Egina FPSO: Samsung misrepresented facts, defrauded Nigeria, says LADOL
Managing Director/CEO, LADOL Group, Dr Ami Jadesimi,
BY FRANCIS EZEM
The Lagos Deep Offshore Logistics LADOL, Base, which incorporates the LADOL Free Zone has taken a swipe at the management of Samsung Heavy Industries SHI over its alleged misrepresentation of facts and defrauding of the company and Nigeria in the handling and execution of the Egina Floating, Production, Storage and Offloading FPSO project awarded by Total.
Managing Director of the LADOL Group, Dr Ami Jadesimi, while speaking in Lagos, disclosed that in the course of the execution of the Egina FPSO contract in which the indigenous logistics giant acted as the Local Content partner, Samsung misrepresented facts and defrauded the company and by extension the Nigerian nation on three fronts comprising fraudulently taking of LADOL’s equity in SHI MCI FZE, which is a joint venture by both parties to execute the Total Egina integration project by illegally appropriating 70 per cent to itself against the LADOL’s 30 per cent.
This, according to the MD SHI did by claiming that it invested nearly $300million to give it ownership of the fabrication and integration facility whereas it was approved by the Federal Government in the project and funded by Total as the poster child of Nigeria’s local content policy in respect of the Egina FPSO project.
“Thus Samsung misappropriated a local content facility and claims it as its own facility that with which it could do as it pleases. This is a massive fraud against LADOL and Nigeria by depriving LADOL and Nigeria of a capacity development project which they had planned to use to benefit Nigeria by attracting other investments and creating at least 50,000 direct and indirect jobs. Similarly, by completely excluding LADOL from the facility, Samsung ensured that there was no technology transfer to Nigerians”, the MD lamented.
Secondly, Samsung was also accused of fraud and misrepresentation of facts when it claimed that there was no $214 million provision in the Egina FPSO contract allocated to the construction of the new fabrication and integration facility at LADOL, through which it fraudulently deceived LADOL to surrender its 80 per cent ownership of SHI MCI FZE, which is the JV for the fabrication and integration facility, through which the Egina Project was carried out.
On the third fraud and misrepresentation, the MD said: “Samsung lied when it claimed that it made a foreign direct investment of $300 million into Nigeria, whereas the truth is that Samsung was paid as a contractor by Total to build the fabrication and integration facility at LADOL as a part of the Egina FPSO package contract. Samsung is a contractor, not an Investor in respect of the facility. It invested nothing”.
Investigations however showed that Samsung kept most crucial aspects of the Egina project, which began about eight years ago secret from LADOL, its local content partner until early this year when the Senate Ad hoc Committee on the Investigation of the Local Content Elements of the Egina Project commenced public hearings on the local content elements of the Egina project and invited Total and all its contractors and subcontractors as well as LADOL to give evidence before it.
It was further learnt that in the course of the public hearing, it was discovered for the first time that contrary to the claims by Total and Samsung prior to, during and after the settlement of negotiations, the upgrade of the facilities at LADOL was included in the Egina FPSO contract, as Total had already paid Samsung at least $214 million for the upgrade of the facilities and that Samsung was seeking to retain the US$214 million and at the same time asserting its ownership of the upgraded facility which it was paid to build as a contractor to Total and its OML 130 partners rather than as an investor.
This, it was further gathered implied that Samsung is a mere contractor for the upgrading of the integration facility LADOL and not an investor as it is currently claiming since Total other OML 130 owners had already paid it $214million for the contract.
It was therefore in the light of this development that LADOL on September 5, 2018 approached Federal High Court sitting in Lagos in a (FHC/L/CS/1459/2018) seeking to set aside a 2014 settlement agreement it had entered into with Samsung for fraud and misrepresentations and to restore the parties to their pre-2014 settlement ownership of SHI MCI FZE, which gives LADOL 80 per cent and 20 per cent to Samsung.
LADOL is also seeking a rectification of the share register of SHI MCI FZE to reflect the 80:20 ownership structures.
LADOL in the suit is also seeking an interlocutory injunction restraining Samsung from parading itself as owner of 70 per cent equity of SHI MCI FZE and from selling or otherwise dealing with or disposing of the shares in the JV pending the hearing and determination of the substantive proceedings.
The company is relying on the fact that the basis for the June 1, 2014 out of court settlement agreement in which it ceded additional 50 per cent ownership of the JV as well as payment of $40.5million was fraudulent and misrepresentation of facts as revealed by the Senate Ad hoc Committee investigation where Total disclosed that it paid $214million for the upgrade of the integration facility contrary to earlier claims by Samsung.
Meanwhile, Samsung Heavy Industries Nigeria SHIN has insisted that SHI-MCI FZE, its subsidiary, has not breached any law or the sublease agreement in respect of the Egina FPSO integration project at the LADOL Base.
Managing Director of the company, Mr Yong-ho Jo, was quoted as saying that though LADOL in the suit alleged a breach of clause 9.6(b), that only applies to a situation where the consent or approval of the sub-lessor (GRML) is required to any act of the sub-lessee (SHI MCI FZE) under the sublease agreement.