By Cosmas Omegoh
Constitutional lawyer, Fred Nzeako, has been speaking on the gamut of issues leading to the seizure of Nigeria’s property overseas by a Chinese company following a botched deal with the Ogun State government.
In an interview with Sunday Sun, Nzeako also an expert in international law and diplomacy, insisted that lessons ought to be learned from the saga, emphasising that those involved in the debacle must be punished for the country to be seen as being serious about building a better society. Excerpts:
How did we arrive at Chinese firm seizing Nigerians property overseas?
To understand the story, we need to go back to 2001, when Nigeria’s former President Olusegun Obasanjo felt the need to go around the world marketing the country to foreign investors, convincing them that Nigeria was worthy of foreign investment. It was in line with that initiative that Obasanjo went to China on a state visit, and signed a lot of bilateral agreements with China making it possible for Nigeria to receive Chinese businesses in Nigeria. On the strength of that, many Chinese companies indicated interest in coming to Nigeria to set up industries. That was what brought Zhongshan Fucheng Industrial Investment Co. Ltd to Nigeria in 2003. In 2005, Zhongshan Fucheng Industrial Investment Co. Ltd struck a deal with Ogun State government to develop a free trade and export processing zone. That was one aspect of what brought the Nigerian government into the Ogun State and Zhongshan Fucheng Industrial Investment Co. Ltd deal. The second aspect was for the company to build or manage a free trade zone, or an export processing zone it must get authorisation and approval from the Nigerian Export Processing Zone Authority (NEPZA). NEPZA is a Federal Government agency that can be likened to Federal Aviation Authority of Nigeria (FAAN). NEPZA is in charge of export free zones and export processing zones in Nigeria. There are 11 of such functional zones in the country. So, NEPZA had to give its authorisation and consent to the deal Ogun State- Zhongshan Fucheng deal. It was on the basis of that, that the Federal Government was brought into the picture. Therefore, the MoU of between the Ogun State government and the Chinese company was endorsed and ratified by the Federal Government through NEPZA. So, that was the third level of the Federal Government endorsement of the deal. So, when the transaction now went bad, the company first went to arbitration in Nigeria; that didn’t work. It went to the court; that didn’t work. So, it went to arbitration outside Nigeria where it now got an arbitral award in its favour, which Nigeria through Ogun State failed to respect. Armed with that, the company went to court to harvest the fruits of the arbitral award given in its favour. And the overseas court now gave it the authority to confiscate every Nigerian asset wherever they can be found until Nigeria paid the money awarded against her. The total sum of the award against Nigeria stood at $55 million. But the arbitration committee also awarded the company £2 million as legal, litigation and general damages and another £2 million in that regard, totaling £74.5 million, when you add the interest. So, in order to get its money, the company went to court to get enforcement. Now, armed with that arbitral award, Zhongshan Fucheng Industrial Investment Co. Ltd sued Nigeria in about eight countries – France, US, Britain, Germany, Canada, British Virgin Island, and two others. Once it got that court judgment, it had to register it in seven other countries. It didn’t need to re-litigate or commence fresh proceedings. All it needed to do was to register the judgment in all the aforementioned countries. The countries now gave it the nod to confiscate Nigerian assets in their domains. That was why the company confiscated Nigerian aircraft in France, Nigerian building in Liverpool, England, another in Canada and yet another in the US. With the authority given to it, it will continue to do so and sell off the property until it either gets the money it was awarded or Nigeria pays it. That is the challenge Nigeria faces right now.
Was Nigeria not represented during proceedings; what possibly went wrong?
I do not think Nigeria was not represented because in drafting an MoU, when it concerns international companies, there must be a clause for arbitration. That is the first resort to resolution of any dispute, because of course, not only in Nigeria, internationally, arbitration has the capacity of coercion because just like the court, it has the capacity to compel the enforcement of certain actions. That is why anybody who wants to go by way of resolving a dispute through arbitration must submit to the final decision of the arbitration panel. Some people will say they will submit to it? But at the end of the day, when its decision fails to go their way, they will renege and that will compel the other party to go to court to enforce action. Once arbitration is well empanelled, and it concludes its action, the court usually wants to enforce the decision of the arbitration. It is a very strong alternative dispute resolution that helps to decongest the court system from all the matters arbitration panels can handle. And in this particular case, the chairman of the arbitration which held in England was the former Chief Justice of the Supreme Court of England. So, you can see that the arbitration was empanelled by very credible personnel. So, I do not think that Nigeria was not represented. Because if Nigeria was not represented at all, the arbitration panel could not have handed down the award against her. I’m speaking from my own personal experience. A client of mine once had an issue with a company in Cameroon. In their MoU, there was a clause for arbitration. When the company which is a public private company – the government of Cameroon and the public have stakes in it – had issues with my client, my client went to arbitration in UK because they agreed to go to London arbitration. By the time my client went there, the company from Cameroon failed to make appearance. Because it failed to go, the arbitration panel could not do anything – because by way of international best practices, for you to empanel and empower an arbitration panel to resolve a matter, you must submit yourself to the authority of the arbitration apart from the fact that that is enshrined in the MoU. Even if it is not enshrined there, once you agree to submit to arbitration, its decision is binding on you. If you refuse, the panel cannot compel you to make an appearance unlike the courts which can compel you by the order of court. But an arbitration panel cannot compel anyone to make an appearance. So, for the company to have got an award means that either Nigeria as a country or a sub-national of the country representing Ogun State was there. So, it was obvious that there was a representation for Nigeria.
