Ogun state government, two Chinese firms and strangely, Nigerian government, have been in a complex, yet simple, international business tango. While the relationship had dragged since 2007, it took a court in Paris, France, to jolt Nigerians to the complications that had been brewing in the business romance.
The dispute is over the management of Ogun Guangdong Free Trade Zone (OGFTZ).
Here’s the backgrounder. In 2007, with Otunba Gbenga Daniel as Governor, Ogun state entered an agreement with Zhongshan’s subsidiary in Nigeria known as Zhongfu International Investment FXE, to manage the free-trade zone. In 2011, shortly after Senator Ibikunle Amosun took over office from Daniel, two different Chinese firms, Messrs China Africa Investment FXE and Zhongfu International Investment FXE laid claims to management rights over the OGFTZ. How? Well, back home in China, there had been intrigues between the duo, a matter not known to Ogun state, nor the Nigerian government.
The tiff between the Chinese firms soon echoed into Nigeria and snowballed into a fierce corporate ding-dong such that it threatened public peace and safety within the Zone and neighboring communities.
There were claims and counter claims as to who between the two was the lawful representative of the original joint venturer, Guangdong Province, China, and consequentially who had the right to manage the Zone.
Amosun gave a vivid account of the intrigues between the Chinese firms. Zhongfu International Investment FXE, he told Nigerians, showed up to be a concerned and genuine tenant and Zone stakeholder and in that façade, volunteered “very damaging and destructive information about the official representatives of Guangdong Province, the Joint Venturer and lawful Zone Managers, China Africa Investment FXE and subsequently requested to be appointed as Interim Zone Managers.”
Based on that information, Ogun government on 15/03/2012 appointed Zhongfu International Investment FXE as Interim Zone Manager pending further evaluation and investigation. All too soon, it was discovered that the information and claims volunteered by Zhongfu International Investment FXE against China Africa Investment FXE were untrue.
Unknown to Ogun government at that time, there was trouble back home in China where Zhongfu was having unresolved issues with China Africa. The beef between the two Chinese firms was carried over to Nigeria and Zhongfu surreptitiously rallied to convert the state-owned assets of Guangdong Province together with its Zone ownership and management rights of its business. These undercurrents were discovered, much later, through the intervention of the Chinese government via Diplomatic Note 1601, dated 11 March, 2016, the year arbitration on the matter began.
By 2019, the arbitration hearing had been concluded. The Arbitral Panel awarded over $60 million against the Federal Government of Nigeria, a co-defendant, when all Zhongfu had done was build a perimeter fence around the free-trade zone.
Not willing to budge to pressure and blackmail, Ogun government resolved to resist the enforcement of the award. The case crisscrossed 8 different jurisdictions in different continents. Worthy of note is the fact that Zhongfu had tried to enforce the kind of illegal order it got in France in both the US and the UK but failed.
In fairness, Ogun state showed good faith by engaging Zhongfu in settlement discussions on reasonable terms. Amosun recalled that the last meeting which held in September 2023 in London, lasted for three days and was attended by several officials of Ogun state, including the incumbent Governor Dapo Abiodun and the Attorney General/Minister of Justice, Prince Lateef Fagbemi.
Zhongfu was said to have shown initial reasonable readiness to consider Ogun state’s offer of arbitration but surprisingly made a volte-face by the second day when it insisted on the government paying the full judgment debt. On account of this, peaceful resolution of the dispute collapsed, with parties agreeing to meet again in the first quarter of this year.
Since then, Zhongfu lapsed into latency mode and remained evasive, unwilling to continue with the option of peaceful dispute resolution. Instead, it embarked on a series of enforcement proceedings, which the legal team appointed by the Federal Government and Ogun state successfully opposed in various courts. A case of forum shopping.
But Ogun state insists it has not given up on a reasonable settlement option, and that it has dispatched letters seeking peaceful resolution of the matter to Zhongshan. The latest of such letters was not responded to by the Chinese firm until after obtaining the latest illegal order from a Paris court.
It took the two orders procured by Zhongshan from the Judicial Court of Paris dated March 7, 2024, and August 12, 2024, without any notice being duly served on the Federal Government of Nigeria and Ogun State Government to alert Nigerians to the matter that mirrors the Process & Industrial Developments Ltd (P&ID) case against Nigeria over issues on gas supply. P&ID had alleged that Nigeria failed to supply “the agreed-upon quantity of natural gas.”
Based on the alleged breach of contract, P&ID approached the London tribunal in 2015 which in 2017, awarded P&ID a shocking $11 billion in a case of deceit and subterfuge.
Now is the turn of a Chinese company to attempt to fleece Nigeria. And just as the P&ID case crashed, the Zhongfu debacle is already hitting the rocks because in all substance and material, it was founded on deceit and blackmail. After what happened in the P&ID case, it’s gratifying to see that both Nigeria and Ogun government are on the same frequency of legitimacy on this matter.
Presidential media aide, Mr. Bayo Onanuga, captured it most succinctly when he said in a statement: “The material facts in the transaction between the Ogun state Government and Zhongshan point to another P&ID case in which unscrupulous and questionable individuals falsely present themselves as investors with the sole objective of undercutting and scamming governments in Africa.
Undoubtedly, Zhongshan withheld vital information and misled the Judicial Court in Paris into attaching the Nigerian government’s presidential jets, which are on routine maintenance in France. The use and nature of the Presidential jets as assets of a sovereign entity whose assets are protected by diplomatic immunity forbid any foreign court from issuing an order against them. We are convinced the Chinese company misled the Judicial Court of Paris regarding the use and nature of the assets it seeks to attach and did not fully disclose to the court as required by law.”
The above sums it up. The trouble was caused in China between two Chinese firms. Now, they want Nigeria to pay for the greed and dishonesty among themselves. No, this is a case of trouble made in China. Nigeria should not be made, compelled or bullied to bear the brunt. Nigerians have consumed so much of Chinese products including garri imported from China, but certainly not a toxic business dispute broth brewed by two disagreeing Chinese firms. No, spare us this, please. Nigeria won’t pay and should not pay!
CAUTION: Nigerian public officials must be wary of the kind of contracts/ agreements they sign and much more, the kind of entities they ink obligations with. The case of P&ID almost left the country with economic and reputational blisters.
First published in Sunday Sun
