*Demands extra $300m *Ladol accuses company of fleecing Nigeria
24 September 2018, Sweetcrude, Lagos — It has been alleged that Samsung, the South Korean company responsible for the fabrication of the Egina Floating Production Storage and Offloading, FPSO, vessel integrated at the Ladol yard in Lagos, has been conniving with some corrupt Nigerians to ship jobs meant for Nigerians to South Korea.
According to information at SweetcrudeReports’ disposal, the fabrication, part of which Nigerians were made to believe would be done in Nigeria, has seen personnel being shipped into the country from South Korea to handle the very integration of the vessel originally planned to be handled by Nigerians at the Ladol yard.
The development thus created jobs for the Koreans here in Nigeria to the detriment of the Nigerian labour force, against the provisions of the Nigerian Content Act and the promise by the Nigerian Content Development and Management Board, NCDMB, Nigerian National Petroleum Corporation, NNPC, and Total, the operators of the FPSO, that the project would create substantial number of jobs for Nigerians.
The Egina FPSO had arrived Nigeria from South Korea amidst pomp and pageantry on January 24, this year.
The vessel, which was already more than half-way completed as at the time of its arrival, was merely planned to create an illusion of its last six modules being locally fabricated in the country by Nigerians.
SweetcrudeReports found that the FPSO, which was due to have left the Ladol yard for its operational base at the deep offshore Egina oil field in June, had faced technicality hitches and controversies surrounding an extra one percent charge by Ladol for hosting the vessel.
It eventually left the free zone location of the Ladol yard in Lagos on Sunday, August 26 for the deepwater Egina oil field operated by Total.
In January when SweetcrudeReports visited the vessel soon after its arrival from South Korea, it was learnt that some South Koreans were hiding in the vessel, having been brought in to handle the integration job on the facility originally meant for Nigerians.
Findings then showed that Nigerians who were working on the vessel were employed on contract basis. In fact, on the second visit to the vessel between February and March, a protest by the Nigerian contract workers was on.
When SweetcrudeReports spoke with some of the workers, it was gathered that they were worried that they would become jobless after the FPSO had left Ladol for the Egina oil field.
Again, when SweetcrudeReports visited earlier this month, it was observed that Samsung had shipped in more South Koreans into Ladol.
Alleged corruption, under-hand dealings
It was gathered that in the first instance, Samsung was the lowest bidder among the contractors who had vied for the Egina FPSO contract. However, according to our source, some “corrupt and unpatriotic Nigerians” had connived to swing the contract for Samsung, shoving aside some of the necessary conditions required of the would-be winner of the contract.
Findings showed that part of what is causing the current controversy with the Egina FPSO is Samsung’s demand for an extra $300 million before the final phase of the job, which we learnt is at 95 percent, is completed and the FPSO handed over to Total.
Our sources did not specify what the extra $300 million being demanded by Samsung was meant for.
But, the sources revealed that the demand was one of the reasons for the extra one percent being demanded by Ladol from Samsung and Total.
“That was what caused the rumour that Ladol is making the free trade zone unfriendly to foreign investors. They wanted to cheat Nigerians,” a source said.
Upon arriving at the Egina oil field, the FPSO will begin production for Total. It will first produce 200,000 barrels of oil per day by the first quarter of 2019.
However, we learnt that Samsung was bent on collecting the extra $300 million from Total and its joint venture partners, including the NNPC, before releasing the vessel.
‘Samsung is sending signals that the vessel would not be released until it gets an extra $300 million. The case is in court and the court will decide whether this happens on not,” a source told this newspaper.
Our sources also said that based on Samsung’s demand for the extra N300m, Ladol is also demanding additional payment from Samsung and Total under the Egina FPSO contract.
“That (Ladol’s demand for additional payment) is what has caused a rumour that Ladol is making the Lagos free trade zone unfriendly and hostile to foreign investors. They (Samsung) are cheating Nigerians. Now they have turned round to accuse Ladol of making the free trade zone unfriendly to foreign investors,” a sources said.
SweetcrudeReports gathered that international oil company, Shell is planning to bring the construction of its planned new FPSO to Ladol, but, that Samsung is demarketing the company and the free trade zone, and convincing the international oil company against involvement with Ladol and the trade zone.
“We learnt that some corrupt Nigerians are now planning to get upcoming FPSO projects like Zaba-Zaba for Samsung. They have been shipping jobs meant for Nigerians to South Korea. How will the Nigerian Content Law be protect with Samsung on those projects?” our source queried.