Could anything be done now to remedy the situation?
Yes, the situation can be remedied. But we have to know that anything that has to do with the court has to do with time. Time is of the essence. And when you fail to appeal your matter within the time allowed by the judicial system, you can be shut out unless you get the leave of the court to appeal. Nigeria had the same experience when we had issue with Cameroon over Bakassi Peninsula and the international court gave judgment against Nigeria. In international law, when a court gives its judgment, you have a 10-year window to go on appeal. Nigeria failed to appeal the matter within the 10 years. And once the 10 years elapses and you fail to appeal, it is taken that the judgment is acceptable to you. And the next thing is enforcement of the judgment. That was what happened to Nigeria. And by the time the country wanted to appeal, it was seen that she had neglected to take up her right to appeal. At that point, the only thing left was a diplomatic option; that lead to that Green Tree Agreement between Nigeria and Cameroon. Again, remember the issues Nigeria had with P&ID. The company wanted to harvest $9.3billion; Nigeria went to arbitration and lost. The country did not appeal the arbitration; then the company went to court. It now secured the order of the court to harvest the arbitration award until Nigerians cried and that was when good enough the matter was still within the window for Nigeria to appeal. The country went on to appeal the judgment and it was quashed. And that gave Nigeria the breather she got. If Nigeria did not appeal and the judgment, if the judgment was not quashed, I can tell you that the company would have leveraged the execution and continued to embarrass Nigeria all over the world. You can imagine that the company grabbed Nigerian assets worth over $9billion. It was obviously the lackadaisical attitude of Nigerians and the collusion of some Nigerians and the people representing the company. When you look at the judgment you wonder whether a human being represented Nigeria at all in the matter. In this particular case involving Nigeria and the Chinese company, Nigerian was there. But the evidence presented by the Chinese company was overwhelming. It could not be upturned at the level of arbitration.
How much damage could the saga be doing to Nigeria at the moment?
The matter is doing very terrible damage to Nigeria right now. The damage are not only economical, but social, political and diplomatic; it is also impacting Nigeria’s sovereignty. The integrity of the country is at stake. It has even affected the level of our seriousness with which investors will be looking at us. Now, look at this. The Chinese company said it made efforts to resolve the matter at the Nigerian court, but the court was not forthcoming. And of course, what that means is that as foreign investors, if you have any serious matter with Nigeria, don’t rely on the courts to give you justice. That is a very terrible perception when it comes to our seriousness with international matters. When you talk about sovereignty, you can imagine now that Nigerian assets are being confiscated abroad. That affects the integrity of Nigeria as a country. What, what is going on also means is that other foreign companies still within Nigeria space have to watch their back when entering into business agreement with Nigeria. There is no single benefit coming out from that experience. Everything about it is negative and very terrible for the country.
Has there been any Federal Government serious reaction to the challenge?
Well, the government reaction has been reactionary. They didn’t know what they should have done early enough until the harm was done. The harm has been done in the sense that the company has got an arbitration award. The company has cemented that award with the judgment of court, leaving us no time to appeal the award. And the country didn’t appeal the judgment until the time elapsed. And the company now has started leveraging execution. So, it is almost like a foregone conclusion for Nigeria, and the only option left now is to pay the company and save face. Sadly, it is looking like there is no way they can defend the indefensible because the main actors in the matter are feeling the shame and the heat. Nigerians are now seeing them for who they are. Nobody ever knew that former Governor Ibikunle Amosun was not a gentleman. Now, many people are coming out to give their experiences with him. Apart from what Prof Pat Utomi said, there are others coming on the social and mainstream media to recall their experiences with him. The man – yes is a chartered account, a fellow of ICAN, but a shadow has been cast on his integrity when it comes to respect for agreement. Any man who cannot respect an agreement cannot be trusted. Right now, many people will be cautious when they want to deal with the government. Amosun’s experience is a very sour one. Some people in government easily forget that government should be a continuum. Unfortunately, a project started by Gbenga Daniel of PDP was scuttled by Amosun of APC as if it was not the same Ogun State that was involved. It was the same Ogun State and by extension, the whole of Nigeria has been affected. So, the very thing the Federal Government should do now is to pay the company because the damage is rubbing off on the whole of the country not just on Ogun State alone. Ogun State is just one finger that has touched the palm oil that has soiled the rest of the fingers. If you ask me, I will say that the Ogun State action has become a very challenging one to all the states in Nigeria. So, the Federal Government has to immediately tackle the matter by paying the company and getting Ogun State to pay back. The Federal Government can withhold the state’s share from the federation allocation.
