DANGOTE FIGHTS BACK

Businessman extra ordinaire, Alhaji Aliko Dangote has engaged his lawyers to sue some media houses for maligning his name and putting him in bad light before the public.

 

Dangote’s determination to hit at these media houses under the soft sell genre is because he believes that the tilt of the story over his recent face-off with his erstwhile friend – Femi Otedola may have been orchestrated by latter.

 

Prior to that, he had sent volume of unsolicited gift – sugar, pasta, which met with the journalists’ surprise as it is viewed as Greek gift.

 

Days after the story that may have prompted his action was revealed, as it was published “after we investigated, the undercurrents”, we gathered.

 

The battleline is drawn as Dangote is determined to go the whole hug, the media houses are confident in readiness for the challenge as they insist, “we are sure of our facts, we remain unbowed.”

CHEVRON CORPORATION BACKS OUT OF SALE OF CHEVRON NIGERIA TO DANTATA

When on 19 September, 2008 the media relations unit of Chevron Corporation USA circulated a press announcing that its subsidiary, Chevron Africa Holdings Limited had agree to sell Chevron Nigeria Holding to Corlay Global SA, the press release carried a caveat in compliance with the Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995.

The cautionary statement informed readers that:

“Some of the items discussed in this press release are forward-looking statements about Chevron’s activities in Nigeria. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. The statements are based upon management’s current expectations, estimates and projections; are not guarantees of future performance; and are subject to certain risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.”

The caveat may just be appropriate because in the wake of the announcement of the agreement of sale of the downstream operations of Chevron Nigeria to Sayyu Dantata’s MRS, the intensity of the legal battle which had dogged the process of bidding for the 60 percent holding of Chevron Corporation held through Chevron Africa, moved some more notches and in the light of this, it is believed that the Chevron is considering appropriate channels to announce a reversal of its announcement.

Femi Otedola, Zenon Oil and Gas and Africa Petroleum Chairman had secured an injunction at a Lagos Federal High Court restraining Chevron from selling the 60 percent holdings without recourse to his 19 percent minority holding which, he claimed, may be jeopardized if the contested 60 percent holding was sold to another bidder who may lack the required expertise and resources to profitably operate the business.

Despite the injunction, Chevron parent office in San Ramon in the United States of America had gone ahead to announce the agreement to sell to Dantata’s company in defiance of the court order. Industry insiders reasoned that the announcement might have been a pre-emptive move to undermine the legal process in Nigeria. But beyond this consideration, industry insiders have argued that Chevron must have been emboldened to make the announcement in consideration of the influence of the backer of Sayyu, a profiled wealthy industrialist whom Chevron believes could pull the right strings in Nigeria to side-step the court proceedings and to also get the backing of the political power base in the country to talk Otedola into surrendering his claims to Chevron.

As was expected, Otedola initiated, through his lawyers, contempt proceedings against Chevron at the Federal High Court but last week Wednesday, he dramatically applied to withdraw the contempt proceeding in the court. This had sent some confusing signals to a growing population of the bid for Chevron.

A source close to Otedola, however, informed that the withdrawal of the contempt charge was strategic.

“The contempt proceeding had to be withdrawn because it may turn out to be a distraction from the main issue of the case.” The source said.

Another source believes that application to stop the contempt proceeding in court may not be unconnected with new revelations that Chevron Corporation, the parent company of Chevron Nigeria may have, indeed, stalled the process of transfer of the 60 percent holding in Chevron Nigeria to Dantata’s MRS in part, because of the on-going legal tango, and in part, because the required sum of money to consummate the purchase have not been made to it.

“The fact is that most Nigerian banks that are supposed to finance the acquisition have backed out, so it’s as if it is difficult to raise the fund locally.”

Any one of the two reasons for the reported abortion of the sale agreement might have thrown the spanners into what the initiators of the MRS bid for Chevron had planned by way of making the Nigerian public pay indirectly for the funding of the 60 percent shares of Chevron Nigeria.

“The strategy to my mind is simple. If the banks financed the acquisition of Chevron, it would have been easy for Sayyu and his backer to pay back the banks simply by selling 25 percent of the holding of Chevron to Nigerian investors through the Nigerian Stock Exchange. This way, they will still hold majority holdings in the company and they would have used money raised from ordinary Nigerians to pay back the money the banks used to finance the initial acquisition.” The source reasoned.

