http://www.vanguardngr.com/wk506200/ls202070.htm
VANGUARD NEWSPAPER ON SUNDAY
Lagos, NIGERIA
2nd Lead Story
Senate
backs debt buy-back to reduce external debts
THE Senate has approved the usage of debt buy back to reduce Nigeria's huge external debt just as it dismissed insinuations that all debt buy back deals entered into by the past governments on behalf of the country were fraudulent.
Specifically, the parliament said the debt buy back undertaken between 1988 and 1993 under the Babangida administration was beneficial to Nigeria but frowned at the unwholesome conduct of the 1996 Ajaokuta debt buy back scheme.
The Senate position is contained in the report of its committee on local and foreign debts on debt buy back transactions in Nigeria from 1983 to date with emphasis on the Ajaokuta debt buy back made available to Sunday Vanguard at the weekend.
The 1988 to 1993 debt buy back deals were handled by the Central Bank of Nigeria (CBN), using a subsidiary company, Greenland Holdings, while the Ajaokuta deal was handled by the Federal Ministry of Finance.
On the 1988 to 1993 deals, a London based Nigerian former football star, Mr. John Fashanu, early this year accused the Babangida administration of sharp practices.
But, a principal partner in the scheme, Bob Minton, alleged Fashanu was being used by the Church of Scientology with which he had a three-year battle over the church's alleged human rights violations and murder of certain persons which he was trying to expose.
The senate committee, in the report, described the debt buy back deals undertaken by Greenland Holdings as very transparent.
"There is no doubt that the London Club debt buy done by government {Babangida administration) through the instrumentality of the offshore company, Greenland Holdings, was transparent and enjoyed input from all concerned at all levels within the CBN who were responsible for the debt and therefore handled the debt buy back," the committee said. It added: "it was covered by the CBN procedure for debt buy backs and attracted little or no controversy at least within the country. Possibly as a result of the openness with which it was done, it attracted the attention and ire of the government of US which advised in strong terms that the operation of the Nigerian government be closed down before it seriously embarrassed the nation."
The debt conversion programme of the CBN, according to the committee, also had a clearly defined procedure which included advertising the Nigerian debts available for purchase while open bids were conducted on regular basis.
The committee pointed out that the Greenland debt buy back resulted in a reduction of Nigeria's debt by $5,000,000,000.00 and a re-scheduling of the balance of the London Club debts "which will be wiped out by the year 2030."
It stated that the debts managed by the Ministry of Finance as illustrated by the Ajaokuta debt was a different kettle of fish.
"The Ministry of Finance (MOF) stated in the memo submitted that no procedure existed for the purchase of the debts managed by the MOF. Mr. Ani who testified as a representative of the Minister of Finance re-emphasised this position in his oral submission.
The submission of Chief Anthony Ani who was then the Minister of Finance also confirms this fact. Intense pressure from the committee could not produce any record of any completed debt buy back transaction in the MOF other than Ajaokuta Steel Complex Limited (ASCL). The committee did not therefore have the benefit of any other completed transaction for it to draw any inference as to the procedure that should have been followed in the ASCL debt buy back," the committee stated.
It explained that so far as the debts managed by the MOF were concerned, no procedure existed for buying those debts back.
The committee observed that the full benefits of the debt conversion programme were yet to be fully achieved and asked the Obasanjo administration to, as a matter of deliberate policy, encourage, enhance and expand the scope of the debt conversion programme by all means at its disposal.
Vanguard: SUNDAY, 2nd JULY, 2000
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Monday 3 July 2000
SENATE COMMITTEE SAYS NIGERIA SAVED $5 BILLION FROM 1988-93 DEBT BUYBACK SCHEME
A committee of Nigeria's upper legislative chamber has backed the strategy of debt buy back schemes in reducing the country's huge external debt. The Senate committee's stance is contained in a report on local and foreign debts that investigated Nigeria's debt buy back transactions from 1983, especially the controversial 1996 Ajaokuta debt buy back deal. In the report made available to Nigeria Today Online at the weekend, the committee, which was until recently led by Senator Idris Abubakar, said it was wrong to insinuate that all debt buy back schemes approved by past governments were fraudulent. The committee stated that the debt buy back scheme undertaken between 1988 and 1993 was beneficial to Nigeria because the country was able to reduce its debt by $5 billion. The committee noted that the full benefits of the debt buyback scheme were yet to be fully achieved and urged President Olusegun Obasanjo to continue the ''scope of the debt conversion programme by all means at its disposal'' as a deliberate policy. The committee however cast aspersions on the conduct of the 1996 Ajaokuta debt buy back scheme.