If Ogun State on its part sees that it former governor did not act in the best interest of the state and its people can now reach out to him and make him pay for his actions.
Is this going to affect states’ agreements with foreign companies going forward?
Yes it will. The ability of states to now enter into agreement with foreign firms has been hurt very badly. It has also thrown up some very important lessons for the Federal Government. It now has to ensure that whenever a sub-national is going into a foreign agreement, it must also ensure that such agreement is brought to the attention of the Federal Government through the Office of the Attorney General of the Federation. If that is not done and challenges arise, the state involved will have to suffer for it. The states must know that there is always allocation to be shared. If a state goes to engage in an agreement without the knowledge of the Federal Government, and challenges arise, they cannot run away because the companies involved are outside Nigeria and only knows Nigeria. Right now, the Chinese firm cannot locate assets belonging to Ogun State; but they can locate that of Nigeria. They cannot deal with Ogun State because the state is not a sovereignty and cannot deal with another sovereignty. That is why countries and companies overseas ensure that in what they do, there is always the consent, involvement and endorsement of Nigeria.
If any company or country has a deal with any sub-national without involving Nigeria, they will be shooting themselves in the foot. They won’t do that. Rather, they will lure Nigeria through one way or the other to ensure that the country’s signature is on the agreement because they know that when there is failure to execute the terms of the agreement, they can only hold the Federal Government and not the state.
Can this harm states government business while waiting Federal Government endorsement?
Yes, that can because when one is stung by a bee, he tries to run away from a housefly.
With what is going on now, countries and companies will be very weary of entering into contractual agreements with sub-nationals in Nigeria. The flip side to it is that genuine investors that have the capacity and the resources will be shying away from coming to Nigeria. And that will make way for crooks to come and invest here – those who are coming to add no real value. That is the kind of portfolio investors we need to watch who are more corrupt than many Nigerian citizens themselves. That is the challenge we are going to have; that is why President Bola Tinubu might run around the world and come back achieving nothing because real genuine and serious investors who have principles might not come to a country where the people they will be dealing with do not honour obligations. A country that will not honour obligations will only attract monkeys.
What’s the way forward; any lesson learnt?
Way forward! One: the president must issue an Executive Order that any sub-national that is going into international engagement must get the Federal Government’s involvement, not just doing that, for the sake of participation, but for the sake of knowledge, information and advice. Two, some nationals must be discouraged from going into agreements they cannot fulfill. And if there are any changes in terms of the agreement, they must ensure that those changes are not caused by them. If the changes are caused by the foreigners, they can chase them away when they have every verifiable proof that they are the ones not living up to the terms of the agreement. But when you as a sub-national, are the one creating the problem, invariably you are the one creating problems for Nigeria. Three, it does not pay Nigeria that Nigerian leaders, both at the national and sub-national levels, will enter into an agreement and renege. It is a reflection of the type of campaign promises they make to the people which they never fulfil knowing full well that they will never fulfil them. They have now carried that mentality into the international arena by entering into an agreement and reneging on such agreement. The lessons to be learned from all of this are both international and domestic in nature. The government should be able to fulfil it promises and fulfil it pledges. That is why a government exists. The government should not be lying; and the government should not be shying away from its responsibilities. Any government official that causes this kind of embarrassment should be made to pay for it. For instance, former Governor Amosun then had immunity. But today, he has no such immunity. Therefore, Ogun State should set up a panel to see the activities of their then governor, and if those activities were not carried out in the best interest of the government and people of the state, that means he threw the government under the bus. And he must account for it. If it means confiscating some of his personal assets, to pay for what he did, that will serve as a deterrent to others. The problem in Nigeria is that people are not adequately sanctioned for their wrong doing. We very easily wish things away and life goes on. It does not send the right message; that does not strike the right cord. But when people are punished for their wrong actions, they will consider things very well before engaging in such wrong actions. And gradually, that is the only way we will begin to build a better society. But if we keep allowing people to go scoth-free after inflicting very grievous harm on the society, on the country, and they are not adequately punished, how do you now send a message that such action cannot be tolerated?