Meanwhile, Chevron has also made public its intention to sell its downstream operations trading under the Caltex brand name in Kenya.   According to AP, the front runners eyeing Chevron’s elaborate retail network include State-owned National Oil Corporation of Kenya and Gulf Africa Petroleum Corporation (Gapco). The two control a paltry 3.65 per cent and 2.65 per cent retail market share respectively.

Speculation is also rife that the cash-rich Oil Libya is equally an interested party, perhaps seeking a foothold in the Mombasa-based Kenya Petroleum Refinery Limited (KPRL), which has been much sought after by big multinationals, and is partly owned by Caltex.

The law, as spelt out under the Kenya’s Energy Act, requires Chevron to notify the Energy Regulatory Commission (ERC) of its intention to divest or transfer the licence to another oil marketer.

Previously, only the Treasury was notified in the event of divestiture by any firm.

“If the sale of Chevron will be through competitive bidding, this process may take some time to be concluded,” said Mr Peter Nduru, Head of Petroleum at ERC.

Treasury is reportedly pushing for Chevron to sell off only its Kenyan business unit to National Oil, despite plans by the global petroleum giant to sell its Kenya and Uganda operations as one bundle.

The AP report, however, observed that unlike in Kenya, this sale transaction on Chevron Nigeria was closed quickly when Chevron Nigeria hurriedly announced the agreement to sell to MRS.

SENATE CAPITAL MARKET COMMITTEE CHAIRMAN, GANIYU SOLOMON, CARPETS SEC, NSE AND CBN FOR LACK OF COORDINATION

very serious

Senator Solomon: very serious

Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon has no soothing description for the nation’s capital and money markets regulatory authorities. In an interview monitored on AIT, Senator Solomon said the Securities and Exchange Commission have been at cross purpose with each directing and dispensing policies that are parallel to each other.

 

Senator Solomon said despite the easy excuse provided by the global financial market meltdown, it was obvious the Nigerian market was headed for trouble with the independent manners the regulatory authorities were conducting their supervisory roles in the markets.

“It is obvious that they are not coordinated” Senator Solomon said. “The three regulatory bodies are expected to consult with one another and agree on common ground before they make pronouncements on policy direction for the capital market and other related activities. But what you see is CBN saying one thing today and the SEC saying another tomorrow while the NSE takes another position the other day. It confuses investors and market operators.”

The Chairman of the Senate Committee on Capital Market also questioned the surveillance capacity of the regulatory authorities:

“It is apparent that the surveillance capacity of the regulatory authorities is limited. It takes time before they react to issues and when they do, they react haphazardly.”

In response to the question of his personal opinion of the assurances of the insulation of the Nigerian financial and capital market to the global financial market crisis given by the Minister of Finance, the CBN Governor and the Minister for National Planning on the floor of the Senate, Senator Solomon said what the officials were trying to do was to merely calm the nerves and anxiety of Nigerians:

“What they are trying to do is just to allay fears” Senator Solomon said. “We all know that the world has shrunk to a global village so what affect a part of the world reflects in other parts of the world. You can see that oil prices have come down which is a fallout of the global crises this will definitely impact our economy. And again, we domicile our foreign reserve in dollar, this mean that if the value of the dollar falls it will affect the value of our foreign reserve. So there is no way we can be insulated from the global crisis.” Senator Solomon explained.

CHURCHES, MOSQUES, NGOs TO START PAYING TAXES FROM NEXT YEAR

The tax exemption status of religion based organizations and non government organisations are to be reviewed to align with international standards. This, according to a source in the Presidency, is to appropriately integrate otherwise tax exempt organizations into the taxable entities mainstream so as to drive the new impetus to fund the growth of the national economy from non oil revenue.

In line with this new thinking, the source informed that the Presidency has given its backing to the Nigeria Accounting Standard Board to evolve accounting standards that will serve as framework for tax exempt organizations to file their accounts and to be able to delineate which of their income is taxable from next year.

