages in the amount of USD2.8 billion. Based on a preliminary assessment of the claim, the Company does not expect the case to have any material adverse effect on the Group’s financial position or its operation as a whole.”

A trial date for BFIG’s damages claim against Rusal has been fixed for February 22, but the Attorney-General and Justice Minister may now seek to delay the proceeding while they prepare their defence. Jimmie Williams, a US attorney for BFIG, comments that Judge Okeke’s ruling may mean that “the court is setting things up to find both of them liable and will award significant damages against them.”