The 1988-1993 debt buy back deals were handled by the Central Bank of Nigeria (CBN), through the former governor, the late Alhaji Abdulkadir Ahmed. The CBN used a subsidiary company, Greenland Holdings, while the Ajaokuta deal was handled by the Federal Ministry of Finance. London based former footballer, John Fashanu, two months ago alleged financial impropriety in the 1988-93 scheme. His accusing fingers were pointed at retired American investment banker Bob Minton, whose firm handled the 1988-93 scheme. Responding to Fashanu's allegations at a public forum which the United Kingdom resident, failed to attend, Minton said Fashanu was being used by the Scientology organisation in the United States with which he had a three-year battle over the group's alleged human rights violations and murder of certain persons which he was trying to expose.
''If people had plundered Nigeria, they should be brought to book, but such a campaign would lose its focus if the main motivation is vendetta. The Fashanu Report was a document conceived out of vendetta. As far as I am concerned Fashanu is being economical with the truth. He should focus on those who stole Nigeria's money and not people like me who are being maligned for a completely different reason'' Minton told a public forum in Howard University, Washington D.C. last month. Privately, Fashanu has denied allegations that he had offered to sell his unsubstantiated findings to the federal government to the tune of 500 million naira. He has also failed to refute the allegations in public.
The senate committee, in its report, concurred that the debt buy back deals undertaken by Greenland Holdings were beneficial to the country. "There is no doubt that the London Club debt buyback done by government through the instrumentality of the offshore company, Greenland Holdings, was transparent and enjoyed input from all concerned at all levels within the CBN who were responsible for the debt and therefore handled the debt buy back.....It was covered by the CBN procedure for debt buy backs and attracted little or no controversy at least within the country. Possibly as a result of the openness with which it was done, it attracted the attention and ire of the government of US which advised in strong terms that the operation of the Nigerian government be closed down before it seriously embarrassed the nation."
The committee, stated that the debt conversion programme of the CBN, had a clearly defined procedure which included advertising the Nigerian debts available for purchase while open bids were conducted on regular basis. The committee pointed out that the Greenland debt buy back resulted in a reduction of Nigeria's debt by $5 billion..."
The committee did not give a clean bill of health for the Ajaokuta debt which was handled by the Federal Ministry of Finance. "The Ministry of Finance (MOF) stated in the memo submitted that no procedure existed for the purchase of the debts managed by the MOF. Mr. Ani who testified as a representative of the Minister of Finance re-emphasised this position in his oral submission. The submission of Chief Anthony Ani who was then the Minister of Finance also confirms this fact. Intense pressure from the committee could not produce any record of any completed debt buy back transaction in the MOF other than Ajaokuta Steel Complex Limited (ASCL). The committee did not therefore have the benefit of any other completed transaction for it to draw any inference as to the procedure that should have been followed in the ASCL debt buy back." The committee pointed out that debts managed by the finance ministry had no procedure for buying those debts back.
His name may not ring a bell to most Nigerians. But Bob Minton is the Babangida administration's principal partner in the $6 billion debt buy-back scheme which former English footballer John Fashanu alleged was fraudulently done. He recently explained that there was no scam as Fashanu claims and lays bare how the transaction was done.
"The buy-back of Central Bank of Nigeria promissory notes began in March 1998 and in August 1988 we started buying restructured bank debt. We agreed with CBN that when we first started doing this we would make profits of approximately 1% at face value of the Nigerian debt that we repurchased.
By the end of the whole operation in February 1993 we had acquired 1.1 billion dollars in CBN promissory notes and approximately $3 billion of Nigerian bank debt. There were external debts of foreign currency of banks all over the world, such as Barclay's Standard Charter Bank, etc.
There is also a list of all the transactions, which amount to about 325 different transactions, over the five-year period. In addition to the $1.1 and $3 billion of bank debts, there is also an additional $450 million of multilateral debts between Nigeria government and USA, ECGE in England, Norway and Hungary).
During the course of this, a sub-total of about $4.5 billion of debt was repurchased for Nigeria. The average price for that debt was 34 cents on the dollar. Nigeria paid roughly $1.5 billion in cash to re-purchase this debt. This happened in 325 different transactions over that five-year period.
It was a very good business for Nigeria. We made a good profit at 1% of $4.5 billion, which is perfectly normal. During the course of this whole operation, the CBN was receiving monthly reports from us and we were talking on the phone everyday to CBN. Governor Ahmed, Ishmael Usman, Sanaki, and Masanwa were dealing with the whole matter.