“The government does not intend to tax the income of churches, mosques or non-governmental organization or any other organization that naturally enjoys tax exemption status. The law is clear on the exemption status of such organizations. What the government has decided to do is to streamline income made in the furtherance of charitable activities of the tax exempt organizations and remove it from income made from what is known universally as unrelated business income,” the source said   

“So many religious organizations have, in fact, transformed into profit earning business enterprises and it is just proper that they are properly assessed for the purpose of taxation under the unrelated business income tax (UBIT),” the source argued. “These organizations are involved in various types of commercial activities, such as operating publishing houses, hotels, factories, radio and TV stations, parking lots, newspapers, bakeries, and restaurants. The Tax Reform will make income derived by churches from unrelated trade or business subject to tax.”

Another source at the Nigeria Accounting Standard Board argued the justification for taxing the unrelated business income of tax exempt organisations

The problem at which the tax on unrelated business income is directed is primarily that of unfair competition. The tax-free status of religion based organizations and NGOs enables them to use their profits tax-free to expand operations, while their competitors can expand only with the profits remaining after taxes. Also, a number of examples have arisen where these organizations have, in effect, used their tax exemptions to buy an ordinary business. That is, they have acquired the business with little or no investment on their own part and paid for it in instalments out of subsequent earnings – a procedure which usually could not be followed if the business were taxable. The idea is to impose the same tax on income derived from an unrelated trade or business as is borne by their competitors. It is, however, not intended that the tax imposed on unrelated business income will have any effect on the tax-exempt status of any organization,” the source explained.

The United States of America’s Internal Revenue Service Code, the template, which the NASB, is likely to adapt in its accounting standard to effect taxation of unrelated business income of affected organizations from next year, explains that churches and religious organizations, like other tax-exempt organizations, may engage in income-producing activities unrelated to their tax-exempt purposes, as long as the unrelated activities are not a substantial part of the organization’s activities. However, the net income from such activities will be subject to the UBIT if the following three conditions are met:

                      the activity constitutes a trade or business,

                      the trade or business is regularly carried on, and

                      the trade or business is not substantially related to the organization’s exempt purpose. (The fact that the organization uses the income to further its charitable or religious purposes does not make the activity substantially related to its exempt purposes.)

 

Exceptions to Unrelated Business Income Tax

Even if an activity meets the above three criteria, the income may not be subject to tax if it meets one of the following exceptions: (a) substantially all of the work in operating the trade or business is performed by volunteers; (b) the activity is conducted by the organization primarily for the convenience of its members; or (c) the trade or business involves the selling of merchandise substantially all of which was donated.

In general, rents from real property, royalties, capital gains, and interest and dividends are not subject to the unrelated business income tax unless financed with borrowed money.

 

The code also provides examples of Unrelated Trade or Business Activities:  Unrelated trade or business activities vary depending on types of activities, as shown below.

Advertising

Many tax-exempt organizations sell advertising in their publications or other forms of public communication. Generally, income from the sale of advertising is unrelated trade or business income. This may include the sale of advertising space in weekly bulletins, magazines or journals, or on church or religious organization Web sites.

 

Sale of merchandise and publications

The sale of merchandise and publications (including the actual publication of materials) can be considered the conduct of an unrelated trade or business if the items involved do not have a substantial relationship to the exempt purposes of the organization.

 

 Rental income

Generally, income derived from the rental of real property and incidental personal property is excluded from unrelated business income. However, there are certain situations in which rental income may be unrelated business taxable income:

                      if a church rents out property on which there is debt outstanding (for example, a mortgage note), the rental income may constitute unrelated debt-financed income subject to UBIT. (However, if a church or convention or association of churches acquires debt-financed land for use in its exempt purposes within 15 years of the time of acquisition, then income from the rental of the land may not constitute unrelated business income.),

                      if personal services are rendered in connection with the rental, then the income may be unrelated business taxable income, or

                      if a church charges for the use of the parking lot, the income may be unrelated business taxable income.

 

Parking lots

If a church owns a parking lot that is used by church members and visitors while attending church services, any parking fee paid to the church would not be subject to UBIT. However, if a church operates a parking lot that is used by members of the general public, parking fees would be taxable, as this activity would not be substantially related to the church’s exempt purpose, and parking fees are not treated as rent from real property. If the church enters into a lease with a third party who operates the church’s parking lot and pays rent to the church, such payments would not be subject to tax, as they would constitute rent from real property.