Ladol responds to hostility claims
Ladol has, meanwhile, denied claims that it is making the free trade zone unfriendly to foreign investors and that its hostile policies were frustrating investors doing business in the area.
Amy Jadesinmi, Ladol’s managing director, had told journalists recently that reports that the operator introduced charges alien to the contract in the free zone, thereby making it unattractive to investors, were untrue.
“All charges are mandated by the Federal Government policy. No company operating in the Ladol free zone has been issued with charges not mandated by the government,” she said.
Samsung sacked from Lagos Free Trade Zone
Meanwhile, Ladol, the operator of the Lagos free trade zone, has sent Samsung Heavy Industries, SHI, packing from its yard, SweetcrudeReports has learnt.
According to a source inside the yard, Ladol made the move after Samsung’s operating license expired.
And going by the laws of the free trade zone that no enterprise can operate there once its license expires and the Nigerian visas of expatriates brought in by the company also expire, the company would have to leave the country.
The South Korean company was shown the way out by Ladol based on these.
We learnt that prior to the expiration of its operating license, Ladol gave SHI-MCI ample opportunity to comply with Nigerian laws by leaving on its own, but that the company failed to leave the yard, prompting Ladol to throw it out.
“Unfortunately they refused to do this and continued to breach several Nigerian laws, including those around local content and conditions of service for their Nigerian staff”, our source said.
“Government staff in Ladol reported that Samsung has always behaved as if it is above the laws of Nigeria. All the government agencies in the zone have had to raise serious issues with them on several occasions – most recently due to serious import and immigration violations”.
SweetcrudeReports also learnt Samsung is currently under investigation by the Economic and Financial Crimes Commission, EFCC, the Nigerian Content Development Monitoring Board, NCDMB, and the State Security Services, SSS, for fraud.
On the matter of the operating license, we learnt Samsung has taken the Free Zone Management and by extension NEPZA to court, and until this matter is settled in court and SHI MCI fully complies with Nigerian law, a new license can not be issued.
Ladol accuses company of fleecing Nigeria
In a statement detailing why Samsung was sacked from the Lagos Free Trade Zone, Ladol said the South Korean company’s dealings in Nigeria in the past 4 years had been “fraught with mischief and reckless disregard for all stakeholders: Ladol as business partners, Nigerian regulators, Nigerian workers and citizens.
It said “Samsung has brazenly and persistently flouted Nigerian laws and breached contracts it duly signed with Ladol and its affiliates”, listing these breaches to include refusal to abide by conditions of service for Nigerian staff and abuse of Nigerian workers, violation of procedures of the Nigerian Customs Service and violation of Nigerian Immigration Procedures.
Ladol also accused the South Korean company of breaches of Nigerian Content Development and Monitoring Board regulations, refusal to remit statutory tariffs to the Federal Government despite several demands from the Nigerian Export Processing Zone Authority and sponsoring the publication of malicious and false information about Nigerian government agencies and the business climate in Nigeria, thereby denigrating the Ease of Doing Business regimen in Nigeria.
It also noted “Samsung’s persistent failure to comply with rules and regulations of the Free Zone 8, concealing sums of money provided for in the head contract from Ladol – their local content partner – and demanding huge unconscionable variations from their client (Total/NNPC Joint Venture) and by extension from the Nigerian people”.
Ladol further accused Samsung of “exclusion of their Nigerian content partner from operational activities, and thereby refusing to transfer technology and blatant repudiation of major contractual terms in agreements duly signed with it (Ladol).
The inescapable conclusions, due to the frequency and seriousness of these infractions, according to Ladol, are “that Samsung’s activities threaten the safety and peace of the Free Zone and of other responsible Nigerian and foreign enterprises doing legitimate business within the zone and that Samsung is committed to operating in a manner that brazenly defies our Nigerian regulators, flouts our laws, maltreats Nigerian workers and sabotages the economy of our dear country”.
According to Ladol also, “as a result of Samsung’s recidivist operational practices and breaches, the following have now occurred: (a) Samsung failed to meet the minimum standard required to qualify for an operating license in a Free Zone, their license has therefore expired without renewal, (b) Samsung’s sublease agreement has been duly terminated, and (c) Ladol has filed a court action (Suit No FHC/L/CS/1459/2018) against Samsung related to their fraudulent activities in Nigeria”.
Ladol emphasised that as a Nigerian company, it “is resolute about enforcing its rights and protecting our country from companies and contractors that flagrantly disobey our laws and disrespect their local partners”.
Attempts to get Samsung to respond to all the allegations against it proved abortive as none of its officers in Nigeria could be directly contacted. An enquiry sent to its website by our correspondent was not replied till our time of going to press.