We were mainly discussing with the Governor on a daily basis to bring him up to date on what was going on, what we had done that day, constantly keeping him informed. Then writing a monthly report sending it to CBN and then writing a yearly detailed report to summarize everything that we have done for the year.
The $1.5 billion the CBN paid to us over this period of time was not given to us upfront. It was given in installments such as $20 million, $75 million and so on. However, constant flow of cash was coming in over this period because it was of great benefit to Nigeria. They continued to provide the resources.
During 1990, the CBN was running a little short of money and they did a deal with NNPC. The CBN sold NNPC $500 million worth of promissory notes. CBN wanted NNPC to hold the notes and NNPC will get the return on the investments and it will free up cash for CBN and they did it under a re-purchase agreement, so NNPC could sell back the notes to CBN which they did in 1992.
We were just collecting the interest from NNCP. The key thing with regards to the bank's debt is that in March 1992 we tendered all of the bank debt into an official buy-back of the Nigerian government debt, under the so-called plan. We sold back to the CBN $3 billion worth of bank debt and received back for that on 40 cents on the dollar, 1 billion and 200 million dollars. The same day we received that amount we gave it to the CBN.
We gave the debt, and there was an agent - Citi Bank. We gave all the debt to City Bank and the debt was cancelled and CBN through Citi Bank gave us $1.2 billion that was the CBN money, the debt that we held was owned by the CBN money, the debt that we held was owned by the CBN but we were nominee, that fiduciary holding the debt for CBN, so we get $1.2 billion and gave it right back to the CBN the same day.
That was a large transaction but it was just part of the whole buy-back operation. There was resources /uses of fund statement in which there was $1 billion, 205 million that was one transaction that happened on one day, where all the bank debt were verified by the agent Citi Bank. - Standard Charter also an agent and was all checked between CBN and Citi Bank. A lot of banks all over the world sold this buy-back, it was all gone, and CBN got their money back for it.
Later in 1992, probably in June or July, all the promissory notes were sent to Chase Manhattan Bank in New York, which were the agents. We received an instruction from CBN to cancel all the promissory notes (about 1000 notes) totaling $1.1 billion. Chase Manhattan Bank sent a message to CBN confirming that the promissory notes were cancelled.
From the CBN's standpoint, $3 billion was finished, wiped-off the books and $1.1 billion debt was finished and wiped-off the books.
The next amount was the multilateral debt, the 450 million. These were done in 10 or 12 transactions and all of those debt notes were given to the CBN who in turn went to the Ministry of Finance because this were owned by the Ministry of France. These debts were then cancelled and those were also finished.
Those were the 3 types of debts. At the end of the day CBN's bought back $4.5 billion and it cost $1.5 billion approximately.
Greenland Holdings and the CBN were there with Sanaki wanting to supervise how things were done. The market price was always available; it was not a hidden price. We were mainly dealing with other banks and financial institutions that were used to trading in this of debts. You negotiate the price with these institutions over the phone, say how much you are willing to sell for and then you simply strike a deal within the price range on screen. The price has gone up from 22 cents to 40 cents over the five-year period. The average price being 34 cents.
The present problem is that John Fashanu came with this report talking about this big debt scam, money laundering, etc. That the debt scheme was part of a money-laundering scheme for General Babangida. He mentioned Abacha, but we had finished in February 1993. Abacha came in to power in August 1993. There was a daily account. There is no possibility that anything more than that amount went through those accounts.
John Fashanu has been used by the Church of Scientology, an organization that considers me to be their greatest enemy in the world. There is no chance that Fashanu investigated it on his own. His investigator is a full time worker for Scientology. He has been given this report so that I can be discredited as an effective critic of Scientology in USA, Europe- France and Germany.
This is a vendetta on Scientology's part against me and they are using Fashanu and Nigeria as a tool to beat me on the head with the clock and that is the bottom line. The fraudulent transaction, money-laundering claim for IBB is not true. The investigator, Robert Clark for Fashanu goes by two different names i.e. David Lee and David Laubach.
I have spent over $4 million of my own money fighting Scientology in the last five years, helping people who have been hurt by Scientology. One person, a female was killed by Scientology and I helped her family prosecute a lawsuit against Scientology who stands over $100 million. They have tried to come to me and pay me off to force the family into settlement.
I am exposing Scientology for the type of Totalitarian organization they are. They like to hide behind religion; they are not a religion but a political movement that disguises itself as a religion. They are not willing to accept or receive any criticism. They say that anybody that speaks against them is a criminal.
They have people prosecuting me for criminal actions. I have been to court twice on this account. They have used different mechanisms to get me arrested and to stop being a critic of Scientology. That is really what it is all about."