Whether an income-producing activity is an unrelated trade or business activity depends on all the facts and circumstances.

THEY SAY ADENUGA’S WISH TO SIGN OFF ETB SUFFERS SET BACK

Perhaps some ETB staff that were in the know of the negotiation of the acquisition of the bank by FirstBank were excited at the prospect of changing boss from the authority of Otunba (Dr.) Mike Adenuga to the structured management of FirstBank. Feelers from the bank owned by Adenuga indicated that some staff members were really perturbed when months after the very discreet discussion between ETB and FirtBank hit the dirt.

Background sourcing indicated that Adenuga is intent at concentrating on his money spinners, the telecom and oil and gas ventures in his vast business empire and considered the relinquishing what they claimed to be the troubles of running his ETB to the banking giant.

 Some of the staff considered this a momentary set back though.

Obama will be a good president

Head or tail, history made

Obama: Head or tail, history made

Away from our beleaguered stock market and the yet roiling global financial markets. At least, a little bit of sanity is returning to the Nigerian stock market though not by way of positive market activities, thankfully, the management of the Nigerian Stock Market has finally discerned the wisdom that informs free market activities by removing the one percent down limit on stocks price depreciation. Good enough, prices are stumbling; curiously, most hurt in the crashing prices are stocks of banks and insurance companies. The manufacturing sector is curiously holding steady, prices of UAC Nigeria, UAC Property and even those in the health sector; especially the pharmaceuticals have managed to hold their own at relative sliding rate. Does this tell a story?

 

I think it does, the power of any economy is a function of its real and active sector. Investors seem to have decidedly held faith with companies that are producing goods and products they can relate with and have turned their backs on the services of the financial sector with the average fall in price of stocks in that sector calculated at more than 50 percent. I guess it all about fears and negative sentiment. Yet, I can still dare to propose that in that sector lies the redeeming prospect of the market. Why?

Financial sector players understand the Nigerian economic market, perhaps, much more than any other sectoral player, and of course, they know how to get things done. They have been at the commanding height of the economy since the military inspired economic structural adjustment programme as influenced by the International Monetary Funds. Nigerian banks and bankers had survived much turbulence since 1993 when we first witnessed the first wholesale crash of the national banking sector and had returned stronger and better.

  So if First Bank is selling for less than 30 per cent of its peak price in 2008 at N20 plus and Access at less than 100 per cent of its high this year, I am tempted to go searching for value in the finance sector.

Please, excuse me, the stock market was not supposed to be in focus this week. I am very sure, the most discussed issue that would be discussed the whole of this week will be the USA presidential election while the most mentioned name any where in the corners of the globe this week will be Barrack Obama, that genteel, lithe figure that suddenly happened on the American political scene and had since captured the imagination of American across age, gender and other persuasion.

It’s natural to expect an opinionated African to canvass an Obama presidency, isn’t it natural? Of course, to my mind, this is the final resolution of the opposites that had defined relationship among people across the world, and for once, an indication that Africa, will, despite the interface of all morbid attributions in national leadership of countries across the black African continent, is where ultimate civilization and prosperity is headed. This may not be more than 50 years, I feel a reordering of the global economic space, an Obama USA presidency will be the beginning of the process.

Is this some fanciful thought? I don’t know, but it’s not every time that an individual, seemingly unqualified for a position just suddenly start marshalling the most effective strategies to beat political institutions in the United States.

The fact that Obama, a black-white man, or put properly, a white-black man (still wonder why they still primarily describe him as a black man as if the white gene and pigmentation of his mum were of no consequence) subsumed the Clintons and veteran John McCain in the opinion of people across the USA should convince anybody that Obama will be a good president.

No need to cajole logic and other persuasive argument about the worthiness of Obama, he has proved this by taking the battle to republican states and even competing on favourable numbers in McCain’s Arizona. And even more interesting, he turned the institution of the republican into a bleary eyed pumpkin mask only suitable to be laughed at during Halloween. Obama is that awesome.

So, can we be practical enough to stop all those talks of a McCain miraculous come as he had done before in those other elections into the senate. This is a different ball game; we are talking here about a phenomenon who is just being introduced to the world stage. Something tells me the world will not be the same after four years of Obama…but that will be if he survives the first term. Now, that’s talk for another day.